EXHIBIT 99.1
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LOAN AGREEMENT
Dated as of April 21, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ AVENUE LP
as Borrower
And
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
as Lender
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TABLE OF CONTENTS
1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.................................1
1.1 SPECIFIC DEFINITIONS...........................................1
1.2 INDEX OF OTHER DEFINITIONS....................................12
1.3 PRINCIPLES OF CONSTRUCTION....................................14
2. GENERAL LOAN TERMS.....................................................14
2.1 THE LOAN......................................................14
2.2 INTEREST; MONTHLY PAYMENTS....................................14
2.2.1 GENERALLY............................................15
2.2.2 DEFAULT RATE.........................................15
2.2.3 TAXES 15
2.2.4 NEW PAYMENT DATE.....................................16
2.3 LOAN REPAYMENT................................................16
2.3.1 REPAYMENT............................................16
2.3.2 MANDATORY PREPAYMENTS................................16
2.3.3 DEFEASANCE...........................................17
2.3.4 OPTIONAL PREPAYMENTS.................................19
2.4 RELEASE OF PROPERTY...........................................19
2.4.1 RELEASE ON DEFEASANCE................................19
2.4.2 RELEASE ON PAYMENT IN FULL...........................19
2.5 PAYMENTS AND COMPUTATIONS.....................................19
2.5.1 MAKING OF PAYMENTS...................................19
2.5.2 COMPUTATIONS.........................................20
2.5.3 LATE PAYMENT CHARGE..................................20
3. CASH MANAGEMENT AND RESERVES...........................................20
3.1 CASH MANAGEMENT ARRANGEMENTS..................................20
3.2 REQUIRED REPAIRS..............................................20
3.2.1 COMPLETION OF REQUIRED REPAIRS.......................20
3.2.2 INTENTIONALLY OMITTED................................20
3.3 TAXES AND INSURANCE...........................................20
3.4 CAPITAL EXPENSE RESERVES......................................21
3.5 ROLLOVER RESERVES.............................................22
3.6 OPERATING EXPENSE SUBACCOUNT..................................23
3.7 CASUALTY/CONDEMNATION SUBACCOUNT..............................23
3.8 SECURITY DEPOSITS.............................................23
3.9 CASH COLLATERAL SUBACCOUNT....................................24
3.10 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS..............24
3.11 PROPERTY CASH FLOW ALLOCATION.................................25
4. REPRESENTATIONS AND WARRANTIES.........................................26
4.1 ORGANIZATION; SPECIAL PURPOSE.................................26
4.2 PROCEEDINGS; ENFORCEABILITY...................................26
4.3 NO CONFLICTS..................................................26
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4.4 LITIGATION....................................................27
4.5 AGREEMENTS....................................................27
4.6 TITLE.........................................................27
4.7 NO BANKRUPTCY FILING..........................................28
4.8 FULL AND ACCURATE DISCLOSURE..................................28
4.9 TAX FILINGS...................................................28
4.10 ERISA; NO PLAN ASSETS.........................................28
4.11 COMPLIANCE....................................................29
4.12 CONTRACTS.....................................................29
4.13 FEDERAL RESERVE REGULATIONS; INVESTMENT COMPANY ACT...........29
4.14 EASEMENTS; UTILITIES AND PUBLIC ACCESS........................29
4.15 PHYSICAL CONDITION............................................30
4.16 LEASES........................................................30
4.17 FRAUDULENT TRANSFER...........................................30
4.18 OWNERSHIP OF BORROWER.........................................31
4.19 PURCHASE OPTIONS..............................................31
4.20 MANAGEMENT AGREEMENT..........................................31
4.21 HAZARDOUS SUBSTANCES..........................................31
4.22 NAME; PRINCIPAL PLACE OF BUSINESS.............................32
4.23 OTHER DEBT....................................................32
5. COVENANTS..............................................................32
5.1 EXISTENCE.....................................................32
5.2 TAXES AND OTHER CHARGES.......................................32
5.3 ACCESS TO PROPERTY............................................33
5.4 REPAIRS; MAINTENANCE AND COMPLIANCE; ALTERATIONS..............33
5.4.1 REPAIRS; MAINTENANCE AND COMPLIANCE..................33
5.4.2 ALTERATIONS..........................................33
5.5 PERFORMANCE OF OTHER AGREEMENTS...............................34
5.6 COOPERATE IN LEGAL PROCEEDINGS................................34
5.7 FURTHER ASSURANCES............................................34
5.8 ENVIRONMENTAL MATTERS.........................................34
5.8.1 HAZARDOUS SUBSTANCES.................................34
5.8.2 ENVIRONMENTAL MONITORING.............................35
5.9 TITLE TO THE PROPERTY.........................................36
5.10 LEASES........................................................36
5.10.1 GENERALLY............................................36
5.10.2 MATERIAL LEASES......................................37
5.10.3 MINOR LEASES.........................................37
5.10.4 ADDITIONAL COVENANTS WITH RESPECT TO LEASES..........38
5.11 ESTOPPEL STATEMENT............................................38
5.12 PROPERTY MANAGEMENT...........................................39
5.12.1 MANAGEMENT AGREEMENT.................................39
5.12.2 TERMINATION OF MANAGER...............................39
5.13 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY......................40
5.14 ASSUMPTION IN NON-CONSOLIDATION OPINION.......................40
5.15 CHANGE IN BUSINESS OR OPERATION OF PROPERTY...................40
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5.16 DEBT CANCELLATION.............................................40
5.17 AFFILIATE TRANSACTIONS........................................40
5.18 ZONING........................................................40
5.19 NO JOINT ASSESSMENT...........................................40
5.20 PRINCIPAL PLACE OF BUSINESS...................................40
5.21 CHANGE OF NAME, IDENTITY OR STRUCTURE.........................40
5.22 INDEBTEDNESS..................................................41
5.23 LICENSES......................................................41
5.24 COMPLIANCE WITH RESTRICTIVE COVENANTS, ETC....................41
5.25 ERISA.........................................................41
5.26 PROHIBITED TRANSFERS..........................................42
5.26.1 GENERALLY............................................42
5.26.2 TRANSFER AND ASSUMPTION..............................42
5.27 LIENS.........................................................44
5.28 DISSOLUTION...................................................44
5.29 EXPENSES......................................................44
5.30 INDEMNITY.....................................................45
5.31 PATRIOT ACT COMPLIANCE........................................46
6. NOTICES AND REPORTING..................................................47
6.1 NOTICES.......................................................47
6.2 BORROWER NOTICES AND DELIVERIES...............................47
6.3 FINANCIAL REPORTING...........................................48
6.3.1 BOOKKEEPING..........................................48
6.3.2 ANNUAL REPORTS.......................................48
6.3.3 MONTHLY/QUARTERLY REPORTS............................48
6.3.4 OTHER REPORTS........................................49
6.3.5 ANNUAL BUDGET........................................49
7. INSURANCE; CASUALTY; AND CONDEMNATION..................................49
7.1 INSURANCE.....................................................49
7.1.1 COVERAGE 49
7.1.2 POLICIES 52
7.2 CASUALTY......................................................53
7.2.1 NOTICE; RESTORATION..................................53
7.2.2 SETTLEMENT OF PROCEEDS...............................53
7.3 CONDEMNATION..................................................54
7.3.1 NOTICE; RESTORATION..................................54
7.3.2 COLLECTION OF AWARD..................................54
7.4 APPLICATION OF PROCEEDS OR AWARD..............................55
7.4.1 APPLICATION TO RESTORATION...........................55
7.4.2 APPLICATION TO DEBT..................................55
7.4.3 PROCEDURE FOR APPLICATION TO RESTORATION.............56
8. DEFAULTS...............................................................56
8.1 EVENTS OF DEFAULT.............................................56
8.2 REMEDIES......................................................58
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8.2.1 ACCELERATION.........................................58
8.2.2 REMEDIES CUMULATIVE..................................58
8.2.3 SEVERANCE............................................59
8.2.4 DELAY 59
8.2.5 LENDER'S RIGHT TO PERFORM............................59
9. SPECIAL PROVISIONS.....................................................59
9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.................59
9.1.1 GENERAL; BORROWER COOPERATION........................59
9.1.2 USE OF INFORMATION...................................60
9.1.3 BORROWER OBLIGATIONS REGARDING DISCLOSURE DOCUMENTS..61
9.1.4 BORROWER INDEMNITY REGARDING FILINGS.................61
9.1.5 INDEMNIFICATION PROCEDURE............................62
9.1.6 CONTRIBUTION.........................................62
9.1.7 SEVERANCE OF LOAN....................................63
9.2 COSTS AND EXPENSES............................................63
10. MISCELLANEOUS..........................................................63
10.1 EXCULPATION...................................................63
10.2 BROKERS AND FINANCIAL ADVISORS................................65
10.3 RETENTION OF SERVICER.........................................66
10.4 SURVIVAL......................................................66
10.5 LENDER'S DISCRETION...........................................66
10.6 GOVERNING LAW.................................................66
10.7 MODIFICATION, WAIVER IN WRITING...............................67
10.8 TRIAL BY JURY.................................................68
10.9 HEADINGS/EXHIBITS.............................................68
10.10 SEVERABILITY..................................................68
10.11 PREFERENCES...................................................68
10.12 WAIVER OF NOTICE..............................................68
10.13 REMEDIES OF BORROWER..........................................69
10.14 PRIOR AGREEMENTS..............................................69
10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES...........................69
10.16 PUBLICITY.....................................................69
10.17 NO USURY 69
10.18 CONFLICT; CONSTRUCTION OF DOCUMENTS...........................70
10.19 NO THIRD PARTY BENEFICIARIES..................................70
10.20 ASSIGNMENT....................................................70
10.21 SET-OFF 70
10.22 CERTAIN ADDITIONAL RIGHTS OF LENDER...........................71
10.23 COUNTERPARTS..................................................72
10.24 YIELD MAINTENANCE PREMIUM.....................................72
Schedule 1 Required Repairs
Schedule 2 Exceptions to Representations and Warranties
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Schedule 3 Rent Roll
Schedule 4 Organization of Borrower
Schedule 5 Definition of Special Purpose Bankruptcy Remote Entity
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LOAN AGREEMENT
LOAN AGREEMENT dated as of April 21, 2005 (as the same may be modified,
supplemented, amended or otherwise changed, this "AGREEMENT") between BEHRINGER
HARVARD UTAH AVENUE LP, a Delaware partnership having an office at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (together with its permitted successors
and assigns, "BORROWER"), and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a
Delaware 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:
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: June 6, 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 MAJOR LEASE LEASING EXPENSES: actual out-of-pocket
expenses incurred by Borrower in connection with re-leasing the space demised
under a Major Lease at the Property pursuant to one or more Leases entered into
in accordance with the Loan Documents, including brokerage commissions and
tenant improvements, which expenses (i) are in any one instance, not in excess
of $25,000 and incurred in the ordinary course of business and on market terms
and conditions, or are otherwise (A) specifically approved by Lender in
connection with approving the applicable Lease, or (B) otherwise approved by
Lender, which approval shall not be unreasonably withheld or delayed, and (ii)
are substantiated by executed Lease documents and brokerage agreements, or other
applicable documentation.
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 its 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
its own funds.
AVAILABLE CASH: as of each Payment Date during the continuance
of a 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) hereof.
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 (2) consecutive Calculation
Dates or (iii) the commencement of a Lease Sweep Period, and shall end upon the
termination of such Lease Sweep Period.
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 twelve (12)-month
period ending with the most recently completed calendar month to (ii) the Debt
Service with respect to such period (but assuming,
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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) five percent (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: Wachovia 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.
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, are treated
as a single employer under any or all of Section 414(b), (c), (m) or (o) of the
Code.
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ESCROW AGREEMENT: that certain Depository Escrow Agreement dated
the date hereof by and among LBA-VIF Utah, LLC ("SELLER"), Borrower and Fidelity
National Title Company ("ESCROW HOLDER").
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.
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 I LP, 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
real estate investment trust for which Behringer Harvard Holdings, LLC, or an
Affiliate of it under its Control, serves as manager or advisor.
INTEREST PERIOD: (i) the period from the date hereof through the
first day thereafter that is the 5th day of a calendar month and (ii) each
period thereafter from the 6th day of each calendar month through the 5th 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 Payment Date to a New Payment Date in accordance with SECTION 2.2.4
hereof, 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 5.54% 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.
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LEASE SWEEP PERIOD: the period which shall commence and end as
hereinafter provided.
A LEASE SWEEP PERIOD shall commence on the first Payment Date
following the occurrence of any of the following:
(i) any Major Lease (or any portion thereof) is cancelled or
terminated prior to its stated expiration date; or
(ii) the date that is twelve (12) months prior to the end of
the term of any Major Lease (including any renewal terms), or
(iii) the date required under a Major Lease by which the
applicable Major Tenant is required to give notice of its exercise of a
renewal option thereunder (and such renewal has not been so exercised);
or
(iv) any Major Tenant ceases to operate its business in
substantially all of the space demised under its respective Major Lease
(i.e. "goes dark") (other than temporary cessation in connection with
renovations or restorations to such portion of such space); or
(v) the occurrence of a Major Tenant Insolvency Proceeding.
A LEASE SWEEP PERIOD shall end:
(1) with respect to a Lease Sweep Period caused by a matter
described in clauses (i), (ii), (iii), (iv) or (v) above, upon the earlier to
occur of (A) the date on which the subject Major Tenant irrevocably exercises
its renewal or extension option (or otherwise enters into an extension agreement
with Borrower and acceptable to Lender) with respect to at least 90% of the
space demised under its Major Lease, and in Lender's judgment, sufficient funds
have been accumulated in the Rollover Reserve Subaccount (during the continuance
of the subject Lease Sweep Period) to pay for all anticipated Approved Major
Lease Leasing Expenses for such Major Lease and any other anticipated expenses
in connection with such renewal or extension, or (B) the date on which at least
90% of the space demised under the subject Major Lease, has been fully leased or
subleased pursuant to a replacement Lease or replacement Leases (or subleases)
approved by Lender and entered into in accordance with SECTION 5.10 hereof (and
providing for an annual aggregate rent (determined by averaging the rents
provided under each replacement Lease or sublease over the entire term thereof)
equal to at least 90% of the annual rent that was payable under the subject
Major Lease that gave rise to the subject Lease Sweep Period), and all Approved
Major Lease Leasing Expenses (and any other expenses in connection with the
re-leasing (or subleasing) of the subject space) have been paid in full or
reserved for hereunder and/or (C) the determination by Lender, in its reasonable
discretion, that sufficient funds have been accumulated in the Rollover Reserve
Subaccount to pay for the anticipated expenses in connection with the re-leasing
(or subleasing) of the subject space that gave rise to the subject Lease Sweep
Period, including brokerage commissions and tenant improvements; and
(2) with respect to a Lease Sweep Period caused by a matter
described in clause (v) above, if the applicable Major Tenant Insolvency
Proceeding has terminated and the
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applicable Major Lease has been affirmed, assumed or assigned in a manner
satisfactory to Lender (or in the event of an involuntary Major Tenant
Insolvency Proceeding, upon the dismissal of the same).
LEASE TERMINATION PAYMENTS: (i) all fees, penalties, commissions
or other payments made to Borrower in connection with or relating to the
rejection, buy-out, termination, surrender or cancellation of any Lease
(including in connection with any bankruptcy proceeding), (ii) any security
deposits, or proceeds of letters of credit held by Borrower in lieu of cash
security deposits, which Borrower is permitted to retain pursuant to the
applicable provisions of any Lease and (iii) any payments made to Borrower
relating to unamortized tenant improvements and leasing commissions under any
Lease.
LEGAL REQUIREMENTS: statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting 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 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 Borrower or SPE
Party, 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 benefit of Lender in connection with the Loan, including the following,
each of which is dated as of the date hereof: (i) the Promissory Note or
Promissory 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) Assignment of Leases and Rents
from Borrower to Lender, (iv) Assignment of Agreements, Licenses, Permits and
Contracts from Borrower to Lender, (v) the Clearing Account Agreement (the
"CLEARING ACCOUNT AGREEMENT") among Borrower, Lender, Manager and 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 to such documents as they may
be) amended, restated, replaced, severed, split, supplemented or otherwise
modified from time to time (including pursuant to SECTION 9.1.7 hereof).
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MAJOR LEASE: (i) that certain Lease Agreement dated as of
December 1, 2003 between LBA-VIF Utah, LLC (Borrower's predecessor in interest),
as landlord, and Unisys Item Processing Services, L.L.C., as tenant (the "UNISYS
LEASE") and (ii) that certain Lease Agreement dated as of March 15, 2004 between
LBA-VIF Utah, LLC (Borrower's predecessor in interest), as landlord, and
Northrop Grumman Space & Mission Systems Corp., as tenant.
MAJOR TENANT: any tenant under a Major Lease (the tenant under
the Unisys Lease is referred to herein as the "UNISYS TENANT").
MAJOR TENANT INSOLVENCY PROCEEDING: (A) the admission in writing
by any Major Tenant of its inability to pay its debts generally, or the making
of a general assignment for the benefit of creditors, or the instituting by any
Major Tenant of any proceeding seeking to adjudicate it insolvent or seeking a
liquidation or dissolution, or the taking advantage by any Major Tenant of any
Insolvency Law (as hereinafter defined), or the commencement by any Major Tenant
of a case or other proceeding naming it as debtor under any Insolvency Law or
the instituting of a case or other proceeding against or with respect to any
Major Tenant under any Insolvency Law or (B) the instituting of any proceeding
against or with respect to any Major Tenant seeking liquidation of its assets or
the appointment of (or if any Major Tenant shall consent to or acquiesce in the
appointment of) a receiver, liquidator, conservator, trustee or similar official
in respect of it or the whole or any substantial part of its properties or
assets or the taking of any corporate, partnership or limited liability company
action in furtherance of any of the foregoing. As used herein, the term
"INSOLVENCY LAW" shall mean Title 11 of the United States Code (11 U.S.C. ▇▇.▇▇.
101 et seq.) as the same has been or may be amended or superseded from time to
time, or any other applicable domestic or foreign liquidation, conservatorship,
bankruptcy, receivership, insolvency, reorganization, or any similar debtor
relief laws affecting the rights, remedies, powers, privileges and benefits of
creditors generally.
MANAGEMENT AGREEMENT: the management agreement between Borrower
and Manager, pursuant to which Manager is to manage the Property, as same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time in accordance with SECTION 5.12 hereof.
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 hereof.
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: (i) any Major Lease and (ii) 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 five percent (5%) of the total annual
Rents or (iii) demise at least one (1) full floor of the Improvements.
7
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).
OFFICER'S CERTIFICATE: a certificate delivered to Lender by
Borrower which is signed by a senior executive officer of SPE Party.
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 6th 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 hereof, 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 June 6, 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 thirty (30)
days after Borrower first receives notice of such Lien, (v) Liens on direct or
indirect ownership interests in Borrower if the foreclosure thereon would
constitute a Permitted Transfer (subject to applicable notice requirements set
forth in the defined term "Permitted Transfers" (if applicable)), and (vi) such
other title and survey exceptions as Lender approves in writing in Lender's
discretion.
PERMITTED TRANSFERS:
(i) a Lease entered into in accordance with the Loan Documents;
(ii) a Permitted Encumbrance;
(iii) a Transfer and Assumption;
8
(iv) provided that no Event of Default shall then exist, a
Transfer of an interest in Borrower other than the partnership interest held by
SPE Party, or a Transfer of an interest in any SPE Party to any Person
(including the Transfer of publicly traded shares or of operating partnership
units in the Behringer Harvard 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 cause the
transferee (other than Key Principal), together with its Affiliates, to acquire
Control of Borrower or to increase its direct or indirect interest in Borrower
to an amount which equals or exceeds 49%, (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 or issuances of shares or "unit interests" in Harvard Fund
I or the Harvard REIT), and (C) the legal and financial structure of Borrower
and its members and the single purpose nature and bankruptcy remoteness of
Borrower and its members after such Transfer, shall satisfy Lender's then
current applicable underwriting criteria and requirements; and (D) if such
Transfer would cause the transferee to increase its direct or indirect interest
in Borrower or in SPE Party to an amount which equals or exceeds twenty percent
(20%), Lender shall have approved in its reasonable discretion such proposed
transferee, which approval shall be based upon Lender's satisfactory
determination as to the reputable character and creditworthiness of such
proposed transferee, as evidenced by credit and background checks performed by
Lender and such other financial statements and other information reasonably
requested by Lender;
(v) provided that no Event of Default shall then exist, a
Transfer of a direct or indirect interest in Borrower related to or in
connection with the estate planning of such transferor to (1) the spouse,
children or grandchildren of such transferor or (2) a trust established for the
benefit of such parties, provided that (A) such Transfer shall not cause a
change in the Control of 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 Borrower, and the single
purpose nature and bankruptcy remoteness of Borrower after such Transfer, shall
satisfy Lender's then current applicable underwriting criteria and requirements;
or
(vi) provided that no Event of Default shall then exist, a
Transfer of a direct or indirect interest in 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 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 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
Borrower and such
9
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.
PLAN: (i) an employee benefit or other plan established or
maintained by 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 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 located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ in El Segundo, California.
RATING AGENCY: each of Standard & Poor's, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("S&P"), ▇▇▇▇▇'▇ Investors Service, Inc.
("▇▇▇▇▇'▇"), and Fitch, Inc., a division of Fitch Ratings Ltd. ("FITCH") 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 the final Secondary Market
Transaction 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 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
10
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 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 the case may be, required
under the Note for all Payment Dates occurring after the Defeasance Date
(including 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.
SPE PARTY: Behringer Harvard Utah Avenue GP, LLC, a Delaware
limited liability company.
STATE: the state in which the Property is located.
STATED MATURITY DATE: May 6, 2015, as such date may be changed
in accordance with SECTION 2.2.4 hereof.
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: (i) 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 (x) all or part of
the Property (including any legal or beneficial direct or indirect interest
therein), (y) any direct or indirect interest in 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.
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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.
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 and/or
Monthly Interest Payment Amount, as the case may be, 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
payments of the Monthly Debt Service Payment Amount and/or Monthly Interest
Payment Amount, as the case may be, 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:
"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
"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
"CLEARING ACCOUNT" - 3.1
"CLEARING ACCOUNT AGREEMENT" - 1.1 (Definition of Loan Documents)
"CLEARING BANK" - 3.1
"CONDEMNATION" - 7.3.1
12
"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
"ENDORSEMENT" - 5.26
"ENVIRONMENTAL LAWS" - 4.21
"EQUIPMENT" - Mortgage
"ESCROW HOLDER" 1.1 (Definition of Escrow Agreement)
"EVENT OF DEFAULT" - 8.1
"EXCHANGE ACT" - 9.1.2
"FITCH" - 1.1 (Definition of Rating Agency)
"GCM GROUP" - 9.1.3
"GOVERNMENT LISTS" - 5.31
"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
"ISSUER" - 9.1.3
"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
"OFAC" - 5.31
"OPERATING EXPENSE SUBACCOUNT" - 3.6
"PATRIOT ACT" - 5.31
"PATRIOT ACT OFFENSE" - 5.31
"PERMITTED INDEBTEDNESS" - 5.22
"PERMITTED INVESTMENTS" - Deposit Account Agreement
"PERMITTED PREPAYMENT DATE" - 2.3.4
"POLICIES" - 7.1.2
"PRINCIPAL" - 2.1
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"PROCEEDS" - 7.2.2
"PROPOSED MATERIAL LEASE" - 5.10.2
"PROVIDED INFORMATION" - 9.1.1
"QUALIFIED CARRIER" - 7.1.1
"REGISTRATION STATEMENT" - 9.1.3
"REMEDIAL WORK" - 5.8.2
"REMIC PROVISIONS" - 1.1 (Definition of U.S. Obligations)
"RENT ROLL" - 4.16
"REQUIRED RECORDS" - 6.3.6
"REQUIRED REPAIRS" - 3.2.1
"RESTORATION" - 7.4.1
"ROLLOVER RESERVE SUBACCOUNT" - 3.5
"ROOF WORK" - 5.10.4
"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 ACCOUNT" - 3.8
"SECURITY DEPOSIT SUBACCOUNT" - 3.8
"SELLER" 1.1 (Definition of Escrow Agreement)
"SIGNIFICANT CASUALTY" - 7.2.2
"SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY" - 5.13
"SPRINGING RECOURSE EVENT" - 10.1
"SUBACCOUNTS" - 3.1
"SUCCESSOR BORROWER" - 2.3.3
"TAX AND INSURANCE SUBACCOUNT" - 3.3
"TOXIC MOLD" - 4.21
"TRANSFER AND ASSUMPTION" - 5.26
"TRANSFEREE BORROWER" - 5.26
"UNDERWRITER GROUP" - 9.1.3
"UNDERWRITERS" - 9.1.3
"UNISYS LEASE" - 1.1 (Definition of Major Lease)
"UNISYS TENANT" - 1.1 (Definition of Major Tenant)
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.
2. GENERAL LOAN TERMS
2.1 THE LOAN. Lender is making a loan (the "LOAN") to Borrower on
the date hereof, in the original principal amount (the "PRINCIPAL") of
$20,000,000, which shall mature on the Stated Maturity Date. Borrower
acknowledges receipt of the Loan, the proceeds of which are
14
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.
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 on the
unpaid Principal from the date hereof through and including May 5, 2005. On June
6, 2005 and each Payment Date thereafter through and including the Payment Date
immediately preceding the Amortization Commencement Date, Borrower shall pay
interest only 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 April 6, 2015, the Principal and interest
thereon at the Interest Rate shall be payable in equal monthly installments of
$114,060.24 (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
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) Borrower shall make such
deductions and (iii) 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 (10) 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
15
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 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 sixth day of each month (a "NEW PAYMENT DATE"), on
thirty (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 above, SECTION 2.3.2 below, SECTION 2.3.3 below, SECTION 2.4 below and
SECTION 7.4.2 below. 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
and 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 hereof. Each
16
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 above, 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 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. Additionally, notwithstanding anything to the contrary contained herein
or in any other Loan Document, no Yield Maintenance Premium shall be payable in
connection with any prepayment of the Debt required under Sections 5 and 6 of
the Mortgage. 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.
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:
(i) 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.
(ii) 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;
(iii) 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;
(iv) Borrower shall execute and deliver to Lender a
Security Agreement in respect of the Defeasance Collateral Account and the
Defeasance Collateral;
(v) 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
17
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;
(vi) Borrower shall deliver to Lender a Rating
Comfort Letter as to the Defeasance Event;
(vii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.3.3 have been
satisfied;
(viii) Borrower shall deliver a certificate of a "big
four" or other nationally recognized public accounting firm acceptable to Lender
certifying that (i) the Defeasance Collateral will generate monthly amounts
equal to or greater than the Scheduled Defeasance Payments, and (ii) the
securities that comprise the Defeasance Collateral are not subject to
prepayment, call or early redemption;
(ix) Borrower shall deliver such other certificates,
opinions, documents and instruments as Lender may reasonably request; and
(x) 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
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Rating Agencies shall require otherwise. Borrower shall transfer and assign all
obligations, rights and duties under and to the Defeased Note, together with the
Defeasance Collateral 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 fifteen (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(a) . If Borrower has elected to
defease the Note and the requirements of SECTION 2.3.3 above 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 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
19
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 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 due under any Loan Document is
not paid by Borrowers on the date on which it is due (other than the balloon
payment of Principal due on the Maturity Date or acceleration of the Loan) 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 five percent (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.
3. CASH MANAGEMENT AND RESERVES
3.1 CASH MANAGEMENT ARRANGEMENTS. Borrower shall cause all Rents to
be transmitted directly by non-residential tenants of the Property into an
Eligible 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 (2) 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
Borrower shall have no 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 1 hereto (the "REQUIRED REPAIRS") within six (6)
months of the date hereof or such shorter period of time for such item set forth
on SCHEDULE 1 hereto.
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3.2.2 INTENTIONALLY OMITTED.
3.3 TAXES AND INSURANCE. Borrower shall pay to Lender on each
Payment Date (i) one-twelfth (1/12th) of the Taxes that Lender estimates will be
payable during the next twelve (12) months in order to accumulate with Lender
sufficient funds to pay all such Taxes at least thirty (30) days prior to their
respective due dates and (ii) one-twelfth (1/12th) of the Insurance Premiums
that Lender estimates will be payable for the renewal of the coverage afforded
by the Policies upon the expiration thereof in order to accumulate with Lender
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies. 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 SECTION 5.2 hereof and SECTION 7.1 hereof, 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 hereof. 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.
3.4 CAPITAL EXPENSE RESERVES. Borrower shall pay to Lender $2,508.25
on each Payment Date. Lender will transfer such amounts into a Subaccount (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 that no Event of Default
has occurred and is continuing, Lender shall disburse funds held in the Capital
Reserve Subaccount to Borrower, within fifteen (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's 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
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as Lender shall reasonably request that the Approved Capital Expenses 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. (a) Borrower shall pay to Lender (i)
$1,100,000 on the date hereof and (ii) $9,406 on each Payment Date. Lender will
transfer such amount into a Subaccount (the "ROLLOVER RESERVE SUBACCOUNT").
Borrower shall also pay to Lender for transfer into the Rollover Reserve
Subaccount all Lease Termination Payments received by Borrower. If Lender
determines in its reasonable judgment that the funds in the Rollover Reserve
Subaccount will be insufficient to pay (or in excess of) the amounts due or to
become due for Approved Major Lease Leasing Expenses, Lender may increase (or
decrease) the monthly contribution required to be made by Borrower to the
Rollover Reserve Subaccount. Provided that no Event of Default has occurred and
is continuing, Lender shall disburse funds held in the Rollover Reserve
Subaccount to Borrower, within fifteen (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
Major Lease Leasing Expenses; (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 Major Lease Leasing Expenses;
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 Major Lease 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 Major Lease 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 Major Lease Leasing Expenses may, at Lender's option, be
made by joint check payable to Borrower and the payee of such Approved Major
Lease Leasing Expenses. Additionally, on each Payment Date occurring during the
continuance of a Lease Sweep Period, all Available Cash shall be paid to Lender
for deposit into the Rollover Reserve Subaccount, which funds shall be disbursed
for payment of Approved Major Lease Leasing Expenses in accordance with the
terms and conditions set forth in this Section 3.5(a).
(b) Any Lease Termination Payments and any other funds deposited
into the Rollover Reserve Subaccount from the Security Deposit Subaccount in
accordance with SECTION 3.8 hereof shall be applied, at Lender's election,
towards either (a) subject to the rights of Borrower under the applicable Lease,
rent arrearages under such Lease (or to cure any other tenant default under such
Lease), (b) debt service shortfalls that may arise as a result of a termination
of such Lease (and Borrower hereby authorizes Lender to disburse to itself any
such amounts without any request therefor by Borrower) or (c) funding any
Approved Major Lease Leasing Expenses, if applicable which are anticipated to
occur in connection with the re-tenanting of the space under the Lease that was
the subject of such termination (in accordance with the terms and conditions of
SECTION 3.5(A) above). Provided no Default or Event of Default is continuing,
upon the termination of the subject Lease Sweep Period, and Lender's receipt of
satisfactory evidence
22
that all Approved Major Lease Leasing Expenses incurred in connection therewith
(and any other expenses in connection with the re-tenanting of the applicable
space) have been paid in full (which evidence may include (i) a letter or
certification from the applicable broker, if any, that all brokerage commissions
payable in connection therewith have been paid and (ii) an estoppel certificate
executed by each applicable tenant which certifies that all contingencies under
such Lease to the payment of full rent (including Borrower's contribution to the
cost of any tenant improvement work) have been satisfied), any funds (if any)
remaining in the Rollover Reserve Subaccount that have been deposited therein as
a result of such Lease Sweep Period shall be disbursed to Borrower; PROVIDED,
however, if a Cash Trap Period is then continuing, then no such funds shall be
disbursed to Borrower, and all such funds shall instead be deposited into the
Cash Collateral Subaccount, to be applied in accordance with SECTION 3.9 hereof.
3.6 OPERATING EXPENSE SUBACCOUNT. On each Payment Date during the
continuance of a Cash Trap Period, a portion of the 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 five (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 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 ARTICLE 7 hereof. All amounts in the
Casualty/Condemnation Subaccount shall disbursed in accordance with the
provisions of ARTICLE 7 hereof.
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3.8 SECURITY DEPOSITS. Borrower shall keep all security deposits
under Leases in accordance with applicable Legal Requirements. After the
occurrence and during the continuance 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 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 the foregoing, if a Lease Sweep Period has
occurred and is then continuing during the continuance of any Cash Trap Period,
provided no Event of Default is then continuing, Lender shall allocate any funds
in the Cash Collateral Subaccount to the Rollover Reserve Subaccount to be
applied in accordance with the terms and conditions of Section 3.5(a) 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, Borrower hereby pledges and
assigns to Lender, and grants to Lender a security interest in, all 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
created pursuant to this Agreement (collectively, the "CASH MANAGEMENT
ACCOUNTS"). 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, 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
24
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 hereof;
(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 Debt Service
Payment Amount or the Monthly Interest 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 required under SECTION 3.4 hereof;
(v) Fifth, to make payments into the Rollover
Reserve Subaccount as required under SECTION 3.5(A) hereof;
(vi) Sixth, during the continuance of a Cash Trap
Period, to make payments for Approved Operating Expenses as required
under SECTION 3.6 hereof;
(vii) Seventh, during the continuance of a Lease Sweep
Period (provided no other Cash Trap Period is then continuing), to make
payments in an amount equal to all remaining Available Cash on such
Payment Date into the Rollover Reserve Subaccount in accordance with
SECTION 3.5(A) hereof; (viii) Eighth, 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 hereof; and
(ix) Lastly, provided that no Cash Trap Period is
then continuing, payments to Borrower of any remaining amounts.
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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 (ix) shall be made on a weekly basis.
(b) The failure of Borrower to make all of the payments
required under clauses (i) through (viii) of Section 3.11(a) above 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.
(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.
4. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as of the date hereof that, except to
the extent (if any) disclosed on SCHEDULE 2 hereto with reference to a specific
Section of this ARTICLE 4:
4.1 ORGANIZATION; SPECIAL PURPOSE. Each of Borrower and SPE Party
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 of Borrower and SPE Party 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 of Borrower and
SPE Party is a Special Purpose Bankruptcy Remote Entity.
4.2 PROCEEDINGS; ENFORCEABILITY. Borrower has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents. The Loan Documents have been duly executed and delivered by Borrower
and constitute legal, valid and binding obligations of Borrower enforceable
against 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 are not subject
to, and Borrower has not 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 Borrower
pursuant to the terms of, any agreement or instrument to which 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
26
over 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, Borrower's performance thereunder, the
recordation of the Mortgage, or the exercise of any remedies by Lender. Any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by 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 Borrower, SPE Party, the Manager or the
Property, which, if adversely determined, might materially adversely affect the
condition (financial or otherwise) or business of Borrower, Manager or the
condition or ownership of the Property.
4.5 AGREEMENTS. Borrower is not a party to any agreement or
instrument or subject to any restriction which might adversely affect Borrower
or the Property, or 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 it is a party or by which it 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, will
create (i) a valid, perfected first priority lien on Borrower's interest in that
portion of the Property constituting interests in real estate (including
fixtures) and (ii) to the extent that a security interest therein may be created
under the Uniform Commercial Code and perfected by the filing of a UCC Financing
Statement, valid and perfected first priority security interests in and to, and
perfected collateral assignments of, all personalty (including the Leases), all
in accordance with the terms thereof, 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 Improvements included in determining the appraised value of the Property
lie wholly within the
27
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. 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 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 it. In addition, neither Borrower nor SPE
Party nor any principal nor Affiliate of either has been a party to, or the
subject of a Bankruptcy Proceeding for the past ten (10) years.
4.8 FULL AND ACCURATE DISCLOSURE. No statement of fact made by
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 Borrower
that has not been disclosed to Lender which adversely affects, or, as far as
Borrower can foresee, might adversely affect, the Property or the business,
operations or condition (financial or otherwise) of 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 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 has no 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 Borrower or the Property from that set
forth in said financial statements.
4.9 TAX FILINGS. To the extent required, 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 Borrower. Borrower believes that its tax returns (if any) properly reflect
the income and taxes of 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 ERISA; NO PLAN ASSETS. As of the date hereof and throughout the
Term (i) Borrower is not and will not 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 Borrower constitutes or will constitute "plan assets" of one or more such
plans within the meaning of 29 C.F.R. Section 2510.3-101, (iii) Borrower is not
and will not be a "governmental plan" within the meaning of Section 3(32) of
ERISA, and (iv) transactions by or with Borrower are not and will not be subject
to state
28
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. 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 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 (1) 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 (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 (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
29
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 3 (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: (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 thirty (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 hereof; (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 the 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 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.
30
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, 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 Borrower).
4.18 OWNERSHIP OF BORROWER. The sole general partner of Borrower is
the SPE Party. The Harvard REIT Operating Partnership is (i) the sole member of
SPE Party and (ii) the limited partner of Borrower. 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
partnership and membership interests in Borrower and SPE Party are owned free
and clear of all Liens, warrants, options and rights to purchase. 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.
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.
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 (including with respect to Toxic Mold), 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,
31
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 Borrower's knowledge, after due inquiry, no
Hazardous Substances are or have been (including the period prior to 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 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, after due inquiry, no Toxic
Mold is on or about the Property which requires remediation; (vi) no underground
storage tanks exist on the Property and the Property has never been used as a
landfill; and (vii) there have been no environmental investigations, studies,
audits, reviews or other analyses conducted by or on behalf of 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 and has not done and will not do business under any
name other than its actual name set forth herein. The principal place of
business of Borrower is its primary address for notices as set forth in SECTION
6.1 hereof, 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.
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, warranties and
covenants set forth in SECTION 4.21 above shall survive in perpetuity.
5. COVENANTS
Until the end of the Term, Borrower hereby covenants and agrees with Lender
that:
5.1 EXISTENCE. Each of Borrower and SPE Party 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 hereof). Borrower shall not suffer and shall promptly cause to be
paid and discharged any Lien against the Property, and shall promptly pay for
all
32
utility services provided to the Property. After prior notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application 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 Borrower is subject and shall not
constitute a default thereunder, (iv) no part of or interest in the Property
will be in 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 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).
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 below 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 (3)
Business Days after 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 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. Borrower shall not
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
33
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.
5.5 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every term to be observed or performed by it pursuant to the
terms of any agreement or instrument affecting or pertaining to the Property,
including the Loan Documents. Additionally, Borrower shall enforce all of
Seller's obligations under the Escrow Agreement (if any), in accordance with the
terms set forth therein. Additionally, Borrower shall not authorize any
disbursement of funds under the Escrow Agreement to Seller, unless Borrower
first deliver to Lender an Officer's Certificate certifying that all conditions
under the Escrow Agreement with respect to such disbursement have been
satisfied, which Officer's Certificate shall be accompanied by all items and
information delivered under the Escrow Agreement with respect to such
disbursement, and if reasonably requested by Lender such additional information,
evidence or backup with respect to such disbursement to Seller.
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 Borrower and SPE Party 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 Borrower owns or is in
possession of the Property, Borrower shall (i) keep the Property free from
Hazardous Substances and in compliance with all Environmental Laws, (ii)
promptly notify Lender if Borrower shall become aware that (A) any Hazardous
Substance is on or near the Property, (B) the Property is in
34
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 Borrower becomes aware of same, at Borrower's sole expense.
Nothing herein shall prevent 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 Borrower or the Property or
any party occupying the Property relating to any loss or injury resulting from
any Hazardous Substance, and (iii) 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 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 thirty (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 Borrower,
or presently exists or is reasonably suspected of existing, Borrower
35
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
thirty (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 Borrower or such Remedial Work violating any
Environmental Law, or (z) if Borrower, at its expense and after prior written
notice to Lender, is contesting by appropriate legal, administrative or other
proceedings, conducted in good faith and with due diligence, the need to perform
Remedial Work. Borrower shall have the right to contest the need to perform such
Remedial Work, provided that, (1) Borrower is 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 Borrower fails to promptly perform the
Remedial Work being contested, and if Borrower fails to prevail in contest,
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 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.
(d) Borrower shall not install or permit to be installed on
the Property any underground storage tank.
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.
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5.10.1 GENERALLY. Upon request, Borrower shall furnish Lender
with executed copies of all Leases then in effect. 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
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") 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 ten (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 ten (10) Business Days will constitute a deemed
approval) and Lender fails to reject the request in writing delivered to
Borrower within ten (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.
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, (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 (3) years or greater than ten (10) years, (c) shall provide for
automatic self-operative subordination to the
37
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 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 (10) 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. 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 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 (1) 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) without the prior consent
of Lender, which consent shall not, so long as no Event of Default is
continuing, be unreasonably withheld or delayed. Without limiting the provisions
of this Section 5.10.4, Borrower agrees that in the event Borrower receives
written notice after the date hereof from the Unisys Tenant requiring Borrower
to further repair the roof of the Property (in connection with prior roof leaks,
and as more particularly described in correspondence from the Unisys Tenant to
Borrower's predecessor in interest dated January 6, 2005 and February 28, 2005),
Borrower shall (i) notify Lender in writing within three Business Days after
Borrowers first receive such notice and (ii) promptly and expeditiously take all
steps necessary (and pay all costs and expenses related thereto) to repair the
same to satisfaction of the Unisys Tenant (the "ROOF WORK").
5.11 ESTOPPEL STATEMENT. After request by Lender, Borrower shall
within ten (10) 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
38
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
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 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 (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 hereafter 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 below); (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 Borrower.
5.12.2 TERMINATION OF MANAGER. If (i) as of any Calculation
Date, Borrower fails 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, provided that such successor
manager and Management Agreement shall be approved in writing by Lender in
Lender's discretion and, after a Secondary Market Transaction, the applicable
Rating Agencies (and, after a Secondary Market Transaction, Lender's approval
may be conditioned upon Borrower delivering a Rating Comfort Letter as to such
successor manager and Management Agreement). If at any time Lender consents to
the appointment of a new manager, such new manager and Borrower shall, as a
39
condition of Lender's consent, execute a consent and subordination of management
agreement substantially in the form of the Consent and Subordination of Manager
of even date herewith executed and delivered by Manager to Lender.
5.13 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY. Each of Borrower and
SPE Party shall at all times be a Special Purpose Bankruptcy Remote Entity.
Neither Borrower nor SPE Party shall directly or indirectly make any change,
amendment or modification to its or SPE Party's organizational documents, or
otherwise take any action which could result in Borrower or SPE Party 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. Borrower and SPE Party
shall each conduct its 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.
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 property 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 Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
5.17 AFFILIATE TRANSACTIONS. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or any of the partners
of Borrower except in the ordinary course of business and on terms which are
fully disclosed to Lender in advance and are no less favorable to Borrower or
such Affiliate than would be obtained in a comparable arm's-length transaction
with an unrelated third party.
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.
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5.20 PRINCIPAL PLACE OF BUSINESS. Borrower shall not change its
principal place of business or chief executive office without first giving
Lender thirty (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 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 Borrower's structure, without first obtaining
the prior written consent of Lender. 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, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Borrower intends to operate the Property, and representing and warranting that
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 2% 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 2% 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 Transfer and
Assumption).
5.24 COMPLIANCE WITH RESTRICTIVE COVENANTS, ETC. Borrower will not
enter into, 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.
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(1) Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(2) Borrower shall not maintain, sponsor, contribute to or
become obligated to contribute to, or suffer or permit any ERISA Affiliate of
Borrower to, maintain, sponsor, contribute to or become obligated to contribute
to, any Plan or any Welfare Plan or permit the assets of Borrower to become
"plan assets," whether by operation of law or under regulations promulgated
under ERISA.
(i) 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) Borrower is not and does
not maintain an "employee benefit plan" as defined in Section 3(3) of ERISA,
which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(32) of ERISA; (B) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) the assets of Borrower do not constitute "plan assets" within the
meaning of 29 C.F.R. Section 2510.3-101.
5.26 PROHIBITED TRANSFERS.
5.26.1 GENERALLY. Borrower shall not directly or indirectly
make, suffer or permit the occurrence of any Transfer other than a Permitted
Transfer.
5.26.2 TRANSFER AND ASSUMPTION.
(a) Notwithstanding the foregoing and subject to the terms
and satisfaction of all the conditions precedent set forth in this SECTION
5.26.2, Borrower shall have a one-time right to Transfer the Property to another
party or to multiple parties as part of a tenant-in-common form of ownership (in
each such case, 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 5.26.2. 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:
(i) No Event of Default has occurred and is
continuing;
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(ii) 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;
(iii) 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;
(iv) 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;
(v) If the Loan has not been the subject of a
Secondary Market Transaction, then Lender shall have determined 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;
(vi) 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;
(vii) 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;
(viii) The identity, experience, and financial
condition of the Transferee Borrower and the replacement guarantors and
indemnitors shall be satisfactory to Lender;
(ix) The proposed property manager and proposed
Management Agreement shall be satisfactory to Lender and the applicable Rating
Agencies; and
(x) If the Transfer and Assumption is being made in
connection with a Transfer of the Property to tenants-in-common, the
tenant-in-common structure and documentation (including the proposed
tenant-in-common agreement and property management agreement) shall be approved
by Lender, in Lender's reasonable discretion, and will be consistent with
Lender's then standards and prevailing Rating Agency standards with respect to
tenant-in-common structures, and the tenant-in-common Transferee Borrowers shall
execute such amendments or modifications to the Loan Documents (at Borrower's or
Transferee Borrower's sole cost and expense), as reasonably required by Lender
in order to reflect such standard tenant-in-common provisions that are then
being used by Lender in connection with tenant-in-common transactions (e.g.,
with respect to representations, warranties, covenants and non-recourse carveout
provisions and guarantees in connection therewith).
43
(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:
(i) Borrower shall deliver to Lender an assumption
fee in the amount of one percent (1%) of the then unpaid Principal;
(ii) 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;
(iii) 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);
(iv) 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 Assumption documents) to the Title
Insurance Policies in form and substance acceptable to Lender, in Lender's
reasonable discretion (the "ENDORSEMENT"); and
(v) 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 Borrower or SPE Party, except Liens in favor of Lender and Permitted
Encumbrances and Permitted Transfers, unless such Lien is bonded or discharged
within thirty (30) days after Borrower first receives notice of such Lien (or is
otherwise being contested in accordance with the express provisions and
conditions set forth in this Agreement).
5.28 DISSOLUTION. Borrower shall not (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 Borrower except to the extent expressly permitted by the Loan Documents.
44
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 or Servicer 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 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 (10) days after
demand may be paid from any amounts in the Deposit Account, with notice thereof
to 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 Borrower of its obligations under, or any misrepresentation by
Borrower contained in, any Loan Document; (ii) the use or intended use of the
proceeds of the Loan; (iii) any information provided by 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
45
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 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 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 PATRIOT ACT COMPLIANCE. (a) Borrower will use its 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 Borrower fails to
comply with the Patriot Act or any such requirements of governmental
authorities, then Lender may, at its option, cause 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 Borrower nor any partner in Borrower or member
of such partner nor any owner of a direct or indirect interest in 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 (as
defined below) or in any enabling legislation or other Presidential Executive
Orders in respect thereof, (c) has been
46
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: Greenwich Capital Financial Products,
Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Loan
Department, Telecopier (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to: ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇; if to Borrower: c/o HPT Management Services LP,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇. 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; 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. Borrower shall (a) give prompt
written notice to Lender of: (i) any litigation, governmental proceedings or
claims or investigations pending or threatened against Borrower or SPE Party
which might materially adversely affect Borrower's or SPE Party's condition
(financial or otherwise) or business or the Property; (ii) any material adverse
change in Borrower's or SPE Party's condition, financial or otherwise, or of the
occurrence of any Default or Event of Default of which Borrower has knowledge;
and (b) furnish and provide to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and
47
agreements, reasonably requested, from time to time, by Lender. 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 its 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. 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 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
Borrower, Manager or any Affiliate of Borrower. Lender shall have the right from
time to time during normal business hours upon reasonable notice to examine such
books, records and accounts at the office of Borrower 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
Borrower's annual financial statements 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 Borrower and the Property
in such detail as Lender may request. Each such statement (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 (20%)
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 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 thirty (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
48
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 ten percent (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) a statement that
Borrower has not incurred any indebtedness other than indebtedness permitted
hereunder; (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. Borrower shall furnish to Lender, within
ten (10) Business Days after request, such further detailed information with
respect to the operation of the Property and the financial affairs of Borrower,
SPE Party or Manager as may be reasonably requested by Lender or any applicable
Rating Agency.
6.3.5 ANNUAL BUDGET. Borrower shall prepare and submit (or
shall cause Manager to prepare and submit) to Lender within thirty (30) days
after a Cash Trap Period 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 the Borrower's anticipated operating income and 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)).
49
7. INSURANCE; CASUALTY; AND CONDEMNATION
7.1 INSURANCE.
7.1.1 COVERAGE. Borrower, at its sole cost, for the mutual
benefit of 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 for ordinance of law coverage, costs of demolition and
increased cost of construction in amounts 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, (ii) have
deductibles no greater than the lesser of $10,000 or five percent (5%) of Net
Operating Income per occurrence, (iii) be paid annually in advance and (iv) be
on a replacement cost basis and contain either no coinsurance or, if
coinsurance, an agreed amount endorsement, and shall cover, without limitation,
all tenant improvements and betterments that Borrower is required to insure on a
replacement cost basis. If the insurance required under this subparagraph is not
obtained by blanket insurance policies, the insurance policy shall be endorsed
to also provide guaranteed building replacement cost to the Improvements and
such tenant improvements in an amount to be subject to the consent of Lender,
which consent shall not be unreasonably withheld. Lender shall be named
Mortgagee and 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 agreed to by Lender and (ii) have a maximum permissible deductible of $3,000.
(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 with no deductible or self
insured retention; together with at least $25,000,000 excess and/or umbrella
liability insurance for any and all claims. 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.
50
(d) Rental loss and/or business interruption insurance (i)
with Lender being named as "Lender Loss Payee", (ii) in an amount equal to 100%
of the projected Rents from the Property during the period of restoration; and
(iii) containing an extended period of indemnity endorsement which provides that
after the physical loss to the Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it was
at prior to the loss, or the expiration of eighteen (18) months from the date
that the Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to the end of
such period. The amount of such 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 lesser 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 ordinance of law, 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.
(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; if 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; if 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
51
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) above 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 below (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 above 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 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 ▇▇▇▇▇ evidence 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 Borrower, Lender nor
any other party shall be a co-insurer under the Policies, (B) that Lender shall
receive at least thirty (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
52
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
hereof) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If Borrower does not furnish such evidence
and receipts at least thirty (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 thirty (30) days after its effective date. Within thirty (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.
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 Default or 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 equals or 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 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
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Casualty/Condemnation Subaccount and disbursed in accordance herewith. If
Borrower or any party other than Lender is a payee on any check representing
Proceeds with respect to a Significant Casualty, Borrower shall immediately
endorse, and cause all such third parties to endorse, such check payable to the
order of Lender. 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 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
54
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
twenty five percent (25%) of the unpaid Principal; (ii) in the reasonable
judgment of Lender, the Property can be restored within nine (9) months after
all applicable restoration permits have been obtained, and prior to six (6)
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) thirty percent (30%), in the case of an Insured Casualty or (y)
fifteen percent (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 sixty-five percent (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 Default or 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 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 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 and other regularly scheduled
reserve payments required hereunder, as reasonably determined by Lender.
7.4.2 APPLICATION TO DEBT. Except as provided in SECTION 7.4.1
above, 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 below. Any such
55
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 pays 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 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 evidence that funds in that amount are irrevocably committed 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 (iv) 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 ninety percent (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
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:
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(a) any portion of the Debt is not paid when due or any
other amount under SECTION 3.11(A)(I) THROUGH (VIII) hereof 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 hereof), subject to Borrower's right
to contest Taxes in accordance with SECTION 5.2 hereof;
(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 ten (10) days
after request;
(d) a Transfer other than a Permitted Transfer occurs;
(e) any representation or warranty made by Borrower or
Guarantor or in any Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished by 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) Borrower, SPE Party or Guarantor (i) shall make an
assignment for the benefit of creditors, or (ii) shall generally not be paying
its debts as they become due;
(g) a receiver, liquidator or trustee shall be appointed for
Borrower, SPE Party or Guarantor; or Borrower, SPE Party 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, Borrower, SPE Party or Guarantor, as the case may be; or any proceeding
for the dissolution or liquidation of Borrower, SPE Party or Guarantor shall be
instituted; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower, SPE Party or
Guarantor, as the case may be, only upon the same not being discharged, stayed
or dismissed within sixty (60) days;
(h) Borrower breaches any covenant contained in SECTIONS
5.12.1 (A) - (F), 5.13, 5.15, 5.22, 5.25 OR 5.28 hereof;
(i) except as expressly permitted hereunder, the alteration,
improvement, demolition or removal of all or any 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;
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(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) 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 (10) 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 thirty (30) days
after notice from Lender in the case of any other default; provided, however,
that if such non-monetary default is susceptible of cure but cannot reasonably
be cured within such thirty (30)-day period, and Borrower (or Guarantor, if
applicable) shall have commenced to cure such default within such thirty
(30)-day period and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30)-day period shall be extended for 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 sixty (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 above) 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 above, 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 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, 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
58
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 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. After the occurrence of an Event of Default,
Lender shall have the right from time to time to sever the Note and the other
Loan Documents into one or more separate notes, mortgages and other security
documents 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. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender 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, 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 Borrower fails to perform
any covenant or obligation contained herein and such failure shall continue for
a period of five (5) 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 Borrower of any such failure.
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9. SPECIAL PROVISIONS
9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.
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) to provide such financial and other
information with respect to the Property, Borrower and its 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 its 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 and SPE Party 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
60
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 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: (a) 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; and (b) indemnify (in a separate instrument of indemnity, if so
requested by Lender) (i) any underwriter, syndicate member or placement agent
(collectively, the "UNDERWRITERS") retained by Lender or its issuing company
affiliate (the "ISSUER") in connection with a Secondary Market Transaction, (ii)
Lender and (iii) the Issuer that is named in the Disclosure Document or
registration statement relating to a Secondary Market Transaction (the
"REGISTRATION STATEMENT"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"GCM GROUP"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the "UNDERWRITER GROUP") for any losses,
claims, damages or liabilities (the "LIABILITIES") to which Lender, the GCM
Group or the Underwriter Group may become subject (including reimbursing all of
them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue statement of any material fact contained in any
of the Provided Information or in any of the applicable portions of such
sections of the Disclosure Document applicable to Borrower, Manager, the
Property or the Loan, or arise out of or are based upon the omission to state
therein a material fact required to be stated in the applicable portions of such
sections or necessary in order to make the statements in the applicable portions
of such sections in light of the circumstances under which they were made, not
misleading; provided, however, that Borrower shall not be required to indemnify
Lender for any Liabilities relating to untrue statements or omissions which
Borrower identified to Lender in writing at the time of Borrower's examination
of such Disclosure Document or (ii) any information or document not provided to
or certified by Borrower. 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 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.
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9.1.4 BORROWER INDEMNITY REGARDING FILINGS. In connection with
filings under the Exchange Act, Borrower shall (i) indemnify Lender, the GCM
Group and the Underwriter Group for any Liabilities to which Lender, the GCM
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 GCM
Group or the Underwriter Group for any legal or other expenses actually incurred
by Lender, GCM 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 above or SECTION 9.1.4 above 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 it 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 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 above or SECTION 9.1.4 above 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 above or SECTION 9.1.4 above, 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
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contribution to which the respective parties are entitled, the following factors
shall be considered: (i) the GCM 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 (2) 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 two (2) Business Days after such request, such documentation as Lender
may reasonably request to evidence and/or effectuate any such modification or
severance.
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 its 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. Subject to the qualifications below, Lender shall
not enforce the liability and obligation of 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 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 Borrower only to the
extent of 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 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 10.1 shall not, however, (i) constitute a waiver, release or
impairment of any obligation evidenced or secured by any Loan
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Document; (ii) impair the right of Lender to name Borrower 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
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys' fees and costs reasonably incurred) arising out of or in
connection with the following (all such liability and obligation of Borrower for
any or all of the following being referred to herein as "BORROWER'S RECOURSE
LIABILITIES"):
(a) fraud or intentional misrepresentation by
Borrower, SPE Party 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 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 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
application of such funds is prevented by bankruptcy, receivership, or
similar judicial proceeding in which 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 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 Borrower
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;
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(g) the breach of any representation, warranty,
covenant or indemnification in any Loan Document concerning
Environmental Laws or Hazardous Substances, including SECTION 4.21
hereof and SECTION 5.8 hereof, and clauses (viii) through (xi) of
SECTION 5.30 hereof;
(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
4, if the same occurs as a result of the economic performance of the
Property); or
(i) the failure by Borrower to perform the Roof Work
if and as required pursuant to the last sentence of Section 5.10.4
(including any claims made by the Unisys Tenant with respect thereto and
any termination of the Unisys Lease as a result thereof).
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, (B) the covenant of Borrower set forth in
the last sentence of Section 5.10.4 shall be fully recourse to Borrower, and (C)
Lender's agreement not to pursue personal liability of Borrower 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 Borrower 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) hereof shall have occurred or (ii) the
occurrence of any condition or event described in either Section 8.1(f) (with
respect to Borrower only) or Section 8.1(g) (with respect to Borrower only)
(each, an "INSOLVENCY ACTION") and, with respect to such Insolvency Action
described in Section 8.1(g), either Borrower, Guarantor or any Person owning an
interest (directly or indirectly) in 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.
10.2 BROKERS AND FINANCIAL ADVISORS. (a) 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. ("BROKER"), whose fees shall be paid by Borrower pursuant to a
separate agreement. 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 (including Broker) 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.
(b) Notwithstanding anything in Section 10.2(a) above to the
contrary, Borrower hereby acknowledges that (i) at Lender's sole discretion,
Broker may receive further
65
consideration (or fees) from Lender relating to the Loan or any other matter for
which Lender may elect to compensate Broker that are in addition to any fees
that are paid by Borrower at closing. In addition, the Broker may act as a
primary servicer or sub-servicer for the Loan and receive fees relating to that
activity, or a buyout of such primary servicing or sub-servicing as determined
by Lender. Borrower agrees that Lender is not responsible for any recommendation
or advice given to Borrower by Broker, that Lender and Borrower are dealing at
arm's length with each other in a commercial lending transaction, and that no
fiduciary or other special relationship exists or shall exist between them.
Further, Borrower acknowledges and agrees that Lender shall have no obligation
to disclose to Borrower the existence of any such agreement or the amount of any
such additional consideration paid or to be paid to Broker whether in connection
with the Loan or otherwise.
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.
Borrower shall pay any reasonable fees and expenses of the Servicer (i) in
connection with a release of the Property (or any portion thereof), (ii) from
and after a transfer of the Loan to any "master servicer" or "special servicer"
for any reason, including without limitation, as a result of a decline in the
occupancy level of the Property, (iii) in connection with an assumption or
modification of the Loan, (iv) in connection with the enforcement of the Loan
Documents or (v) in connection with any other action or approval 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 is 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.
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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.
(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
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS AS SET FORTH
ABOVE. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.
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 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
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purpose, for which given. Except as otherwise expressly provided herein, no
notice to or demand on Borrower shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances. 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 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. 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 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.
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10.12 WAIVER OF NOTICE. Borrower shall not be entitled to any notices
of any nature whatsoever from Lender except with respect to matters for which
this Agreement or any other Loan Document specifically and expressly requires
the giving of notice by Lender to Borrower and except with respect to matters
for which Borrower is not, pursuant to applicable Legal Requirements, permitted
to waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which no Loan
Document specifically and expressly requires the giving of notice by Lender to
Borrower.
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.
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. Borrower hereby waives the
right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against it by Lender or its agents, 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 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
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 GCM 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 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 Borrower's
approval.
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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 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 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. Borrower
may not assign its rights, title, interests or obligations under this Loan
Agreement or under any of the Loan Documents.
10.21 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 BORROWER, ANY SUCH NOTICE BEING EXPRESSLY WAIVED BY BORROWER TO
THE EXTENT PERMITTED BY APPLICABLE
70
LAW, UPON ANY AMOUNT BECOMING DUE AND PAYABLE BY 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.
10.22 CERTAIN ADDITIONAL RIGHTS OF LENDER. Notwithstanding anything to
the contrary which may be contained in this Agreement, Lender shall have:
(i) the right to routinely consult with Borrower's management
regarding the significant business activities and business and financial
developments of Borrower, provided, however, that such consultations
shall not include discussions of environmental compliance programs or
disposal of hazardous substances. Consultation meetings should occur on
a regular basis (no less frequently than quarterly) with Lender having
the right to call special meetings at any reasonable times;
(ii) the right, in accordance with the terms of this Agreement, to
examine the books and records of Borrower at any time upon reasonable
notice;
(iii) the right, in accordance with the terms of this Agreement, to
receive monthly, quarterly and year-end financial reports, including
balance sheets, statements of income, shareholder's equity and cash
flow, a management report and schedules of outstanding indebtedness;
(iv) the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to restrict financing to
be obtained with respect to the Properties so long as any portion of the
Debt remains outstanding;
(v) the right, without restricting any other right of Lender under
this Agreement or the other Loan Documents (including any similar
right), to restrict, upon the occurrence of an Event of Default,
Borrower's payments of management, consulting, director or similar fees
to Affiliates of Borrower from the Rents;
(vi) the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to approve any operating
budget and/or capital budget of Borrower;
(vii) the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to approve any acquisition
by Borrower of any other significant property (other than personal
property required for the day to day operation of the Property); and
71
(viii) the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to restrict the transfer
of interests in Borrower held by its members, and the right to restrict
the transfer of interests in such member, except for any transfer that
is a Permitted Transfer.
The rights described above may be exercised directly or indirectly by
any Person that owns substantially all of the ownership interests in Lender.
10.23 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.
10.24 YIELD MAINTENANCE PREMIUM. Borrower acknowledges 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
agrees that, except as expressly provided in ARTICLE 7 hereof, 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 acknowledges that (A) it is a knowledgeable real
estate developer and/or investor; (B) it fully understands 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 acknowledges that the provisions of
this Agreement limiting the right of prepayment and providing for the payment of
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. BY INITIALING BELOW, BORROWER EXPRESSLY
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ACKNOWLEDGES AND UNDERSTANDS THAT, PURSUANT TO THE TERMS OF THIS AGREEMENT,
BORROWER HAS AGREED THAT IT DOES NOT HAVE THE RIGHT TO PREPAY THE LOAN IN WHOLE
OR IN PART WITHOUT PREMIUM EXCEPT AS OTHERWISE PROVIDED HEREIN, AND THAT
BORROWER SHALL BE LIABLE FOR THE PAYMENT OF THE YIELD MAINTENANCE PREMIUM TO THE
EXTENT PROVIDED HEREIN IF BORROWER PREPAY THE LOAN FOLLOWING THE OCCURRENCE OF
AN ACCELERATION OF THE LOAN. FURTHERMORE, BY INITIALING BELOW, BORROWER WAIVES
ANY RIGHTS IT MAY HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR
ANY SUCCESSOR STATUTE, AND BORROWER AGREES THAT IF A PREPAYMENT OF ANY OR ALL OF
THIS AGREEMENT IS MADE FOLLOWING ANY ACCELERATION OF THE MATURITY DATE BY LENDER
ON ACCOUNT OF ANY TRANSFER OR DISPOSITION PROHIBITED OR RESTRICTED HEREIN OR BY
THE MORTGAGE, BORROWER SHALL BE OBLIGATED TO PAY CONCURRENTLY THEREWITH THE
YIELD MAINTENANCE PREMIUM, IF ANY. BORROWER EXPRESSLY ACKNOWLEDGES AND
UNDERSTANDS THAT LENDER HAS MADE THE LOAN EVIDENCED HEREBY IN RELIANCE ON THE
FOREGOING AGREEMENTS AND WAIVERS OF BORROWER, THAT LENDER WOULD NOT HAVE MADE
THIS LOAN WITHOUT SUCH AGREEMENTS AND WAIVERS OF BORROWER, AND THAT THE MAKING
OF THE LOAN AT THE INTEREST RATE AND FOR THE TERMS SET FORTH HEREIN CONSTITUTES
ADEQUATE CONSIDERATION, GIVEN WEIGHT BY THE UNDERSIGNED, FOR SUCH AGREEMENTS AND
WAIVER.
BORROWER'S INITIALS: ______________
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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 UTAH AVENUE LP, a
Delaware limited partnership
By: Behringer Harvard Utah Avenue GP, LLC, a
Delaware limited liability company, its sole general
partner
By: _______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, Secretary
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC., a Delaware corporation
By: ________________________________
Name:
Title:
SCHEDULE 1
REQUIRED REPAIRS
SCHEDULE 2
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
NONE
SCHEDULE 3
RENT ROLL
(see attached)
SCHEDULE 4
ORGANIZATION OF BORROWER
(see attached)
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 or limited liability companies;
(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
3
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 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) has maintained and will maintain an arm's-length
relationship with its Affiliates;
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(xxi) (a) if such entity owns the Property, has and will have
no indebtedness other than the Loan and Permitted Indebtedness (subject
to the proviso and the other provisions set forth in Section 5.22 of
this Loan Agreement), or (b) if such entity acts as the general partner
of a limited partnership which owns the Property, has and will have no
indebtedness other than other than legal liabilities incurred in its
capacity as general partner of such limited partnership and 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) 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) other than the Management 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;
3
(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 excess of the
amount required to pay the Debt is insufficient to pay such obligation;
and
(xxxii) to the fullest extent permitted by applicable law, 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 (5)
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 (5) 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)(A),
(ii)(A), (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
4
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 (other than a Permitted Transfer) 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
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
5
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 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.
Lender agrees that each of (i) the Limited Partnership Agreement of Borrower and
(ii) the Operating Agreement of the SPE Party, approved by Lender as of the date
hereof shall be deemed to have met the above requirements.
6
