Exhibit 99.1
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LOAN AGREEMENT
Dated as of August ___, 2005
By and Between
BEHRINGER HARVARD ONE FINANCIAL, LLC
And
CITIGROUP GLOBAL MARKETS REALTY CORP.
as Lender
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TABLE OF CONTENTS
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1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION..............................1
1.1 SPECIFIC DEFINITIONS........................................1
1.2 INDEX OF OTHER DEFINITIONS..................................1
1.3 PRINCIPLES OF CONSTRUCTION..................................1
1.4 DEFINITION OF BORROWER; JOINT AND SEVERAL LIABILITY. .......1
2. GENERAL LOAN TERMS...................................................1
2.1 THE LOAN....................................................1
2.2 INTEREST; MONTHLY PAYMENTS..................................1
2.2.1 GENERALLY..........................................1
2.2.2 DEFAULT RATE.......................................1
2.2.3 TAXES..............................................1
2.2.4 NEW PAYMENT DATE...................................1
2.3 LOAN REPAYMENT..............................................1
2.3.1 REPAYMENT..........................................1
2.3.2 MANDATORY PREPAYMENTS..............................1
2.3.3 DEFEASANCE.........................................1
2.3.4 OPTIONAL PREPAYMENTS...............................1
2.4 RELEASE OF PROPERTY.........................................1
2.4.1 RELEASE ON DEFEASANCE..............................1
2.4.2 RELEASE ON PAYMENT IN FULL.........................1
2.5 PAYMENTS AND COMPUTATIONS...................................1
2.5.1 MAKING OF PAYMENTS.................................1
2.5.2 COMPUTATIONS.......................................1
2.5.3 LATE PAYMENT CHARGE................................1
3. CASH MANAGEMENT AND RESERVES.........................................1
3.1 CASH MANAGEMENT ARRANGEMENTS................................1
3.2 REQUIRED REPAIRS;...........................................1
3.2.1 COMPLETION OF REQUIRED REPAIRS.....................1
3.2.2 REQUIRED REPAIRS RESERVES..........................1
3.3 TAXES AND INSURANCE.........................................1
3.4 CAPITAL EXPENSE RESERVES;...................................1
3.4.1 CAPITAL RESERVE SUBACCOUNT.........................1
3.5 ROLLOVER RESERVES...........................................1
3.5.1 GENERAL ROLLOVER RESERVE...........................1
3.5.2 1
3.6 OPERATING EXPENSE SUBACCOUNT................................1
3.7 CASUALTY/CONDEMNATION SUBACCOUNT............................1
3.8 SECURITY DEPOSITS...........................................1
3.9 CASH COLLATERAL SUBACCOUNT..................................1
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3.10 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS............1
3.11 PROPERTY CASH FLOW ALLOCATION...............................1
3.12 INITIAL DEPOSITS INTO RESERVES. ...........................1
3.13 INITIAL LEASING RESERVE. ..................................1
4. REPRESENTATIONS AND WARRANTIES.......................................1
4.1 ORGANIZATION; SPECIAL PURPOSE...............................1
4.2 PROCEEDINGS; ENFORCEABILITY.................................1
4.3 NO CONFLICTS................................................1
4.4 LITIGATION..................................................1
4.5 AGREEMENTS..................................................1
4.6 TITLE.......................................................1
4.7 NO BANKRUPTCY FILING........................................1
4.8 FULL AND ACCURATE DISCLOSURE................................1
4.9 TAX FILINGS.................................................1
4.10 NO PLAN ASSETS..............................................1
4.11 COMPLIANCE..................................................1
4.12 CONTRACTS...................................................1
4.13 FEDERAL RESERVE REGULATIONS; INVESTMENT COMPANY ACT.........1
4.14 EASEMENTS; UTILITIES AND PUBLIC ACCESS......................1
4.15 PHYSICAL CONDITION..........................................1
4.16 LEASES......................................................1
4.17 FRAUDULENT TRANSFER.........................................1
4.18 OWNERSHIP OF BORROWER.......................................1
4.19 PURCHASE OPTIONS............................................1
4.20 MANAGEMENT AGREEMENT........................................1
4.21 HAZARDOUS SUBSTANCES........................................1
4.22 NAME; PRINCIPAL PLACE OF BUSINESS...........................1
4.23 OTHER DEBT..................................................1
4.24 TENANT IN COMMON AGREEMENT..................................1
4.25 SECURITIES LAWS COMPLIANCE..................................1
5. COVENANTS............................................................1
5.1 EXISTENCE...................................................1
5.2 TAXES AND OTHER CHARGES.....................................1
5.3 ACCESS TO PROPERTY..........................................1
5.4 REPAIRS; MAINTENANCE AND COMPLIANCE; ALTERATIONS............1
5.4.1 REPAIRS; MAINTENANCE AND COMPLIANCE................1
5.4.2 ALTERATIONS........................................1
5.5 PERFORMANCE OF OTHER AGREEMENTS.............................1
5.6 COOPERATE IN LEGAL PROCEEDINGS..............................1
5.7 FURTHER ASSURANCES..........................................1
5.8 ENVIRONMENTAL MATTERS.......................................1
5.8.1 HAZARDOUS SUBSTANCES...............................1
5.8.2 ENVIRONMENTAL MONITORING...........................1
5.9 TITLE TO THE PROPERTY.......................................1
5.10 LEASES......................................................1
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5.10.1 GENERALLY..........................................1
5.10.2 MATERIAL LEASES....................................1
5.10.3 MINOR LEASES.......................................1
5.10.4 ADDITIONAL COVENANTS WITH RESPECT TO LEASES........1
5.11 ESTOPPEL STATEMENT..........................................1
5.12 PROPERTY MANAGEMENT.........................................1
5.12.1 MANAGEMENT AGREEMENT...............................1
5.12.2 TERMINATION OF MANAGER.............................1
5.13 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY....................1
5.14 ASSUMPTION IN NON-CONSOLIDATION OPINION.....................1
5.15 CHANGE IN BUSINESS OR OPERATION OF PROPERTY.................1
5.16 DEBT CANCELLATION...........................................1
5.17 AFFILIATE TRANSACTIONS......................................1
5.18 ZONING......................................................1
5.19 NO JOINT ASSESSMENT.........................................1
5.20 PRINCIPAL PLACE OF BUSINESS.................................1
5.21 CHANGE OF NAME, IDENTITY OR STRUCTURE.......................1
5.22 INDEBTEDNESS................................................1
5.23 LICENSES....................................................1
5.24 COMPLIANCE WITH RESTRICTIVE COVENANTS, ETC..................1
5.25 ERISA.......................................................1
5.26 TRANSFERS...................................................1
5.26.1 GENERALLY..........................................1
5.26.2 PERMITTED TIC TRANSFERS............................1
5.26.3 TRANSFER AND ASSUMPTION............................1
5.27 LIENS.......................................................1
5.28 DISSOLUTION.................................................1
5.29 EXPENSES....................................................1
5.30 INDEMNITY...................................................1
5.31 TENANT IN COMMON AGREEMENT..................................1
5.32 BEHRINGER MINIMUM TENANT-IN COMMON INTEREST.................1
5.33 PATRIOT ACT COMPLIANCE......................................1
6. NOTICES AND REPORTING................................................1
6.1 NOTICES.....................................................1
6.2 BORROWER NOTICES AND DELIVERIES.............................1
6.3 FINANCIAL REPORTING.........................................1
6.3.1 BOOKKEEPING........................................1
6.3.2 ANNUAL REPORTS.....................................1
6.3.3 MONTHLY/QUARTERLY REPORTS..........................1
6.3.4 OTHER REPORTS......................................1
6.3.5 ANNUAL BUDGET......................................1
7. INSURANCE; CASUALTY; AND CONDEMNATION................................1
7.1 INSURANCE...................................................1
7.1.1 COVERAGE...........................................1
7.1.2 POLICIES...........................................1
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7.2 CASUALTY....................................................1
7.2.1 NOTICE; RESTORATION................................1
7.2.2 SETTLEMENT OF PROCEEDS.............................1
7.3 CONDEMNATION................................................1
7.3.1 NOTICE; RESTORATION................................1
7.3.2 COLLECTION OF AWARD................................1
7.4 APPLICATION OF PROCEEDS OR AWARD............................1
7.4.1 APPLICATION TO RESTORATION.........................1
7.4.2 APPLICATION TO DEBT................................1
7.4.3 PROCEDURE FOR APPLICATION TO RESTORATION...........1
8. DEFAULTS.............................................................1
8.1 EVENTS OF DEFAULT...........................................1
8.2 REMEDIES....................................................1
8.2.1 ACCELERATION.......................................1
8.2.2 REMEDIES CUMULATIVE................................1
8.2.3 SEVERANCE..........................................1
8.2.4 DELAY..............................................1
8.2.5 LENDER'S RIGHT TO PERFORM..........................1
9. SPECIAL PROVISIONS...................................................1
9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION...............1
9.1.1 GENERAL; BORROWER COOPERATION......................1
9.1.2 USE OF INFORMATION.................................1
9.1.3 BORROWER OBLIGATIONS REGARDING DISCLOSURE
DOCUMENTS..........................................1
9.1.4 BORROWER INDEMNITY REGARDING FILINGS...............1
9.1.5 INDEMNIFICATION PROCEDURE..........................1
9.1.6 CONTRIBUTION.......................................1
9.1.7 SEVERANCE OF LOAN..................................1
9.2 COSTS AND EXPENSES..........................................1
10. MISCELLANEOUS........................................................1
10.1 EXCULPATION.................................................1
10.2 BROKERS AND FINANCIAL ADVISORS..............................1
10.3 RETENTION OF SERVICER.......................................1
10.4 SURVIVAL....................................................1
10.5 LENDER'S DISCRETION.........................................1
10.6 GOVERNING LAW...............................................1
10.7 MODIFICATION, WAIVER IN WRITING.............................1
10.8 TRIAL BY JURY...............................................1
10.9 HEADINGS/EXHIBITS...........................................1
10.10 SEVERABILITY................................................1
10.11 PREFERENCES.................................................1
10.12 WAIVER OF NOTICE............................................1
10.13 REMEDIES OF BORROWER........................................1
10.14 PRIOR AGREEMENTS............................................1
10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.........................1
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10.16 PUBLICITY...................................................1
10.17 NO USURY....................................................1
10.18 CONFLICT; CONSTRUCTION OF DOCUMENTS.........................1
10.19 NO THIRD PARTY BENEFICIARIES................................1
10.20 YIELD MAINTENANCE PREMIUM...................................1
10.21 ASSIGNMENT..................................................1
10.22 BORROWER'S DESIGNEE.........................................1
10.23 INTENTIONALLY OMITTED.......................................1
10.24 SET-OFF.....................................................1
10.25 1031 EXCHANGE...............................................1
10.26 COUNTERPARTS. .............................................1
Schedule 1 - TI and Free Rent
Schedule 2 - Required Repairs
Schedule 3 - Exceptions to Representations and Warranties
Schedule 4 - Organization of Borrower
Schedule 5 - Definition of Special Purpose Bankruptcy Remote Entity
Schedule 6 - Form of Guaranty of Recourse Obligations
Schedule 7 - Loan Assumption and Ratification Agreement
Schedule 8 - Rent Roll
Schedule 9 - Outstanding Equity of Behringer
Schedule 10 - O&M Program
Schedule 11 - Form of TIC Borrower limited liability company agreement
Schedule 12 - Tenant in Common Agreement
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LOAN AGREEMENT
LOAN AGREEMENT dated as of August ___, 2005 (as the same may be
modified, supplemented, amended or otherwise changed, this "AGREEMENT") by and
among Behringer Harvard One Financial, LLC ("INITIAL BORROWER"), a Delaware
limited liability company having an office at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and CITIGROUP GLOBAL MARKETS REALTY CORP., a New York
corporation (together with its successors and assigns, "LENDER").
1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1 SPECIFIC DEFINITIONS. The following terms have the meanings set
forth below:
ADVANCE: any portion of the Principal advanced by Lender to
Borrower.
AFFILIATE: 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.
AMORTIZATION COMMENCEMENT DATE: September 11, 2010, as such date
may be changed in accordance with Section 2.2.4.
APPROVED CAPITAL EXPENSES: Capital Expenses incurred by
Borrower, provided that during a Cash Trap Period, such Capital Expenses shall
either be (i) included in the total Approved Capital Budget or (ii) approved by
Lender.
APPROVED LEASING EXPENSES: actual out-of-pocket expenses
incurred by Borrower in leasing space at the Property pursuant to Leases entered
into in accordance with the Loan Documents, including brokerage commissions
(including those paid pursuant to the Management Agreement) and tenant
improvements, which expenses (i) are (A) specifically approved by Lender in
connection with approving the applicable Lease, (B) incurred in the ordinary
course of business and on market terms and conditions in connection with Leases
which do not require Lender's approval under the Loan Documents, or (C)
otherwise approved by Lender, which approval shall not be unreasonably withheld
or delayed, and (ii) are substantiated by executed Lease documents and brokerage
agreements.
APPROVED OPERATING EXPENSES: during a Cash Trap Period,
operating expenses incurred by Borrower which (i) are within 105% of the total
amounts included in the Approved Operating Budget for the current calendar month
(or for unpaid operating expenses included in the Approved Operating Budget for
prior calendar months); provided that, for purposes hereof, operating expenses
in such Approved Operating Budget shall be deemed to be increased from the
amounts in the applicable Approved Operating Budget to the extent that such
increased amounts are at least equal to an increase in operating revenues from
the amounts in such Approved Operating Budget or directly relate to variances in
occupancy levels or emergencies or unforeseen circumstances, (ii) are for real
estate taxes, insurance premiums, electric, gas, oil, water, sewer or other
utility service to the Property, (iii) are for property management fees payable
to Manager under the Management Agreement, such amounts not to exceed 4% of the
monthly Rents (excluding however any asset management fees payable by Borrower
to Manager pursuant to the Management Agreement; provided, however, the
foregoing 4% limitation shall not be deemed to preclude Borrower from paying any
such asset management fees pursuant to the terms of the Management Agreement
from their own funds) or (iv) have been approved by Lender, acting in a
commercially reasonably manner. Notwithstanding the foregoing, nothing herein
shall be deemed to preclude Borrower from paying any asset management fee (over
and above the amount set forth above) pursuant to the terms of the Management
Agreement from their own funds.
AVAILABLE CASH: as of each Payment Date during the continuance
of Cash Trap Period, the amount of Rents, if any, remaining in the Deposit
Account after the application of all of the payments required under clauses (i)
through (vi) of Section 3.11(a).
BEHRINGER: Behringer Harvard Holdings, LLC, a Delaware limited
liability company.
BEHRINGER ENTITIES: collectively, Behringer, Initial Borrower,
Harvard Fund I and Harvard REIT.
BEHRINGER MINIMUM TENANT-IN-COMMON INTEREST: a 25%
tenant-in-common ownership interest in the Property held by one or more of the
Behringer Entities.
BORROWER: the Initial Borrower, provided that in the event of a
Permitted TIC Transfer, the definition of Borrower shall be deemed to be
modified in accordance with the provisions of Section 1.4 below.
BORROWERS' DESIGNEE: the Manager or such other Person as
Borrower, with the consent of Lender (not to be unreasonably withheld), may from
time to time designate as "Borrower's Designee"; provided that there shall be
only one Borrower's Designee at any time.
BUSINESS DAY: any day other than a Saturday, Sunday or any day
on which commercial banks in New York, New York are authorized or required to
close.
CALCULATION DATE: the last day of each calendar quarter during
the Term.
CAPITAL EXPENSES: expenses that are capital in nature or
required under GAAP to be capitalized.
CASH TRAP PERIOD: shall commence, if, (i) an Event of Default
has occurred and is continuing, and shall end if such Event of Default has been
cured and no other Event of Default has occurred and is continuing, or (ii) as
of any Calculation Date, the Debt Service Coverage Ratio is less than 1.10:1,
and shall end upon Lender's determination that the Property has achieved a Debt
Service Coverage Ratio of at least 1.10:1 for two consecutive Calculation Dates
or (iii) at any time during the Term, any of the covenants set forth in Section
5.32 are breached, and shall end upon the full compliance with such covenants.
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CODE: the Internal Revenue Code of 1986, as amended and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
CONTROL: with respect to any Person, either (i) ownership
directly or indirectly of 49% or more of all equity interests in such Person or
(ii) the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, by contract or otherwise.
DEBT: the unpaid Principal, all interest accrued and unpaid
thereon, any Yield Maintenance Premium and all other sums due to Lender in
respect of the Loan or under any Loan Document.
DEBT SERVICE: with respect to any particular period, the
scheduled Principal and interest payments due under the Note in such period.
DEBT SERVICE COVERAGE RATIO: as of any date, the ratio
calculated by Lender of (i) the Net Operating Income for the 12-month period
ending with the most recently completed calendar month to (ii) the Debt Service
with respect to such period (but assuming, only for the purpose of calculating
the Debt Service Coverage Ratio, that the Amortization Commencement Date has
already occurred).
DEFAULT: the occurrence of any event under any Loan Document
which, with the giving of notice or passage of time, or both, would be an Event
of Default.
DEFAULT RATE: a rate per annum equal to the lesser of (i) the
maximum rate permitted by applicable law, or (ii) 5% above the Interest Rate (as
applicable prior to the occurrence of an Event of Default), compounded monthly.
DEFEASANCE COLLATERAL: U.S. Obligations, which provide payments
(i) on or prior to, but as close as possible to, all Payment Dates and other
scheduled payment dates, if any, under the Note after the Defeasance Date and up
to and including the Stated Maturity Date, and (ii) in amounts equal to or
greater than the Scheduled Defeasance Payments.
DEPOSIT BANK: LaSalle Bank, National Association, or such other
bank or depository selected by Lender in its discretion.
ELIGIBLE ACCOUNT: a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts (A) maintained with a federal or state-chartered depository institution
or trust company which complies with the definition of Eligible Institution or
(B) as to which Lender has received a Rating Comfort Letter from each of the
applicable Rating Agencies with respect to holding funds in such account, or
(ii) a segregated trust account or accounts maintained with the corporate trust
department of a federal depository institution or state chartered depository
institution subject to regulations regarding fiduciary funds on deposit similar
to Title 12 of the Code of Federal Regulations ss.9.10(b), having in either case
corporate trust powers, acting in its fiduciary capacity, and a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal and state authorities. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.
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ELIGIBLE INSTITUTION: a depository institution insured by the
Federal Deposit Insurance Corporation 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 Letters of Credit or 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 ▇▇▇▇▇'▇.
ERISA: the Employment Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder.
ERISA AFFILIATE: all members of a controlled group of
corporations and all trades and business (whether or not incorporated) under
common control and all other entities which, together with Borrower (or any
Borrower), are treated as a single employer under any or all of Section 414(b),
(c), (m) or (o) of the Code.
GAAP: generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
GOVERNMENTAL AUTHORITY: any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental ▇▇▇▇ (▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) now or hereafter in
existence.
GUARANTOR: Behringer Harvard REIT I, Inc., a Maryland
corporation, collectively with (if a Permitted TIC Transfer occurs), each TIC
Owner that may hereafter execute and deliver a guaranty of recourse obligations
as contemplated by Section 5.26.2.
HARVARD FUND I: individually or collectively, Behringer Harvard
Short-Term Opportunity Funds I, L.P., a Texas limited partnership and/or
Behringer Harvard Mid-Term Value Enhancement Fund I, L.P. a Texas limited
partnership and/or Behringer Harvard Strategic Opportunity Fund LLP, a Texas
limited partnership, and/or any other fund for which Behringer Harvard Holdings,
LLC, or an Affiliate of it under its Control, serves as general partner, manager
or advisor.
HARVARD REIT: individually or collectively, the BH Operating
Partnership I LP, a Texas limited partnership (the "HARVARD REIT OPERATING
PARTNERSHIP") and/or Behringer Harvard REIT I, Inc., a Maryland corporation
("BEHRINGER HARVARD REIT") and/or Behringer Harvard Opportunity REIT I, Inc., a
Maryland corporation ("Behringer Harvard Opportunity REIT"), and/or any other
fund for which Behringer Harvard Holdings, LLC, or an Affiliate of it under its
Control, serves as general partner, manager or advisor.
INTEREST PERIOD: (i) the period from the date hereof through the
first day thereafter that is the 10th day of a calendar month and (ii) each
period thereafter from the 11th day of each calendar month through the 10th day
of the following calendar month; except that the Interest Period, if any, that
would otherwise commence before and end after the Maturity Date shall end on the
Maturity Date. Notwithstanding the foregoing, if Lender exercises its right to
change the
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Payment Date to a New Payment Date in accordance with Section 2.2.4, then from
and after such election, each Interest Period shall be the period from the New
Payment Date in each calendar month through the day in the next succeeding
calendar month immediately preceding the New Payment Date in such calendar
month.
INTEREST RATE: a rate of interest equal to 5.141% per annum (or,
when applicable pursuant to this Agreement or any other Loan Document, the
Default Rate).
KEY PRINCIPAL: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual.
LEASES: all leases and other agreements or arrangements
heretofore or hereafter entered into providing for the use, enjoyment or
occupancy of, or the conduct of any activity upon or in, the Property or the
Improvements, including any guarantees, extensions, renewals, modifications or
amendments thereof and all additional remainders, reversions and other rights
and estates appurtenant thereunder.
LEGAL REQUIREMENTS: statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting any Borrower, any Loan Document or all or part of the Property or the
construction, ownership, use, alteration or operation 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 instrument, either of record or known to any
Borrower, at any time in force affecting all or part of the Property.
LIEN: any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, easement, restrictive covenant, preference,
assignment (intended as security), security interest or any other encumbrance,
charge or transfer (intended as security) of, or any agreement to enter into or
create any of the foregoing, on or affecting all or any part of the Property or
any interest therein, or any direct or indirect interest in any Borrower,
including 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 DOCUMENTS: this Agreement and all other documents,
agreements and instruments now or hereafter evidencing or securing the Loan or
pursuant to which any Person incurs, has incurred or assumes any obligation to
or for the benefit of Lender, or makes any certification, representation or
warranty to Lender in connection with the Loan, including the following, each of
which is dated as of the date hereof: (i) the Note or Notes made by Borrower to
Lender in the aggregate principal amount equal to the Loan (the "NOTE"), (ii)
the Deed of Trust, Assignment of Leases and Rents and Security Agreement made by
Borrower to a trustee, in favor of Lender which covers the Property (the
"MORTGAGE"), (iii) the Assignment of Leases and Rents from Borrower to Lender,
(iv) the Assignment of Agreements, Licenses, Permits and Contracts from Borrower
to Lender, (v) the Clearing Account Agreement (the "CLEARING ACCOUNT
AGREEMENTS") among Borrower, Lender, Manager and the Clearing Bank, (vi) the
Deposit Account Agreement (the "DEPOSIT ACCOUNT AGREEMENT") among Borrower,
Lender, Manager and the Deposit Bank, and (vii) the Guaranty of Recourse
Obligations made by Guarantor; as each of the foregoing may be (and each of the
foregoing defined terms shall refer
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to such documents as they may be) amended, restated, replaced, supplemented or
otherwise modified from time to time (including pursuant to Section 9.1.7).
Additionally, from and after any Permitted TIC Transfer, each TIC Transfer
Document shall constitute a Loan Document.
MANAGEMENT AGREEMENT: the Second Amended and Restated Property
Management and Leasing Agreement between Borrower and Manager, pursuant to which
Manager is to manage the Property, together with that certain Property
Management and Leasing Subcontract (the "SUBMANAGEMENT AGREEMENT"), by and
between Manager and ▇▇▇▇▇▇ Management Corporation, an Illinois corporation, and
▇▇▇▇▇▇ Realty Corporation, an Illinois corporation (▇▇▇▇▇▇ Management
Corporation and ▇▇▇▇▇▇ Realty Corporation are collectively referred to herein as
the "SUBMANAGER"), as each of the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time in accordance with Section
5.12.
MANAGER: HPT Management Services LP, a Texas limited
partnership, or any successor, assignee or replacement manager appointed by
Borrower in accordance with Section 5.12, together with Submanager under the
Submanagement Agreement.
MATERIAL ALTERATION: any alteration affecting structural
elements of the Property the cost of which exceeds $250,000; provided, however,
that in no event shall (i) any Required Repairs, (ii) any tenant improvement
work performed pursuant to any Lease existing on the date hereof or entered into
hereafter in accordance with the provisions of this Agreement, or (iii)
alterations performed as part of a Restoration, constitute a Material
Alteration.
MATERIAL LEASE: all Leases which individually or in the
aggregate with respect to the same tenant and its Affiliates (i) cover more than
10,000 square feet of the Improvements or (ii) have a gross annual rent of more
than 5% of the total annual Rents or (iii) demise at least one full floor of the
Improvements.
MATURITY DATE: the date on which the final payment of principal
of the Note (or any replacement promissory note issued in connection with a
Defeasance Event, if applicable) becomes due and payable as therein provided,
whether at the Stated Maturity Date, by declaration of acceleration, or
otherwise.
MINOR LEASE: any Lease that is not a Material Lease.
NET OPERATING INCOME: for any period, the underwritten net cash
flow of the Property determined by Lender in its sole discretion exercised in
good faith (uniformly and consistently applied in the same manner as Lender
exercises similar discretion in other loans of this type and nature for
comparable properties) in accordance with Lender's then current underwriting
standards for loans of this type and the then current underwriting standards of
the Rating Agencies (including adjustments for a management fee equal to the
greater of the combined management fees and asset management fees paid under the
Management Agreement during such period or 4% of gross revenues, market vacancy,
bankrupt tenants which are not in full occupancy of their respective leased
premises or which have rejected their respective leases or which are not paying
rent on a current basis, leasing costs and capital items).
6
OFFICER'S CERTIFICATE: a certificate delivered to Lender by
Borrower, which is signed by the manager or a senior executive officer of
Borrower or, from and after a Permitted TIC Transfer, Borrower's Designee.
OTHER CHARGES: all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including 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.
PAYMENT DATE: the 11th day of each calendar month or, upon
Lender's exercise of its right to change the Payment Date in accordance with
Section 2.2.4, the New Payment Date (in either case, if such day is not a
Business Day, the Payment Date shall be the first Business Day thereafter). The
first Payment Date hereunder shall be September 11, 2005.
PERMITTED ENCUMBRANCES: (i) the Liens created by the Loan
Documents, (ii) all Liens and other matters disclosed in the Title Insurance
Policy, (iii) Liens, if any, for Taxes or Other Charges not yet due and payable
and not delinquent, (iv) any workers', mechanics' or other similar Liens on the
Property provided that any such Lien is bonded or discharged within 30 days
after a Borrower first receives notice of such Lien and (v) such other title and
survey exceptions as Lender approves in writing in Lender's discretion.
PERMITTED TIC TRANSFER: an Additional TIC Transfer and a TIC
Transfer and Assumption, each pursuant to and subject to the satisfaction of the
conditions set forth in, subsection (b) or (c) of Section 5.26.2, as applicable.
PERMITTED TRANSFERS:
(i) a Lease entered into in accordance with the Loan Documents;
(ii) a Permitted Encumbrance;
(iii) a Transfer and Assumption pursuant to Section 5.26.3;
(iv) a Permitted TIC Transfer;
(v) in the event a Permitted TIC Transfer occurs, then provided
that no Event of Default shall then exist (or, if an Event of Default exists,
the Transfer of the subject tenant-in-common interest will cure such Event of
Default), a conveyance or assignment of a tenant-in-common interest in the
Property from one existing Borrower to any other existing Borrower or to
Behringer or its Affiliates in accordance with the terms and provisions of the
Tenant in Common Agreement and this Agreement (provided that the such transfer
would not result in the Behringer Entities' retaining less than the Behringer
Minimum Tenant-in-Common Interest in the Property and the Behringer Entities at
all times retain not less than the Behringer Minimum Tenant-In-Common Interest
in the Property);
(vi) provided that no Event of Default shall then exist, a
Transfer of a direct or indirect interest in any Borrower to any Person
(including the Transfer or issuance of publicly traded shares or of operating
partnership units in the Behringer Harvard REIT, Behringer
7
Harvard Opportunity REIT, Harvard Fund I or the Harvard REIT Operating
Partnership, which shall be permitted whether or not an Event of Default shall
exist) provided that (A) such Transfer shall not (x) cause the transferee (other
than Key Principal), together with its Affiliates, to acquire Control of any
Borrower or to increase its direct or indirect interest in any Borrower to an
amount which equals or exceeds 49% or (y) result in Initial Borrower no longer
being Controlled by Key Principal, (B) Borrower shall give Lender notice of such
Transfer together with copies of all instruments effecting such Transfer not
less than 10 days prior to the date of such Transfer (other than with respect to
Transfers of "unit interests" in Harvard Fund I), and (C) the legal and
financial structure of each Borrower and its member(s) and the single purpose
nature and bankruptcy remoteness of each Borrower and its member(s) after such
Transfer, shall satisfy Lender's then current applicable underwriting criteria
and requirements;
(viii) provided that no Event of Default shall then exist, a
Transfer of a direct or indirect interest in a Borrower related to or in
connection with the estate planning of such transferor to (1) the spouse,
children or grandchildren of such transferor (and/or any spouse of a child or
grandchild), or any other immediate family member of such transferor, or (2) a
trust established for the benefit of any such parties, provided that (A) such
Transfer shall not cause a change in the Control of any Borrower, (B) such
Transfer shall not result in a change of the day to day management and
operations of the Property, (C) Borrower shall give Lender notice of such
Transfer together with copies of all instruments effecting such Transfer not
less than 10 days after the date of such Transfer and (D) the legal and
financial structure of each Borrower, and the single purpose nature and
bankruptcy remoteness of each Borrower after such Transfer, shall satisfy
Lender's then current applicable underwriting criteria and requirements; or
(ix) a Transfer of a direct or indirect interest in any Borrower
that occurs by devise or bequest or by operation of law upon the death of a
natural person that was the holder of such interest to a member of the immediate
family of such interest holder or a trust established for the benefit of such
immediate family member, provided that (A) no such Transfer shall result in a
change of the day to day operations of the Property, (B) Borrower shall give
Lender notice of such Transfer together with copies of all instruments effecting
such Transfer not less than 30 days after the date of such Transfer, (C)
Borrower shall continue to be a Special Purpose Bankruptcy Remote Entity, (D) if
any such Transfer would result in a change of Control of any Borrower and occurs
prior to the occurrence of a Secondary Market Transaction, such Transfer is
approved by Lender in writing within 30 days after any such Transfer, and (E) if
any such Transfer would result in a change of Control of any Borrower and occurs
after the occurrence of a Secondary Market Transaction, Borrower, at Borrower's
sole cost and expense, shall, within 30 days after any such Transfer, (a)
deliver (or cause to be delivered) (x) a Rating Comfort Letter to Lender, and
(y) a substantive non-consolidation opinion to Lender and the Rating Agencies
with respect to such Borrower and such transferee in form and substance
satisfactory to Lender and the Rating Agencies, (b) obtain the prior written
consent of Lender which shall not be unreasonably withheld, and (c) reimburse
Lender for all reasonable expenses incurred by Lender in connection with such
Transfer.
PERSON: any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other person or entity, and 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.
8
PLAN: (i) an employee benefit or other plan established or
maintained by a Borrower or any ERISA Affiliate or to which Borrower or any
ERISA Affiliate makes or is obligated to make contributions and (ii) which is
covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
PROPERTY: the parcel of real property and Improvements thereon
owned or leased by Borrower and encumbered by the Mortgage; together with all
rights pertaining to such real property and Improvements, and all other
collateral for the Loan as more particularly described in the Granting Clauses
of the Mortgage and referred to therein as the Trust Property. The Property is
known as ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
RATING AGENCY: each of Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("S&P"), ▇▇▇▇▇'▇ Investors Service,
Inc. ("▇▇▇▇▇'▇"), and Fitch, Inc., a division of Fitch Ratings Ltd., or any
other nationally-recognized statistical rating organization to the extent any of
the foregoing have been engaged by Lender or its designee in connection with or
in anticipation of any Secondary Market Transaction.
RATING COMFORT LETTER: a letter issued by each of the applicable
Rating Agencies which confirms that the taking of the action referenced to
therein will not result in any qualification, withdrawal or downgrading of any
existing ratings of Securities created in a Secondary Market Transaction.
RELEASE DATE: the earlier to occur of (i) the forty second
(42nd) Payment Date of the Term and (ii) the date that is two (2) years from the
"startup day" (within the meaning of Section 860G(a)(9) of the Code) of the
REMIC Trust established in connection with a Securitization involving this Loan.
REMIC TRUST: a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code that holds the Note.
RENTS: all rents, rent equivalents, moneys payable as damages
(including payments by reason of the rejection of a Lease in a bankruptcy
proceeding) or in lieu of rent or rent equivalents, royalties (including all oil
and gas or other mineral royalties and bonuses), income, fees, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payment and consideration of whatever form or nature received by or paid to or
for the account of or benefit of each Borrower, Manager or any of their agents
or employees (other than fees paid under the Management Agreements and salaries
paid to employees) from any and all sources arising from or attributable to the
Property and the Improvements, including all receivables, customer obligations,
installment payment obligations and other obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license, concession or
other grant of the right of the use and occupancy of the Property or rendering
of services by a Borrower, Manager or any of their agents or employees and
proceeds, if any, from business interruption or other loss of income insurance.
SCHEDULED DEFEASANCE PAYMENTS: the Monthly Debt Service Payment
Amount and/or Monthly Interest Payment Amount (as applicable) required under the
Note for all
9
Payment Dates occurring after the Defeasance Date and the outstanding Principal
balance on the Note as of the Stated Maturity Date.
SECURITY AGREEMENT: a security agreement in form and substance
that would be satisfactory to Lender (in Lender's sole but good faith
discretion) pursuant to which Borrower grants Lender a perfected, first priority
security interest in the Defeasance Collateral Account and the Defeasance
Collateral.
SERVICER: a servicer selected by Lender to service the Loan,
including any "master servicer" or "special servicer" appointed under the terms
of any pooling and servicing agreement or similar agreement entered into as a
result of a Secondary Market Transaction.
STATE: the state in which the Property is located.
STATED MATURITY DATE: August 11, 2015, as such date may be
changed in accordance with Section 2.2.4.
TAXES: all real estate and personal property taxes, assessments,
water rates or sewer rents, maintenance charges, impositions, vault charges and
license fees, now or hereafter levied or assessed or imposed against all or part
of the Property.
TERM: the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrower pursuant to the Loan Documents (other than surviving
indemnity obligations with respect to matters as to which no claim for
indemnification is then pending).
TITLE INSURANCE POLICY: the ALTA mortgagee title insurance
policy in the form acceptable to Lender issued with respect to the Property and
insuring the Lien of the Mortgage.
TRANSFER: any sale, conveyance, transfer, lease or assignment,
or the entry into any agreement to sell, convey, transfer, lease or assign,
whether by law or otherwise, of, on, in or affecting (i) all or part of the
Property (including any legal or beneficial direct or indirect interest therein)
or (ii) any direct or indirect interest in any Borrower (including any profit
interest).
UCC: the Uniform Commercial Code as in effect in the State or
the state in which any of the Cash Management Accounts are located, as the case
may be.
U.S. OBLIGATIONS: obligations that are "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended, and, to the extent acceptable to the applicable Rating Agencies, other
non-callable government securities satisfying the REMIC Provisions (hereinafter
defined), in each case to the extent such obligations are not subject to
prepayment, call or early redemption. As used herein, "REMIC PROVISIONS" mean
provisions of the federal income tax law relating to real estate mortgage
investment conduits, which appear at Sections 860A through 860G of Subchapter M
of Chapter 1 of Subtitle A of the Code, and related provisions, and temporary
and final regulations and, to the extent not inconsistent with such temporary
and final regulations, proposed regulations, and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time.
10
WELFARE PLAN: an employee welfare benefit plan, as defined in
Section 3(1) of ERISA.
YIELD MAINTENANCE PREMIUM: an amount which, when added to the
outstanding Principal, would be sufficient to purchase U.S. Obligations which
provide payments (a) on or prior to, but as close as possible to, all successive
scheduled payment dates under this Agreement through the Stated Maturity Date
and (b) in amounts equal to the Monthly Debt Service Payment Amount required
under this Agreement through the Stated Maturity Date together with the
outstanding principal balance of the Note as of the Stated Maturity Date
assuming all such Monthly Debt Service Payments are made (including any
servicing costs associated therewith). In no event shall the Yield Maintenance
Premium be less than zero.
1.2 INDEX OF OTHER DEFINITIONS. The following terms are defined in
the sections or Loan Documents indicated below:
"ADDITIONAL TIC BORROWER" - 5.26.3
"ADDITIONAL TIC TRANSFER" - 5.26.3
"APPROVED ANNUAL BUDGET" - 6.3.5
"ANNUAL BUDGET" - 6.3.5
"APPROVED CAPITAL BUDGET" - 6.3.5
"APPROVED OPERATING BUDGET" - 6.3.5
"APPLICABLE TAXES" - 2.2.3
"AWARD" - 7.3.2
"BANKRUPTCY PROCEEDING" - 4.7
"BORROWER'S RECOURSE LIABILITIES" - 10.1
"BORROWERS" - 5.26.3
"CAPITAL RESERVE SUBACCOUNT" - 3.4
"CASH COLLATERAL SUBACCOUNT" - 3.9
"CASH MANAGEMENT ACCOUNTS" - 3.10
"CASUALTY" - 7.2.1
"CASUALTY/CONDEMNATION PREPAYMENT" - 2.3.2
"CASUALTY/CONDEMNATION SUBACCOUNT" - 3.7
"CITIGROUP GROUP" - 9.1.3
"CLEARING ACCOUNT" - 3.1
"CLEARING ACCOUNT AGREEMENT" - 1.1 (Definition of Loan Documents)
"CLEARING BANK" - 3.1
"CONDEMNATION" - 7.3.1
"DEFEASANCE COLLATERAL ACCOUNT" - 2.3.3
"DEFEASANCE EVENT" - 2.3.3
"DEFEASANCE DATE" - 2.3.3
"DEPOSIT ACCOUNT" - 3.1
"DEPOSIT ACCOUNT AGREEMENT" - 1.1 (Definition of Loan Documents)
"DISCLOSURE DOCUMENT" - 9.1.2
"EASEMENTS" - 4.14
"ENVIRONMENTAL LAWS" - 4.21
"EQUIPMENT" - Mortgage
"EVENT OF DEFAULT" - 8.1
"EXCHANGE ACT" - 9.1.2
11
"HARVARD REIT OPERATING PARTNERSHIP" - 1.1 (Definition of Harvard REIT)
"HAZARDOUS SUBSTANCES" - 4.21
"IMPROVEMENTS" - Mortgage
"INDEMNIFIED LIABILITIES" - 5.30
"INDEMNIFIED PARTY" - 5.30
"INDEPENDENT DIRECTOR" - Schedule 5
"INSURANCE PREMIUMS" - 7.1.2
"INSURED CASUALTY" - 7.2.2
"LATE PAYMENT CHARGE" - 2.5.3
"LENDER'S CONSULTANT" - 5.8.1
"LIABILITIES" - 9.1.3
"LICENSES" - 4.11
"LOAN" - 2.1
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" - 2.2.1
"MONTHLY INTEREST PAYMENT AMOUNT" - 2.2.1
"MOODY'S" - 1.1 (Definition of Rating Agency)
"MORTGAGE" - 1.1 (Definition of Loan Documents)
"NEW PAYMENT DATE" - 2.2.4
"NOTE" - 1.1 (Definition of Loan Documents)
"NOTICE" - 6.1
"OPERATING EXPENSE SUBACCOUNT" - 3.6
"PERMITTED INDEBTEDNESS" - 5.22
"PERMITTED INVESTMENTS" - Deposit Account Agreement
"PERMITTED PREPAYMENT DATE" - 2.3.4
"PERMITTED TIC TRANSFER PERIOD" - 5.26.3
"POLICIES" - 7.1.2
"PRINCIPAL" - 2.1
"PROCEEDS" - 7.2.2
"PROPOSED MATERIAL LEASE" - 5.10.2
"PROVIDED INFORMATION" - 9.1.1
"QUALIFIED CARRIER" - 7.1.1
"REMEDIAL WORK" - 5.8.2
"RENT ROLL" - 4.16
"REQUIRED RECORDS" - 6.3.6
"REQUIRED REPAIRS" - 3.2.1
"REQUIRED REPAIRS SUBACCOUNT" - 3.2.2
"RESTORATION" - 7.4.1
"ROLLOVER RESERVE SUBACCOUNT" - 3.5.1
"S&P" - 1.1 (Definition of Rating Agency)
"SECONDARY MARKET TRANSACTION" - 9.1.1
"SECURITIES" - 9.1.1
"SECURITIES ACT" - 9.1.2
"SECURITY DEPOSIT SUBACCOUNT" - 3.8
"SIGNIFICANT CASUALTY" - 7.2.2
"SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY" - 5.13
12
"SPRINGING RECOURSE EVENT" - 10.1
"SUBACCOUNTS" - 3.1
"SUBSTITUTE TIC BORROWER" - 5.26.3
"SUBSTITUTE TIC OWNER" - 5.26.3
"SUCCESSOR BORROWER" - 2.3.3
"TAX AND INSURANCE SUBACCOUNT" - 3.3
"TENANT IN COMMON AGREEMENT" - 5.26.3
"TIC BORROWER" - 5.26.3
"TIC OWNER" - 5.26.3
"TIC TRANSFER DOCUMENTS" - 5.26.3
"TIC TRANSFER AND ASSUMPTION" - 5.26.3
"TOXIC MOLD" - 4.21
"TRANSFER AND ASSUMPTION" - 5.26.3
"TRANSFEREE BORROWER" - 5.26.3
1.3 PRINCIPLES OF CONSTRUCTION. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the word "including" means "including but not limited to," and (v)
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
1.4 DEFINITION OF BORROWER; JOINT AND SEVERAL LIABILITY. In the
event of a Permitted TIC Transfer, (i) references herein to Borrower shall mean
and refer to each of the Initial Borrower hereunder and each TIC Borrower, or to
any or all of such Initial Borrower and/or each TIC Borrower, as appropriate to
the context, with the choice of context to be made by Lender, in Lender's
reasonable discretion, subject, however, to the provisions of the last sentence
of Article 4 and the provisions of Article 10, and (ii) except to the extent
expressly provided otherwise in the Loan Documents, each of the Initial Borrower
and each TIC Borrower shall be jointly and severally liable for payment of the
Debt and performance of all other obligations of the Borrower (or any of them)
under this Agreement or any other Loan Document.
2. GENERAL LOAN TERMS
2.1 THE LOAN. Subject to and upon the terms and conditions of this
Agreement, Lender agrees to make a loan to Borrower (the "Loan") in the maximum
principal amount of up to $43,000,000 (the "PRINCIPAL"). The Loan shall mature
on the Stated Maturity Date. Borrower acknowledges receipt of the Principal, the
proceeds of which are being and shall be used to (i) acquire the Property, (ii)
fund certain of the Subaccounts and (iii) pay transaction costs. Any excess
proceeds may be used for any lawful purpose. No amount repaid in respect of the
Loan may be reborrowed.
2.2 INTEREST; MONTHLY PAYMENTS.
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2.2.1 GENERALLY. From and after the date hereof, interest on
the unpaid Principal shall accrue at the Interest Rate and be payable as
hereinafter provided. On the date hereof, Borrower shall pay interest only on
the unpaid Principal from the date hereof through and including August 10, 2005.
On September 11, 2005 and each Payment Date thereafter through and including the
Payment Date immediately preceding the Amortization Commencement Date, Borrower
shall pay interest on the unpaid Principal accrued at the Interest Rate during
the Interest Period immediately preceding such Payment Date (the "MONTHLY
INTEREST PAYMENT AMOUNT"). On the Amortization Commencement Date and each
Payment Date thereafter through and including July 11, 2015 (as such date may be
changed in accordance with Section 2.2.4), the Principal and interest thereon at
the Interest Rate shall be payable in equal monthly installments of $234,552.90
(the "MONTHLY DEBT SERVICE PAYMENT AMOUNT"); which is based on the Interest Rate
and a 360-month amortization schedule. The Monthly Debt Service Payment Amount
due on any Payment Date shall first be applied to the payment of interest
accrued during the preceding Interest Period and the remainder of such Monthly
Debt Service Payment Amount shall be applied to the reduction of the unpaid
Principal. All accrued and unpaid interest shall be due and payable on the
Maturity Date. If the Loan is repaid on any date other than on a Payment Date
(whether prior to or after the Stated Maturity Date), Borrower shall also pay
interest that would have accrued on such repaid Principal to but not including
the next Payment Date.
2.2.2 DEFAULT RATE. After the occurrence and during the
continuance of an Event of Default, the entire unpaid Debt shall bear interest
at the Default Rate, and shall be payable upon demand from time to time, to the
extent permitted by applicable law.
2.2.3 TAXES. Any and all payments by Borrower hereunder and
under the other Loan Documents shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on Lender's income, and franchise taxes imposed on Lender by the
law or regulation of any Governmental Authority (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to in this Section 2.2.3 as "APPLICABLE TAXES"). If any
Borrower shall be required by law to deduct any Applicable Taxes from or in
respect of any sum payable hereunder to Lender, the following shall apply: (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.2.3), Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Borrower shall make
such deductions and (iii) such Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law. Payments pursuant to this Section 2.2.3 shall be made within ten days after
the date Lender makes written demand therefor. If the amounts payable hereunder
relate to Applicable Taxes which are not of general application to lending
institutions making secured mortgage loans at such time, Borrower shall have the
option to prepay the Loan in full without any Yield Maintenance Premium unless
Lender, at its option, elects not to require Borrower to pay such Applicable
Taxes pursuant to this Section 2.2.3. Notwithstanding the foregoing, if the Loan
is transferred to a transferee which is organized under the laws of any
jurisdiction other than the United States of America or any state thereof, the
transferor shall cause such transferee, concurrently with the effectiveness of
such transfer, to furnish to the transferor and Borrower either a United States
Internal Revenue Service Form 4224 or United
14
States Internal Revenue Service Form 1001 (wherein such transferee claims
entitlement to complete exemption from United States federal withholding tax on
all interest payments hereunder); provided, however, that in the event that the
transferor fails to cause the transferee to furnish either such Form, Borrower
shall deduct any Applicable Taxes to the extent required by law and payments
shall be made net of any Applicable Taxes without regard to the provisions of
clause (i) of the second sentence of this Section 2.2.3.
2.2.4 NEW PAYMENT DATE. Lender shall have the right, to be
exercised not more than once during the term of the Loan, to change the Payment
Date to a date other than the eleventh day of each month (a "NEW PAYMENT DATE"),
on 30 days' written notice to Borrower; provided, however, that any such change
in the Payment Date: (i) shall not modify the amount of regularly scheduled
monthly principal and interest payments, except that the first payment of
principal and interest payable on the New Payment Date shall be accompanied by
interest at the interest rate herein provided for the period from the Payment
Date in the month in which the New Payment Date first occurs to the New Payment
Date, (ii) shall extend the Amortization Commencement Date to the New Payment
Date occurring in the month set forth in the definition of Amortization
Commencement Date, and (iii) shall extend the Stated Maturity Date to the New
Payment Date occurring in the month set forth in the definition of Stated
Maturity Date.
2.3 LOAN REPAYMENT.
2.3.1 REPAYMENT. Borrower shall repay the entire outstanding
principal balance of the Note in full on the Maturity Date, together with
interest thereon to (but excluding) the date of repayment and any other amounts
due and owing under the Loan Documents. Borrower shall have no right to prepay
or defease all or any portion of the Principal except in accordance with Section
2.2.3, Section 2.3.2, Section 2.3.4 and Section 7.4.2 hereof. Except during the
continuance of an Event of Default, all proceeds of any repayment, including any
prepayments of the Loan, shall be applied by Lender as follows in the following
order of priority: FIRST, accrued and unpaid interest at the Interest Rate;
SECOND, to Principal; and THIRD, to any other amounts then due and owing under
the Loan Documents. If prior to the Stated Maturity Date the Debt is accelerated
by reason of an Event of Default, then Lender shall be entitled to receive, in
addition to the unpaid Principal and accrued interest and other sums due under
the Loan Documents, an amount equal to the Yield Maintenance Premium applicable
to such Principal so accelerated. During the continuance of an Event of Default,
all proceeds of repayment, including any payment or recovery on the Property
(whether through foreclosure, deed-in-lieu of foreclosure, or otherwise) shall,
unless otherwise provided in the Loan Documents, be applied in such order and in
such manner as Lender shall elect in Lender's discretion.
2.3.2 MANDATORY PREPAYMENTS. The Loan is subject to mandatory
prepayment in certain instances of Insured Casualty or Condemnation (each a
"CASUALTY/CONDEMNATION PREPAYMENT"), in the manner and to the extent set forth
in Section 7.4.2. Each Casualty/Condemnation Prepayment, after deducting
Lender's costs and expenses (including reasonable attorneys' fees and expenses)
in connection with the settlement or collection of the Proceeds or Award, shall
be applied in the same manner as repayments under Section 2.3.1, and if such
Casualty/Condemnation Payment is made on any date other than a Payment Date,
then such Casualty/Condemnation Payment shall include interest that would have
accrued on the
15
Principal prepaid to but not including the next Payment Date. Provided that no
Event of Default is continuing, any such mandatory prepayment under this Section
2.3.2 shall be without the payment of the Yield Maintenance Premium.
Notwithstanding anything to the contrary contained herein, each
Casualty/Condemnation Prepayment shall be applied in inverse order of maturity
and shall not extend or postpone the due dates of the monthly installments due
under the Note or this Agreement, or change the amounts of such installments. In
addition, and notwithstanding anything to the contrary contained herein or in
any other Loan Document, provided no Event of Default is continuing, no Yield
Maintenance Premium shall be payable in connection with any prepayment of the
Debt required by Lender under Sections 5 and 6 of the Mortgage.
2.3.3 DEFEASANCE.
(A) CONDITIONS TO DEFEASANCE. Provided no Event of Default
shall be continuing, Borrower shall have the right on any Payment Date after the
Release Date and prior to the Permitted Prepayment Date to voluntarily defease
the entire amount of the Principal and obtain a release of the Lien of the
Mortgage by providing Lender with the Defeasance Collateral (a "DEFEASANCE
EVENT"), subject to the satisfaction of the following conditions precedent:
(1) Borrower shall give Lender not less than thirty (30)
days prior written notice specifying a Payment Date (the "DEFEASANCE
Date") on which the Defeasance Event is to occur.
(2) Borrower shall pay to Lender (A) all payments of
Principal and interest due on the Loan to and including the Defeasance
Date and (B) all other sums, then due under the Note, this Agreement and
the other Loan Documents;
(3) Borrower shall deposit the Defeasance Collateral into
the Defeasance Collateral Account and otherwise comply with the
provisions of subsections (b) and (c) of this Section 2.3.3;
(4) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the
Defeasance Collateral;
(5) Borrower shall deliver to Lender 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 (i) Lender has a legal and valid
perfected first priority security interest in the Defeasance Collateral
Account and the Defeasance Collateral, (ii) if a securitization has
occurred, the REMIC Trust formed pursuant to such 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 a
Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance
Event will not result in a significant modification and will not be an
exchange of the Note for purposes of Section 1001 of the Code and the
Treasury Regulations thereunder, (iv) delivery of the Defeasance
Collateral and the grant of a security interest therein to Lender will
not constitute an avoidable preference under Section 547 of the
Bankruptcy Code or applicable state law and (v) a non-consolidation
opinion with respect to the Successor Borrower;
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(6) Borrower shall deliver to Lender a Rating Comfort Letter
as to the Defeasance Event;
(7) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.3.3 have
been satisfied;
(8) Borrower shall deliver a certificate of a "big four" or
other nationally recognized public accounting firm acceptable to Lender
certifying that the Defeasance Collateral will generate monthly amounts
equal to or greater than the Scheduled Defeasance Payments;
(9) Borrower shall deliver such other certificates,
opinions, documents and instruments as Lender may reasonably request;
and
(10) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Defeasance Event, including Lender's
reasonable attorneys' fees and expenses and Rating Agency fees and
expenses.
(B) DEFEASANCE COLLATERAL ACCOUNT. On or before the date on
which Borrower delivers the Defeasance Collateral, Borrower shall open at any
Eligible Institution the defeasance collateral account (the "DEFEASANCE
COLLATERAL ACCOUNT") which shall at all times be an Eligible Account. The
Defeasance Collateral Account shall contain only (i) Defeasance Collateral, and
(ii) cash from interest and principal paid on the Defeasance Collateral. All
cash from interest and principal payments paid on the Defeasance Collateral
shall be paid over to Lender on each Payment Date and applied first to accrued
and unpaid interest and then to Principal. Any cash from interest and principal
paid on the Defeasance Collateral not needed to pay accrued and unpaid interest
or Principal shall be retained in the Defeasance Collateral Account as
additional collateral for the Loan. Borrower shall cause the Eligible
Institution at which the Defeasance Collateral is deposited to enter an
agreement with Borrower and Lender, satisfactory to Lender in its sole
discretion, pursuant to which such Eligible Institution shall agree to hold and
distribute the Defeasance Collateral in accordance with this Agreement. The
Successor Borrower shall be the owner of the Defeasance Collateral Account and
shall report all income accrued on Defeasance Collateral for federal, state and
local income tax purposes in its income tax return. Borrower shall prepay all
cost and expenses associated with opening and maintaining the Defeasance
Collateral Account. Lender shall not in any way be liable by reason of any
insufficiency in the Defeasance Collateral Account.
(C) SUCCESSOR BORROWER. In connection with a Defeasance
Event under this Section 2.3.3, Borrower shall, if required by the Rating
Agencies or if Borrower elects to do so, establish or designate a successor
entity (the "SUCCESSOR BORROWER") which shall be a Single Purpose Bankruptcy
Remote Entity and which shall be approved by the Rating Agencies. Any such
Successor Borrower may, at Borrower's option, be an Affiliate of Borrower unless
the Rating Agencies shall require otherwise. Borrower shall transfer and assign
all obligations, rights and duties under and to the Note, together with the
Defeasance Collateral
17
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 a minimum of $1,000 to any
such Successor Borrower as consideration for assuming the obligations under the
Note and the Security Agreement. Borrower shall pay all costs and expenses
incurred by Lender, including Lender's attorney's fees and expenses, incurred in
connection therewith.
2.3.4 OPTIONAL PREPAYMENTS. From and after the third Payment
Date prior to the Stated Maturity Date (the "PERMITTED PREPAYMENT Date"),
Borrower shall have the right to prepay the Loan in whole (but not in part),
provided that Borrower gives Lender at least 15 days' prior written notice
thereof. If any such prepayment is not made on a Payment Date, Borrower shall
also pay interest that would have accrued on such prepaid Principal to, but not
including, the next Payment Date. Any such prepayment shall be made without
payment of the Yield Maintenance Premium.
2.4 RELEASE OF PROPERTY.
2.4.1 RELEASE ON DEFEASANCE. If Borrower has elected to
defease the Note and the requirements of Section 2.3.3 and this Section 2.4 have
been satisfied, the Property shall be released from the Lien of the Mortgage and
the Defeasance Collateral pledged pursuant to the Security Agreement shall be
the sole source of collateral securing the Note. In connection with the release
of the Lien, Borrower shall submit to Lender, not less than thirty (30) days
prior to the Defeasance Date (or such shorter time as is acceptable to Lender in
its sole discretion), a release of Lien (and related Loan Documents) for
execution by Lender. Such release shall be in a form appropriate in the
jurisdiction in which the Property is located and contain standard provisions
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 release in accordance with the terms of
this Agreement. Borrower shall pay all costs, taxes and expenses associated with
the release of the Lien of the Mortgage, including Lender's reasonable
attorneys' fees.
2.4.2 RELEASE ON PAYMENT IN FULL. Lender shall, upon the
written request and at the expense of Borrower, upon payment in full of the Debt
in accordance herewith, release or, if requested by Borrower, assign to
Borrower's' designee (without any representation or warranty by and without any
recourse against Lender whatsoever), the Lien of the Loan Documents if not
theretofore released.
2.5 PAYMENTS AND COMPUTATIONS.
2.5.1 MAKING OF PAYMENTS. Each payment by a Borrower shall be
made in funds settled through the New York Clearing House Interbank Payments
System or other funds immediately available to Lender by 11:00 a.m., New York
City time, on the date such payment is due, to Lender by deposit to such account
as Lender may designate by written notice to Borrower. Whenever any such payment
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the first Business Day thereafter. All such payments shall be
made irrespective of, and without any deduction, set-off or counterclaim
whatsoever and are
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payable without relief from valuation and appraisement laws and with all costs
and charges incurred in the collection or enforcement thereof, including
attorneys' fees and court costs.
2.5.2 COMPUTATIONS. Interest payable under the Loan Documents
shall be computed on the basis of the actual number of days elapsed over a
360-day year.
2.5.3 LATE PAYMENT CHARGE. If any regularly scheduled payment
of Principal, interest or other monthly payment or reserve or escrow deposit due
under any Loan Document is not paid by Borrower on the date on which it is due
and, subject to the last sentence of this Section 2.5.3, such failure continues
for five (5) days, Borrower shall pay to Lender upon demand an amount equal to
the lesser of 5% of such unpaid sum or the maximum amount permitted by
applicable law (the "LATE PAYMENT CHARGE"), 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. Such
amount shall be secured by the Loan Documents. With respect to the foregoing 5
day grace period, the parties agree that such 5 day grace period shall only be
applicable no more than twice during the Term, and in all other instances, the
Late Payment Charge shall be payable in accordance with this Section 2.5.3 with
respect to any Principal, interest or other sum due under any Loan Document
which is not paid by Borrower on the date on which the same is due (other than
the balloon payment of Principal due on the Maturity Date or acceleration of the
Loan).
3. CASH MANAGEMENT AND RESERVES
3.1 CASH MANAGEMENT ARRANGEMENTS. Borrower shall cause all Rents to
be transmitted directly by tenants of the Property into a trust account (the
"CLEARING ACCOUNT") maintained by Borrower at a local bank selected by Borrower,
which shall at all times be an Eligible Institution (the "CLEARING BANK") as
more fully described in the Clearing Account Agreement. Without in any way
limiting the foregoing, all Rents received by Borrower or Manager shall be
deposited into the Clearing Account within two Business Days of receipt. Funds
deposited into the Clearing Account shall be swept by the Clearing Bank on a
daily basis into an Eligible Account at the Deposit Bank controlled by Lender
(the "DEPOSIT ACCOUNT") and applied and disbursed in accordance with this
Agreement. Funds in the Deposit Account shall be invested at Lender's discretion
only in Permitted Investments. Lender will also establish subaccounts of the
Deposit Account which shall at all times be Eligible Accounts (and may be ledger
or book entry accounts and not actual accounts) (such subaccounts are referred
to herein as "SUBACCOUNTS"). The Deposit Account and any Subaccount will be
under the sole control and dominion of Lender, and no Borrower shall have any
right of withdrawal therefrom. Borrower shall pay for all expenses of opening
and maintaining all of the above accounts.
3.2 REQUIRED REPAIRS; 3.2.1 COMPLETION OF REQUIRED REPAIRS. Borrower
shall perform and complete each item of the repairs and environmental remedial
work at the Property described on Schedule 2 (the "REQUIRED REPAIRS") within six
(6) months of the date hereof or such shorter period of time for such item set
forth on Schedule 2.
3.2.2 REQUIRED REPAIRS RESERVES. On the date hereof, Borrower
shall deposit with Lender $91,526.14 and Lender shall cause such amount to be
transferred to a Subaccount
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(the "REQUIRED REPAIRS SUBACCOUNT"). Provided no Event of Default shall have
occurred and is continuing, Lender shall disburse funds held in the Required
Repairs Subaccount to Borrower (or at Borrower's direction, disburse directly to
the payee of the subject Required Repairs (or portion thereof)), within 10 days
after the delivery by Borrower to Lender of a request therefor (but not more
often than once per month), in increments of at least $5,000, accompanied by the
following items (which items shall be in form and substance satisfactory to
Lender): (i) an Officer's Certificate (A) certifying that the Required Repairs
or any portion thereof which are the subject of the requested disbursement have
been completed in a good and workmanlike manner and in accordance with all
applicable Legal Requirements, (B) identifying each Person that supplied
materials or labor in connection with such Required Repairs or any portion
thereof and (C) stating that each such Person has been or, upon receipt of the
requested disbursement, will be paid in full with respect to the portion of the
Required Repairs which is the subject of the requested disbursement; (ii) copies
of appropriate Lien waivers or other evidence of payment satisfactory to Lender;
(iii) with respect to any disbursement that exceeds $50,000, at Lender's option,
a title search for the Property indicating that it is free from all Liens not
previously approved by Lender; (iv) a copy of each License required to be
obtained with respect to the portion of the Required Repairs which is the
subject of the requested disbursement; and (v) such other evidence as Lender
shall reasonably request that the Required Repairs which are the subject of the
requested disbursement have been completed and paid for. Provided no Default or
Event of Default shall have occurred and is continuing, upon Borrower's'
completion of all Required Repairs in accordance with this Section 3.2, Lender
shall release any funds remaining in the Required Repairs Subaccount, if any, to
Borrower.
3.3 TAXES AND INSURANCE. Borrower shall pay to Lender on each
Payment Date (i) one-twelfth of the Taxes that Lender estimates will be payable
during the next 12 months in order to accumulate with Lender sufficient funds to
pay all such Taxes at least 30 days prior to their respective due dates and (ii)
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 30 days prior to the expiration of the Policies. Such amounts
will be transferred by Lender to a Subaccount (the "TAX AND INSURANCE
SUBACCOUNT"). Provided that no monetary Event of Default or material
non-monetary Event of Default has occurred and is continuing, Lender will (a)
apply funds in the Tax and Insurance Subaccount to payments of Taxes and
Insurance Premiums required to be made by Borrower pursuant to Sections 5.2 and
7.1, provided that Borrower has promptly supplied Lender with notices of all
Taxes and Insurance Premiums due, or (b) reimburse Borrower for such amounts
upon presentation of evidence of payment; subject, however, to Borrower's' right
to contest Taxes in accordance with Section 5.2. In making any payment relating
to Taxes and Insurance Premiums, 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), 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. If Lender determines in its reasonable judgment that the funds in the
Tax and Insurance Subaccount will be insufficient to pay (or in excess of) the
Taxes or Insurance Premiums next coming due, Lender may increase (or decrease)
the monthly contribution required to be made by Borrower to the Tax and
Insurance Subaccount.
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3.4 CAPITAL EXPENSE RESERVES; 3.4.1 CAPITAL RESERVE SUBACCOUNT. On
the date hereof, Borrower shall deposit with Lender $0 and Lender shall transfer
such amounts into a Subaccount (the "CAPITAL RESERVE SUBACCOUNT"). On the
Payment Date occurring in September, 2005, and each Payment Date thereafter,
Borrower shall pay to Lender $6,565.00 per month. Lender will transfer such
amounts into the Capital Reserve Subaccount. Additionally, upon thirty (30)
days' prior notice to Borrower, Lender may reassess the amount of the monthly
payment required under this Section 3.4 from time to time in its reasonable
discretion (based upon its then current underwriting standards); provided,
however, that Lender shall only increase the amount of such monthly
contributions if Lender reasonably determines that such increase is necessary to
address unanticipated material changes after the date hereof in the anticipated
capital expenses for the Property (in which event such reassessment shall be
limited to address only such issues). Provided that no Event of Default has
occurred and is continuing, Lender shall disburse funds held in the Capital
Reserve Subaccount to Borrower, within 15 days after the delivery by Borrower to
Lender of a request therefor (but not more often than once per month), in
increments of at least $5,000 provided that (i) such disbursement is for an
Approved Capital Expense; (ii) Lender shall have (if it desires) verified (by an
inspection conducted at Borrower' expense (with respect to any disbursement in
excess of $50,000)) performance of the work associated with such Approved
Capital Expense; and (iii) the request for disbursement is accompanied by (A) an
Officer's Certificate certifying (1) that such funds will be used to pay or
reimburse Borrower for Approved Capital Expenses and a description thereof, (2)
that all outstanding trade payables (other than those not yet due and payable or
those to be paid from the requested disbursement or those constituting Permitted
Indebtedness) have been paid in full, (3) that the same has not been the subject
of a previous disbursement, and (4) that all previous disbursements have been
used to pay the previously identified Approved Capital Expenses, and (B) lien
waivers or other evidence of payment satisfactory to Lender, (C) with respect to
any disbursement that exceeds $50,000, 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 (D) such other evidence
as Lender shall reasonably request that the Approved Capital Expenditures 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. Any such
disbursement of more than $10,000 to pay (rather than reimburse) Approved
Capital Expenses may, at Lender's option, be made by joint check payable to
Borrower and the payee on such Approved Capital Expenses.
3.5 ROLLOVER RESERVES.
3.5.1 GENERAL ROLLOVER RESERVE. On the date hereof, Borrower
shall deposit with Lender $4,000,000.00 and Lender shall transfer such amount
into a Subaccount (the "ROLLOVER RESERVE SUBACCOUNT"). On the Payment Date
occurring in August, 2006, and each Payment Date thereafter, Borrower shall pay
to Lender a monthly amount equal to $16,667.67 per month. Lender will transfer
such amounts into the Rollover Reserve Subaccount. Borrower shall pay to Lender
for transfer into the Rollover Reserve Subaccount all payments received from
tenants in connection with the early termination or cancellation of any Leases,
including fees, penalties and commissions ("LEASE TERMINATION PAYMENTS");
provided, however, that once Borrower has provided to Lender evidence acceptable
to Lender that the space under the Lease that was the subject of such
termination has been fully re-tenanted and all Approved Leasing Expenses in
connection with such space have been paid in full, Lender shall, upon Borrower's
21
request, disburse to Borrower any remaining portion of the Lease Termination
Payment made under such terminated Lease, so long as no Event of Default has
occurred and is continuing. Provided that no Event of Default has occurred and
is continuing, Lender shall disburse funds held in the Rollover Reserve
Subaccount to Borrower, within 15 days after the delivery by Borrower to Lender
of a request therefor (but not more often than once per month), in increments of
at least $5,000, provided (i) such disbursement is for an Approved Leasing
Expense incurred hereafter (with respect to the initial deposit into the
Rollover Reserve Subaccount), or after August 11, 2005 (with respect to monthly
deposits into the Rollover Reserve Subaccount; (ii) Lender shall have (if it
desires) verified (by an inspection conducted at Borrower's expense) performance
of any construction work associated with such Approved Leasing Expense; and
(iii) the request for disbursement is accompanied by (A) an Officer's
Certificate certifying (1) that such funds will be used only to pay (or
reimburse Borrower for) Approved Leasing Expenses and a description thereof, (2)
that all outstanding trade payables (other than those not yet due and payable or
those to be paid from the requested disbursement or those constituting Permitted
Indebtedness) have been paid in full, (3) that the same has not been the subject
of a previous disbursement, and (4) that all previous disbursements have been
used only to pay (or reimburse Borrower for) the previously identified Approved
Leasing Expenses, and (B) reasonably detailed supporting documentation as to the
amount, necessity and purpose therefor. Any such disbursement of more than
$10,000 to pay (rather than reimburse) Approved Leasing Expenses may, at
Lender's option, be made by joint check payable to Borrower and the payee of
such Approved Leasing Expenses.
3.6 OPERATING EXPENSE SUBACCOUNT On each Payment Date during the
continuance of a Cash Trap Period, a portion of Rents that have been deposited
into the Deposit Account during the immediately preceding Interest Period in an
amount equal to the monthly amount set forth in the Approved Operating Budget
for the following month (plus any other amounts requested by Borrower for such
month for payment of items constituting Approved Operating Expenses, which are
not included in the Approved Operating Budget), shall be transferred into a
Subaccount for the purpose of payment of Approved Operating Expenses for the
month in which such Payment Date occurs (the "OPERATING EXPENSE SUBACCOUNT").
Provided no Event of Default has occurred and is continuing, Lender shall
disburse funds held in the Operating Expense Subaccount to Borrower (or at
Borrower's direction, to the Manager), within 5 Business Days after delivery by
Borrower to Lender of a request therefor (but not more often than weekly), in
increments of at least $1,000, provided (i) such disbursement is for an Approved
Operating Expense; and (ii) such disbursement is accompanied by (A) an Officer's
Certificate certifying (1) that such funds will be used to pay Approved
Operating Expenses and a description thereof, (2) that all outstanding trade
payables (other than those not yet due and payable or those to be paid from the
requested disbursement or those constituting Permitted Indebtedness) have been
paid in full, (3) that the same has not been the subject of a previous
disbursement, and (4) that all previous disbursements have been or will be used
to pay the previously identified Approved Operating Expenses, and (B) reasonably
detailed documentation satisfactory to Lender as to the amount, necessity and
purpose therefor. Notwithstanding anything to the contrary contained herein, to
the extent that (i) Borrower has requested a disbursement of funds from the
Operating Expense Subaccount in accordance with the foregoing provisions and
(ii) at the time of such request, the funds that have been collected in the
Operating Expense Subaccount are insufficient to cover the same, then Lender
shall nonetheless disburse additional funds that are thereafter deposited into
the Operating Expense Subaccount to
22
Borrower (without any requirement for Borrower to submit an additional request
therefor); provided that sufficient funds have been collected in the Deposit
Account to make the payments required under clauses (i) - (v) of Section 3.11(a)
on the next succeeding Payment Date.
3.7 CASUALTY/CONDEMNATION SUBACCOUNT. Borrower shall pay, or cause
to be paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation
to be transferred to a Subaccount (the "CASUALTY/CONDEMNATION SUBACCOUNT") in
accordance with the provisions of Section 7. All amounts in the
Casualty/Condemnation Subaccount shall be disbursed in accordance with the
provisions of Section 7.
3.8 SECURITY DEPOSITS. Borrower shall keep all security deposits
under Leases in accordance with applicable Legal Requirements. After the
occurrence of an Event of Default, Borrower shall, upon Lender's request, if
permitted by applicable Legal Requirements, turn over to Lender the security
deposits (and any interest theretofore earned thereon) under Leases, to be held
by Lender in a Subaccount (the "SECURITY DEPOSIT SUBACCOUNT") subject to the
terms of the Leases. Security deposits held in the Security Deposit Subaccount
will be released by Lender upon notice from Borrower together with such evidence
as Lender may reasonably request that such security deposit is required to be
returned to a tenant pursuant to the terms of a Lease or may be applied as Rent
pursuant to the rights of Borrower under the applicable Lease. Any letter of
credit or other instrument that any Borrower receives in lieu of a cash security
deposit under any Lease shall (i) be maintained in full force and effect in the
full amount unless replaced by a cash deposit as hereinabove described and (ii)
if permitted pursuant to any Legal Requirements, name Lender as payee or
mortgagee thereunder (or at Lender's option, be fully assignable to Lender).
3.9 CASH COLLATERAL SUBACCOUNT. If a Cash Trap Period shall have
commenced, then on the immediately succeeding Payment Date and on each Payment
Date thereafter during the continuance of such Cash Trap Period, all Available
Cash shall be paid to Lender, which amounts shall be transferred by Lender into
a Subaccount (the "CASH COLLATERAL SUBACCOUNT") as cash collateral for the Debt.
Any funds in the Cash Collateral Account and not previously disbursed or applied
shall be disbursed to Borrower upon the termination of such Cash Trap Period.
Lender shall have the right, but not the obligation, at any time during the
continuance of a monetary Event of Default or material non-monetary Event of
Default, in its sole and absolute discretion to apply all sums then on deposit
in the Cash Collateral Subaccount to the Debt, in such order and in such manner
as Lender shall elect in its sole and absolute discretion, including to make a
prepayment of Principal (together with the applicable Yield Maintenance Premium
applicable thereto). Notwithstanding anything to the contrary contained above,
Lender shall have the right, but not the obligation, in its sole and absolute
discretion, to allocate any funds that have been deposited into the Cash
Collateral Subaccount as a result of a Cash Trap Period described in clause (ii)
of the defined term "Cash Trap Period", into the Rollover Reserve Subaccount to
be applied in accordance with the terms and conditions of SECTION 3.5 hereof.
3.10 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS. As security
for payment of the Debt and the performance by Borrower of all other terms,
conditions and provisions of the Loan Documents, each Borrower hereby pledges
and assigns to Lender, and grants to Lender a security interest in, all such
Borrower's right, title and interest in and to all Rents and in and to all
payments to or monies held in the Clearing Account, the Deposit Account, all
Subaccounts
23
created pursuant to this Agreement (collectively, the "CASH MANAGEMENT
ACCOUNTS"). Each Borrower hereby grants to Lender a continuing security interest
in, and agrees to hold in trust for the benefit of Lender, all Rents in its
possession prior to the (i) payment of such Rents to Lender or (ii) deposit of
such Rents into the Deposit Account. Borrower shall not (and no Borrower shall),
without obtaining the prior written consent of Lender, further pledge, assign or
grant any security interest in any Cash Management Account, or permit any Lien
to attach thereto, or any levy to be made thereon, or any UCC Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto. This Agreement is, among other things, intended by the parties
to be a security agreement for purposes of the UCC. Upon the occurrence and
during the continuance of an Event of Default, Lender may apply any sums in any
Cash Management Account in any order and in any manner as Lender shall elect in
Lender's discretion without seeking the appointment of a receiver and without
adversely affecting the rights of Lender to foreclose the Lien of the Mortgage
or exercise its other rights under the Loan Documents. Cash Management Accounts
shall not constitute trust funds and may be commingled with other monies held by
Lender. All interest which accrues on the funds in any Cash Management Account
(other than the Tax and Insurance Subaccount) shall accrue for the benefit of
Borrower and shall be taxable to Borrower and shall be added to and disbursed in
the same manner and under the same conditions as the principal sum on which said
interest accrued. Upon repayment in full of the Debt, all remaining funds in the
Subaccounts, if any, shall be promptly disbursed to Borrower.
3.11 PROPERTY CASH FLOW ALLOCATION. (a)All Rents deposited into the
Deposit Account during the immediately preceding Interest Period shall be
applied on each Payment Date as follows in the following order of priority: (i)
First, to make payments into the Tax and Insurance Subaccount as required under
Section 3.3; (ii) Second, to pay the monthly portion of the fees charged by the
Deposit Bank in accordance with the Deposit Account Agreement; (iii) Third, to
Lender to pay the Monthly Interest Payment Amount or the Monthly Debt Service
Payment Amount, as the case may be, due on such Payment Date (plus, if
applicable, interest at the Default Rate and all other amounts, other than those
described under other clauses of this Section 3.11(a), then due to Lender under
the Loan Documents); (iv) Fourth, to make payments into the Capital Reserve
Subaccount as and when required under Section 3.4; (v) Fifth, to make payments
into the Rollover Reserve Subaccount as and when required under Section 3.5;
(vi) Sixth, during the continuance of a Cash Trap Period, to make payments for
Approved Operating Expenses as required under Section 3.6; (vii) Seventh, during
the continuance of a Cash Trap Period, to make payments in an amount equal to
all remaining Available Cash on such Payment Date into the Cash Collateral
Subaccount in accordance with Section 3.9; and (viii) Lastly, except during the
continuance of a Cash Trap Period, payments to Borrower of any remaining
amounts. Notwithstanding the foregoing, except during the continuance of a Cash
Trap Period, provided that in any given Interest Period, all amounts referred to
in the foregoing clauses (i) - (v) have been paid, then at Borrower's request,
the payments to Borrower under the foregoing clause (viii) shall be made on a
weekly basis.
(b) The failure of Borrower to make all of the payments
required under clauses (i) through (vii) of Section 3.11(a) in full on each
Payment Date shall constitute an Event of Default under this Agreement;
provided, however, if adequate funds are available in the Deposit Account for
such payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default.
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(c) Notwithstanding anything to the contrary contained in
this Section 3.11, after the occurrence of an Event of Default, Lender may apply
all Rents deposited into the Deposit Account and other proceeds of repayment in
such order and in such manner as Lender shall elect.
3.12 INITIAL DEPOSITS INTO RESERVES. The initial deposits required to
be made on the date hereof into the reserve accounts established under this
Article 3 are funded from the proceeds of the Loan disbursed at closing.
3.13 INITIAL LEASING RESERVE. On the date hereof, Borrower shall
deposit with Lender $714,884.04 which shall be referred to as the "Tenant
Improvement Funds" and Lender shall transfer such amount into a Subaccount (the
"Tenant Improvement Reserve Subaccount"). A total of $545,387.04 of the Tenant
Improvement Funds shall be used to reimburse Borrower and/or to pay, in the
allocated amounts and in accordance with the terms and conditions set forth in
this Agreement, for the reasonable costs and expenses incurred by Borrower in
completing the tenant improvements and/or paying leasing commissions under the
leases of the tenants described on Schedule 1, in each case allocated among such
leases as set forth on Schedule 1 (the "TI Leases"; such funds the "TI Funds"),
and a total of $169,497 of the Tenant Improvement Funds shall be held until the
expiration of free rent periods under the leases described on Schedule 1 (the
"Free Rent Funds"), in each case allocated among such leases in accordance with
Schedule 1, such that the amount of Free Rent Funds allocated to each such lease
shall be released to Borrower as and when the applicable free rent period under
such lease expires and the tenant thereunder has commenced rental payments under
such lease. Provided that no Event of Default has occurred and is continuing,
Lender shall disburse TI Funds applicable to each lease held in the Tenant
Improvement Reserve Subaccount to Borrower, within 15 days after the delivery by
Borrower to Lender of a request therefore (but not more often than once per
month), in increments of at least $5,000, provided Borrower shall have provided
Lender with either (1) as to leasing commissions) reasonable evidence that such
commissions have been paid, or will be paid with proceeds of the requested
disbursement, or (2) as to leasehold improvement work, tenant estoppel
certificates from the tenant under the applicable TI Lease indicating that all
construction to be performed and all improvements to be installed under the TI
Lease has been completed, that such tenant has accepted the tenant improvements
and occupied the space covered by the tenant improvements and has commenced
paying rent and the free rent or rent abatement periods under such TI Lease has
expired, and there are no defaults under such lease (nor does there exist any
event or condition, which with the passage of time or the giving of notice, or
both, could result in such a default); (iii) Lender shall have (if it desires)
verified (by an inspection conducted at Borrowers' expense) performance of any
construction work associated with such work; and (iv) the request for
disbursement is accompanied by (A) an Officer's Certificate certifying (1) that
such funds will be used only to pay (or reimburse Borrower for) tenant
improvements under the applicable TI Lease (or such tenant improvements have
been completed and paid for, in which event the balance of the reserve funds
allocated to such lease shall be released), (2) that all outstanding trade
payables (other than those not yet due and payable or those to be paid from the
requested disbursement or those constituting Permitted Indebtedness) have been
paid in full, and (3) that the same has not been the subject of a previous
disbursement, and (B) reasonably detailed supporting documentation as to the
amount, necessity and purpose therefor. Any such disbursement of more than
$10,000 to pay (rather than reimburse) tenant improvements under this Section
may, at Lender's option, be made by joint check payable to Borrowers and the
payee of such tenant improvements.
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4. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Lender as of the date hereof
(subject to the last paragraph of this Section 4 and provided that the
representations and covenants in Section 4.24 and 4.25 are not made as of the
date hereof, and shall not be deemed made unless and until an Additional TIC
Transfer occurs, in which event they shall be deemed made as of the date of each
Additional TIC Transfer, in which event the representations and covenants in
Section 4.25 shall be deemed made by Individual Borrower and not by any other
Borrower) that, except to the extent (if any) disclosed on Schedule 3 with
reference to a specific Section of this Article 4:
4.1 ORGANIZATION; SPECIAL PURPOSE. Each Borrower has been duly
organized and is validly existing and in good standing under the laws of the
state of its formation, with requisite power and authority, and all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
own its properties and to transact the business in which it is now engaged. Each
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 its
properties, business and operations. Each Borrower is a Special Purpose
Bankruptcy Remote Entity.
4.2 PROCEEDINGS; ENFORCEABILITY. Each Borrower has taken all
necessary action to authorize the execution, delivery and performance of the
Loan Documents. The Loan Documents to which Borrower is a party have been duly
executed and delivered by each Borrower and constitute legal, valid and binding
obligations of such Borrower enforceable against such Borrower in accordance
with their respective terms, subject to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and general principles of
equity. The Loan Documents to which Borrower's Guarantor and/or Affiliates are a
party have been duly executed and delivered by such Guarantor and/or Affiliates
party thereto, and constitute legal, valid and binding obligations of such
Guarantor and/or Affiliates party thereto, enforceable against such Guarantor
and/or Affiliates party thereto in accordance with their respective terms,
subject to applicable bankruptcy, insolvency and similar laws affecting rights
of creditors generally, and general principles of equity. The Loan Documents are
not subject to, and Borrower has not (and no Borrower has) asserted, any right
of rescission, set-off, counterclaim or defense, including the defense of usury.
No exercise of any of the terms of the Loan Documents, or any right thereunder,
will render any Loan Document unenforceable.
4.3 NO CONFLICTS. The execution, delivery and performance of the
Loan Documents by Borrower and the transactions contemplated hereby 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
(other than pursuant to the Loan Documents) upon any of the property of any
Borrower pursuant to the terms of, any agreement or instrument to which any
Borrower is a party or by which its property is subject, nor 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 any Borrower
or any of its properties. Borrower's rights under the Licenses and the
Management Agreement will not be adversely affected by the execution and
delivery of the Loan Documents, any Borrower's performance thereunder, the
recordation of the Mortgage. Any consent, approval, authorization, order,
registration or qualification of or with any
26
Governmental Authority required for the execution, delivery and performance by
any Borrower of the Loan Documents has been obtained and is in full force and
effect.
4.4 LITIGATION. There are no actions, suits or other proceedings at
law or in equity by or before any Governmental Authority now pending or
threatened against or affecting any Borrower, the Manager or the Property,
which, if adversely determined, might materially adversely affect the condition
(financial or otherwise) or business of any Borrower, Manager or the condition
or ownership of the Property.
4.5 AGREEMENTS. Borrower is not (and no Borrower shall be) a party
to any agreement or instrument or subject to any restriction which might
adversely affect any Borrower or the Property, or any Borrower's business,
properties, operations or condition, financial or otherwise. 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 Permitted
Encumbrance or any other agreement or instrument to which any Borrower is a
party or by which any Borrower or the Property is bound.
4.6 TITLE. Borrower has good, marketable and indefeasible title in
fee to the real property and good title to the balance of the Property, free and
clear of all Liens except the Permitted Encumbrances. 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 in
connection with the transfer of the Property to Borrower have been paid. The
Mortgage when properly recorded in the appropriate records, together with any
UCC Financing Statements required to be filed in connection therewith and the
other Loan Documents, will create (i) a valid, perfected first priority lien on
Borrower's interest in that portion of the Property, the Leases (to the extent
not subject to the Uniform Commercial Code) and the Rents constituting interest
in real estate or real property interests (including fixtures) and (ii) to the
extent that a security interest therein may be created under the Uniform
Commercial Code, a valid security interest in that portion of the Property, the
Leases (to the extent subject to the Uniform Commercial Code)and Rents and other
collateral for the Loan constituting personal property, which security interest
constitutes a perfected first priority security interest (a) to the extent that
a security interest therein may be perfected by the filing of a UCC Financing
Statement and (b) with respect to the Cash Management Account by virtue of
Lender's control of such Cash Management Accounts, all in accordance with the
terms of such Loan Documents, in each case subject only to any applicable
Permitted Encumbrances. All mortgage, recording, stamp, intangible or other
similar taxes required to be paid by any Person under applicable Legal
Requirements in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents have been
paid. The Permitted Encumbrances do not materially adversely affect the value,
operation or use of the Property, or Borrower's ability to repay the Loan. No
Condemnation or other proceeding has been commenced or, to Borrower's best
knowledge, is contemplated with respect to all or part of the Property or for
the relocation of roadways providing access to the Property. There are no claims
for payment for work, labor or materials affecting the Property which are or may
become a Lien prior to, or of equal priority with, the Liens created by the Loan
Documents. There are no outstanding options to purchase or rights of first
refusal affecting all or any portion of the Property. The survey for the
Property delivered to Lender does not fail to reflect any material matter
affecting the Property or the title thereto. Except as shown on the survey, all
of the
27
Improvements included in determining the appraised value of the Property lie
wholly within the boundaries and building restriction lines of the Property, and
no improvement on an adjoining property encroaches upon the Property, and no
easement or other encumbrance upon the Property encroaches upon any of the
Improvements, except those insured against by the Title Insurance Policy. Each
parcel comprising the Property is a separate tax lot and is not a portion of any
other tax lot that is not a part of the Property. To the best of Borrower's
knowledge, there are no pending or proposed special or other assessments for
public improvements or otherwise affecting the Property, or any contemplated
improvements to the Property that may result in such special or other
assessments.
4.7 NO BANKRUPTCY FILING. Borrower is not (and no Borrower shall be)
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency law or the liquidation of all or a major portion of its
property (a "BANKRUPTCY PROCEEDING"), and Borrower has no knowledge of any
Person contemplating the filing of any such petition against any Borrower. In
addition, no Borrower nor any principal nor Affiliate of any Borrower has been a
party to, or the subject of a Bankruptcy Proceeding for the past ten years.
4.8 FULL AND ACCURATE DISCLOSURE. No statement of fact made by any
Borrower in any Loan Documents contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
therein not misleading. There is no material fact presently known to any
Borrower that has not been disclosed to Lender which adversely affects, or, as
far as any Borrower can foresee, might adversely affect, the Property or the
business, operations or condition (financial or otherwise) of any Borrower. All
financial data, including the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of Borrower and, to
Borrower's knowledge, the Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of each
Borrower and the Property as of the date of such reports, and (iii) to the
extent prepared by an independent certified public accounting firm, have been
prepared in accordance with GAAP 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,
unrealized or anticipated losses from any unfavorable commitments or any
liabilities or obligations not expressly permitted by this Agreement. Since the
date of such financial statements, there has been no materially adverse change
in the financial condition, operations or business of any Borrower or the
Property from that set forth in said financial statements.
4.9 TAX FILINGS. To the extent required, each Borrower has filed (or
has obtained effective extensions for filing) all federal, state and local tax
returns required to be filed and have paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable
by such Borrower. Each Borrower believes that its tax returns (if any) properly
reflect the income and taxes of such Borrower for the periods covered thereby,
subject only to reasonable adjustments required by the Internal Revenue Service
or other applicable tax authority upon audit.
4.10 NO PLAN ASSETS. As of the date hereof and throughout the Term
(i) Borrower is not and will not (and no Borrower shall) be an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, (ii)
none of the assets of any Borrower
28
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. Section 2510.3-101, (iii) Borrower is not and will not
(and no Borrower shall) be a "governmental plan" within the meaning of Section
3(32) of ERISA, and (iv) transactions by or with any Borrower are not and will
not be subject to state statutes regulating investment of, and fiduciary
obligations with respect to, governmental plans. As of the date hereof, neither
Borrower, nor any member of a "controlled group of corporations" (within the
meaning of Section 414 of the Code) maintains, sponsors or contributes to a
"defined benefit plan" (within the meaning of Section 3(35) of ERISA) or a
"multiemployer pension plan" (within the meaning of Section 3(37)(A) of ERISA).
4.11 COMPLIANCE. Each Borrower and, to Borrower's best knowledge, the
Property and the use thereof comply in all material respects with all applicable
Legal Requirements (including with respect to parking and applicable zoning and
land use laws, regulations and ordinances). Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which might materially adversely affect the
condition (financial or otherwise) or business of any Borrower. The Property is
used exclusively as an office building property and other appurtenant and
related uses. In the event that all or any part of the Improvements are
destroyed or damaged, said Improvements can be legally reconstructed to their
condition prior to such damage or destruction, and thereafter exist for the same
use without violating any zoning or other ordinances applicable thereto and
without the necessity of obtaining any variances or special permits. No legal
proceedings are pending or, to the knowledge of Borrower, threatened with
respect to the zoning of the Property. Neither the zoning nor any other right to
construct, use or operate the Property is in any way dependent upon or related
to any property other than the Property. All certifications, permits, licenses
and approvals, including certificates of completion and occupancy permits
required for the legal use, occupancy and operation of the Property
(collectively, the "LICENSES"), have been obtained and are in full force and
effect. The use being made of the Property is in conformity with the certificate
of occupancy issued for the Property and all other restrictions, covenants and
conditions affecting the Property.
4.12 CONTRACTS. There are no service, maintenance or repair contracts
affecting the Property that are not terminable on one month's notice or less
without cause and without penalty or premium. All service, maintenance or repair
contracts affecting the Property have been entered into at arms-length in the
ordinary course of Borrower's business (or that of its predecessor in interest)
and provide for the payment of fees in amounts and upon terms comparable to
existing market rates.
4.13 FEDERAL RESERVE REGULATIONS; INVESTMENT COMPANY ACT. 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 that would be
inconsistent with such Regulation U or any other regulation of such Board of
Governors, or for any purpose prohibited by Legal Requirements or any Loan
Document. Borrower is not (and no Borrower shall be) (i) an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (ii) 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
29
(iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
4.14 EASEMENTS; UTILITIES AND PUBLIC ACCESS. All easements, cross
easements, licenses, air rights and rights-of-way or other similar property
interests (collectively, "EASEMENTS"), if any, necessary for the full
utilization of the Improvements for their intended purposes have been obtained,
are described in the Title Insurance Policy and are in full force and effect
without default thereunder. The Property has rights of access to public ways and
is served by water, sewer, sanitary sewer and storm drain facilities adequate to
service it for its intended uses. All public utilities necessary or convenient
to the full use and enjoyment of the Property are located in the public
right-of-way abutting the Property, and all such utilities are connected so as
to serve the Property without passing over other property absent a valid
easement. All roads necessary for the use of the Property for its current
purpose have been completed and dedicated to public use and accepted by all
Governmental Authorities.
4.15 PHYSICAL CONDITION. Other than the Required Repairs, the
Property, including all Improvements, parking facilities, systems, Equipment and
landscaping, are in good condition, order and repair in all material respects;
to Borrower's knowledge there exists no structural or other material defect or
damages to the Property, whether latent or otherwise. Borrower has not received
notice from any insurance company or bonding company of any defect or inadequacy
in the Property, or any part thereof, which would adversely affect its
insurability or cause the imposition of extraordinary premiums or charges
thereon or any termination of any policy of insurance or bond. No portion of the
Property is located in an area as identified by the Federal Emergency Management
Agency as an area having special flood hazards. The Improvements have suffered
no material casualty or damage which has not been fully repaired and the cost
thereof fully paid.
4.16 LEASES. The rent roll attached hereto as Schedule 8 (the "RENT
ROLL") is true, complete and correct and the Property is not subject to any
Leases other than the Leases described in the Rent Roll. Except as set forth on
the Rent Roll or tenant estoppel certificates delivered to Lender prior to the
date hereof: (i) each Lease is in full force and effect; (ii) the tenants under
the Leases have accepted possession of and are in occupancy of all of their
respective demised premises, have commenced the payment of rent under the
Leases, and there are no offsets, claims or defenses to the enforcement thereof;
(iii) all rents due and payable under the Leases have been paid and no portion
thereof has been paid for any period more than 30 days in advance; (iv) the rent
payable under each Lease is the amount of fixed rent set forth in the Rent Roll,
and there is no claim or basis for a claim by the tenant thereunder for an
adjustment to the rent; (v) to Borrower's best knowledge, no tenant has made any
claim against the landlord under any Lease which remains outstanding, there are
no defaults on the part of the landlord under any Lease, and no event has
occurred which, with the giving of notice or passage of time, or both, would
constitute such a default; (vi) to Borrower's best knowledge, there is no
present material default by the tenant under any Lease; (vii) all security
deposits under Leases are as set forth on the Rent Roll and are held consistent
with Section 3.8; (viii) Borrower is the sole owner of the entire lessor's
interest in each Lease; (ix) each Lease is the valid, binding and enforceable
obligation of such Borrower and the applicable tenant thereunder; (x) to
Borrower's best knowledge, no Person has any possessory interest in, or right to
occupy, the Property except under the terms of the Lease; and (xi) each Lease is
subordinate to the Loan Documents, either
30
pursuant to its terms or pursuant to a subordination and attornment agreement.
None of the Leases contains any option to purchase or right of first refusal to
purchase the Property or any part thereof. Neither the Leases nor the Rents have
been assigned or pledged except to Lender, and no other Person has any interest
therein except the tenants thereunder.
4.17 FRAUDULENT TRANSFER. Borrower has not entered into the Loan or
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and Borrower has received reasonably equivalent value in exchange for
its obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower's total probable liabilities, including subordinated,
unliquidated, disputed or contingent liabilities, including the maximum amount
of its contingent liabilities or its debts as such debts become absolute and
matured. Borrower's assets do not and, immediately following the execution and
delivery of the Loan Documents 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 (and no Borrower shall
intend to or believe that it will), incur debts and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
debts as they mature (taking into account the timing and amounts to be payable
on or in respect of obligations of such Borrower).
4.18 OWNERSHIP OF BORROWER.
(a) The sole member of Borrower is the Harvard REIT
Operating Partnership. The only partners of the Harvard REIT Operating
Partnership are the Behringer Harvard REIT (0.1% general partner) and BHR
Partners, LLC, a Delaware limited liability company (99.9% limited partner),
which is 100% owned by the Behringer Harvard REIT. The membership interests in
Borrower and the general partnership interest and the limited partnership
interest of BHR Partners, LLC in Behringer Harvard Operating Partnership I LP
are owned free and clear of all Liens, warrants, options and rights to purchase.
BHR Partners, LLC owns at least 80% of the outstanding limited partnership
interests in Behringer Harvard Operating Partnership I LP. Borrower has no
obligation to any Person to purchase, repurchase or issue any ownership interest
in it. The organizational chart attached hereto as Schedule 4 is complete and
accurate and illustrates all Persons who have a direct or indirect ownership
interest in Borrower.
(b) INTENTIONALLY DELETED.
(c) INTENTIONALLY DELETED.
4.19 PURCHASE OPTIONS. Neither the Property nor any part thereof is
subject to any purchase options or other similar rights in favor of third
parties.
4.20 MANAGEMENT AGREEMENT. The Management Agreement is in full force
and effect. There is no default, breach or violation existing thereunder, and no
event has occurred (other than payments due but not yet delinquent) that, with
the passage of time or the giving of notice, or both, would constitute a
default, breach or violation thereunder, by either party thereto. Immediately
following a Permitted TIC Transfer, pursuant to the Management Agreement,
Borrower shall appoint the Manager as its agent for (i) hiring, terminating
(subject to the
31
provisions thereof), overseeing and otherwise dealing with any sub-property
manager for the Property, (ii) otherwise overseeing the operation and management
of the Property, and (iii) making decisions and otherwise interacting and
dealing with Lender with respect to the Loan, this Agreement, the other Loan
Documents and the Property. Additionally, subject to the provisions of Section
3.1 and the Clearing Account Agreement and the Deposit Account Agreement,
immediately following a Permitted TIC Transfer, the Manager shall have control
of all operating and other bank accounts with respect to the Property.
4.21 HAZARDOUS SUBSTANCES. Except as disclosed in the environmental
assessment report delivered to Lender in connection with the Loan, (i) the
Property is not in violation of any Legal Requirement pertaining to or imposing
liability or standards of conduct concerning environmental regulation,
contamination or clean-up, including the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Emergency Planning and Community Right-to-Know Act of 1986, the Hazardous
Substances Transportation Act, the Solid Waste Disposal Act, the Clean Water
Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking Water
Act, the Occupational Safety and Health Act, any state super-lien and
environmental clean-up statutes, any local law requiring related permits and
licenses and all amendments to and regulations in respect of the foregoing laws
(collectively, "ENVIRONMENTAL LAWS"); (ii) the Property is not subject to any
private or governmental Lien or judicial or administrative notice or action or
inquiry, investigation or claim relating to hazardous, toxic and/or dangerous
substances, toxic mold or fungus of a type that may pose a risk to human health
or the environment or would negatively impact the value of the Property ("TOXIC
MOLD") or any other substances or materials which are included under or
regulated by Environmental Laws (collectively, "HAZARDOUS SUBSTANCES"); (iii) to
the best of each Borrower's knowledge, after due inquiry, no Hazardous
Substances are or have been (including the period prior to such Borrower's
acquisition of the Property), discharged, generated, treated, disposed of or
stored on, incorporated in, or removed or transported from the Property other
than in compliance with all Environmental Laws; (iv) to the best of each
Borrower's knowledge, after due inquiry, no Hazardous Substances are present in,
on or under any nearby real property which could migrate to or otherwise affect
the Property; (v) to the best of Borrower's knowledge, no Toxic Mold is on or
about the Property which requires remediation; and (vi) no underground storage
tanks exist on the Property and the Property has never been used as a landfill.
There have been no environmental investigations, studies, audits, reviews or
other analyses conducted by or on behalf of any Borrower which have not been
provided to Lender.
4.22 NAME; PRINCIPAL PLACE OF BUSINESS. Borrower does not use and
will not use any trade name or has done or will not do business under any name
other than its actual name set forth herein and the trade name of the Property.
The principal place of business of each Borrower is its primary address for
notices as set forth in Section 6.1, and Borrower has no other place of
business.
4.23 OTHER DEBT. There is no indebtedness with respect to the
Property or any excess cash flow or any residual interest therein, whether
secured or unsecured, other than Permitted Encumbrances and Permitted
Indebtedness.
32
4.24 TENANT IN COMMON AGREEMENT. In the event of and as of the date
of each Additional TIC Transfer:
(a) The Tenant in Common Agreement is in full force and
effect and has not been modified or amended.
(b) There are no defaults under the Tenant in Common
Agreement on the part of any Borrower, and no event has occurred, which with the
passage of time, the giving of notice, or both, would constitute a default under
the Tenant in Common Agreement on the part of any Borrower.
(c) The Tenant in Common Agreement provides that so long as
the Loan or any portion thereof is outstanding, each tenant-in-common agrees
that it will not seek or be entitled to seek and obtain a partition of all or
any part of the Property without first obtaining the prior written consent of
Lender, and each tenant-in-common expressly waives any right it may have to
partition the Property or any part thereof, unless Lender has consented in
writing to such party's exercise of such rights.
(d) The Tenant in Common Agreement provides that each
tenant-in-common agrees that the Tenant in Common Agreement, and all rights and
privileges and remedies of each tenant-in-common thereunder, including without
limitation, any rights of first refusal, purchase options or other similar
rights under the Tenant in Common Agreement, are subject and subordinate to the
Mortgage and the other Loan Documents and the Liens created thereby, and to all
rights of the Lender thereunder.
(e) The Tenant in Common Agreement provides that no party
thereunder may exercise any remedy provided for therein (including any rights of
indemnification) against any other party for as long as the Loan (or any portion
thereof) is outstanding.
(f) The Tenant in Common Agreement provides that each
tenant-in-common waives, for so long as the Loan (or any portion thereof) is
outstanding, any lien rights, whether statutory or otherwise, that it may have
against the co-tenancy interest of any other tenant-in-common.
(g) The Tenant in Common Agreement provides that for so long
as the Loan (or any portion thereof) is outstanding, Lender shall be a third
party beneficiary of the Tenant in Common Agreement.
4.25 SECURITIES LAWS COMPLIANCE. With respect to each Additional TIC
Transfer (if any are made) no Securities Laws have been violated in connections
with the issuing, selling, transferring or marketing of tenancy in common
interests. Without limiting the foregoing, neither Initial Borrower nor any of
its Affiliates has made any material untrue statement in any offering memorandum
or other offering materials provided to prospective investors in connection with
any potential investment in any such tenancy in common interest or has omitted
any material fact or information from any such materials. Initial Borrower shall
and shall cause all of its Affiliates to comply with any and all securities laws
in connections with the issuing, selling, transferring or marketing of tenancy
in common interests. Without limiting the foregoing, neither Initial Borrower
nor any of its Affiliates shall include any material untrue
33
statement in any offering memorandum or other offering materials provided to
prospective investors in connection with any potential investment in any such
tenancy in common interest or shall omit any material fact or information from
any such materials.
All of the representations and warranties in this Article 4 and
elsewhere in the Loan Documents (i) shall survive for so long as any portion of
the Debt remains owing to Lender and (ii) shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf, provided, however, that the representations and
warranties set forth in Section 4.21 shall survive in perpetuity.
Notwithstanding anything to the contrary contained herein, in the event of a
Permitted TIC Transfer it is understood and agreed that any representation made
by a Borrower relating to a Borrower shall be deemed made only by such Borrower
with respect to itself and not by any other Borrower.
5. COVENANTS
Until the end of the Term, Borrower hereby covenants and agrees with
Lender that:
5.1 EXISTENCE. Each Borrower shall (i) do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
existence, rights, and franchises, (ii) continue to engage in the business
presently conducted by it, (iii) obtain and maintain all Licenses, and (iv)
qualify to do business and remain in good standing under the laws of each
jurisdiction, in each case as and to the extent required for the ownership,
maintenance, management and operation of the Property.
5.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes and Other
Charges prior to delinquency, and deliver to Lender receipts for payment or
other evidence satisfactory to Lender that the Taxes and Other Charges have been
so paid prior to delinquency (provided, however, that Borrower need not pay such
Taxes nor furnish such receipts for payment of Taxes paid by Lender pursuant to
Section 3.3). Borrower shall not suffer and shall promptly cause to be paid and
discharged any Lien against the Property, and shall promptly pay for all utility
services provided to the Property. After prior notice to Lender, Borrower, at
their 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 of any Taxes or Other Charges, provided that (i) no
Event of Default has occurred and is continuing, (ii) such proceeding shall
suspend the collection of the Taxes or such Other Charges, (iii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which any Borrower is subject and shall not constitute a
default thereunder, (iv) no part of or interest in the Property will be in
imminent danger of being sold, forfeited, terminated, canceled or lost, (v)
Borrower shall have furnished such security as may be required in the
proceeding, or as may be requested by Lender, to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon, which
shall not be less than 125% of the Taxes and Other Charges being contested (less
amounts then being retained in the Taxes and Insurance Subaccount to pay such
Taxes so contested), and (vi) Borrower shall promptly upon final determination
thereof pay the amount of such Taxes or Other Charges, together with all costs,
interest and penalties. Lender may, with the prior approval of Borrower (not to
be unreasonably withheld), pay over any such
34
security or part thereof held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established.
5.3 ACCESS TO PROPERTY. Borrower shall permit agents,
representatives, consultants 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 of the Property under their respective Leases.
5.4 REPAIRS; MAINTENANCE AND COMPLIANCE; ALTERATIONS.
5.4.1 REPAIRS; MAINTENANCE AND COMPLIANCE. Borrower shall at
all times maintain, preserve and protect all franchises and trade names, and
Borrower shall cause the Property to be maintained in a good and safe condition
and repair and shall not remove, demolish or alter the Improvements or Equipment
(except for alterations performed in accordance with Section 5.4.2 and normal
replacement of Equipment with Equipment of equivalent value and functionality or
removal of Equipment that is not material to the operation or value of the
Property as an office building). Borrower shall promptly comply with all Legal
Requirements and immediately cure properly any violation of a Legal Requirement.
Borrower shall notify Lender in writing within three Business Days after any
Borrower first receives notice of any such non-compliance. Borrower shall
promptly repair, replace or rebuild any part of the Property that becomes
damaged, worn or dilapidated and shall complete and pay for any Improvements at
any time in the process of construction or repair.
5.4.2 ALTERATIONS. Borrower may, without Lender's consent,
perform alterations to the Improvements and Equipment which (i) do not
constitute a Material Alteration, (ii) do not adversely affect any Borrower's
financial condition or the value or Net Operating Income of the Property and
(iii) are in the ordinary course of Borrower's business. No Borrower shall
perform any Material Alteration without Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed. Lender may, as a
condition to giving its consent to a Material Alteration, require that Borrower
deliver to Lender security for payment of the cost of such Material Alteration
in an amount equal to 125% of the cost of the Material Alteration as estimated
by Lender. Upon substantial completion of the Material Alteration, Borrower
shall provide evidence satisfactory to Lender that (i) the Material Alteration
was constructed in accordance with applicable Legal Requirements and
substantially in accordance with plans and specifications approved by Lender
(which approval shall not be unreasonably withheld or delayed), (ii) all
contractors, subcontractors, materialmen and professionals who provided work,
materials or services in connection with the Material Alteration have been paid
in full and have delivered unconditional releases of lien and (iii) all material
Licenses necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued. Borrower shall reimburse Lender upon demand
for all out-of-pocket costs and expenses (including the reasonable fees of any
architect, engineer or other professional engaged by Lender) incurred by Lender
in reviewing plans and specifications or in making any determinations necessary
to implement the provisions of this Section 5.4.2.
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5.5 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every term to be observed or performed by Borrower pursuant to
the terms of any agreement or instrument affecting or pertaining to the
Property, including the Loan Documents.
5.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate fully
with Lender with respect to, and permit Lender, at its option, to participate
in, any proceedings before any Governmental Authority which may in any way
affect the rights of Lender under any Loan Document.
5.7 FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost and
expense, (i) 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 Debt and/or for the better and more effective
carrying out of the intents and purposes of the Loan Documents, as Lender may
reasonably require from time to time; and (ii) upon Lender's request therefor
given from time to time after the occurrence of any Default or Event of Default
pay for (a) reports of UCC, federal tax lien, state tax lien, judgment and
pending litigation searches with respect to any Borrower and (b) searches of
title to the Property, each such search to be conducted by search firms
reasonably designated by Lender in each of the locations reasonably designated
by Lender.
5.8 ENVIRONMENTAL MATTERS.
5.8.1 HAZARDOUS SUBSTANCES. So long as one or more Borrower
owns or is in possession of the Property, each such Borrower shall (i) keep the
Property free from Hazardous Substances and in compliance with all Environmental
Laws, (ii) promptly notify Lender if such Borrower shall become aware that (A)
any Hazardous Substance is on or near the Property, (B) the Property is in
violation of any Environmental Laws or (C) any condition on or near the Property
shall pose a threat to the health, safety or welfare of humans and (iii) remove
such Hazardous Substances and/or cure such violations and/or remove such
threats, as applicable, as required by law (or as shall be required by Lender in
the case of removal which is not required by law, but in response to the opinion
of a licensed hydrogeologist, licensed environmental engineer or other qualified
environmental consulting firm engaged by Lender ("LENDER'S CONSULTANT")),
promptly after such Borrower becomes aware of same, at Borrower's sole expense.
Nothing herein shall prevent such Borrower from recovering such expenses from
any other party that may be liable for such removal or cure.
5.8.2 ENVIRONMENTAL MONITORING.
(a) Borrower shall give prompt written notice to Lender of
(i) any proceeding or inquiry by any party (including any Governmental
Authority) with respect to the presence of any Hazardous Substance on, under,
from or about the Property, (ii) all claims made or threatened by any third
party (including any Governmental Authority) against any Borrower or the
Property or any party occupying the Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) any Borrower's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of
the Property that could cause the Property to be subject to any investigation or
cleanup pursuant to any Environmental Law. Upon becoming aware of the presence
of mold or fungus at the Property, Borrower shall (i) undertake an investigation
to
36
identify the source(s) of such mold or fungus and shall develop and implement an
appropriate remediation plan to eliminate the presence of any Toxic Mold, (ii)
perform or cause to be performed all acts reasonably necessary for the
remediation of any Toxic Mold (including taking any action necessary to clean
and disinfect any portions of the Property affected by Toxic Mold, including
providing any necessary moisture control systems at the Property), and (iii)
provide evidence reasonably satisfactory to Lender of the foregoing. Borrower
shall permit Lender to join and participate in, as a party if it so elects, any
legal or administrative proceedings or other actions initiated with respect to
the Property in connection with any Environmental Law or Hazardous Substance,
and Borrower shall pay all reasonable attorneys' fees and disbursements incurred
by Lender in connection therewith.
(b) Upon Lender's request, at any time and from time to
time, Borrower shall provide an inspection or audit of the Property prepared by
a licensed hydrogeologist, licensed environmental engineer or qualified
environmental consulting firm approved by Lender assessing the presence or
absence of Hazardous Substances on, in or near the Property, and if Lender in
its good faith judgment determines that reasonable cause exists for the
performance of such environmental inspection or audit, then the cost and expense
of such audit or inspection shall be paid by Borrower. Such inspections and
audit may include soil borings and ground water monitoring. If Borrower fails to
provide any such inspection or audit within 30 days after such request, Lender
may order same, and Borrower hereby grants to Lender and its employees and
agents access to the Property and a license to undertake such inspection or
audit.
(c) If any environmental site assessment report prepared in
connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for any Hazardous Substance, whether such
Hazardous Substance existed prior to the ownership of the Property by any
Borrower, or presently exists or is reasonably suspected of existing, Borrower
shall cause such operations and maintenance plan to be prepared and implemented
at its expense upon request of Lender, and with respect to any Toxic Mold,
Borrower shall take all action necessary to clean and disinfect any portions of
the Improvements affected by Toxic Mold in or about the Improvements, including
providing any necessary moisture control systems at the Property. If any
investigation, site monitoring, containment, cleanup, removal, restoration or
other work of any kind is reasonably necessary under an applicable Environmental
Law ("REMEDIAL WORK"), Borrower shall commence all such Remedial Work within 30
days after written demand by Lender and thereafter diligently prosecute to
completion all such Remedial Work within such period of time as may be required
under applicable law). All Remedial Work shall be performed by licensed
contractors approved in advance by Lender and under the supervision of a
consulting engineer approved by Lender. All costs of such Remedial Work shall be
paid by Borrower, including Lender's reasonable attorneys' fees and
disbursements incurred in connection with the monitoring or review of such
Remedial Work. If Borrower does not timely commence and diligently prosecute to
completion the Remedial Work, Lender may (but shall not be obligated to) cause
such Remedial Work to be performed at Borrower's expense. Notwithstanding the
foregoing, Borrower shall not be required to commence such Remedial Work within
the above specified time period: (x) if prevented from doing so by any
Governmental Authority, (y) if commencing such Remedial Work within such time
period would result in any Borrower or such Remedial Work violating any
Environmental Law, or (z) if Borrower, at its expense and after prior written
notice to Lender, are contesting by appropriate legal, administrative or other
proceedings, conducted in good faith and with due diligence, the
37
need to perform Remedial Work. Borrower shall have the right to contest the need
to perform such Remedial Work, provided that, (1) Borrower are permitted by the
applicable Environmental Laws to delay performance of the Remedial Work pending
such proceedings, (2) neither the Property nor any part thereof or interest
therein will be sold, forfeited or lost if a Borrower fails to promptly perform
the Remedial Work being contested, and if such Borrower fails to prevail in
contest such Borrower would thereafter have the opportunity to perform such
Remedial Work, (3) Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which Borrower has not furnished
additional security as provided in clause (4) below, or to any risk of criminal
liability, and neither the Property nor any interest therein would be subject to
the imposition of any Lien for which Borrower has not furnished additional
security as provided in clause (4) below, as a result of the failure to perform
such Remedial Work and (4) Borrower shall have furnished to Lender additional
security in respect of the Remedial Work being contested and the loss or damage
that may result from Borrower's failure to prevail in such contest in such
amount as may be reasonably requested by Lender but in no event less than one
hundred twenty-five percent (125%) of the cost of such Remedial Work as
estimated by Lender or Lender's Consultant and any loss or damage that may
result from Borrower's failure to prevail in such contest, which amount shall
periodically be disbursed to Borrower during the course of such Remedial Work in
accordance with the procedures and requirements set forth in clauses (i) - (v)
of Section 3.2.2 relating to the Required Repairs. Upon completion of the
Remedial Work, any unused portion of any security deposited with Lender pursuant
to this Section 5.8.2 shall promptly be released to Borrower.
(d) Borrower shall not install or permit to be installed on
the Property any underground storage tank.
(e) Borrower shall maintain and comply and cause the
Property to be operated in compliance with, and comply in all respects with the
terms and conditions of, an operation and maintenance program for the Property
with respect to the presence of asbestos and asbestos-containing materials at
the Property (the "O&M Program"), a copy of which O&M Program is attached hereto
as Schedule 10.
5.9 TITLE TO THE PROPERTY. Borrower will warrant and defend the
title to the Property, and the validity and priority of all Liens granted or
otherwise given to Lender under the Loan Documents, subject only to Permitted
Encumbrances, against the claims of all Persons.
5.10 LEASES.
5.10.1 GENERALLY. Upon request, Borrower shall furnish Lender
with executed copies of all Leases then in effect (other than Leases that have
previously been furnished to Lender). All renewals of Leases and all proposed
leases shall provide for rental rates and terms comparable to existing local
market rates and shall be arm's length transactions with bona fide, independent
third-party tenants.
5.10.2 MATERIAL LEASES. Borrower shall not enter into a
proposed Material Lease or a proposed renewal, extension (other than a renewal
or extension that is being unilaterally exercised by a tenant pursuant to the
terms of an existing Lease, with respect to which Lender shall not have any
consent rights) or modification of an existing Material Lease without the prior
38
written consent of Lender, which consent shall not, so long as no Event of
Default is continuing, be unreasonably withheld or delayed. Prior to seeking
Lender's consent to any Material Lease, Borrower shall deliver to Lender a copy
of such proposed lease (a "PROPOSED MATERIAL LEASE") and, if such Proposed
Material Lease is based on the Standard form of Lease approved by Lender,
blacklined to show changes from the standard form of Lease approved by Lender
and then being used by Borrower. Lender shall approve or disapprove each
Proposed Material Lease or proposed renewal, extension or modification of an
existing Material Lease for which Lender's approval is required under this
Agreement within 10 Business Days of the submission by Borrower to Lender of a
written request for such approval, accompanied by a final copy of the Proposed
Material Lease or proposed renewal, extension or modification of an existing
Material Lease. If requested by Borrower, Lender will grant conditional
approvals of Proposed Material Leases or proposed renewals, extensions or
modifications of existing Material Leases at any stage of the leasing process,
from initial "term sheet" through negotiated lease drafts, provided that Lender
shall retain the right to disapprove any such Proposed Material Lease or
proposed renewal, extension or modification of an existing Material Lease, if
subsequent to any preliminary approval material changes are made to the terms
previously approved by Lender, or additional material terms are added that had
not previously been considered and approved by Lender in connection with such
Proposed Material Lease or proposed renewal, extension or modification of an
existing Material Lease. Provided that no Event of Default is continuing, if
Borrower provides Lender with a written request for approval (which written
request shall specifically refer to this Section 5.10.2 and shall explicitly
state that failure by Lender to approve or disapprove within 10 Business Days
will constitute a deemed approval) and Lender fails to reject the request in
writing delivered to Borrower within 10 Business Days after receipt by Lender of
the request, the Proposed Material Lease or proposed renewal, extension or
modification of an existing Material Lease shall be deemed approved by Lender,
and Borrower shall be entitled to enter into such Proposed Material Lease or
proposed renewal, extension or modification of an existing Material Lease.
Notwithstanding anything to the contrary in this Section 5.10, unless expressly
agreed to in writing by Lender, any approval or deemed approval by Lender of a
proposed Lease or proposed renewal, extension or modification of an existing
Lease pursuant to this Section 5.10 shall not be deemed to constitute (in and of
itself) an approval or deemed approval by Lender of any Approved Leasing
Expenses in connection therewith.
5.10.3 MINOR LEASES. Notwithstanding the provisions of Section
5.10.2 above, provided that no Event of Default is continuing, renewals,
amendments and modifications of existing Leases and proposed leases shall not be
subject to the prior approval of Lender provided (i) the proposed lease would be
a Minor Lease or the existing Lease as amended or modified or the renewal Lease
is a Minor Lease, (ii) the proposed lease shall be written substantially in
accordance with the standard form of Lease which shall have been approved by
Lender, (iii) the Lease as amended or modified or the renewal Lease or series of
leases or proposed lease or series of leases: (a) shall provide for net
effective rental rates comparable to existing local market rates for similarly
situated properties, (b) with respect to any new Lease with a new tenant (other
than kiosks and vending machines), shall have an initial term (together with all
renewal options) of not less than three years or greater than ten years, (c)
shall provide for automatic self-operative subordination to the Mortgage and, at
Lender's option, (x) attornment to Lender and (y) the unilateral right by
Lender, at the option of Lender, to subordinate the Lien of the Mortgage to the
Lease, and (d) shall not contain any option to purchase, any right of first
refusal to purchase, any
39
right to terminate (except in the event of the destruction or condemnation of
substantially all of the Property), any requirement for a non-disturbance or
recognition agreement, or any other provision which might adversely affect the
rights of Lender under the Loan Documents in any material respect. Borrower
shall deliver to Lender copies of all Leases which are entered into pursuant to
the preceding sentence together with Borrower's certification that it has
satisfied all of the conditions of the preceding sentence within ten days after
the execution of the Lease. Notwithstanding anything in this Section 5.10 to the
contrary, at Borrower's request and at Borrower's sole cost and expense, Lender
shall enter into a subordination, non-disturbance and attornment agreement on
Lender's then current form with any tenant under a Lease of at least 2,500
rentable square feet.
5.10.4 ADDITIONAL COVENANTS WITH RESPECT TO LEASES. Each
Borrower (i) shall observe and perform the material obligations imposed upon the
lessor under the Leases and shall not do or permit anything to impair the value
of the Leases as security for the Debt; (ii) shall promptly send copies to
Lender of all notices of default that such Borrower shall send or receive under
any Lease; (iii) shall enforce, in accordance with commercially reasonable
practices for properties similar to the Property, the terms, covenants and
conditions in the Leases to be observed or performed by the lessees, short of
termination thereof; (iv) shall not collect any of the Rents more than one month
in advance (other than security deposits); (v) shall not execute any other
assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (vi) shall not modify any Lease in a manner
inconsistent with the Loan Documents; (vii) shall not convey or transfer or
suffer or permit a conveyance or transfer of the Property so as to effect a
merger of the estates and rights of, or a termination or diminution of the
obligations of, lessees under Leases; (viii) shall not consent to any assignment
of or subletting under any Material Lease unless required in accordance with its
terms without the prior consent of Lender, which, with respect to a subletting,
may not, so long as no Event of Default is continuing, be unreasonably withheld
or delayed; and (ix) shall not cancel or terminate any Lease or accept a
surrender thereof (except in the exercise of Borrower's commercially reasonable
judgment in connection with a tenant default under a Minor Lease or as expressly
permitted under the terms of such Lease in accordance with Section 5.10.3(d))
without the prior consent of Lender, which consent shall not, so long as no
Event of Default is continuing, be unreasonably withheld or delayed.
5.11 ESTOPPEL STATEMENT. After request by Lender, Borrower shall
within ten days furnish Lender with a statement addressed to Lender, its
successors and assigns, duly acknowledged and certified, setting forth (i) the
unpaid Principal, (ii) the Interest Rate, (iii) the date installments of
interest and/or Principal were last paid, (iv) any offsets or defenses to the
payment of the Debt, and (v) that the Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
5.12 PROPERTY MANAGEMENT.
5.12.1 MANAGEMENT AGREEMENT. Borrower shall (i) cause the
Property to be managed pursuant to the Management Agreement; (ii) promptly
perform and observe all of the covenants required to be performed and observed
by it under the Management Agreement and do all things necessary to preserve and
to keep unimpaired its rights thereunder; (iii) promptly notify Lender of any
default under the Management Agreement of which it is aware; (iv) promptly
40
deliver to Lender a copy of each financial statement, business plan, capital
expenditure plan, and property improvement plan and any other notice, report and
estimate received by any Borrower under the Management Agreement; and (v)
promptly enforce the performance and observance of all of the covenants required
to be performed and observed by Manager under the Management Agreement. Without
Lender's prior written consent, Borrower shall not (and no Borrower shall) (a)
surrender, terminate, cancel, extend or renew the Management Agreement (other
than extensions or renewals pursuant to the express renewal/extension provisions
set forth in the Management Agreement on the same terms and conditions set forth
therein (as in effect on the date hereof, or as hereinafter amended or modified
in accordance with the terms and conditions set forth in this Agreement)) or
otherwise replace the Manager or enter into any other management agreement
(except pursuant to Section 5.12.2); (b) reduce or consent to the reduction of
the term of the Management Agreement; (c) increase or consent to the increase of
the amount of any charges under the Management Agreement; (d) otherwise modify,
change, supplement, alter or amend in any material respect, or waive or release
any of its rights and remedies under, the Management Agreement; (e) suffer or
permit the occurrence and continuance of a default beyond any applicable cure
period under the Management Agreement (or any successor management agreement) if
such default permits the Manager to terminate the Management Agreement (or such
successor management agreement); or (f) suffer or permit the ownership,
management or control of the Manager to be transferred to a Person other than an
Affiliate of Behringer.
5.12.2 TERMINATION OF MANAGER. If (i) as of any Calculation
Date, Borrower fail to maintain a Debt Service Coverage Ratio of at least 1.05:1
or (ii) an Event of Default shall be continuing, or (iii) Manager is in default
under the Management Agreement, or (iv) upon the gross negligence, malfeasance
or willful misconduct of the Manager, Borrower shall, at the request of Lender,
terminate the Management Agreement and replace Manager with a replacement
manager acceptable to Lender in Lender's discretion and the applicable Rating
Agencies on terms and conditions satisfactory to Lender and the applicable
Rating Agencies. All calculations of the Debt Service Coverage Ratio for
purposes of this Section 5.12.2 shall be subject to verification by Lender.
Borrower's failure to appoint an acceptable manager within thirty (30) days
after Lender's request of Borrower to terminate the Management Agreement shall
constitute an immediate Event of Default. Borrower may from time to time appoint
a successor manager to manage the Property, which successor manager and
Management Agreement shall be approved in writing by Lender in Lender's
discretion and the applicable Rating Agencies.
5.13 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY. Each Borrower shall at
all times be a Special Purpose Bankruptcy Remote Entity. Borrower shall not (and
no Borrower shall) directly or indirectly make any change, amendment or
modification to its organizational documents, or otherwise take any action which
could result in such Borrower not being a Special Purpose Bankruptcy Remote
Entity. A "SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY" shall have the meaning set
forth on Schedule 5 hereto.
5.14 ASSUMPTION IN NON-CONSOLIDATION OPINION. Each Borrower shall
conduct their business so that the assumptions (with respect to each Person)
made in that certain substantive non-consolidation opinion letter dated the date
hereof delivered by Borrower's counsel in connection with the Loan, shall be
true and correct in all respects.
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5.15 CHANGE IN BUSINESS OR OPERATION OF PROPERTY. Borrower shall not
purchase or own any real property other than the Property and 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 or otherwise cease to operate
the Property as an office building, or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to the
Property).
5.16 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 such Borrower by any Person, except for adequate
consideration and in the ordinary course of such Borrower's business.
5.17 AFFILIATE TRANSACTIONS. Other than the Management Agreement or
the TIC Agreement, if any, Borrower shall not enter into, or be a party to, any
transaction with an Affiliate of any Borrower or any of the members of any
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 such Borrower or
such Affiliate than would be obtained in a comparable arm's-length transaction
with an unrelated third party. With respect to the foregoing, Lender hereby
acknowledges that it has approved the Management Agreement and the form of the
TIC Agreement.
5.18 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.
5.19 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real property
constituting a tax lot separate from the Property, and (ii) with any portion of
the Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the Property.
5.20 PRINCIPAL PLACE OF BUSINESS. Borrower shall not (and no Borrower
shall) change its principal place of business or chief executive office without
first giving Lender 30 days' prior notice.
5.21 CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower shall not change
its name, identity (including its trade name or names) or such Borrower's
corporate, partnership or other structure without notifying Lender of such
change in writing at least thirty (30) days prior to the effective date of such
change and, in the case of a change in such Borrower's structure, without first
obtaining the prior written consent of Lender. Each Borrower shall execute and
deliver to Lender, prior to or contemporaneously with the effective date of any
such change, any financing statement or financing statement change required by
Lender to establish or maintain the validity, perfection and priority of the
security interest granted herein. At the request of Lender, each Borrower shall
execute a certificate in form satisfactory to Lender listing the trade names
under
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which such Borrower intends to operate the Property, and representing and
warranting that such Borrower does business under no other trade name with
respect to the Property.
5.22 INDEBTEDNESS. Borrower shall not directly or indirectly create,
incur or assume any indebtedness other than the Debt and unsecured trade
payables incurred in the ordinary course of business relating to the ownership
and operation of the Property which do not exceed, at any time, a maximum amount
of 3% of the original amount of the Principal and are paid within sixty (60)
days of the date incurred or invoiced (collectively, "PERMITTED INDEBTEDNESS");
provided, however, such 3% limitation shall not apply to (i) any asset
management or property management fee payable pursuant to the terms of the
Management Agreement or (ii) any amounts that are payable out of the Capital
Reserve Subaccount, the Rollover Reserve Subaccount or any other reserves
established under this Agreement. Notwithstanding the foregoing, with respect to
the 60-day period set forth above, Borrower may, after prior notice to Lender,
at its own expense, contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the amount or validity of
any such Permitted Indebtedness (during which time such 60-day period shall be
tolled), provided that if Borrower desires to withhold payment of such Permitted
Indebtedness during the pendency of the contest, (i) no Event of Default has
occurred and is continuing, (ii) no part of or interest in the Property will be
in danger of being sold, forfeited, terminated, canceled or lost, (iii) Borrower
shall have furnished such security as may be required in the proceeding, or as
may be reasonably requested by Lender, to insure the payment of any such
Permitted Indebtedness, together with all interest and penalties thereon, which
shall not be less than 125% of the Permitted Indebtedness being contested, and
(iv) Borrower shall promptly upon final determination thereof pay the amount of
such Permitted Indebtedness, together with all costs, interest and penalties and
Borrower shall be permitted to use such security to make such payment.
5.23 LICENSES. Borrower shall not Transfer any License required for
the operation of the Property (other than in connection with a Lender-approved
TIC Transfer and Assumption or a Transfer and Assumption pursuant to Section
5.26.2 or Section 5.26.3).
5.24 COMPLIANCE WITH RESTRICTIVE COVENANTS, ETC. Borrower will not
modify, waive in any material respect or release any Easements, restrictive
covenants or other Permitted Encumbrances, or suffer, consent to or permit the
foregoing, without Lender's prior written consent, which consent may be granted
or denied in Lender's sole discretion.
5.25 ERISA.
5.25.1.1 Borrower shall not (and no Borrower shall)
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.
5.25.1.2 Borrower shall not (and no Borrower shall)
maintain, sponsor, contribute to or become obligated to contribute to, or suffer
or permit any ERISA Affiliate of such Borrower to, maintain, sponsor, contribute
to or become obligated to contribute to, any Plan
43
or any Welfare Plan or permit the assets of such Borrower to become "plan
assets," whether by operation of law or under regulations promulgated under
ERISA.
5.25.1.3 Each Borrower shall deliver to Lender such
certifications or other evidence from time to time throughout the Term, as
requested by Lender in its sole discretion, that (A) such 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(3) of ERISA; (B) such 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:
(1) Equity interests in such Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of each outstanding
class of equity interests in such Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. ss.2510.3-101(f)(2); or
(3) Such 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).
5.26 TRANSFERS.
5.26.1 GENERALLY. Borrower shall not (and no Borrower shall)
directly or indirectly make, suffer or permit the occurrence of any Transfer
other than a Permitted Transfer.
5.26.2 PERMITTED TIC TRANSFERS.
(a) [Intentionally Omitted]
(b) After August 11, 2006, subject to (i) obtaining Lender's
prior written consent, and (ii) the satisfaction of all of the conditions
precedent set forth below, Initial Borrower may, from time to time, but not more
than twice during the Term, transfer tenant-in-common interests in the Property
to one or more entities (each, an "Additional TIC Borrower", and together with
the Substitute TIC Borrowers, collectively, the "TIC Borrowers"; the Initial
Borrower and the TIC Borrowers are sometimes herein referred to as "Borrowers"))
that will assume with the Initial Borrower, on a joint and several basis (except
as may be otherwise expressly set forth in the Loan Documents), the obligations
of the Borrower under the Loan Documents (an "Additional TIC Transfer").
Borrower may make a written application to Lender from time to time for Lender's
consent to one or more Additional TIC Transfers, subject to the conditions set
forth below. Together with each such written application, Borrower shall pay to
Lender a non-refundable processing fee in the amount of (i) for the first
Additional TIC Transfer, $25,000, plus $2,000 per Additional TIC Borrower
proposed to acquire a tenant-in-common interest, and (ii) for subsequent
Additional TIC Transfers, $2,000 per Additional TIC Borrower proposed to acquire
a tenant-in-common interest. Borrowers also shall pay on demand all of the
reasonable out-of-pocket costs and expenses, including reasonable attorneys'
fees and expenses, incurred by Lender in connection with any proposed Additional
TIC Transfer, whether or not the proposed transaction occurs. Lender's consent
to an Additional TIC Transfer shall be granted or
44
denied within ten (10) Business Days following receipt of the items described in
clause (2) below, and shall be subject to the satisfaction of the following
conditions, which (except as otherwise provided in Section 5.26.2(c) below)
shall also be conditions to Lender's consent to any TIC Transfer and Assumption
pursuant to Section 5.26.2(c) below:
(1) No Event of Default shall have occurred and be
continuing.
(2) The identity and financial condition of the proposed TIC
Borrower and the owner(s) of the beneficial interests in such proposed
TIC Borrower (each, a "TIC Owner") shall be satisfactory to Lender. In
connection with the foregoing, with respect to any proposed TIC Borrower
or TIC Owner, (i) Lender shall have received true and correct copies of
credit reports, Lexis/Nexis background searches, financial statements
and federal income tax returns for the two years preceding the
Additional TIC Transfer or TIC Transfer and Assumption in question, and
any other information reasonably requested by Lender concerning the
proposed TIC Borrower and/or its TIC Owner(s) and (ii) the subject TIC
Owner shall (1) be solvent, (2) have never been convicted of a felony,
(3) have never been the subject of a voluntary, or an undischarged
involuntary, bankruptcy proceeding, (4) have no outstanding judgments
against him/her/it and (5) shall be an "Accredited Investor" as defined
in Regulation D, as promulgated under the Securities Act of 1933.
(3) The proposed TIC Borrower shall be a Single Member
Bankruptcy Remote LLC in compliance with the requirements of Section
5.13 and Schedule 5, and its operating agreement shall be in
substantially the form of Schedule 11 attached hereto.
(4) The TIC Owner(s) of the applicable TIC Borrower shall
execute and deliver to Lender a Guaranty of Recourse Obligations in the
form attached hereto as Schedule 6.
(5) The Property shall not at any time be owned by more than
30 Borrowers, provided that, for purposes of determining the number of
Borrowers, any two TIC Borrowers that are separately wholly owned or
controlled, directly or indirectly, by a husband and wife (i.e., one
controlled by the husband and the other controlled by the wife), shall
be counted as one TIC Borrower.
(6) No Additional TIC Transfer shall be permitted until
August 12, 2006 or after August 11, 2013 (such period the "Permitted TIC
Transfer Period"), although a TIC Transfer and Assumption pursuant to
Section 5.26.2(c) below may occur after the Permitted TIC Transfer
Period.
(7) The Behringer Entities shall collectively at all times
retain at least the Behringer Minimum Tenant-in-Common Interest in the
Property.
(8) The applicable TIC Borrower shall execute and deliver to
Lender an assignment and assumption agreement in the form attached
hereto as Schedule 7, pursuant to which, among other things, such TIC
Borrower shall assume all of Borrowers' liabilities and obligations
under the Loan Documents so that each existing Borrower and such TIC
Borrower shall be jointly and severally liable (except as may be
45
otherwise expressly set forth in the Loan Documents) for all of the
liabilities and obligations under the Loan Documents as set forth
herein, and, upon the execution and delivery of such assignment and
assumption agreement, such TIC Borrower shall be a "Borrower" for all
purposes under the Loan Documents.
(9) With respect to the initial Additional TIC Transfer, the
Initial Borrower and each Additional TIC Borrower shall execute and
deliver a tenancy in common agreement in the form attached hereto as
Schedule 12 (the "Tenant in Common Agreement"), which Tenant in Common
Agreement shall be subordinate to the Mortgage. For subsequent
Additional TIC Transfers and TIC Transfers and Assumptions, the
applicable TIC Borrower shall execute and deliver an assumption of the
Tenant-in-Common Agreement and the Management Agreement.
(10) The applicable TIC Borrower and each existing Borrower
shall execute and deliver to Lender any other documents or deliverables
required by Lender related to such Permitted TIC Transfer, including
title insurance endorsements, in form and substance acceptable to Lender
in Lender's reasonable discretion (together with the documents required
pursuant to clauses (4), (8) and (9) above, the "TIC Transfer
Documents"); provided that Lender may not require pursuant to this
clause (10) an assignment and assumption agreement in any form other
than the assignment and assumption agreement attached hereto as Schedule
7 or a guaranty other than in the form attached hereto as Schedule 6, or
the execution and delivery of additional Loan Documents which impose
obligations upon any TIC Borrower or existing Borrower, or upon any
principal of any of them, in addition to those contained in such forms
attached as Schedule 6 and 7, except as may be necessary to accommodate
any material change in fact or law, and after the initial Additional TIC
Transfer, Lender's documentation requirements for subsequent Additional
TIC Transfers and TIC Transfers and Assumptions shall (except as
provided in Section 5.26.2(c) below) be consistent with those imposed by
Lender with respect to the initial Additional TIC Transfer, except as
may be necessary to accommodate any material change in fact or law;
(11) The applicable TIC Borrower shall deliver to Lender an
opinion of counsel, in form and substance satisfactory to Lender, to the
effect that such TIC Borrower is duly formed, validly existing, and in
good standing, that the TIC Transfer Documents to which such TIC
Borrower is a party have been duly authorized, executed and delivered by
such TIC Borrower, that the TIC Transfer Documents and the Loan
Documents to which such TIC Borrower is a party (after giving effect to
such Permitted TIC Transfer) are enforceable in accordance with their
respective terms, and addressing such other matters as Lender may
reasonably request; provided (A) that with respect to the opinions
relating to the TIC Owners (as opposed to TIC Borrowers), while the
opinions with respect to such TIC Owners will address enforceability,
such opinions will not be required to address formation or existence of,
or authorization and execution by the TIC Owners (but will be required
to address formation and existence of, and authorization and execution
by the TIC Borrowers) and the TIC Owners shall instead provide Lender
with certified consents and resolutions demonstrating due and proper
formation and existence (if applicable) and authorization and execution
by the TIC Owners of the documents and instruments to which they are
party, and (B) after the initial
46
Additional TIC Transfer, Lender's opinion requirements for subsequent
Additional TIC Transfers and TIC Transfers and Assumptions shall (except
as provided in Section 5.26.2(c) below) be consistent with those imposed
by Lender with respect to the initial Additional TIC Transfer, except as
may be necessary to accommodate any material change in fact or law;
(12) The applicable TIC Borrower shall deliver to Lender a
substantive non-consolidation opinion, in form and substance reasonably
satisfactory to Lender, with respect to the applicable TIC Borrower and
TIC Owner(s); provided that after the initial Additional TIC Transfer,
Lender's opinion requirements for subsequent Additional TIC Transfers
and TIC Transfers and Assumptions shall (except as provided in Section
5.26.2(c) below) be consistent with those imposed by Lender with respect
to the initial Additional TIC Transfer, except as may be necessary to
accommodate any material change in fact or law.
(13) After giving effect to such Permitted TIC Transfer (and
all other Permitted TIC Transfers occurring on the same day), (i) Key
Principal shall continue to Control (as defined in clause (ii) of the
defined term "Control" in Section 1.1) the Manager and the day to day
management and operations of the Property, and (ii) no change of the day
to day management and operations of the Property shall have occurred.
(14) If the Loan, by itself or together with other loans, has
been the subject of a Secondary Market Transaction, then, if required by
the applicable Rating Agencies, Lender shall have received a Rating
Comfort Letter from the applicable Rating Agencies with respect to such
Permitted TIC Transfer.
(c) SUBSTITUTION OF TIC BORROWERS. In the event one or more
Additional TIC Transfers occur, then after the Permitted TIC Transfer Period:
subject to (i) obtaining Lender's prior written consent, and (ii) the
satisfaction of all of the conditions precedent set forth below, any TIC
Borrower that owns less than a 49% tenant-in-common interest in the Property
(or, if applicable the TIC Owner(s) thereof) may, from time to time, transfer
its tenant-in-common interest in the Property (or its membership interest in
such TIC Borrower) to another entity (the "Substitute TIC Borrower" or
"Substitute TIC Owner(s)", respectively) that will assume, on a joint and
several basis (except as may be otherwise expressly set forth in the Loan
Documents), Borrowers' (or the transferor TIC Owner(s)') obligations under the
Loan Documents (a "TIC Transfer and Assumption"). Borrowers may make a written
application to Lender for Lender's consent to a TIC Transfer and Assumption,
subject to the conditions set forth below. Together with each such written
application, Borrowers shall pay to Lender a non-refundable $2,000 processing
fee for each proposed Substitute TIC Borrower or Substitute TIC Owner, as
applicable. Borrowers also shall pay on demand all of the reasonable
out-of-pocket costs and expenses, including reasonable attorneys' fees and
expenses, incurred by Lender in connection with any proposed TIC Transfer and
Assumption, whether or not the proposed transaction occurs. Lender's consent to
a TIC Transfer and Assumption shall be granted or denied within ten (10)
Business Days following receipt of the items described in clause (2) of
subsection (b) above, and shall be subject to the satisfaction of the following
conditions:
47
(1) The conditions set forth in subsection (b) above shall
have been satisfied; provided that, with respect to a TIC Transfer and
Assumption involving the transfer of the membership interest in a TIC
Borrower to a Substitute TIC Owner, the Substitute TIC Owner and such
TIC Borrower shall execute and deliver such agreements and other
documents (which may include a Guaranty of Recourse Obligations in the
form attached hereto as Schedule 6, revised as Lender may reasonably
require to account for the transfer of ownership interest rather than a
direct tenant in common interest) as Lender may reasonably require
(subject to the provisions of subsection (b)) to reflect such transfer,
and such execution and delivery shall be deemed to satisfy the
conditions set forth in clauses (4) and (8) of subsection (b) above.
(2) Borrowers shall deliver to Lender an assumption fee in
the amount of 1.00% of the pro-rata share of the then unpaid Principal
attributable to the tenant-in-common interest that is being transferred
(i.e., an amount equal to 1.00% of the product of (1) the then unpaid
Principal and (2) the tenant-in-common interest that is the subject of
such TIC Transfer and Assumption (expressed as a percentage)).
5.26.3 TRANSFER AND ASSUMPTION.
(a) Subject to obtaining Lender's prior written consent,
which may be withheld in Lender's reasonable and absolute discretion, and
subject to the terms and satisfaction of all of the conditions precedent set
forth in this Section 5.26.3, Borrower shall have a the right (which may not be
exercised more than twice during the Term) to Transfer the Property to one or
more parties (the "TRANSFEREE BORROWER") and have the Transferee Borrower assume
all of Borrower's obligations under the Loan Documents, and have replacement
guarantors and indemnitors assume all of the obligations of the indemnitors and
guarantors of the Loan Documents (collectively, a "TRANSFER AND ASSUMPTION").
Borrower may make a written application to Lender for Lender's consent to the
Transfer and Assumption, subject to the conditions set forth in paragraphs (b)
and (c) of this Section 5.26.3. Together with such written application, Borrower
will pay to Lender the reasonable review fee then required by Lender. Borrower
also shall pay on demand all of the reasonable costs and expenses incurred by
Lender, including reasonable attorneys' fees and expenses, and including the
fees and expenses of Rating Agencies and other outside entities, in connection
with considering any proposed Transfer and Assumption, whether or not the same
is permitted or occurs.
(b) Lender's consent, which may be withheld in Lender's
reasonable discretion, to a Transfer and Assumption shall be subject to the
following conditions:
(1) No Event of Default has occurred and is continuing;
(2) Borrower has submitted to Lender true, correct and
complete copies of any and all information and documents of any kind
requested by Lender concerning the Property, Transferee Borrower,
replacement guarantors and indemnitors and Borrower;
(3) Evidence satisfactory to Lender has been provided
showing that the Transferee Borrower and such of its Affiliates as shall
be designated by Lender comply and will comply with Section 5.13 hereof,
as those provisions may be modified by Lender taking into account the
ownership structure of Transferee Borrower and its Affiliates;
48
(4) If the Loan, by itself or together with other loans, has
been the subject of a Secondary Market Transaction, then Lender shall
have received a Rating Comfort Letter from the applicable Rating
Agencies;
(5) If the Loan has not been the subject of a Secondary
Market Transaction, then Lender shall have determined that no rating for
any securities that would be issued in connection with such
securitization will be diminished, qualified, or withheld by reason of
the Transfer and Assumption;
(6) Borrower shall have paid all of Lender's reasonable
costs and expenses in connection with considering the Transfer and
Assumption, and shall have paid the amount requested by Lender as a
deposit against Lender's costs and expenses in connection with the
effecting the Transfer and Assumption;
(7) Borrower, the Transferee Borrower, and the replacement
guarantors and indemnitors shall have indicated in writing in form and
substance reasonably satisfactory to Lender their readiness and ability
to satisfy the conditions set forth in subsection (c) below;
(8) The identity, experience, and financial condition of the
Transferee Borrower and the replacement guarantors and indemnitors shall
be satisfactory to Lender; and
(9) The proposed property manager and proposed Management
Agreement shall be satisfactory to Lender and the applicable Rating
Agencies.
(c) If Lender consents to the Transfer and Assumption, the
Transferee Borrower and/or Borrower as the case may be, shall immediately
deliver the following to Lender:
(1) Borrower shall deliver to Lender an assumption fee in
the amount of 1.00% of the then unpaid Principal;
(2) Borrower, Transferee Borrower and the original and
replacement guarantors and indemnitors shall execute and deliver to
Lender any and all documents required by Lender, in form and substance
required by Lender, in Lender's sole discretion;
(3) Counsel to the Transferee Borrower and replacement
guarantors and indemnitors shall deliver to Lender opinions in form and
substance satisfactory to Lender as to such matters as Lender shall
require, which may include opinions as to substantially the same matters
and were required in connection with the origination of the Loan
(including a new substantive non-consolidation opinion with respect to
the Transferee Borrower);
(4) Borrower shall cause to be delivered to Lender, an
endorsement (relating to the change in the identity of the vestee and
execution and delivery of the Transfer and
49
Assumption documents) to the Title Insurance Policies in form and
substance acceptable to Lender, in Lender's reasonable discretion (the
"ENDORSEMENT"); and
(5) Borrower shall deliver to Lender a payment in the amount
of all remaining unpaid costs incurred by Lender in connection with the
Transfer and Assumption, including but not limited to, Lender's
reasonable attorneys fees and expenses, all recording fees, and all fees
payable to the title company for the delivery to Lender of the
Endorsement.
(d) Upon the closing of a Transfer and Assumption, Lender
shall release Borrower and Guarantor from all obligations under the Loan
Documents arising prior to and after the date of the Transfer and Assumption
(but only to the extent that such obligations of Borrower and Guarantor are
expressly assumed by the Transferee Borrower or replacement guarantor, as the
case may be, in connection with the Transfer and Assumption).
5.27 LIENS. Without Lender's prior written consent, Borrower shall
not create, incur, assume, permit or suffer to exist any Lien on all or any
portion of the Property or any direct or indirect legal or beneficial ownership
interest in any Borrower, except Liens in favor of Lender and Permitted
Encumbrances, unless such Lien is bonded or discharged within 30 days after any
Borrower first receives notice of such Lien (or such longer period as is
permitted under this Agreement in the event and to the extent the Lien is of a
nature which may be contested by Borrower under the provisions of this Agreement
and Borrower is in fact contesting such Lien in accordance with the express
provisions and conditions set forth in this Agreement). Notwithstanding the
foregoing, pledges of any direct or indirect legal or beneficial ownership
interest in Behringer Harvard Operating Partnership I, L.P. shall not constitute
Liens prohibited hereunder.
5.28 DISSOLUTION. Borrower shall not (and no Borrower shall) (i)
engage in any dissolution, liquidation or consolidation or merger with or into
any other business entity, (ii) engage in any business activity not related to
the ownership and operation of the Property or (iii) transfer, lease or sell, in
one transaction or any combination of transactions, all or substantially all of
the property or assets of such Borrower except to the extent expressly permitted
by the Loan Documents.
5.29 EXPENSES. Borrower shall reimburse Lender upon receipt of notice
for all reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with the
Loan, including (i) the preparation, negotiation, execution and delivery of the
Loan Documents and the consummation of the transactions contemplated thereby and
all the costs of furnishing all opinions by counsel for Borrower; (ii)
Borrower's and Lender's ongoing performance under and compliance with the Loan
Documents, including confirming compliance with environmental and insurance
requirements; (iii) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications of or
under any Loan Document and any other documents or matters requested by Lender;
(iv) filing and recording of any Loan Documents; (v) title insurance, surveys,
inspections and appraisals; (vi) the creation, perfection or protection of
Lender's Liens in the Property and the Cash Management Accounts (including fees
and expenses for title and lien searches, intangibles taxes, personal property
taxes, mortgage
50
recording taxes, due diligence expenses, travel expenses, accounting firm fees,
costs of appraisals, environmental reports and Lender's Consultant, surveys and
engineering reports); (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, the Loan
Documents, the Property, or any other security given for the Loan; (viii) fees
charged by Rating Agencies in connection with any modification of the Loan
requested by Borrower and (ix) enforcing any obligations of or collecting any
payments due from Borrower under any Loan Document or with respect to the
Property or in connection with any refinancing or restructuring of the Loan in
the nature of a "work-out", or any insolvency or bankruptcy proceedings. Any
costs and expenses due and payable by Borrower hereunder which are not paid by
Borrower within ten days after demand may be paid from any amounts in the
Deposit Account, with notice thereof to any Borrower. The obligations and
liabilities of Borrower under this Section 5.29 shall survive the Term and the
exercise by Lender of any of its rights or remedies under the Loan Documents,
including the acquisition of the Property by foreclosure or a conveyance in lieu
of foreclosure.
5.30 INDEMNITY. Borrower shall defend, indemnify and hold harmless
Lender and each of its Affiliates and their respective successors and assigns,
including the directors, officers, partners, members, shareholders,
participants, employees, professionals and agents of any of the foregoing
(including any Servicer) and each other Person, if any, who Controls Lender, its
Affiliates or any of the foregoing (each, an "INDEMNIFIED PARTY"), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for an Indemnified Party in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not Lender shall be
designated a party thereto, court costs and costs of appeal at all appellate
levels, investigation and laboratory fees, consultant fees and litigation
expenses), that may be imposed on, incurred by, or asserted against any
Indemnified Party (collectively, the "INDEMNIFIED LIABILITIES") in any manner,
relating to or arising out of or by reason of the Loan, including: (i) any
breach by any Borrower of its obligations under, or any misrepresentation by any
Borrower contained in, any Loan Document; (ii) the use or intended use of the
proceeds of the Loan; (iii) any information provided by any Borrower; (iv)
ownership of the Mortgage, the Property or any interest therein, or receipt of
any Rents; (v) any accident, injury to or death of persons or loss of or damage
to property occurring in, on or about the Property or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(vi) any use, nonuse or condition in, on or about the Property or on adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(vii) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property; (viii) the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission, release, or threatened
release of any Hazardous Substance on, from or affecting the Property; (ix) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to such Hazardous Substance; (x) any lawsuit brought
or threatened, settlement reached, or government order relating to such
Hazardous Substance; (xi) any violation of the Environmental Laws which is based
upon or in any way related to such Hazardous Substance, including the costs and
expenses of any Remedial Work; (xii) any failure of the Property to comply with
any Legal Requirement; (xiii) any claim by brokers, finders or similar persons
claiming to be entitled to a commission in connection with any Lease or other
transaction involving the Property or any part thereof, or any liability
asserted against Lender
51
with respect thereto; and (xiv) the claims of any lessee of any portion of the
Property or any Person acting through or under any lessee or otherwise arising
under or as a consequence of any Lease; provided, however, that Borrower shall
not have any obligation to any Indemnified Party hereunder to the extent that it
is finally judicially determined that such Indemnified Liabilities arise from
the gross negligence, illegal acts, fraud or willful misconduct of such
Indemnified Party. Any amounts payable to any Indemnified Party by reason of the
application of this paragraph shall be payable within 10 days after demand and
shall bear interest at the Default Rate from the date due until paid. The
obligations and liabilities of Borrower under this Section 5.30 shall survive
the Term (with respect to any matter occurring or in existence prior to the end
of the Term, and thereafter with respect to third party claims, suits and
actions) and the exercise by Lender of any of its rights or remedies under the
Loan Documents, including the acquisition of the Property by foreclosure or a
conveyance in lieu of foreclosure.
5.31 TENANT IN COMMON AGREEMENT. In the event of any Permitted TIC
Transfer(s):
(a) Each Borrower shall (i) diligently perform and observe
all of the terms, covenants and conditions set forth in the Tenant in Common
Agreement on the part of each such Borrower to be performed thereunder, and (ii)
promptly deliver to Lender any notice given or received by any Borrower under
the Tenant in Common Agreement.
(b) No Borrower shall without the prior consent of Lender,
terminate or cancel the Tenant in Common Agreement or modify, change,
supplement, alter or amend the Tenant in Common Agreement in any manner
whatsoever (other than to reflect an assumption of the Tenant in Common
Agreement by a TIC Borrower in accordance with Section 5.26.2(b)(10)), and any
such termination, cancellation, modification, change, supplement, alteration or
amendment of the Tenant in Common Agreement without the prior consent of Lender
shall be void and of no force and effect.
(c) Each Borrower hereby assigns to Lender, as further
security for the payment of the Debt and for the performance and observance of
the terms, covenants and conditions of the Loan Documents all of the rights,
privileges and prerogatives of the applicable Borrower under the Tenant in
Common Agreement and the Management Agreement, including any rights of first
refusal (including any such rights arising under Section 363(i) of Chapter 11 of
the United States Bankruptcy Code), purchase options or other similar rights
under the Tenant in Common Agreement. Each Borrower hereby agrees that any
rights of first refusal, purchase options or other similar rights under the
Tenant in Common Agreement afforded to any Borrower are hereby made expressly
subordinate to the Mortgage and the other Loan Documents.
(d) Each Borrower hereby agrees that all rights and remedies
of each such Borrower, including rights of indemnification, under the Tenant in
Common Agreement are hereby expressly made subject and subordinate to the terms
and conditions of the Loan Documents and, so long as the Loan is outstanding, no
Borrower shall exercise any such rights and remedies, including any rights of
indemnification, against any other tenant-in-common under the Tenant in Common
Agreement.
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(e) Each Borrower hereby waives any rights it may have
(whether by operation of law or pursuant to the terms of the Tenant in Common
Agreement), so long as any portion of the Debt is outstanding, to create or
suffer to exist any Lien on all or any portion of any other tenant-in-common
interest held by any other Borrower pursuant to the terms of the Tenant in
Common Agreement and, so long as the Loan is outstanding, no Borrower shall
place a Lien on all or any portion of any other tenant-in-common interest held
by any other Borrower pursuant to the terms of the Tenant in Common Agreement.
(f) Each Borrower hereby waives any right that it may have
(whether by operation of law or pursuant to the terms of the Tenant in Common
Agreement), so long as any portion of the Debt is outstanding, to make any
application to or petition any court for a partition of the Property, and, so
long any portion of the Debt is outstanding, no Borrower shall make any
application to or petition any court for a partition of the Property.
5.32 BEHRINGER MINIMUM TENANT-IN COMMON INTEREST. It is understood
that if Permitted TIC Transfers occur, the interest of the Initial Borrower in
the Property will be accordingly reduced. Notwithstanding any Permitted TIC
Transfers or any other Permitted Transfers, at all times during the Term, (i)
the Behringer Entities shall collectively retain at least the Behringer Minimum
Tenant-in-Common Interest in the Property, and (ii) Key Principal shall continue
to maintain Control (directly or indirectly) (as defined in clause (ii) of the
defined term "Control" in Section 1.1) of the Initial Borrower and each
Behringer Entity hold a tenancy-in-common interest in the Property which is
included in satisfying the Behringer Minimum Tenant-in-Common Interest in the
Property, with respect to voting rights on all matters relating to the Loan, the
Loan Documents and/or restructurings or amendments or modifications thereof
(including in connection with a work-out relating thereto). The failure of the
foregoing shall, at Lender's option, constitute an Event of Default.
5.33 PATRIOT ACT COMPLIANCE(a) . (a) Borrower will use their good
faith and commercially reasonable efforts to comply with the Patriot Act (as
defined below) and all applicable requirements of governmental authorities
having jurisdiction over Borrower and the Property, including those relating to
money laundering and terrorism. Lender shall have the right to audit Borrower's
compliance with the Patriot Act and all applicable requirements of governmental
authorities having jurisdiction over Borrower and the Property, including those
relating to money laundering and terrorism. In the event that any Borrower fails
to comply with the Patriot Act or any such requirements of governmental
authorities, then Lender may, at its option, cause such Borrower to comply
therewith and any and all reasonable costs and expenses incurred by Lender in
connection therewith shall be secured by the Mortgage and the other Loan
Documents and shall be immediately due and payable. For purposes hereof, the
term "PATRIOT ACT" means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001, as the same may be amended from time to time, and corresponding
provisions of future laws.
(b) Neither any Borrower nor any partner in any Borrower or
member of such partner nor any owner of a direct or indirect interest in any
Borrower (a) is listed on any Government Lists (as defined below), (b) is a
person who has been determined by competent authority to be subject to the
prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations
of OFAC
53
(as defined below) or in any enabling legislation or other Presidential
Executive Orders in respect thereof, (c) has been previously indicted for or
convicted of any felony involving a crime or crimes of moral turpitude or for
any Patriot Act Offense (as defined below), or (d) is currently under
investigation by any governmental authority for alleged criminal activity. For
purposes hereof, the term "PATRIOT ACT OFFENSE" means any violation of the
criminal laws of the United States of America or of any of the several states,
or that would be a criminal violation if committed within the jurisdiction of
the United States of America or any of the several states, relating to terrorism
or the laundering of monetary instruments, including any offense under (a) the
criminal laws against terrorism; (b) the criminal laws against money laundering,
(c) the Bank Secrecy Act, as amended, (d) the Money Laundering Control Act of
1986, as amended, or the (e) Patriot Act. "Patriot Act Offense" also includes
the crimes of conspiracy to commit, or aiding and abetting another to commit, a
Patriot Act Offense. For purposes hereof, the term "GOVERNMENT LISTS" means (i)
the Specially Designated Nationals and Blocked Persons Lists maintained by
Office of Foreign Assets Control ("OFAC"), (ii) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC that Lender notified Borrower in writing is
now included in "Governmental Lists", or (iii) any similar lists maintained by
the United States Department of State, the United States Department of Commerce
or any other government authority or pursuant to any Executive Order of the
President of the United States of America that Lender notified Borrower in
writing is now included in "Governmental Lists".
6. NOTICES AND REPORTING
6.1 NOTICES. All notices, consents, approvals and requests required
or permitted hereunder or under any other Loan Document (a "NOTICE") shall be
given in writing and shall be effective for all purposes if either hand
delivered with receipt acknowledged, or by a nationally recognized overnight
delivery service (such as Federal Express), or by certified or registered United
States mail, return receipt requested, postage prepaid, or by facsimile and
confirmed by facsimile answer back, in each case addressed as follows (or to
such other address or Person as a party shall designate from time to time by
notice to the other party): If to Lender: Citigroup Global Markets Realty Corp.,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇,
Telecopier (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to: Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇; if to Borrower (including, if a Permitted TIC Transfer occurs,
each Borrower): c/o the Borrower's Designee, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, to the attention of each Borrower, Telecopier: (214)
655-1610. 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 overnight delivery, upon the first attempted delivery on a Business Day; or
in the case of facsimile, upon the confirmation of such facsimile transmission.
6.2 BORROWER NOTICES AND DELIVERIES. Each Borrower shall (a) give
prompt written notice to Lender of: (i) any litigation, governmental proceedings
or claims or investigations pending or threatened against any such Borrower
which might materially adversely affect such Borrower's condition (financial or
otherwise) or business or the Property; (ii) any material adverse change in such
Borrower's condition, financial or otherwise, or of the occurrence of any
Default or Event of Default of which such Borrower has knowledge; and (b)
furnish and provide
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to Lender all instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, reasonably requested, from time to time, by
Lender within the possession or reasonable control of Borrower. In addition,
after request by Lender (but no more frequently than twice in any year), (x)
Borrower shall furnish to Lender within ten days, a certificate addressed to
Lender, its successors and assigns reaffirming (to the best of their knowledge)
all representations and warranties of Borrower set forth in the Loan Documents
as of the date requested by Lender or, to the extent of any changes to any such
representations and warranties, so stating such changes, and (y) Borrower shall
use commercially reasonable efforts to furnish to Lender within 30 days, tenant
estoppel certificates addressed to Lender, its successors and assigns from each
tenant at each Property in form and substance reasonably satisfactory to Lender.
6.3 FINANCIAL REPORTING.
6.3.1 BOOKKEEPING. Each Borrower shall keep on a calendar year
basis, in accordance with GAAP (or federal income tax basis of accounting,
consistently applied), proper and accurate books, records and accounts
reflecting all of the financial affairs of such Borrower and all items of income
and expense and any services, Equipment or furnishings provided in connection
with the operation of the Property, whether such income or expense is realized
by such Borrower, Manager or any Affiliate of such Borrower. Lender shall have
the right from time to time during normal business hours upon reasonable notice
to examine such books, records and accounts relating to the Property at the
office of Manager or other Person maintaining them, and to make such copies or
extracts thereof as Lender shall desire. After an Event of Default, Borrower
shall pay any costs incurred by Lender to examine such books, records and
accounts, as Lender shall determine to be necessary or appropriate in the
protection of Lender's interest.
6.3.2 ANNUAL REPORTS. Borrower shall furnish to Lender
annually, within 120 days after each calendar year, a complete copy of each
Borrower's annual financial statements audited (if Lender requires for such
statements for any year by notice delivered no later than October 31 of the
calendar year in question; in the absence of such Lender requirement such
statements need not be audited) by a "big four" accounting firm or another
independent certified public accountant (accompanied by an unqualified opinion
from such accounting firm or other independent certified public accountant)
reasonably acceptable to Lender, each in accordance with GAAP (or federal income
tax basis of accounting, consistently applied) and containing balance sheets and
statements of profit and loss for such Borrower and the Property in such detail
as Lender may request; provided, however, no individual TIC Borrower shall be
required to furnish such financial statements unless such TIC Borrower owns at
least a 20% tenant-in-common interest in the Property. Each of such financial
statements (x) shall be in form and substance satisfactory to Lender, (y) shall
set forth the financial condition and the income and expenses for the Property
for the immediately preceding calendar year, including statements of annual Net
Operating Income as well as (1) a list of tenants, if any, occupying more than
twenty percent of the rentable space of the Property, (2) a breakdown showing
(a) the year in which each Lease then in effect expires, (b) the percentage of
rentable space covered by such Lease, (c) the percentage of base rent with
respect to which Leases shall expire in each such year, expressed both on a per
year and a cumulative basis and (z) shall be accompanied by an Officer's
Certificate certifying (1) that such statement is true, correct, complete and
accurate and presents
55
fairly the financial condition of the Property and has been prepared in
accordance with GAAP(or federal income tax basis of accounting, consistently
applied) and (2) whether there exists a Default or Event of Default, and if so,
the nature thereof, the period of time it has existed and the action then being
taken to remedy it.
6.3.3 MONTHLY/QUARTERLY REPORTS. Borrower shall furnish to
Lender within 30 days after the end of each calendar month or calendar quarter
(as indicated below) the following items: (i) monthly and year-to-date operating
statements, noting Net Operating Income and other information necessary and
sufficient under GAAP (or federal income tax basis of accounting, consistently
applied) to fairly represent the financial position and results of operation of
the Property during such calendar month, all in form satisfactory to Lender;
(ii) a balance sheet for such calendar month; (iii) a comparison of the budgeted
income and expenses and the actual income and expenses for each month and
year-to-date for the Property, together with a detailed explanation of any
variances of 10% or more between budgeted and actual amounts for such period and
year-to-date; (iv) a statement of the actual Capital Expenses made by Borrower
during each calendar quarter as of the last day of such calendar quarter; (v)
[intentionally omitted]; (vi) an aged receivables report and (vii) rent rolls
identifying the leased premises, names of all tenants, units leased, monthly
rental and all other charges payable under each Lease, date to which paid, term
of Lease, date of occupancy, date of expiration, material special provisions,
concessions or inducements granted to tenants, and a year-by-year schedule
showing by percentage the rentable area of the Improvements and the total base
rent attributable to Leases expiring each year) and a delinquency report for the
Property. Each such statement shall be accompanied by an Officer's Certificate
certifying that to the best of such officer's knowledge, (1) that such items are
true, correct, accurate, and complete and fairly present the financial condition
and results of the operations of Borrower and the Property in accordance with
GAAP (or federal income tax basis of accounting, consistently applied) (subject
to normal year-end adjustments) and (2) whether there exists a Default or Event
of Default, and if so, the nature thereof, the period of time it has existed and
the action then being taken to remedy it.
6.3.4 OTHER REPORTS. Subject to the provisions of Section
6.3.2, Borrower shall furnish to Lender, within ten Business Days after request,
such further detailed information with respect to the operation of the Property
and the financial affairs of Borrower or Manager as may be reasonably requested
by Lender or any applicable Rating Agency. Notwithstanding the foregoing, no TIC
Borrower owning less than a 20% undivided interest in the Property shall be
required to provide such additional financial information under this Section
6.3.2, other than available financial information concerning such TIC Borrower
which may be reasonably requested from time to time by Lender.
6.3.5 ANNUAL BUDGET. Borrower shall prepare and submit (or
shall cause Manager to prepare and submit) to Lender within 30 days after a Cash
Trap Period commences and by December 15th of each year thereafter during the
Term until such Cash Trap Period has ended, for approval by Lender, which
approval shall not be unreasonably withheld or delayed, a proposed pro forma
budget for the Property for the succeeding calendar year (the "ANNUAL BUDGET",
and each Annual Budget approved by Lender is referred to herein as the "APPROVED
ANNUAL BUDGET")), and, promptly after preparation thereof, any revisions to such
Annual Budget. The Annual Budget shall consist of (i) an operating expense
budget showing, on a month-by-month basis, in reasonable detail, each line item
of Borrower's anticipated operating income and
56
operating expenses (on a cash and accrual basis), including amounts required to
establish, maintain and/or increase any monthly payments required hereunder (and
once such Annual Budget has been approved by Lender, such operating expense
budget shall be referred to herein as the "APPROVED OPERATING BUDGET"), and (ii)
a Capital Expense budget showing, on a month-by-month basis, in reasonable
detail, each line item of anticipated Capital Expenses (and once such Annual
Budget has been approved by Lender, such Capital Expense budget shall be
referred to herein as the "APPROVED CAPITAL BUDGET"). Until such time that any
Annual Budget has been approved by Lender, the prior Approved Annual Budget
shall apply for all purposes hereunder (with such adjustments as reasonably
determined by Lender (including increases for any non-discretionary expenses)).
7. INSURANCE; CASUALTY; AND CONDEMNATION
7.1 INSURANCE.
7.1.1 COVERAGE. Borrower, at its sole cost, for the mutual
benefit of each Borrower and Lender, shall obtain and maintain during the Term
the following policies of insurance:
(a) Property insurance insuring against loss or damage
customarily included under so called "all risk" or "special form" policies
including fire, lightning, vandalism, and malicious mischief, boiler and
machinery and, if required by Lender in accordance with subsections (b) or (i)
below, flood and/or earthquake coverage, and subject to subsection (j) below,
coverage for damage or destruction caused by the acts of "Terrorists" (or such
policies shall have no exclusion from coverage with respect thereto) and such
other insurable hazards as, under good insurance practices, from time to time
are insured against for other property and buildings similar to the premises in
nature, use, location, height, and type of construction. Such insurance policy
shall also insure costs of demolition and increased cost of construction (which
insurance for demolition and increased cost of construction may contain a
sub-limit satisfactory to Lender). Each such insurance policy shall (i) be in an
amount equal to 100% of the then replacement cost of the Improvements without
deduction for physical depreciation and in any event in such amount as is
necessary so that the insurer would not deem Borrower a co-insurer under such
policies, (ii) have deductibles no greater than the lesser of $10,000 or 5% of
the Net Operating Income per occurrence, (iii) be paid annually in advance and
(iv) contain an agreed amount replacement cost endorsement with a waiver of
depreciation, and shall cover, without limitation, all tenant improvements and
betterments that Borrower is required to insure on a replacement cost basis.
Lender shall be named Loss Payee on a Standard Mortgagee Endorsement.
(b) Flood insurance if any part of the Property is located
in an area now or hereafter designated by the Federal Emergency Management
Agency as a Zone "A" & "V" Special Hazard Area, or such other Special Hazard
Area if Lender so requires in its sole discretion. Such policy shall (i) be in
an amount equal to (A) 100% of the full replacement cost of the Improvements on
the Property (without any deduction for depreciation) or (B) such other amount
as is agreed by Lender and (ii) have a maximum permissible deductible of $3,000.
57
(c) Public liability insurance, including (i) "Commercial
General Liability Insurance", (ii) "Owned", "Hired" and "Non Owned Auto
Liability"; and (iii) umbrella liability coverage for personal injury, bodily
injury, death, accident and property damage, such insurance providing in
combination no less than containing minimum limits per occurrence of $1,000,000
and $2,000,000 in the aggregate for any policy year; together with at least
$10,000,000 excess and/or umbrella liability insurance for any and all claims
with no deductible. The policies described in this subsection shall also include
coverage for elevators, escalators, independent contractors, "Contractual
Liability" (covering, to the maximum extent permitted by law, Borrower's
obligation to indemnify Lender as required under this Agreement and the other
Loan Documents), "Products" and "Completed Operations Liability" coverage.
(d) Rental loss and/or business interruption insurance (i)
with Lender being named as "Lender Loss Payee", and (ii) in an amount equal to
one hundred percent (100%) of the projected Rents from the Property for not less
than a 24 month period commencing at the time of loss until repairs are
completed with reasonable speed and diligence plus a post-repair completion
extended period of indemnity such that the continued loss of income will be
insured until the Property is restored and such income returns to the same level
it was at prior to the loss, or the expiration of not less than such 24 month
period from the time of loss, whichever first occurs, and notwithstanding that
the policy may expire prior to the end of such period. The amount of such
insurance shall be increased from time to time during the Term as and when the
estimated or actual Rents increase.
(e) Comprehensive boiler and machinery insurance covering
all mechanical and electrical equipment against physical damage, rent loss and
improvements loss and covering, without limitation, all tenant improvements and
betterments that Borrower is required to insure pursuant to the lease on a
replacement cost basis and in an amount equal to the greater of (i) $2,000,000
and (ii) 100% of the full replacement cost of the Improvements on the Property
(without any deduction for depreciation).
(f) Worker's compensation and disability insurance with
respect to any employees of Borrower, as required by any Legal Requirement.
(g) During any period of repair or restoration, builder's
"all-risk" insurance on the so-called completed value basis in an amount equal
to not less than the full insurable value of the Property, against such risks
(including fire and extended coverage and collapse of the Improvements to agreed
limits) as Lender may request, in form and substance acceptable to Lender.
(h) Coverage to compensate for the cost of demolition and
the increased cost of construction in an amount satisfactory to Lender.
(i) Such other insurance (including environmental liability
insurance, earthquake (but only if a future seismic study indicates a PML in
excess of 20%) insurance, mine subsidence insurance and windstorm insurance) as
may from time to time be reasonably required by Lender in order to protect its
interests.
58
(j) Notwithstanding anything in subsection (a) above to the
contrary, Borrower shall be required to obtain and maintain coverage in its
property insurance Policy (or by a separate Policy) against loss or damage by
terrorist acts in an amount equal to 100% of the "Full Replacement Cost" of the
Property; provided that such coverage is available. In the event that such
coverage with respect to terrorist acts is not included as part of the "all
risk" property policy required by subsection (a) above, Borrower shall,
nevertheless be required to obtain coverage for terrorism (as stand alone
coverage) in an amount equal to 100% of the "Full Replacement Cost" of the
Property; provided that such coverage is available. Notwithstanding the
foregoing, with respect to any such stand-alone policy covering terrorist acts,
Borrower shall not be required to pay any Insurance Premiums solely with respect
to such terrorism coverage in excess of the Terrorism Premium Cap (hereinafter
defined); provided that if the Insurance Premiums payable with respect to such
terrorism coverage exceeds the Terrorism Premium Cap, Lender may, at its option
(1) purchase such stand-alone terrorism Policy, with Borrower paying such
portion of the Insurance Premiums with respect thereto equal to the Terrorism
Premium Cap and the Lender paying such portion of the Insurance Premiums in
excess of the Terrorism Premium Cap or (2) modify the deductible amounts, policy
limits and other required policy terms to reduce the Insurance Premiums payable
with respect to such stand-alone terrorism Policy to the Terrorism Premium Cap.
As used herein, (i) "TERRORISM PREMIUM CAP" means an amount equal to 100% of the
aggregate Insurance Premiums payable with respect to all the insurance coverage
under Section 7.1.1(a) for the last policy year in which coverage for terrorism
was included as part of the "all risk" property policy required by subsection
(a) above, adjusted annually by a percentage equal to the increase in the
Consumer Price Index (hereinafter defined) and (ii) "CONSUMER PRICE INDEX" means
the Consumer Price Index for All Urban Consumers published by the Bureau of
Labor Statistics of the United States Department of Labor, New York Metropolitan
Statistical Area, All Items (1982-84 = 100), or any successor index thereto,
approximately adjusted, and in the event that the Consumer Price Index is
converted to a different standard reference base or otherwise revised, the
determination of adjustments provided for herein shall be made with the use of
such conversion factor, formula or table for converting the Consumer Price Index
as may be published by the Bureau of Labor Statistics or, if said Bureau shall
not publish the same, then with the use of such conversion factor, formula or
table as may be published by ▇▇▇▇▇▇▇▇-▇▇▇▇, Inc., or any other nationally
recognized publisher of similar statistical information; and if the Consumer
Price Index ceases to be published, and there is no successor thereto (i) such
other index as Lender and Borrower shall agree upon in writing or (ii) if Lender
and Borrower cannot agree on a substitute index, such other index, as reasonably
selected by Lender. Borrower shall obtain the coverage required under this
subsection (j) from a carrier which otherwise satisfies the rating criteria
specified in Section 7.1.2 (a "QUALIFIED CARRIER") or in the event that such
coverage is not available from a Qualified Carrier, Borrower shall obtain such
coverage from the highest rated insurance company providing such coverage.
7.1.2 POLICIES. All policies of insurance (the "POLICIES")
required pursuant to Section 7.1.1 shall (i) be issued by companies approved by
Lender and licensed to do business in the State, with a claims paying ability
rating of "AA" or better by S&P (and the equivalent by any other Rating Agency)
and a rating of A:X or better in the current Best's Insurance Reports; (ii) name
Lender and its successors and/or assigns as their interest may appear as the
mortgagee (in the case of property insurance), loss payee (in the case of
business interruption/loss of rents coverage) and an additional insured (in the
case of liability insurance); (iii) contain (in the case of property insurance)
a Non-Contributory Standard Mortgagee Clause and a Lender's Loss
59
Payable Endorsement, or their equivalents, naming Lender as the person to which
all payments made by such insurance company shall be paid; (iv) contain a waiver
of subrogation against Lender; (v) be assigned and the originals thereof
delivered to Lender, or in lieu of delivering originals of the Policies,
Borrower may, on an annual basis, deliver ▇▇▇▇▇ evidences of coverages or the
equivalent, as adequate proof of coverage; provided, however, if at any time,
Lender requests carrier certification of Policies, Borrower shall deliver such
certification within ten (10) days of Lender's request therefor; (vi) contain
such provisions as Lender deems reasonably necessary or desirable to protect its
interest, including (A) endorsements providing that neither any Borrower, Lender
nor any other party shall be a co-insurer under the Policies, (B) that Lender
shall receive at least 30 days' prior written notice of any modification,
reduction or cancellation of any of the Policies, (C) an agreement whereby the
insurer waives any right to claim any premiums and commissions against Lender,
provided that the policy need not waive the requirement that the premium be paid
in order for a claim to be paid to the insured and (D) providing that Lender is
permitted to make payments to effect the continuation of such policy upon notice
of cancellation due to non-payment of premiums; (vii) in the event any insurance
policy (except for general public and other liability and workers compensation
insurance) shall contain breach of warranty provisions, such policy shall
provide that with respect to the interest of Lender, such insurance policy shall
not be invalidated by and shall insure Lender regardless of (A) any act, failure
to act or negligence of or violation of warranties, declarations or conditions
contained in such policy by any named insured, (B) the occupancy or use of the
premises for purposes more hazardous than permitted by the terms thereof, or (C)
any foreclosure or other action or proceeding taken by Lender pursuant to any
provision of the Loan Documents; and (viii) be satisfactory in form and
substance to Lender and approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. Borrower shall pay the premiums for such
Policies (the "INSURANCE PREMIUMS") as the same become due and payable and
furnish to Lender evidence of the renewal of each of the Policies together with
(unless such Insurance Premiums have been paid by Lender pursuant to Section
3.3) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If Borrower do not furnish such evidence and
receipts at least 30 days prior to the expiration of any expiring Policy, then
Lender may, but shall not be obligated to, procure such insurance and pay the
Insurance Premiums therefor, and Borrower shall reimburse Lender for the cost of
such Insurance Premiums promptly on demand, with interest accruing at the
Default Rate. Borrower shall deliver to Lender a certified copy of each Policy
within 30 days after its effective date. Within 30 days after request by Lender,
Borrower shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices, and the like.
7.2 CASUALTY.
7.2.1 NOTICE; RESTORATION. If the Property is damaged or
destroyed, in whole or in part, by fire or other casualty (a "CASUALTY"),
Borrower shall give prompt notice thereof to Lender. Following the occurrence of
a Casualty, Borrower, regardless of whether insurance proceeds are available
(unless Lender has breached its obligation (if any) to make such insurance
proceeds available pursuant to Section 7.4.1), shall promptly proceed to
restore, repair, replace or rebuild the Property in accordance with Legal
Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction.
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7.2.2 SETTLEMENT OF PROCEEDS. If a Casualty covered by any of
the Policies (an "INSURED CASUALTY") occurs where the loss does not exceed
$250,000, provided no Event of Default has occurred and is continuing, Borrower
may settle and adjust any claim without the prior consent of Lender; provided
such adjustment is carried out in a competent and timely manner, and Borrower is
hereby authorized to collect and receipt for the insurance proceeds (the
"PROCEEDS"). In the event of an Insured Casualty where the loss exceeds $250,000
(a "SIGNIFICANT CASUALTY"), Borrower may settle and adjust any claim with the
prior consent of Lender (which consent shall not be unreasonably withheld or
delayed) unless either (i) an Event of Default has occurred and is continuing or
(ii) the loss equals or exceeds $1,000,000, in which either such case Lender
may, in its sole discretion, settle and adjust any claim without the consent of
any Borrower and agree with the insurer(s) on the amount to be paid on the loss,
and the Proceeds shall be due and payable solely to Lender and held by Lender in
the Casualty/Condemnation Subaccount and disbursed in accordance herewith. If
any Borrower or any party other than Lender is a payee on any check representing
Proceeds with respect to a Significant Casualty, such Borrower shall immediately
endorse, and cause all such third parties to endorse, such check payable to the
order of Lender. Each Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to endorse such check payable to the
order of Lender. The expenses incurred by Lender in the settlement, adjustment
and collection of the Proceeds shall become part of the Debt and shall be
reimbursed by Borrower to Lender upon demand. Notwithstanding anything to the
contrary contained herein, if in connection with a Casualty any insurance
carrier makes a payment under a property insurance Policy that Borrower proposes
be treated as business or rental interruption insurance, then, notwithstanding
any designation (or lack of designation) by the insurance carrier as to the
purpose of such payment, as between Lender and Borrower, such payment shall not
be treated as business or rental interruption insurance proceeds unless Borrower
has demonstrated to Lender's satisfaction that the remaining net Proceeds that
will be received from the property insurance carriers are sufficient to pay 100%
of the cost of fully restoring the Improvements or, if such net Proceeds are to
be applied to repay the Debt in accordance with the terms hereof, that such
remaining net Proceeds will be sufficient to pay the Debt in full.
7.3 CONDEMNATION.
7.3.1 NOTICE; RESTORATION. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding affecting the Property (a "CONDEMNATION") and shall deliver to
Lender copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Borrower, regardless of whether an
Award is available (unless Lender has breached its obligation (if any) to make
such Award available pursuant to Section 7.4.1), shall promptly proceed to
restore, repair, replace or rebuild the Property in accordance with Legal
Requirements to the extent practicable to be of at least equal value and of
substantially the same character (and to have the same utility) as prior to such
Condemnation.
7.3.2 COLLECTION OF AWARD. If a Condemnation occurs where the
award or payment in respect thereof (an "AWARD") does not exceed $250,000 or
which results in the taking of 5% or less of the Property, provided no Event of
Default has occurred and is continuing, Borrower may make any compromise,
adjustment or settlement in connection with such Condemnation with the prior
consent of Lender, not to be unreasonably withheld, provided such
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adjustment is carried out in a competent and timely manner, and Borrower is
hereby authorized to collect and receipt for the Award. In the event of a
Condemnation where the Award is in excess of $250,000 or which results in the
taking of more than 5% of the Property, Lender is hereby irrevocably appointed
as Borrower's attorney-in-fact, coupled with an interest, with exclusive power
to collect, receive and retain such Award and to make any compromise, adjustment
or settlement in connection with such Condemnation with the prior consent of
Borrower (unless an Event of Default is continuing, in which case, Borrower's
prior consent shall not be required), not to be unreasonably withheld (which
shall be deemed consented to if Borrower fails to respond to any request for
consent therefor within 10 days' of request). Notwithstanding any Condemnation
(or any transfer made in lieu of or in anticipation of such Condemnation),
Borrower shall continue to pay the Debt at the time and in the manner provided
for in the Loan Documents, and the Debt shall not be reduced unless and until
any Award shall have been actually received and applied by Lender to expenses of
collecting the Award and to 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 in
the Note. If the Property is sold, through foreclosure or otherwise, prior to
the receipt by Lender of such Award, Lender shall have the right, whether or not
a deficiency judgment on the Note shall be recoverable or shall have been
sought, recovered or denied, to receive all or a portion of the Award sufficient
to pay the Debt. Borrower shall cause any Award that is payable to Borrower to
be paid directly to Lender. Lender shall hold such Award in the
Casualty/Condemnation Subaccount and disburse such Award in accordance with the
terms hereof.
7.4 APPLICATION OF PROCEEDS OR AWARD.
7.4.1 APPLICATION TO RESTORATION. If an Insured Casualty or
Condemnation occurs where (i) the loss is in an aggregate amount less than the
25% of the unpaid Principal, (ii) in the reasonable judgment of Lender, the
Property can be restored within nine months after all applicable restoration
permits have been obtained, and prior to six months before the Stated Maturity
Date and prior to the expiration of the rental or business interruption
insurance with respect thereto, to the Property's pre-existing condition and
utility as existed immediately prior to such Insured Casualty or Condemnation
and to an economic unit not less valuable and not less useful than the same was
immediately prior to the Insured Casualty or Condemnation, and after such
restoration will adequately secure the Debt, (iii) less than (x) 30%, in the
case of an Insured Casualty or (y) 15%, in the case of a Condemnation, of the
rentable area of the Improvements has been damaged, destroyed or rendered
unusable as a result of such Insured Casualty or Condemnation; (iv) Leases
demising in the aggregate at least 65% of the total rentable space in the
Property and in effect as of the date of the occurrence of such Insured Casualty
or Condemnation remain in full force and effect during and after the completion
of the Restoration (hereinafter defined); and (v) no Event of Default shall have
occurred and be then continuing, then the Proceeds or the Award, as the case may
be (after reimbursement of any expenses incurred by Lender), shall be applied to
pay for or reimburse Borrower for the cost of restoring, repairing, replacing or
rebuilding the Property (the "RESTORATION"), in the manner set forth herein.
Borrower shall commence and diligently prosecute such Restoration.
Notwithstanding the foregoing, in no event shall Lender be obligated to apply
the Proceeds or Award to reimburse any Borrower for the cost of Restoration
unless, in addition to satisfaction of the foregoing conditions, both (x)
Borrower shall pay (and if required by Lender, Borrower shall deposit with
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Lender in advance) all costs of such Restoration in excess of the net amount of
the Proceeds or the Award made available pursuant to the terms hereof; and (y)
Lender shall have received evidence reasonably satisfactory to it that during
the period of the Restoration, the Rents will be at least equal to the sum of
the operating expenses and Debt Service, as reasonably determined by Lender.
7.4.2 APPLICATION TO DEBT. Except as provided in Section
7.4.1, any Proceeds and/or Award may, at the option of Lender in its discretion,
be applied to the payment of (i) accrued but unpaid interest on the Note, (ii)
the unpaid Principal and (iii) other charges due under the Note and/or any of
the other Loan Documents, or applied to reimburse Borrower for the cost of any
Restoration, in the manner set forth in Section 7.4.3. Any such prepayment of
the Loan shall be without any Yield Maintenance Premium, unless an Event of
Default has occurred and is continuing at the time the Proceeds are received
from the insurance company or the Award is received from the condemning
authority, as the case may be, in which event Borrower shall pay to Lender an
additional amount equal to the Yield Maintenance Premium, if any, that may be
required with respect to the amount of the Proceeds or Award applied to the
unpaid Principal. Notwithstanding anything to the contrary contained herein, if
any Proceeds or Award are not required to be made available for a Restoration
and are retained and applied by Lender toward the payment of the Debt, Borrower
may prepay the entire outstanding Principal without payment of any Yield
Maintenance Premium provided that (x) such prepayment is made within 90 days
after Lender applies such Proceeds or Award to the Debt and (y) together with
such prepayment, Borrower pay to Lender all accrued and unpaid interest and all
other sums payable under the Loan Documents.
7.4.3 PROCEDURE FOR APPLICATION TO RESTORATION. If any
Borrower is entitled to reimbursement out of the Proceeds or an Award held by
Lender, such Proceeds or Award shall be disbursed from time to time from the
Casualty/Condemnation Subaccount upon Lender being furnished with (i) evidence
satisfactory to Lender of the estimated cost of completion of the Restoration,
(ii) a fixed price or guaranteed maximum cost construction contract for
Restoration satisfactory to Lender, (iii) prior to the commencement of
Restoration, all immediately available funds in addition to the Proceeds or
Award that in Lender's judgment are required to complete the proposed
Restoration (or such additional funds are irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose), (iv) such
architect's certificates, waivers of lien, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey, permits, approvals, licenses and
such other documents and items as Lender may reasonably require and approve in
Lender's discretion, and (v) all plans and specifications for such Restoration,
such plans and specifications to be approved by Lender prior to commencement of
any work. Lender may, at Borrower's expense, retain a consultant to review and
approve all requests for disbursements, which approval shall also be a condition
precedent to any disbursement. No payment made prior to the final completion of
the Restoration shall exceed 90% of the value of the work performed from time to
time; funds other than the Proceeds or Award shall be disbursed prior to
disbursement of such Proceeds or Award; and at all times, the undisbursed
balance of such Proceeds or Award remaining in the hands of Lender, together
with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose, shall be at
least sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Provided no Default or Event of Default then exists, any surplus that remains
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out of the Proceeds held by Lender after payment of such costs of Restoration
shall be paid to Borrower. Any surplus that remains out of the Award received by
Lender after payment of such costs of Restoration shall, in the discretion of
Lender, be retained by Lender and applied to payment of the Debt or returned to
Borrower.
8. DEFAULTS
8.1 EVENTS OF DEFAULT. An "Event of Default" shall exist with
respect to the Loan if any of the following shall occur:
(a) any portion of the Debt is not paid when due or any
other amount under Section 3.11(a)(i) through (vii) is not paid in full on each
Payment Date (provided, however, if adequate funds are available in the Deposit
Account for such payments, the failure by the Deposit Bank to allocate such
funds into the appropriate Subaccounts shall not constitute an Event of
Default);
(b) any of the Taxes are not paid when due (unless Lender is
paying such Taxes pursuant to Section 3.3), subject to Borrower's right to
contest Taxes in accordance with Section 5.2;
(c) the Policies are not kept in full force and effect, or
are not delivered to Lender pursuant to Section 7.1.2(v) within 10 days after
request;
(d) a Transfer other than a Permitted Transfer occurs;
(e) any representation or warranty made by any Borrower or
Guarantor or in any Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished by any Borrower
or Guarantor in connection with any Loan Document, shall be false or misleading
in any material respect as of the date the representation or warranty was made;
(f) any Borrower or Guarantor shall (i) make an assignment
for the benefit of creditors, or (ii) shall generally not be paying its debts as
they become due; provided that in the event a Permitted TIC Transfer occurs,
then so long as no other Event of Default shall have occurred and be continuing,
an assignment for the benefit of creditors by any one Guarantor (other than
Behringer Harvard REIT I, Inc. or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇) shall not be an Event of
Default hereunder if the tenant-in-common ownership interest indirectly owned by
such Guarantor is purchased by any Borrower (subject to the terms, conditions
and limitations contained in this Agreement) within 60 days of such assignment
in accordance with Section 9.1 of the Tenant in Common Agreement (provided that
Borrower has provided Lender with evidence of commencement of the purchase
process within 15 days of such assignment), and the owner/guarantor of such
purchasing Borrower reaffirms its obligations under its Guaranty of Recourse
Obligations in connection therewith;
(g) a receiver, liquidator or trustee shall be appointed for
any Borrower or Guarantor; or any Borrower or Guarantor shall be adjudicated a
bankrupt or insolvent; or 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,
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any Borrower or Guarantor, as the case may be; or any proceeding for the
dissolution or liquidation of any Borrower or Guarantor shall be instituted;
provided however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by such Borrower or Guarantor, as the case may
be, only upon the same not being discharged, stayed or dismissed within 60 days;
and further provided, that if a Permitted TIC Transfer occurs then so long as no
other Event of Default shall have occurred and be continuing, the occurrence of
any event described in this subsection (g) with respect to any one Guarantor
(other than Behringer Harvard REIT I, Inc. or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇) shall not be
an Event of Default hereunder if the tenant-in-common ownership interest
indirectly owned by such Guarantor is purchased by any Borrower (subject to the
terms, conditions and limitations contained in this Agreement) within 60 days of
the occurrence of such event in accordance with Section 9.1 of the Tenant in
Common Agreement (provided that Borrower has provided Lender with evidence of
commencement of the purchase process within 15 days of the occurrence of such
event), and the owner/guarantor of such purchasing Borrower reaffirms its
obligations under its Guaranty of Recourse Obligations in connection therewith;
(h) any Borrower breaches any covenant contained in Sections
5.12.1 (a) - (f), 5.13, 5.15, 5.22 (other than failure to pay trade payables
within 60 days if due to lack of available funds), 5.25, 5.28 or 5.31;
(i) except as expressly permitted hereunder, the alteration,
improvement, demolition or removal of all or any of portion of the Improvements
without the prior written consent of Lender (if such consent is required
pursuant to the terms of this Agreement);
(j) an Event of Default as defined or described elsewhere in
this Agreement or in any other Loan Document occurs;
(k) a default occurs under any term, covenant or provision
set forth herein or in any other Loan Document which specifically contains a
notice requirement or grace period and such notice has been given and such grace
period has expired;
(l) any of the assumptions contained in any substantive
non-consolidation opinion, delivered to Lender by Borrower's counsel in
connection with the Loan or otherwise hereunder, were not true and correct as of
the date of such opinion or thereafter became untrue or incorrect;
(m) if Key Principal fails to Control (as defined in clause
(ii) of the defined term "Control" in Section 1.1) the Manager and the day to
day management and operations of the Property (unless the Manager is replaced
with a successor manager in accordance with and subject to satisfaction of the
terms and conditions set forth in Section 5.12.2); or
(n) a default shall be continuing under any of the other
terms, covenants or conditions of this Agreement or any other Loan Document not
otherwise specified in this Section 8.1, for ten days after notice to Borrower
(and Guarantor, if applicable) from Lender, in the case of any default which can
be cured by the payment of a sum of money, or for 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
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Borrower (or Guarantor, if applicable) 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 an additional period
of time as is reasonably necessary for Borrower (or Guarantor, if applicable) in
the exercise of due diligence to cure such default, such additional period not
to exceed 60 days.
8.2 REMEDIES.
8.2.1 ACCELERATION. Upon the occurrence and during the
continuance of an Event of Default (other than an Event of Default described in
paragraph (f) or (g) of Section 8.1) and at any time and from time to time
thereafter during the continuance of such Event of Default, in addition to any
other rights or remedies available to it pursuant to the Loan Documents or at
law or in equity, Lender may take such action, without notice or demand, that
Lender deems advisable to protect and enforce its rights against Borrower and in
and to the Property; including declaring the Debt to be immediately due and
payable (including unpaid interest), Default Rate interest, Late Payment
Charges, Yield Maintenance Premium and any other amounts owing by Borrower),
without notice or demand; and upon any Event of Default described in paragraph
(f) or (g) of Section 8.1, the Debt (including unpaid interest, Default Rate
interest, Late Payment Charges, Yield Maintenance Premium and any other amounts
owing by Borrower) shall immediately and automatically become due and payable,
without notice or demand, and each Borrower hereby expressly waives any such
notice or demand, anything contained in any Loan Document to the contrary
notwithstanding.
8.2.2 REMEDIES CUMULATIVE. Upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Lender against Borrower under
the Loan Documents 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,
or be automatically, 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. 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 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 in the Loan Documents.
Without limiting the generality of the foregoing, each Borrower agrees that if
an Event of Default is continuing, (i) to the extent permitted by applicable
law, Lender is not subject to any "one action" or "election of remedies" law or
rule, and (ii) all Liens and other rights, remedies or privileges provided to
Lender shall remain in full force and effect until Lender has exhausted all of
its remedies against the Property, the Mortgage has been foreclosed, the
Property has been sold and/or otherwise realized upon in satisfaction of the
Debt or the Debt has been paid in full. To the extent permitted by applicable
law, nothing contained in any Loan Document shall be construed as requiring
Lender to resort to any particular Property or any portion of the Property for
the satisfaction of any of the Debt in preference or priority to any other
portion, and Lender may seek satisfaction out of the entire Property or any part
thereof, in its discretion.
8.2.3 SEVERANCE. During the continuance of an Event of Default
Lender shall have the right from time to time to sever the Note and the other
Loan Documents into one or
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more separate notes, mortgages and other security documents in such
denominations and priorities of payment and liens as Lender shall determine in
its discretion for purposes of evidencing and enforcing its rights and remedies.
Each Borrower shall execute and deliver to Lender from time to time, promptly
after the request of Lender, a severance agreement and such other documents as
Lender shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Each
Borrower hereby absolutely and irrevocably appoints Lender 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 such severance, each
Borrower ratifying all that such attorney shall do by virtue thereof.
8.2.4 DELAY. No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default, or the granting of any
indulgence or compromise by Lender shall impair any such remedy, right or power
hereunder or 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 shall not be construed to
be a waiver of any subsequent Default or Event of Default or to impair any
remedy, right or power consequent thereon. Notwithstanding any other provision
of this Agreement, Lender reserves the right to seek a deficiency judgment or
preserve a deficiency claim in connection with the foreclosure of the Mortgage
to the extent necessary to foreclose on all or any portion of the Property, the
Rents, the Cash Management Accounts or any other collateral.
8.2.5 LENDER'S RIGHT TO PERFORM. If any Borrower fails to
perform any covenant or obligation contained herein and such failure shall
continue for a period of five Business Days after Borrower's receipt of written
notice thereof from Lender, without in any way limiting Lender's right to
exercise any of its rights, powers or remedies as provided hereunder, or under
any of the other Loan Documents, Lender may, but shall have no obligation to,
perform, or cause performance of, such covenant or obligation, and all costs,
expenses, liabilities, penalties and fines of Lender incurred or paid in
connection therewith shall be payable by Borrower to Lender upon demand and if
not paid shall be added to the Debt (and to the extent permitted under
applicable laws, secured by the Mortgage and other Loan Documents) and shall
bear interest thereafter at the Default Rate. Notwithstanding the foregoing,
Lender shall have no obligation to send notice to any Borrower of any such
failure. Additionally, during the continuance of an Event of Default, Lender
shall have the right, but not the obligation, to make any Protective Advance
(hereinafter defined) (provided, however, that Lender will only make such
Protective Advance from its own funds if there are insufficient funds in the
Cash Management Accounts), and the same shall be added to the Debt (and to the
extent permitted under applicable laws, secured by the Mortgage and other Loan
Documents) and shall bear interest thereafter at the Default Rate. As used
herein, "PROTECTIVE ADVANCE" means all sums advanced for the purpose of payment
of real estate taxes (including special payments in lieu of real estate taxes),
maintenance costs, insurance premiums, operating expenses, trade payables or
other items with respect to the Property (including capital items) reasonably
necessary to protect the Property or any other security given for the Loan or to
preserve any of Lender's rights or remedies under the Loan Documents.
9. SPECIAL PROVISIONS
9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.
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9.1.1 GENERAL; BORROWER COOPERATION. Lender shall have the
right at any time and from time to time (i) to sell or otherwise transfer the
Loan or any portion thereof or the Loan Documents or any interest therein to one
or more investors, (ii) to sell participation interests in the Loan to one or
more investors or (iii) to securitize the Loan or any portion thereof in a
single asset securitization or a pooled loan securitization of rated single or
multi-class securities (the "SECURITIES") secured by or evidencing ownership
interests in the Note and the Mortgage (each such sale, assignment,
participation and/or securitization is referred to herein as a "SECONDARY MARKET
TRANSACTION"). In connection with any Secondary Market Transaction, Borrower
shall use all reasonable efforts and cooperate fully and in good faith with
Lender and otherwise assist Lender in satisfying the market standards to which
Lender customarily adheres or which may be reasonably required in the
marketplace or by the Rating Agencies in connection with any such Secondary
Market Transactions, including: (a) to (i) provide such financial and other
information with respect to the Property, Borrower and their Affiliates, Manager
and any tenants of the Property, (ii) provide business plans and budgets
relating to the Property and (iii) perform or permit or cause to be performed or
permitted such site inspection, appraisals, surveys, market studies,
environmental reviews and reports, engineering reports and other due diligence
investigations of the Property, as may be reasonably requested from time to time
by Lender or the Rating Agencies or as may be necessary or appropriate in
connection with a Secondary Market Transaction or Exchange Act requirements (the
items provided to Lender pursuant to clauses (i) and (ii) of this paragraph (a)
being called the "PROVIDED INFORMATION"), together, if customary, with
appropriate verification of and/or consents to the Provided Information through
letters of auditors or opinions of counsel of independent attorneys acceptable
to Lender and the Rating Agencies; (b) at Borrower's expense, cause counsel to
render opinions as to non-consolidation (which may be an update of an existing
non-consolidation opinion) and any other opinion customary in securitization
transactions with respect to the Property, Borrower and their Affiliates, which
counsel and opinions shall be reasonably satisfactory to Lender and the Rating
Agencies; (c) make such representations and warranties as of the closing date of
any Secondary Market Transaction with respect to the Property, Borrower and the
Loan Documents as are customarily provided in such transactions and as may be
reasonably requested by Lender or the Rating Agencies and consistent with the
facts covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents; (d) provide current certificates of good standing and qualification
with respect to Borrower from appropriate Governmental Authorities; and (e)
execute such amendments to the Loan Documents and Borrower's organizational
documents, as may be requested by Lender or the Rating Agencies or otherwise to
effect a Secondary Market Transaction, provided that nothing contained in this
subsection (e) shall result in changes to Loan terms adverse to Borrower or
require Borrower to incur any additional liabilities. Borrower's cooperation
obligations set forth herein shall continue until the Loan has been paid in
full.
9.1.2 USE OF INFORMATION. Borrower understands that all or any
portion of the Provided Information and the Required Records may be included in
disclosure documents in connection with a Secondary Market Transaction,
including a prospectus 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 or other parties
relating to the Secondary Market
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Transaction. If the Disclosure Document is required to be revised, Borrower
shall cooperate with Lender in updating the Provided Information or Required
Records for inclusion or summary in the Disclosure Document or for other use
reasonably required in connection with a Secondary Market Transaction by
providing all current information pertaining to Borrower, Manager and the
Property necessary to keep the Disclosure Document accurate and complete in all
material respects with respect to such matters.
9.1.3 BORROWER OBLIGATIONS REGARDING DISCLOSURE DOCUMENTS. In
connection with a Disclosure Document, Borrower shall, if requested by Lender,
certify in writing that Borrower has carefully examined those portions of such
Disclosure Document, pertaining to Borrower, the Property Manager and the Loan,
and that such portions do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not misleading.
Notwithstanding anything to the contrary contained in this Section 9.1.3,
nothing contained herein shall impose liability upon Borrower for any losses,
claims, damages or liability arising out of or based upon an untrue statement of
any material fact contained in any statement, report or document provided to
Lender on behalf of Borrower by a party who is not an Affiliate of a Borrower (a
"THIRD PARTY REPORT"), unless Borrower had actual knowledge at the time Borrower
provided such statement, report or document to Lender that such Third Party
Report contains such untrue statement.
9.1.4 BORROWER INDEMNITY REGARDING FILINGS. In connection with
filings under the Exchange Act, Borrower shall (i) indemnify Lender, the
Citigroup Group and the Underwriter Group for any Liabilities to which Lender,
the Citigroup Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission to state in the Provided
Information a material fact required to be stated in the Provided Information in
order to make the statements in the Provided Information, in light of the
circumstances under which they were made not misleading and (ii) reimburse
Lender, the Citigroup Group or the Underwriter Group for any legal or other
expenses actually incurred by Lender, Citigroup Group or the Underwriter Group
in connection with defending or investigating the Liabilities. Notwithstanding
anything to the contrary contained in this Section 9.1.4, nothing contained
herein shall impose liability upon Borrower for any Liabilities arising out of
or based upon an untrue statement of any material fact contained in any Third
Party Report, unless Borrower had actual knowledge at the time Borrower provided
such statement, report or document to Lender that such Third Party Report
contains such untrue statement.
9.1.5 INDEMNIFICATION PROCEDURE. Promptly after receipt by an
indemnified party under Section 9.1.3 or 9.1.4 of notice of the commencement of
any action for which a claim for indemnification is to be made against Borrower,
such indemnified party shall notify Borrower in writing of such commencement,
but the omission to so notify Borrower will not relieve Borrower from any
liability that they may have to any indemnified party hereunder except to the
extent that failure to notify causes prejudice to Borrower. If any action is
brought against any indemnified party, and it notifies Borrower of the
commencement thereof, Borrower will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent that it (or they)
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice of commencement, to assume the defense thereof
with counsel satisfactory to such indemnified party in its discretion. After
notice from Borrower to such
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indemnified party under this Section 9.1.5, Borrower shall not be responsible
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both Borrower and an indemnified party, and any indemnified party shall have
reasonably concluded that there are any legal defenses available to it and/or
other indemnified parties that are different from or additional to those
available to Borrower, then the indemnified party or parties shall have the
right to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Borrower shall not be liable for the expenses of more than one separate
counsel unless there are legal defenses available to it that are different from
or additional to those available to another indemnified party.
9.1.6 CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 9.1.3 or 9.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 9.1.3
or 9.1.4, Borrower shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
the Citigroup Group's and Borrower's relative knowledge and access to
information concerning the matter with respect to which the claim was asserted;
(ii) the opportunity to correct and prevent any statement or omission; and (iii)
any other equitable considerations appropriate in the circumstances. Lender and
Borrower hereby agree that it may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
9.1.7 SEVERANCE OF LOAN. Lender shall have the right, at any
time (whether prior to, in connection with, or after any Secondary Market
Transaction), with respect to all or any portion of the Loan, to modify, split
and/or sever all or any portion of the Loan as hereinafter provided. Without
limiting the foregoing, Lender may (i) cause the Note and the Mortgage to be
split into a first and second mortgage loan, (ii) create one more senior and
subordinate notes (I.E., an A/B or A/B/C structure), (iii) create multiple
components of the Note or Notes (and allocate or reallocate the principal
balance of the Loan among such components) or (iv) otherwise sever the Loan into
two or more loans secured by mortgages and by a pledge of partnership or
membership interests (directly or indirectly) in Borrower (I.E., a senior
loan/mezzanine loan structure), in each such case, in whatever proportion and
whatever priority Lender determines; provided, however, in each such instance
the outstanding principal balance of all the Notes evidencing the Loan (or
components of such Notes) immediately after the effective date of such
modification equals the outstanding principal balance of the Loan immediately
prior to such modification and the weighted average of the interest rates for
all such Notes (or components of such Notes) immediately after the effective
date of such modification equals the interest rate of the original Note
immediately prior to such modification. If requested by Lender, Borrower (and
Borrower's constituent members, if applicable, and Guarantor) shall execute
within seven (7) Business Days after such request, such documentation as Lender
may reasonably request to evidence and/or effectuate any such modification or
severance.
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9.2 COSTS AND EXPENSES. Notwithstanding anything to the contrary
contained in this Article 9, Borrower shall not be required to incur
out-of-pocket expenses in the performance of their obligations under Sections
9.1.1 (other than with respect to the delivery or update of non-consolidation
opinions), 9.1.2 and clause (a) of Section 9.1.3 and 9.1.7.
10. MISCELLANEOUS
10.1 EXCULPATION. (a) Subject to the qualifications below, Lender
shall not enforce the liability and obligation of any Borrower to perform and
observe the obligations contained in the Loan Documents by any action or
proceeding wherein a money judgment shall be sought against such 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 and rights under the Loan Documents, or in
the Property, the Rents 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 a
Borrower only to the extent of such Borrower's interest in the Property, in the
Rents and in any other collateral given to Lender, and Lender shall not ▇▇▇ for,
seek or demand any deficiency judgment against a Borrower in any such action or
proceeding under or by reason of or under or in connection with any Loan
Document. The provisions of this Section shall not, however, (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by any Loan
Document; (ii) impair the right of Lender to name one or more Borrowers as a
party defendant in any action or suit for foreclosure and sale under the
Mortgage; (iii) affect the validity or enforceability of any of the Loan
Documents or any guaranty made in connection with the Loan or any of the rights
and remedies of Lender thereunder; (iv) impair the right of Lender to obtain the
appointment of a receiver; (v) impair the enforcement of the Assignment of
Leases; (vi) constitute a prohibition against Lender to commence any other
appropriate action or proceeding in order for Lender to fully realize the
security granted by the Mortgage or to exercise its remedies against the
Property; or (vii) constitute a waiver of the right of Lender to enforce the
liability and obligation of Borrowers, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs reasonably incurred)
(collectively, "LENDER'S LOSSES") arising out of or in connection with the
following (all such liability and obligation of Borrower for any or all of the
following being referred to herein as "BORROWERS' RECOURSE LIABILITIES"): (a)
fraud or intentional misrepresentation by any Borrower, or Guarantor in
connection with obtaining the Loan; (b) physical waste of the Property or any
portion thereof (other than acts committed by a third party non-affiliated
property manager), or after an Event of Default the removal or disposal of any
portion of the Property (other than acts committed by a third party
non-affiliated property manager); (c) any Proceeds paid by reason of any Insured
Casualty or any Award received in connection with a Condemnation or other sums
or payments attributable to the Property not applied in accordance with the
provisions of the Loan Documents (other than acts committed by a third party
non-affiliated property manager) (except to the extent that a Borrower did not
have the legal right, because of a bankruptcy, receivership or similar judicial
proceeding, to direct disbursement of such sums or payments); (d) all Rents of
the Property received or collected by or on behalf of any Borrower after an
Event of Default and not applied to payment of Principal and interest due under
the Note, and to the payment of actual and reasonable operating expenses of the
Property, as they become due or payable (other than acts committed by a third
party non-affiliated property manager) (except to the extent that such
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application of such funds is prevented by bankruptcy, receivership, or similar
judicial proceeding in which such Borrower is legally prevented from directing
the disbursement of such sums); (e) misappropriation (including failure to turn
over to Lender on demand following an Event of Default) of tenant security
deposits and rents collected in advance, or of funds held by any Borrower for
the benefit of another party (other than acts committed by a third party
non-affiliated property manager); (f) the failure to pay Taxes, provided
Borrowers shall not be liable (A) to the extent funds to pay such amounts are
available in the Tax and Insurance Subaccount and Lender failed to pay same or
has elected not to pay the same pursuant to Section 3.3 or (B) Rents are
insufficient to yield sufficient funds to pay such amounts; (g) the breach of
any representation, warranty, covenant or indemnification in any Loan Document
concerning Environmental Laws or Hazardous Substances, including Sections 4.21
and 5.8, and clauses (viii) through (xi) of Section 5.30; (h) the breach of the
covenants set forth in Section 5.13 (other than a breach of any of the covenants
described in clauses (x) and (xxi) (with respect to unsecured trade payables)
set forth in the definition of "Special Purpose Bankruptcy Remote Entity" on
Schedule 5, if the same occurs as a result of the economic performance of the
Property); (i) any Borrower or any Guarantor of such Borrower or any of their
direct or indirect Affiliates taking any action or making any omission intended
or reasonably likely to hinder, delay, impair or prevent Lender in or from
enforcing any and all of its rights and remedies under or pursuant to the Loan
Documents or at law or in equity (unless the same is brought in good faith and
is determined in favor of such Borrower or Guarantor pursuant to a final,
non-appealable judgment of a court of competent jurisdiction); (j) the
termination of the Management Agreement or the removal of the then-current
Manager as property manager thereunder without Lender's consent (provided that,
in the event of a Permitted TIC Transfer only the Borrower(s) that voted in
favor of such termination or removal shall be liable for such losses); or (k) in
the event a Permitted TIC Transfer occurs, then subject to the next succeeding
sentence, the failure by any Borrower to consent to a modification of the terms
of the Loan after a minimum of other Borrowers representing a collective 66%
tenancy in common interest in the Property (as such percentage shall be
automatically increased by each percentage point by which the Behringer Minimum
Tenant-in-Common Interest exceeds 5%) have approved the same. For purposes of
the foregoing clause (k), Lender's Losses with respect to the occurrence of any
event giving rise to such matter (A) shall be deemed to be equal to any unpaid
portion of the Debt that remains outstanding after Lender completes its
realization with respect to the Property (and all of its other collateral for
the Loan pursuant to any of the Loan Documents) and applies the proceeds of such
realization to the Debt and (B) Lender's Losses with respect to any applicable
Borrower shall be limited to an amount equal to the product of (1) the original
principal amount of the Loan and (2) the applicable Borrower's respective
undivided tenant in common interest in the Property (expressed as a percentage).
(b) Notwithstanding anything to the contrary in this
Agreement or any of the Loan Documents, (A) Lender shall not be deemed to have
waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provisions of the U.S. Bankruptcy Code to file a claim for the full
amount of the Debt or to require that all collateral shall continue to secure
all of the Debt in accordance with the Loan Documents, and (B) Lender's
agreement not to pursue personal liability of Borrower(s) as set forth above
SHALL BECOME NULL AND VOID and shall be of no further force and effect, and the
Debt shall be fully recourse to the Borrower (or to the applicable Borrower or
Borrowers in the event a Permitted TIC Transfer occurs) an amount equal to the
greater of (x) Lender's Losses arising out of or in connection with
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the following matters or (y) an amount equal to the unpaid balance of the Debt
(or, if a Permitted TIC Transfer occurs, the product of (1) the unpaid balance
of the Debt and (2) the applicable Borrower's respective undivided tenant in
common interest in the Property (expressed as a percentage)), in the event that
one or more of the following occurs (each, a "SPRINGING RECOURSE EVENT"): (i) an
Event of Default described in Section 8.1(d) shall have occurred, (ii) the
occurrence of any condition or event described in either Section 8.1(f)(i) (with
respect to Borrowers only) or Section 8.1(g) (with respect to Borrower(s) only)
(each, an "INSOLVENCY ACTION") and, with respect to such Insolvency Action
described in Section 8.1(g), either any Borrower, Guarantor or any Person owning
an interest (directly or indirectly) in any Borrower, or Guarantor consents to,
aids, solicits, supports, or otherwise cooperates or colludes to cause such
Insolvency Action or fails to contest such Insolvency Action, except in the
event that any such party has a fiduciary or legal duty to take such action,
(iii) any involuntary bankruptcy proceeding is brought by any Borrower or its
Guarantor or any of such Borrower's or its Guarantor's Affiliates against any
other Borrower; (iv) if subsequent to the commencement of any voluntary
bankruptcy proceeding with respect to any Borrower, any involuntary bankruptcy
proceeding is brought by Lender against one or more Borrowers and any Borrower
or such Borrower's Guarantor files any motion contesting the same; or (v) any
Borrower, such Borrower's Guarantor or any Affiliate of such Borrower brings or
joins in any action or proceeding for the partition of the Property or any
portion thereof or interest therein.
(c) In the event a Permitted TIC Transfer occurs, then
notwithstanding anything to the contrary in this Section 10.1 or in any Loan
Document, Lender hereby agrees that (1) with respect to the matters described in
clauses (a) through (f), (h), (i), (j) and (k) of Borrowers' Recourse
Liabilities, each TIC Borrower shall be liable for its own acts, and no TIC
Borrower (or any other Borrower) shall be liable for such Borrowers' Recourse
Liabilities occasioned as a result of the acts of any other Borrower (or
property manager) and (2) with respect to the matters described clauses (i)
through (v) of the Springing Recourse Events, if any such Springing Recourse
Event is caused by one or more TIC Borrowers, then only such TIC Borrower or TIC
Borrowers (and such TIC Borrower's or TIC Borrowers' Guarantor or Guarantors (as
applicable)) shall have the liability set forth in clause (b) above, and no
other TIC Borrower (or any other Borrower or Guarantor) shall be liable as a
result of such matter.
10.2 BROKERS AND FINANCIAL ADVISORS. Each Borrower hereby represents
that it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the Loan, other than NorthMarq
Capital, Inc., whose fee shall be paid by Borrower. Borrower shall indemnify and
hold Lender harmless from and against any and all claims, liabilities, costs and
expenses (including attorneys' fees, whether incurred in connection with
enforcing this indemnity or defending claims of third parties) of any kind in
any way relating to or arising from a claim by any Person that such Person acted
on behalf of Borrower in connection with the transactions contemplated herein.
The provisions of this Section 10.2 shall survive the expiration and termination
of this Agreement and the repayment of the Debt.
10.3 RETENTION OF SERVICER. Lender reserves the right to retain the
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, any pooling and servicing agreement or similar agreement entered into
as a result of a Secondary Market Transaction, the Deposit Account Agreement or
otherwise, together with such other powers as are reasonably incidental thereto.
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Borrower shall pay any reasonable fees and expenses of the Servicer in
connection with a release of the Property, assumption or modification of the
Loan, enforcement of the Loan Documents or any other action taken by Servicer
hereunder on behalf of Lender, to the extent such actions are permitted to be
taken pursuant to the terms of the Loan Documents, but only to the extent that
Borrower are expressly required to pay such expenses pursuant to the terms of
this Agreement. Notwithstanding anything to the contrary contained herein, to
the extent any matter described in this Agreement requires the consent or
approval of the special servicer under the pooling and servicing agreement (or
other similar agreement) entered into in connection with a Securitization, such
special servicer shall be afforded a consent period for such matter equal to the
greater of (i) the period of time given to Lender hereunder within which to
consent or approve such matter, (ii) 15 Business Days (to the extent such 15
Business Day period is required under the terms of such pooling and servicing
agreement).
10.4 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 any of the Debt is unpaid or such longer period if expressly set
forth in this Agreement. All Borrower's covenants and agreements in this
Agreement shall inure to the benefit of the respective legal representatives,
successors and assigns of Lender.
10.5 LENDER'S DISCRETION. Whenever pursuant to this Agreement or any
other Loan Document, Lender exercises any right given to it to approve or
disapprove, or consent or withhold consent, or any arrangement or term is to be
satisfactory to Lender or is to be in Lender's discretion, the decision of
Lender to approve or disapprove, to consent or withhold consent, or to decide
whether arrangements or terms are satisfactory or not satisfactory, or
acceptable or unacceptable or in Lender's discretion shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.
10.6 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK
AND THE PROCEEDS OF THE NOTE 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 MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THE 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 VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT.
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 AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO ss. 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND BORROWER WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE 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 OF BORROWER MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED
HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
BORROWER (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), 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 OFFICE SHALL BE
DESIGNATED AS THE 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.
10.7 MODIFICATION, WAIVER IN WRITING. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by any 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 any Borrower shall entitle any Borrower to any other or future notice
or demand in the same, similar or other circumstances. 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 any other Loan Document, 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 any Loan Document, Lender
shall not be deemed to have waived any right either
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to require prompt payment when due of all other amounts due under the Loan
Documents, or to declare an Event of Default for failure to effect prompt
payment of any such other amount.
10.8 TRIAL BY JURY. EACH BORROWER AND LENDER HEREBY AGREE NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE 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 EACH BORROWER AND LENDER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE
A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY THE OTHER.
10.9 HEADINGS/EXHIBITS. The Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose. The Exhibits attached hereto, are
hereby incorporated by reference as a part of the Agreement with the same force
and effect as if set forth in the body hereof.
10.10 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.
10.11 PREFERENCES. Upon the occurrence and continuance of an Event of
Default, Lender shall have the continuing and exclusive right to apply any and
all payments by Borrower to any portion of the Debt. To the extent Borrower
makes a payment to Lender, or Lender receives proceeds of any collateral, which
is in whole or part 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
Debt 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. This provision shall survive the expiration or termination of this
Agreement and the repayment of the Debt.
10.12 WAIVER OF NOTICE. Borrower shall not (and no Borrower shall) be
entitled to any notices of any nature whatsoever from Lender except with respect
to matters for which this Agreement or any other Loan Document specifically and
expressly requires the giving of notice by Lender to such Borrower and except
with respect to matters for which such Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice. Each Borrower
hereby expressly waives the right to receive any notice from Lender with respect
to any matter for which no Loan Document specifically and expressly requires the
giving of notice by Lender to such Borrower.
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10.13 REMEDIES OF BORROWER. If a claim or adjudication is made that
Lender or any of its agents, including Servicer, has acted unreasonably or
unreasonably delayed acting in any case where by law or under any Loan Document,
Lender or any such agent, as the case may be, has an obligation to act
reasonably or promptly, Borrower agrees that neither Lender nor its agents,
including Servicer, shall be liable for any monetary damages, and Borrower's
sole remedy shall be to commence an action seeking injunctive relief or
declaratory judgment. Any action or proceeding to determine whether Lender has
acted reasonably shall be determined by an action seeking declaratory judgment.
Each Borrower specifically waives any claim against Lender and its agents,
including Servicer, with respect to actions taken by Lender or its agents on
Borrower's behalf.
10.14 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,
understandings and negotiations among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan
Documents.
10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. Each Borrower hereby waives
the right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against Borrower by Lender or its agents, including
Servicer, or otherwise offset any obligations to make payments required under
the Loan Documents. Any assignee of Lender's interest in and to the Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which Borrower may otherwise have (including with respect to any Future
Funding Obligation or any default or dispute relating thereto) against any
assignor of such documents, and no such offset, 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 offset, counterclaim or defense in any such action or proceeding is hereby
expressly waived by Borrower.
10.16 PUBLICITY. All news releases, publicity or advertising by any
Borrower or its Affiliates through any media intended to reach the general
public, which refers to the Loan Documents, the Loan, Lender or any member of
the Citigroup Group, a Loan purchaser, the Servicer or the trustee in a
Secondary Market Transaction, shall be subject to the prior written approval of
Lender; provided however, that Lender's consent shall not be required by any
Borrower, Borrower's Affiliates, or any broker dealer or investor representative
related to the marketing or sale of any investment fund or investment trust
managed by Borrower's Affiliates which disclosure is required under the
Securities Act of 1933 or 1934 or to any potential purchaser of an interest in
the Property. Lender shall have the right to issue any of the foregoing without
any Borrower's approval.
10.17 NO USURY. Borrower and Lender intend at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 10.17 shall
control every other agreement in the Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Debt, or if Lender's
exercise of the option to accelerate the maturity
77
of the Loan or any prepayment by Borrower results in Borrower having paid any
interest in excess of that permitted by applicable law, then it is Borrower's
and Lender's express intent that all excess amounts theretofore collected by
Lender shall be credited against the unpaid Principal and all other Debt (or, if
the Debt has been or would thereby be paid in full, refunded to Borrower), and
the provisions of the Loan Documents immediately be deemed reformed and the
amounts thereafter collectible thereunder reduced, without the necessity of the
execution of any new document, so as to comply with applicable law, but so as to
permit the recovery of the fullest amount otherwise called for thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of 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
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained in any Loan Document, it is not the intention
of Lender to accelerate the maturity of any interest that has not accrued at the
time of such acceleration or to collect unearned interest at the time of such
acceleration.
10.18 CONFLICT; CONSTRUCTION OF DOCUMENTS. In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that each is represented by separate counsel in connection with the
negotiation and drafting of the Loan Documents and that the Loan Documents shall
not be subject to the principle of construing their meaning against the party
that drafted them.
10.19 NO THIRD PARTY BENEFICIARIES. The Loan Documents are solely for
the benefit of Lender and Borrower and nothing contained in any Loan Document
shall be deemed to confer upon anyone other than the Lender and Borrower any
right to insist upon or to enforce the performance or observance of any of the
obligations contained therein.
10.20 YIELD MAINTENANCE PREMIUM. Borrower acknowledge that (a) Lender
is making the Loan in consideration of the receipt by Lender of all interest and
other benefits intended to be conferred by the Loan Documents and (b) if
payments of Principal are made to Lender prior to the Stated Maturity Date, for
any reason whatsoever, whether voluntary, as a result of Lender's acceleration
of the Loan after an Event of Default, by operation of law or otherwise, Lender
will not receive all such interest and other benefits and may, in addition,
incur costs. For these reasons, and to induce Lender to make the Loan, Borrower
agree that, except as expressly provided in Section 2.2.3, Section 2.3.2,
Section 2.3.4 and Section 7.4.2 of this Agreement, all prepayments, if any,
whether voluntary or involuntary, will be accompanied by the Yield Maintenance
Premium. Such Yield Maintenance Premium shall be required whether payment is
made by Borrower, by a Person on behalf of Borrower, or by the purchaser at any
foreclosure sale, and may be included in any bid by Lender at such sale.
Borrower further acknowledge that (A) they are knowledgeable real estate
developers and/or investors; (B) they fully understand the effect of the
provisions of this Section 10.20, as well as the other provisions of the Loan
Documents; (C) the making of the Loan by Lender at the Interest Rate and other
terms set forth in the Loan Documents are sufficient consideration for
Borrower's obligation to pay a Yield Maintenance Premium (if required); and (D)
Lender would not make the Loan on the terms set forth herein without the
inclusion of such provisions. Borrower also acknowledge that the provisions of
this Agreement limiting the right of prepayment and providing for the payment of
78
the Yield Maintenance Premium and other charges specified herein were
independently negotiated and bargained for, and constitute a specific material
part of the consideration given by Borrower to Lender for the making of the Loan
except as expressly permitted hereunder.
10.21 ASSIGNMENT. The Loan, the Note, the Loan Documents and/or
Lender's rights, title, obligations and interests therein may be assigned by
Lender and any of its successors and assigns to any Person at any time in its
discretion, in whole or in part, whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise. Upon such assignment, all
references to Lender in this Loan Agreement and in any Loan Document shall be
deemed to refer to such assignee or successor in interest and such assignee or
successor in interest shall thereafter stand in the place of Lender. No Borrower
may assign its rights, title, interests or obligations under this Loan Agreement
or under any of the Loan Documents.
10.22 BORROWER'S DESIGNEE. Each Borrower hereby authorizes, designates
and directs Borrower's Designee to give Lender directions of any kind, to take
the actions or make such deliveries specified herein to be taken or delivered by
Borrower's Designee (including under Sections 5.11, 6.3 and 9.1, and including
with respect to any requisitions from any reserve accounts under Article 3) and
to give and receive notices of any kind on behalf of such Borrower under this
Agreement or any of the other Loan Documents. Any notice given by Lender to
Borrower's Designee shall be deemed to have been given to each and every
Borrower.
10.23 INTENTIONALLY OMITTED.
10.24 SET-OFF. IN ADDITION TO ANY RIGHTS AND REMEDIES OF LENDER
PROVIDED BY THIS LOAN AGREEMENT AND BY LAW, LENDER SHALL HAVE THE RIGHT, WITHOUT
PRIOR NOTICE TO ANY BORROWER, ANY SUCH NOTICE BEING EXPRESSLY WAIVED BY EACH
BORROWER TO THE EXTENT PERMITTED BY APPLICABLE LAW, UPON ANY AMOUNT BECOMING DUE
AND PAYABLE BY ANY BORROWER HEREUNDER (WHETHER AT THE STATED MATURITY, BY
ACCELERATION OR OTHERWISE) TO SET-OFF AND APPROPRIATE AND APPLY AGAINST SUCH
AMOUNT ANY AND ALL DEPOSITS (GENERAL OR SPECIAL, TIME OR DEMAND, PROVISIONAL OR
FINAL), IN ANY CURRENCY, AND ANY OTHER CREDITS, INDEBTEDNESS OR CLAIMS, IN ANY
CURRENCY, IN EACH CASE WHETHER DIRECT OR INDIRECT, ABSOLUTE OR CONTINGENT,
MATURED OR UNMATURED, AT ANY TIME HELD OR OWING BY LENDER OR ANY AFFILIATE
THEREOF TO OR FOR THE CREDIT OR THE ACCOUNT OF BORROWER. LENDER AGREES PROMPTLY
TO NOTIFY BORROWER AFTER ANY SUCH SET-OFF AND APPLICATION MADE BY LENDER;
PROVIDED THAT THE FAILURE TO GIVE SUCH NOTICE SHALL NOT AFFECT THE VALIDITY OF
SUCH SET-OFF AND APPLICATION. 10.25 1031 EXCHANGE10.26 . Borrower acknowledges
in the event of a Permitted TIC Transfer a tenancy in common ownership structure
will be established by Borrowers for the Property in order to, among other
t10.27 hings, obtain certain tax benefits afforded under the provisions of
Section 1031 of the Code. In the event of a Permitted TIC Transfer, each
Borrower shall be deemed, by virtue of acquiring such tenancy in common interest
pursuant to such Permitted TIC Transfer and executing the TIC Transfer
Documents, to have expressly acknowledge that, together with its own
professional advisors and legal counsel, it has performed its own due diligence
and legal analysis relating to a tenancy in common ownership structure and to
the financial, tax, legal and other issues as it had deemed necessary or
appropriate to make an informed investment decision to purchase a tenancy in
common interest in the Property. In the event of a Permitted TIC Transfer, each
Borrower shall be deemed, by virtue of acquiring such
79
tenancy in common interest pursuant to such Permitted TIC Transfer and executing
the TIC Transfer Documents, to expressly acknowledge that Lender has not acted
in any way whatsoever as an advisor to any Borrower with respect to the
foregoing and agrees that Lender shall have no responsibility or express or
implied liability whatsoever with respect to any of the foregoing.
10.26 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
80
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
Behringer Harvard One Financial, LLC, a
Delaware limited liability company
By:____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, Secretary
LENDER:
CITIGROUP GLOBAL MARKETS REALTY CORP.,
a New York corporation
By:____________________________________
Name: __________________
Title: __________________
SCHEDULE 1
OUTSTANDING TI AND FREE RENT
Summary of Outstanding TI and Free Rent
Tenant Improvements:
Twin Cities Business Journal $405,407.00
Deloitte & Touche $67,774.25
Take Care Chiropractic $44,615.26
▇▇▇▇▇▇▇ & ▇▇▇▇▇ $2,694.28
Today's Temporary $83.36
D'Brian's Deli $2,492.89
American Council For the Blind $22,320.00
Total Tenant Improvements to be Escrowed $545,387.18
Free Rent
Annual Rent # Total Free
Tenant & Reimbursements of Months Rent
Excel Bank $111,807 4 $37,269
Chiropractic USA $38,567 1 $3,214
▇▇▇▇▇▇▇ & ▇▇▇▇▇ $68,337 5 $28,474
LeaderSource $172,355 7 $100,540
Total Free Rent to be Escrowed $169,497.00
- 1 -
SCHEDULE 2
REQUIRED REPAIRS AND DELIVERIES
Domestic Hot Water Upgrade $9,131.85
Common Area Corridors $12,394.29
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Construction $70,000.00
Total: $91,526.14
2 - 1
SCHEDULE 3
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
3 - 1
SCHEDULE 4
ORGANIZATION OF BORROWER
(SEE ATTACHED)
4 - 1
SCHEDULE 5
DEFINITION OF SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY
A "SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY" means (x) a limited liability
company that is a Single Member Bankruptcy Remote LLC or (y) a corporation,
limited partnership or limited liability company which at all times since its
formation and at all times thereafter (i) was and will be organized solely for
the purpose of (A) owning the Property or (B) acting as a general partner of the
limited partnership that owns the Property or member of the limited liability
company that owns the Property; (ii) has not engaged and will not engage in any
business unrelated to (A) the ownership of the Property, (B) acting as general
partner of the limited partnership that owns the Property or (C) acting as a
member of the limited liability company that owns the Property, as applicable;
(iii) has not had and will not have any assets other than those related to the
Property or its partnership or member interest in the limited partnership or
limited liability company that owns the Property, as applicable; (iv) has not
engaged, sought or consented to and will not engage in, seek or consent to any
dissolution, winding up, liquidation, consolidation, merger, asset sale (except
as expressly permitted by this Agreement), transfer of partnership or membership
interests or the like, or amendment of its limited partnership agreement,
articles of incorporation, articles of organization, certificate of formation or
operating agreement (as applicable); (v) if such entity is a limited
partnership, has and will have, as its only general partners, Special Purpose
Bankruptcy Remote Entities that are corporations; (vi) if such entity is a
corporation, has and will have at least one Independent Director, and has not
caused or allowed and will not cause or allow the board of directors of such
entity to take any action requiring the unanimous affirmative vote of 100% of
the members of its board of directors unless all of the directors and all
Independent Directors shall have participated in such vote; (vii) if such entity
is a limited liability company, has and will have at least one member that has
been and will be a Special Purpose Bankruptcy Remote Entity that has been and
will be a corporation and such corporation is the managing member of such
limited liability company; (viii) if such entity is a limited liability company,
has and will have articles of organization, a certificate of formation and/or an
operating agreement, as applicable, providing that (A) such entity will dissolve
only upon the bankruptcy of the managing member, (B) the vote of a
majority-in-interest of the remaining members is sufficient to continue the life
of the limited liability company in the event of such bankruptcy of the managing
member and (C) if the vote of a majority-in-interest of the remaining members to
continue the life of the limited liability company following the bankruptcy of
the managing member is not obtained, the limited liability company may not
liquidate the Property without the consent of the applicable Rating Agencies for
as long as the Loan is outstanding; (ix) has not, and without the unanimous
consent of all of its partners, directors or members (including all Independent
Directors), as applicable, will not, with respect to itself or to any other
entity in which it has a direct or indirect legal or beneficial ownership
interest (A) file a bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors
generally, (B) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such
entity or for all or any portion of such entity's properties, (C) make any
assignment for the benefit of such entity's creditors or (D) take any action
that might cause such entity to become insolvent; (x) has remained and will
remain solvent and has maintained and will maintain adequate capital in light
5 - 1
of its contemplated business operations; (xi) has not failed and will not fail
to correct any known misunderstanding regarding the separate identity of such
entity; (xii) has maintained and will maintain its accounts, books and records
separate from any other Person and will file its own tax returns; (xiii) has
maintained and will maintain its books, records, resolutions and agreements as
official records; (xiv) has not commingled and will not commingle its funds or
assets with those of any other Person; (xv) has held and will hold its assets in
its own name; (xvi) has conducted and will conduct its business in its name or
under the trade name of the Property, (xvii) has maintained and will maintain
its financial statements, accounting records and other entity documents separate
from any other Person; (xviii) has paid and will pay its own liabilities,
including the salaries of its own employees, out of its own funds and assets;
(xix) has observed and will observe all partnership, corporate or limited
liability company formalities, as applicable; (xx) subject to sub clause (xxx)
below, has maintained and will maintain an arm's-length relationship with its
Affiliates; (xxi) (a) if such entity owns the Property, has and will have no
indebtedness other than the Loan and unsecured trade payables in the ordinary
course of business relating to the ownership and operation of Property which (1)
do not exceed, at any time, a maximum amount of 2% of the original amount of the
Principal and (2) are paid within sixty (60) days of the date incurred, or (b)
if such entity acts as the general partner of a limited partnership which owns
the Property, has and will have no indebtedness (in addition to such liability
as it has by virtue of its status as general partner) other than unsecured trade
payables in the ordinary course of business relating to acting as general
partner of the limited partnership which owns the Property which (1) do not
exceed, at any time, $10,000 and (2) are paid within thirty (30) days of the
date incurred, or (c) if such entity acts as a managing member of a limited
liability company which owns the Property, has and will have no indebtedness
other than unsecured trade payables in the ordinary course of business relating
to acting as a member of the limited liability company which owns the Property
which (1) do not exceed, at any time, $10,000 and (2) are paid within thirty
(30) days of the date incurred; (xxii) except, if applicable, by virtue of its
status as a general partner, 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 for the Loan;
(xxiii) has not and will not acquire obligations or securities of its partners,
members or shareholders; (xxiv) has allocated and will allocate fairly and
reasonably shared expenses, including shared office space, and uses separate
stationery, invoices and checks; (xxv) except in connection with the Loan, has
not pledged and will not pledge its assets for the benefit of any other Person;
(xxvi) 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 and not as
a division or part of any other Person; (xxvii) 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; (xxviii) has not made and will not make loans to any Person; (xxix) has
not identified and will not identify its partners, members or shareholders, or
any Affiliate of any of them, as a division or part of it; (xxx) except for the
Management Agreement and the TIC 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, shareholders or Affiliates except in the ordinary course of its
business and on terms which are intrinsically fair and are no less favorable to
it than would be obtained in a comparable arm's-length transaction with an
unrelated third party; (xxxi) has and will have no obligation to indemnify its
partners, officers, directors, members or Special Members, as the case may be,
or has such an obligation that is fully subordinated to the Debt and will not
constitute a claim against it if cash flow in
5 - 2
excess of the amount required to pay the Debt is insufficient to pay such
obligation; and (xxxii) will consider the interests of its creditors in
connection with all corporate, partnership or limited liability actions, as
applicable.
"INDEPENDENT DIRECTOR" means (x) in the case of a Single Member Bankruptcy
Remote LLC: a natural person selected by Borrower and reasonably satisfactory to
Lender who shall not have been at the time of such individual's appointment as
an Independent Director of the Single Member Bankruptcy Remote LLC, does not
thereafter become while serving as an Independent Director (except pursuant to
an express provision in the Single Member Bankruptcy Remote LLC's limited
liability company agreement providing for the Independent Director to become a
Special Member (defined below) upon the sole member of such Single Member
Bankruptcy Remote LLC ceasing to be a member in such Single Member Bankruptcy
Remote LLC) and shall not have been at any time during the preceding five years
(i) a shareholder/partner/member of, or an officer or employee of, Borrower or
any of its shareholders, subsidiaries or Affiliates, (ii) a director (other than
as an Independent Director) of any shareholder, subsidiary or Affiliate of
Borrower, (iii) a customer of, or supplier to, Borrower or any of its
shareholders, subsidiaries or Affiliates, (iv) a Person who Controls any such
shareholder, supplier or customer, or (v) a member of the immediate family of
any such shareholder/ director/partner/member, officer, employee, supplier or
customer or of any director of Borrower (other than as an Independent Director);
and (y) in the case of a corporation, an individual selected by Borrower and
reasonably satisfactory to Lender who shall not have been at the time of such
individual's appointment as a director, does not thereafter become while serving
as an Independent Director and shall not have been at any time during the
preceding five years (i) a shareholder/partner/member of, or an officer,
employee, consultant, agent or advisor of, Borrower or any of its shareholders,
subsidiaries, members or Affiliates, (ii) a director (other than as an
Independent Director) of any shareholder, subsidiary, member, or Affiliate of
Borrower other than Borrower's general partner or managing member, (iii) a
customer of, or supplier to, Borrower or any of its shareholders, subsidiaries
or Affiliates that derives more than 10% of its purchases or income from its
activities with Borrower or any Affiliate of Borrower, (iv) a Person who
Controls any such shareholder, supplier or customer, or (v) a member of the
immediate family (including a grandchild or sibling) of any such
shareholder/director/partner/member, officer, employee, supplier or customer or
of any other director of Borrower's general partner or managing member.
"SINGLE MEMBER BANKRUPTCY REMOTE LLC" means a limited liability company
organized under the laws of the State of Delaware which at all times since its
formation and at all times thereafter (i) complies with the following clauses of
the definition of Special Purpose Bankruptcy Remote Entity above: (i), (ii),
(iii), (iv), (ix), (x), (xi) and (xiii) through (xxxii); (ii) has maintained and
will maintain its accounts, books and records separate from any other person;
(iii) has and will have an operating agreement which provides that the business
and affairs of Borrower shall be managed by its sole member (the "SOLE MEMBER"),
and at all times there shall be at least one duly appointed Independent
Director, and the Sole Member will not, without the written consent of its
Independent Director (1) take any action affecting its status as a "Special
Purpose Bankruptcy Remote Entity" (as set forth in this Schedule 5) or (2) take
any other "Material Action" (which for purposes hereof means any action to
consolidate or merge the Borrower with or into any Person, or sell all or
substantially all of the assets of the Borrower, or to institute proceedings to
have the Borrower be adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Borrower or file
a petition
5 - 3
seeking, or consent to, reorganization or relief with respect to the Borrower
under any applicable federal or state law relating to bankruptcy, or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Borrower or a substantial part of its property,
or make any assignment for the benefit of creditors of the Borrower, or admit in
writing the Borrower's inability to pay its debts generally as they become due,
or take action in furtherance of any such action, or, to the fullest extent
permitted by law, dissolve or liquidate the Borrower); (iv) has and will have an
operating agreement which provides that, as long as any portion of the Debt
remains outstanding, (A) upon the occurrence of any event that causes Sole
Member to cease to be a member of Borrower (other than (x) upon an assignment by
Sole Member of all of its limited liability company interest in Borrower and the
admission of the transferee, if permitted pursuant to the organizational
documents of Borrower and the Loan Documents, or (y) the resignation of Sole
Member and the admission of an additional member of Borrower, if permitted
pursuant to the organizational documents of Borrower and the Loan Documents),
the person acting as an Independent Director of Borrower shall, without any
action of any Person and simultaneously with Sole Member ceasing to be a member
of Borrower, automatically be admitted as the sole member of Borrower (the
"SPECIAL MEMBER") and shall preserve and continue the existence of Borrower
without dissolution, (B) no Special Member may resign or transfer its rights as
Special Member unless (x) a successor Special Member has been admitted to
Borrower as a Special Member, and (y) such successor Special Member has also
accepted its appointment as an Independent Director and (C) except as expressly
permitted pursuant to the terms of this Agreement, Sole Member may not resign
and no additional member shall be admitted to Borrower; (v) has and will have an
operating agreement which provides that, as long as any portion of the Debt
remains outstanding, (A) Borrower shall be dissolved, and its affairs shall be
would up only upon the first to occur of the following: (x) the termination of
the legal existence of the last remaining member of Borrower or the occurrence
of any other event which terminates the continued membership of the last
remaining member of Borrower in Borrower unless the business of Borrower is
continued in a manner permitted by its operating agreement or the Delaware
Limited Liability Company Act (the "ACT") or (y) the entry of a decree of
judicial dissolution under Section 18-802 of the Act; (B) upon the occurrence of
any event that causes the last remaining member of Borrower to cease to be a
member of Borrower or that causes Sole Member to cease to be a member of
Borrower (other than (x) upon an assignment by Sole Member of all of its limited
liability company interest in Borrower and the admission of the transferee, if
permitted pursuant to the organizational documents of Borrower and the Loan
Documents, or (y) the resignation of Sole Member and the admission of an
additional member of Borrower, if permitted pursuant to the organizational
documents of Borrower and the Loan Documents), to the fullest extent permitted
by law, the personal representative of such member shall be authorized to, and
shall, within 90 days after the occurrence of the event that terminated the
continued membership of such member in Borrower, agree in writing to continue
the existence of Borrower and to the admission of the personal representative or
its nominee or designee, as the case may be, as a substitute member of Borrower,
effective as of the occurrence of the event that terminated the continued
membership of such member in Borrower; (C) the bankruptcy of Sole Member or a
Special Member shall not cause such member or Special Member, respectively, to
cease to be a member of Borrower and upon the occurrence of such an event, the
business of Borrower shall continue without dissolution; (D) in the event of
dissolution of Borrower, Borrower shall conduct only such activities as are
necessary to wind up its affairs (including the sale of the assets of Borrower
in an
5 - 4
orderly manner), and the assets of Borrower shall be applied in the manner, and
in the order of priority, set forth in Section 18-804 of the Act; and (E) to the
fullest extent permitted by law, each of Sole Member and the Special Members
shall irrevocably waive any right or power that they might have to cause
Borrower or any of its assets to be partitioned, to cause the appointment of a
receiver for all or any portion of the assets of Borrower, to compel any sale of
all or any portion of the assets of Borrower pursuant to any applicable law or
to file a complaint or to institute any proceeding at law or in equity to cause
the dissolution, liquidation, winding up or termination of Borrower.
5 - 5
SCHEDULE 6
FORM OF GUARANTY OF RECOURSE OBLIGATIONS
(See attached)
6 - 1
SCHEDULE 7
FORM OF LOAN ASSUMPTION AND RATIFICATION AGREEMENT
(See Attached)
7 - 1
SCHEDULE 8
RENT ROLL
(SEE ATTACHED)
8 - 1
SCHEDULE 9
BEHRINGER HARVARD HOLDINGS, LLC
CURRENTLY OUTSTANDING EQUITY
As of the date hereof, the outstanding equity of Behringer Harvard
Holdings, LLC is as follows:
--------------------------------------------------------------- -------------------------- ---------------------------
PERCENTAGE
INTEREST AS OF THE
MEMBER NAME SERIES DATE HEREOF
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ A 55.231%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ B 11.0%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III B 4.5%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ B 4.0%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ B 3.0%
--------------------------------------------------------------- -------------------------- ---------------------------
M. ▇▇▇▇▇ ▇▇▇▇▇▇ B 1.5%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ B 1.0%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ B 0.250%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. B 0.125%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee 0.125%
--------------------------------------------------------------- -------------------------- ---------------------------
Holland Realty Partners, L.P. C 9.3662%
--------------------------------------------------------------- -------------------------- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ C 6.1141%
--------------------------------------------------------------- -------------------------- ---------------------------
North Bosque Properties, L.P. C 3.7887%
--------------------------------------------------------------- -------------------------- ---------------------------
The only voting equity securities are the Series A Membership Interests. All or
a portion of the equity interests of each Messrs. Reihsen, Aisner, Bresky,
▇▇▇▇▇▇ and Schwaber vest over time or upon the occurrence of certain events
contingent upon continued employment with us or our subsidiaries. The holders of
the Series A Membership Interests have the option to purchase the unvested
portion of these interests at the book value thereof unless the holder is
terminated from employment without cause or he terminates his employment for
good reason, in which case the purchase price is the amount paid he originally
paid for the interest. If the holders of the Series A Membership Interests do
not exercise their option to purchase the unvested interests then all of the
members have a pro rata option to purchase such interests.
9 - 1
SCHEDULE 10
O&M PROGRAM
(SEE ATTACHED)
10- 1
SCHEDULE 11
FORM OF TIC BORROWER LIMITED LIABILITY COMPANY AGREEMENT
(SEE ATTACHED)
11 - 1
SCHEDULE 12
TENANT IN COMMON AGREEMENT
(SEE ATTACHED)
12 - 1
