EXHIBIT NO. 10.15
MEZZANINE LOAN AGREEMENT
Dated as of May 28, 2003
Between
330 N. WABASH MEZZANINE, L.L.C.,
as Borrower
and
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
as Lender
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TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION................................2
Section 1.1 Definitions..................................................2
Section 1.2 Principles of Construction..................................21
II. GENERAL TERMS ........................................................21
Section 2.1 Loan Commitment; Disbursement to Borrower...................21
Section 2.2 Interest; Loan Payments; Late Payment Charge................22
Section 2.3 Prepayments.................................................26
Section 2.4 Extension of Maturity Date..................................29
Section 2.5 Release.....................................................29
Section 2.6 Manner of Making Payments...................................30
Section 2.7 Interest Rate Cap Agreement.................................30
III. INTENTIONALLY OMITTED.................................................32
IV. REPRESENTATIONS AND WARRANTIES........................................32
Section 4.1 Borrower Representations....................................32
Section 4.2 Survival of Representations.................................40
Section 4.3 Scope of Representations and Warranties.....................40
V. BORROWER COVENANTS....................................................41
Section 5.1 Affirmative Covenants.......................................41
Section 5.2 Negative Covenants..........................................51
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS...................59
Section 6.1 Insurance...................................................59
Section 6.2 Casualty....................................................59
Section 6.3 Condemnation................................................60
Section 6.4 Restoration.................................................60
VII. RESERVE FUNDS .........................................................60
Section 7.1 Intentionally Omitted.......................................60
Section 7.2 Tax, Insurance and Ground Rent Escrow Fund..................60
Section 7.3 Rollover Reserve............................................61
Section 7.4 Asbestos Abatement Reserve..................................64
Section 7.5 Transfer of Reserve Funds under Mortgage Loan...............65
Section 7.6 Reserve Funds, Generally....................................65
VIII. DEFAULTS ............................................................66
Section 8.1 Event of Default............................................66
Section 8.2 Remedies....................................................69
Section 8.3 Remedies Cumulative; Waivers................................70
IX. SPECIAL PROVISIONS....................................................71
Section 9.1 Sale of Notes and Securitization............................71
Section 9.2 Securitization Indemnification..............................72
Section 9.3 Intentionally Omitted.......................................74
Section 9.4 Exculpation.................................................74
Section 9.5 Termination of Manager......................................76
Section 9.6 Servicer....................................................76
X. MISCELLANEOUS ........................................................77
Section 10.1 Survival....................................................77
Section 10.2 Lender's Discretion.........................................77
Section 10.3 Governing Law...............................................77
Section 10.4 Modification, Waiver in Writing.............................78
Section 10.5 Delay Not a Waiver..........................................78
Section 10.6 Notices.....................................................79
Section 10.7 Trial by Jury...............................................80
Section 10.8 Headings....................................................80
Section 10.9 Severability................................................80
Section 10.10 Preferences.................................................80
Section 10.11 Waiver of Notice............................................81
Section 10.12 Remedies of Borrower........................................81
Section 10.13 Expenses; Indemnity.........................................81
Section 10.14 Schedules Incorporated......................................82
Section 10.15 Offsets, Counterclaims and Defenses.........................82
Section 10.16 No Joint Venture or Partnership; No Third Party
Beneficiaries..............................................83
Section 10.17 Publicity...................................................83
Section 10.18 Waiver of Marshalling of Assets.............................83
Section 10.19 Waiver of Counterclaim......................................84
Section 10.20 Conflict; Construction of Documents; Reliance...............84
Section 10.21 Brokers and Financial Advisors..............................84
Section 10.22 Component Notes.............................................85
Section 10.23 Reallocation of Loan Amounts................................85
Section 10.24 Prior Agreements............................................86
SCHEDULES
Schedule I - Reserved
Schedule II - Reserved
Schedule III- Organizational Structure
Schedule IV - Description of Ground Lease
Schedule V - Reserved
Schedule VI - Unfunded Tenant Allowances
Schedule VII - Requirements for Replacement Interest Rate Cap Agreements
Schedule VIII - Form of Assignment of Interest Rate Cap Agreement
Schedule IX - Identification of the IBM Lease
MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT, dated as of May 28, 2003 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between ▇▇▇▇▇▇ BROTHERS HOLDINGS INC., a Delaware corporation,
having an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("Lender") and ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, L.L.C., a Delaware limited liability
company, having an address at c/o Prime Group Realty Trust, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower").
W I T N E S S E T H :
WHEREAS, ▇▇▇▇▇▇ Brothers Bank FSB, a federal stock savings bank, as
mortgage lender ("Mortgage Lender"), has made a loan in the original principal
amount of $195,000,000 (the "Mortgage Loan") to ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C., a
Delaware limited liability company ("Mortgage Borrower"), pursuant to a Loan
Agreement dated as of March 10, 2003 (as amended, supplemented or otherwise
modified from time to time, the "Mortgage Loan Agreement"), which Mortgage Loan
is evidenced by a Promissory Note of even date therewith (as amended,
supplemented or otherwise modified from time to time, the "Mortgage Note") made
by Mortgage Borrower to Mortgage Lender and secured by, among other things, a
certain Fee and Leasehold Mortgage, Assignment of Leases and Rents and Security
Agreement of even date therewith (as amended, supplemented or otherwise modified
from time to time, the "Mortgage") by Mortgage Borrower in favor of Mortgage
Lender pursuant to which Mortgage Borrower has granted the Mortgage Lender a
first priority mortgage on, among other things, the real property and other
collateral as more fully described in the Mortgage (collectively, the
"Property");
WHEREAS, Borrower is the legal and beneficial owner of all of the
limited liability company interests in Mortgage Borrower, consisting of a 100%
membership interest therein (the "Pledged Company Interests");
WHEREAS, Mortgage Lender is exercising the Mezzanine Option (as
defined in the Mortgage Loan Agreement) under Section 10.23 of the Mortgage Loan
Agreement and pursuant thereto Lender will make a loan to Borrower in the
aggregate principal amount of $64,788,229 (the "Loan");
WHEREAS, simultaneously with the making of the Loan on the date
hereof, Borrower will make a capital contribution to Mortgage Borrower in the
amount of the Loan and Mortgage Borrower will use such capital contribution to
pay down the Mortgage Loan in the amount of $64,788,229, such that the
outstanding principal amount under the Mortgage Loan as of the date hereof shall
be $130,211,771; and
WHEREAS, as a condition precedent to the obligation of Lender to
make the Loan to Borrower, Borrower has entered into that certain Pledge and
Security Agreement, dated as of the date hereof, in favor of Lender (as amended,
supplemented or otherwise modified from time to time, the "Pledge Agreement"),
pursuant to which Borrower has granted to Lender a first priority security
interest in the Collateral (as defined in the Pledge Agreement) as collateral
security for the Debt (as defined below).
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"Acceptable Counterparty" means any Counterparty to the Interest
Rate Cap Agreement that has and shall maintain, until the expiration of the
applicable Interest Rate Cap Agreement, a long-term unsecured debt rating of not
less than "AA" by S&P and Fitch (if rated by Fitch) and "Aa2" from ▇▇▇▇▇'▇.
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"Agent" shall mean any Eligible Institution acting as Agent under
the Mezzanine Cash Management Agreement.
"Aggregate Debt Service" shall mean, with respect to any particular
period of time, the sum of scheduled principal and/or interest payments under
the Mortgage Note and the Note.
"Alterations Threshold Amount" shall have the meaning set forth in
Section 5.1.21.
"Annual Budget" shall mean the operating budget, including all
planned Capital Expenditures, for the Property prepared by Borrower for the
applicable Fiscal Year or other period.
"Applicable Interest Rate" shall mean the Floating Rate.
"Approved Annual Budget" shall have the meaning set forth in Section
5.1.11(d) hereof.
"Approved Bank" shall mean a bank or other financial institution
which has a minimum long-term unsecured debt rating of at least "AA" by the
Rating Agency or Rating Agencies, as applicable.
"Asbestos Abatement Costs" shall mean the costs of abating asbestos
at the Property in connection with re-leasing of portions of the Property.
"Asbestos Abatement Deposit" shall mean $125,000.
"Asbestos Abatement Reserve Account" shall have the meaning set
forth in Section 7.4.1 hereof.
"Asbestos Abatement Reserve Fund" shall have the meaning set forth
in Section 7.4.1 hereof.
"Assignment of Interest Rate Cap Agreement" shall have the meaning
set forth in Section 2.7 hereof.
"Assumed Note Rate" shall have the meaning set forth in Section
2.3.1(c) hereof.
"Award" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of the
Property.
"Breakage Costs" shall have the meaning set forth in Section
2.2.7(g) hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York, New York are not open for
business.
"Capital Expenditures" shall mean, for any period, the amount
expended for items capitalized under GAAP (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
"Cash" shall mean coin or currency of the United States of America
or immediately available federal funds, including such funds delivered by wire
transfer.
"Cash Management Agreement" shall mean that certain Cash Management
Agreement by and among Mortgage Borrower, Manager, Agent and Mortgage Lender,
dated as of March 10, 2003, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Casualty" shall have the meaning set forth in Section 6.2 hereof.
"Closing Date" shall mean the date the Loan is disbursed by Lender.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as
it may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"Collateral" shall have the meaning set forth in the Pledge
Agreement.
"Condemnation" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"control" (and the correlative terms "controlled by" and
"controlling") shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management, policies or activities of the
business and affairs of the entity in question by reason of the ownership of
beneficial interests, by contract or otherwise.
"Counterparty" means the Person which is the issuer of the Interest
Rate Cap Agreement.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Pledge Agreement or any other Loan Document.
"Debt Service" shall mean, with respect to any particular period of
time, scheduled principal and/or interest payments under the Note.
"Debt Service Payment Amount" shall mean the interest for the
applicable Interest Period at the Applicable Interest Rate.
"Default" shall mean the occurrence of any event hereunder or under
any other Loan Document which, but for the giving of notice or passage of time,
or both, would be an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per
annum equal to the lesser of (a) the Maximum Legal Rate, or (b) five percent
(5%) above the Applicable Interest Rate.
"Determination Date" shall mean with respect to any Interest Period,
the date that is two (2) LIBOR Business Days prior to the fifteenth (15th)
calendar day of the month in which such Interest Period commenced.
"Disclosure Document" shall have the meaning set forth in Section
9.2(a) hereof.
"Eligible Account" shall mean a separate and identifiable account
from all other funds held by the holding institution that is either (a) an
account or accounts maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a state chartered depository
institution or trust company, is subject to regulations substantially similar to
12 C.F.R. ss.9.10(b), having in either case a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"Eligible Institution" shall mean a depository institution or trust
company, the deposits of which are insured by the Federal Deposit Insurance
Corporation and the short term unsecured debt obligations or commercial paper of
which are rated at least A-1 by S&P, P-1 by ▇▇▇▇▇'▇ and, if rated by Fitch, F-1+
by Fitch in the case of accounts in which funds are held for 30 days or less
(or, in the case of accounts in which funds are held for more than 30 days, the
long term unsecured debt obligations of which are rated at least "AA" by S&P and
Fitch (if rated by Fitch) and "Aa2" by ▇▇▇▇▇'▇).
"Embargoed Person" shall have the meaning set forth in Section
4.1.37 hereof.
"Environmental Indemnity" shall mean that certain Environmental
Indemnity Agreement executed by Borrower, dated the date hereof, in connection
with the Loan for the benefit of Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Equity Holder" shall have the meaning set forth in Section
5.2.13(g) hereof.
"Event of Default" shall have the meaning set forth in Section
8.1(a) hereof.
"Exchange Act" shall have the meaning set forth in Section 9.2(a)
hereof.
"Extension Fee" shall mean an amount equal to 0.25% of the
outstanding principal balance of the Loan on the date the Extension Fee is
payable.
"Extension Option" shall have the meaning set forth in Section 2.4
hereof.
"First Extended Maturity Date" shall mean March 9, 2007, or if March
9, 2007 is not a Business Day, the first Business Day preceding March 9, 2007.
"First Required Additional Deposit" shall have the meaning set forth
in Section 7.3.2(a) hereof.
"First Rollover Trigger Date" shall mean the Payment Date occurring
in August, 2005.
"Fiscal Year" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"Fitch" shall mean Fitch IBCA, Inc.
"Floating Rate" shall mean the sum of (i) the greater of (x) the
LIBOR Rate and (y) 2.0% plus (ii) the LIBOR Spread, determined as herein set
forth; provided, however, the Floating Rate for the period commencing on the
date hereof through and including June 14, 2003 shall be 7.70%.
"Foreign Taxes" shall have the meaning set forth in Section 2.2.7
hereof.
"GAAP" shall mean generally accepted accounting principles,
consistently applied, in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession as in effect from time to time.
"Governmental Authority" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Gross Income from Operations" shall mean all income, computed in
accordance with GAAP, derived from the ownership and operation of the Property
from whatever source, including, but not limited to, Rents, utility charges
payable to Mortgage Borrower, escalations, forfeited security deposits, interest
on credit accounts, service fees or charges, license fees, parking fees, rent
concessions or credits, and other required pass-throughs but excluding sales,
use and occupancy or other taxes on receipts required to be accounted for by
Mortgage Borrower to any Governmental Authority, refunds and uncollectible
accounts, sales of furniture, fixtures and equipment, Insurance Proceeds (other
than business interruption or other loss of income insurance), Awards,
unforfeited security deposits, utility and other similar deposits, any
disbursements to Mortgage Borrower from the Reserve Funds and any portion of the
upfront fee paid by Exelon Thermal Technologies, Inc., formerly Unicom Thermal
Technologies, Inc. ("Exelon") in connection with the easement granted under the
Easement Agreement dated as of December 30, 1999 (as amended or otherwise
modified), between Mortgage Borrower and Exelon that is required to be accounted
for during that period. Gross income shall not be diminished as a result of the
Mortgage or the creation of any intervening estate or interest in the Property
or any part thereof. In calculating Gross Income from Operations, the effects,
if any, of "straight-lining" of rents shall be eliminated.
"Ground Lease" shall mean that certain lease described in Schedule
IV, together with all amendments, modifications, extensions and replacements
thereof.
"Ground Lease Parcel" shall mean that portion of the Property leased
to Mortgage Borrower pursuant to the Ground Lease.
"Ground Rents" shall mean the rents payable by Mortgage Borrower
pursuant to the Ground Lease.
"Guarantor" shall mean Prime Group Realty, L.P., a Delaware limited
partnership.
"IBM" shall mean the lessee under the IBM Lease.
"IBM Lease" shall mean that lease more particularly identified on
Schedule IX attached hereto.
"IBM Lease Renewal Event" shall mean the exercise by IBM of the
option to renew in its entirety the IBM Lease upon the terms and conditions set
forth in the IBM Lease.
"IBM Space" shall mean the portion of the Property consisting of
280,670 rentable square feet occupied by IBM on the Closing Date pursuant to the
IBM Lease.
"Improvements" shall have the meaning set forth in the granting
clause of the Mortgage.
"Indebtedness" of a Person, at a particular date, means the sum
(without duplication) at such date of (a) indebtedness or liability for borrowed
money; (b) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under letters of credit;
(e) obligations under acceptance facilities; (f) all guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds, to invest in any Person or entity, or otherwise to assure a
creditor against loss; and (g) obligations secured by any Liens, whether or not
the obligations have been assumed; provided that Taxes will not be considered
Indebtedness.
"Independent Manager" shall mean a natural Person who has been
provided to Borrower by a nationally-recognized company that provides
professional independent directors (and similar Persons) and who is not at the
time of initial appointment, or at any time while serving as a non-member
manager of the board of managers of Borrower, and has not been at any time
during the preceding five (5) years: (a) a stockholder, director (with the
exception of serving as the Independent Manager of Borrower or an independent
director or manager of any Affiliate), officer, employee, partner, member (other
than as a special member), attorney or counsel of Borrower or its Affiliates
(provided, however, that no Person may serve as an Independent Manager of both
Borrower and Mortgage Borrower); (b) a creditor, customer, supplier or other
Person who derives any of its purchases or revenues from its activities with
Borrower or its Affiliates (other than his or her service as an Independent
Manager); (c) an Affiliate of any such stockholder, partner, member, creditor,
customer, supplier or other Person (other than his or her service as an
Independent Manager or special member of Borrower or an independent director or
manager or special member of any Affiliate); (d) a member of the immediate
family of any such stockholder, director, officer, employee, partner, member,
creditor, customer, supplier or other Person; or (e) a Person controlling or
under common control with any Person excluded from serving as an Independent
Manager under clauses (a) through (d), inclusive, above.
"Indemnified Liabilities" shall have the meaning set forth in
Section 10.13(b) hereof.
"Initial Maturity Date" shall mean March 9, 2006.
"Insurance Premiums" shall have the meaning set forth in Section
6.1(b) hereof.
"Insurance Proceeds" shall have the meaning set forth in Section
6.4(b) hereof.
"Intercreditor Agreement" shall mean the Intercreditor Agreement
entered into between Lender and Mortgage Lender with respect to the Loan and the
Mortgage Loan.
"Interest Period" means, in connection with the calculation of
interest accrued with respect to any specified Payment Date, the period from and
including the fifteenth (15th) day of the prior calendar month to and including
the fourteenth (14th) day of the calendar month in which the applicable Payment
Date occurs; provided, however, that with respect to the Payment Date occurring
in June, 2003, the Interest Period shall be the period commencing on the Closing
Date to and including June 14, 2003. Each Interest Period, except for the
Interest Period ending June 14, 2003, shall be a full month and shall not be
shortened by reason of any payment of the Loan prior to the expiration of such
Interest Period.
"Interest Rate Cap Agreement" shall mean an interest rate cap
agreement or similar agreement reasonably acceptable to Lender (together with
the confirmation and schedules relating thereto), between an Acceptable
Counterparty and Borrower obtained by Borrower as and when required pursuant to
Section 2.7. After delivery of a Replacement Interest Rate Cap Agreement to
Lender, the term "Interest Rate Cap Agreement" shall be deemed to mean such
Replacement Interest Rate Cap Agreement.
"Lease" shall mean any lease, sublease or subsublease, letting,
license, concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in the
Property, and every modification, amendment or other agreement relating to such
lease, sublease, subsublease, or other agreement entered into in connection with
such lease, sublease, subsublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting the Property or any part thereof, or the construction, use, alteration
or operation thereof, or any part thereof, whether now or hereafter enacted and
in force, and all permits, licenses and authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Borrower, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use and enjoyment
thereof.
"▇▇▇▇▇▇" shall have the meaning set forth in Section 9.2(b) hereof.
"▇▇▇▇▇▇ Group" shall have the meaning set forth in Section 9.2(b)
hereof.
"Letter of Credit" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit acceptable to Lender and the
Rating Agencies (either an evergreen letter of credit or one which does not
expire until at least thirty (30) Business Days after the Maturity Date) in
favor of Lender and entitling Lender to draw thereon in New York, New York,
based solely on a statement purportedly executed by an officer of Lender stating
it has the right to draw thereon and issued by a domestic Approved Bank or the
U.S. agency or branch of a foreign Approved Bank. If at any time the bank
issuing any such Letter of Credit shall cease to be an Approved Bank, Lender
shall have the right immediately to draw down the same in full and hold the
proceeds of such draw in accordance with the applicable provisions hereof.
"Liabilities" shall have the meaning set forth in Section 9.2(b)
hereof.
"LIBOR Rate" shall mean for each Interest Period, the quoted offered
rate for one-month United States dollar deposits with leading banks in the
London interbank market that appears as of 11:00 a.m. (London time) on the
related Determination Date on Telerate Page 3750.
If, as of such time on any Determination Date, no quotation is given
on Telerate Page 3750, then Lender shall establish the LIBOR Rate on such
Determination Date by requesting four Reference Banks meeting the criteria set
forth herein to provide the quotation offered by its principal London office for
making one-month United States dollar deposits with leading banks in the London
interbank market as of 11:00 a.m., London time, on such Determination Date.
(i) If two or more Reference Banks provide such offered quotations, then the
LIBOR Rate for the next Interest Period shall be the arithmetic mean of such
offered quotations (rounded upward if necessary to the nearest whole multiple of
1/1,000%). (ii) If only one or none of the Reference Banks provides such offered
quotations, then the LIBOR Rate for the next Interest Period shall be the
Reserve Rate. (iii) If on any Determination Date, Lender is required but is
unable to determine the LIBOR Rate in the manner provided in paragraphs (i) and
(ii) above, the LIBOR Rate for the next Interest Period shall be the LIBOR Rate
as determined on the preceding Determination Date.
The establishment of the LIBOR Rate on each Determination Date by
Lender shall be final and binding absent manifest error.
"LIBOR Business Day" means a day upon which United States dollar
deposits may be dealt in on the London and the New York City interbank markets
and commercial banks and foreign exchange markets are open in London and New
York City.
"LIBOR Spread" shall mean five hundred seventy (570) basis points
(5.70%).
"Licenses" shall have the meaning set forth in Section 4.1.22
hereof.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or against Borrower, Mortgage Borrower, the Property, any
portion thereof or any interest therein, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic's, materialmen's and other similar liens
and encumbrances.
"Liquidation Event" shall have the meaning set forth in Section
2.3.2 hereof.
"Loan" shall mean the loan made by Lender to Borrower pursuant to
this Agreement.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Pledge Agreement, the Assignment of Interest Rate Cap Agreement, the
Environmental Indemnity, the Subordination of Management Agreement, the
Non-Recourse Guaranty, the Mezzanine Cash Management Agreement and all other
documents evidencing and/or securing the Loan.
"Management Agreement" shall mean the management agreement entered
into by and between Mortgage Borrower and the Manager, pursuant to which the
Manager is to provide management and other services with respect to the
Property, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time in accordance with the terms of this
Agreement.
"Manager" shall mean Prime Group Realty, L.P. or an Affiliate of
Prime Group Realty, L.P. or any of their permitted successors and assigns.
"Material Adverse Effect" shall mean any material adverse effect
upon (a) the business operations, economic performance, assets or condition
(financial or otherwise) of Borrower, (b) the ability of Borrower to perform, in
all material respects, its obligations under the Loan Documents, (c) the
enforceability or validity of the Loan Documents or the perfection or priority
of the Liens created under the Loan Documents, (d) the value of, or cash flow
from, the Property or the operations thereof or (e) the rights, interests and
remedies of Lender under the Loan Documents.
"Material Lease Threshold" shall mean (a) net rentable area equal to
or in excess of one floor with respect to the portion of the Improvements
constituting office space and (b) the portion of the Improvements constituting
the parking garage.
"Maturity Date" shall mean the Initial Maturity Date or, upon an
exercise of the first Extension Option set forth in Section 2.4 of this
Agreement, the First Extended Maturity Date, or, upon an exercise of the second
Extension Option set forth in Section 2.4 of this Agreement, the Second Extended
Maturity Date or such other date on which by acceleration or otherwise the
principal sum of this Note becomes due and payable.
"Maximum Legal Rate" shall mean the maximum nonusurious per annum
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Note and as provided for herein or the other Loan Documents, under the laws of
such state or states whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.
"Maximum Rollover Required Deposit" shall mean an amount equal to
$15,000,000.00, including any amounts deposited by Borrower into the Rollover
Reserve Account and disbursed by Lender to Borrower.
"Mezzanine Cash Management Agreement" shall mean the Mezzanine Cash
Management Agreement, dated the date of this Agreement, among Borrower, Mortgage
Borrower, Lender, Mortgage Lender and Agent, together with any extensions,
renewals, amendments or modifications thereof.
"Mezzanine Debt Service Account" shall have the meaning set forth in
the Mezzanine Cash Management Agreement.
"Mezzanine Entities" shall have the meaning set forth in Section
5.2.13(b) hereof.
"Minimum Rollover Required Deposit" shall mean an amount equal to
the sum of (i) $6,000,000.00 plus (ii) the amount of Rollover Costs theretofore
incurred or reasonably estimated by Lender to be incurred by Borrower in
connection with the IBM Lease Renewal Event.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage" shall have the meaning set forth in the recitals to this
Agreement.
"Mortgage Borrower" shall have the meaning set forth in the recitals
to this Agreement.
"Mortgage Borrower Company Agreement" shall mean the Amended and
Restated Limited Liability Company Agreement of Mortgage Borrower, dated as of
February 21, 2003, by Borrower, as member, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as the First
Special Member and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as the Second Special Member, as amended,
restated, replaced, supplemented or otherwise modified from time to time in
accordance with the terms and provisions of the Mortgage Loan Agreement.
"Mortgage Lender" shall have the meaning set forth in the recitals
to this Agreement.
"Mortgage Loan" shall have the meaning set forth in the recitals to
this Agreement.
"Mortgage Loan Agreement" shall have the meaning set forth in the
recitals to this Agreement.
"Mortgage Loan Default" shall mean a "Default" under and as defined
in the Mortgage Loan Agreement.
"Mortgage Loan Documents" shall mean, collectively, the Mortgage
Note, the Mortgage Loan Agreement, the Mortgage, the Cash Management Agreement,
and any and all other documents defined as "Loan Documents" in the Mortgage Loan
Agreement, as amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Mortgage Loan Event of Default" shall mean an "Event of Default"
under and as defined in the Mortgage Loan Agreement.
"Mortgage Note" shall have the meaning set forth in the recitals to
this Agreement.
"Mortgage Reserve Funds" shall mean the "Reserve Funds" as defined
in the Mortgage Loan Agreement.
"Net Cash Flow" for any period shall mean the amount obtained by
subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
"Net Cash Flow After Debt Service" for any period shall mean the
amount obtained by subtracting Aggregate Debt Service for such period from Net
Cash Flow for such period.
"Net Liquidation Proceeds After Debt Service" shall mean, with
respect to any Liquidation Event, all amounts paid to or received by or on
behalf of Mortgage Borrower in connection with such Liquidation Event,
including, without limitation, proceeds of any sale, refinancing or other
disposition or liquidation, less (i) Lender's and/or Mortgage Lender's
reasonable costs incurred in connection with the recovery thereof, (ii) the
costs incurred by Mortgage Borrower in connection with a restoration of the
Property made in accordance with the Mortgage Loan Documents, (iii) amounts
required or permitted to be deducted therefrom and amounts paid pursuant to the
Mortgage Loan Documents to Mortgage Lender, (iv) in the case of a foreclosure
sale, disposition or transfer of the Property in connection with realization
thereon following an Event of Default under the Mortgage Loan, such reasonable
and customary costs and expenses of sale or other disposition (including
attorneys' fees and brokerage commissions), (v) in the case of a foreclosure
sale, such costs and expenses incurred by Mortgage Lender under the Mortgage
Loan Documents as Mortgage Lender shall be entitled to receive reimbursement for
under the terms of the Mortgage Loan Documents and (vi) in the case of a
refinancing of the Mortgage Loan, such costs and expenses (including attorneys'
fees) of such refinancing as shall be reasonably approved by Lender.
"Net Operating Income" means the amount obtained by subtracting
Operating Expenses from Gross Income from Operations.
"New Mortgage Borrower" shall have the meaning set forth in Section
5.2.13(b) hereof.
"New Mortgage Loan" shall have the meaning set forth in Section
5.2.17 hereof.
"Nonconsolidation Opinion" shall mean (i) that certain opinion
letter dated the date hereof to be delivered by ▇▇▇▇▇ Day to Lender in
connection with the Loan and (ii) with respect to any Nonconsolidation Opinion
required to be delivered after the Closing Date, an opinion of ▇▇▇▇▇ Day or
other competent counsel selected by Borrower in form and substance reasonably
satisfactory to the Rating Agencies stating that, in the event a case were to be
instituted in respect of certain holder(s) of direct or indirect equity
interests in Borrower under the Bankruptcy Code, Title 11 of the United States
Code, the court having jurisdiction over the case would not order the
substantive consolidation of such holder(s) with Borrower.
"Non-Recourse Guaranty" shall mean that certain Guaranty of
Non-Recourse Carve-outs dated the date hereof made by Guarantor in connection
with the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Note" shall mean that certain note of even date herewith in the
principal amount of Sixty-Four Million Seven Hundred Eighty-Eight Thousand Two
Hundred Twenty-Nine and No/100 Dollars ($64,788,229), made by Borrower in favor
of Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Officers' Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by an authorized senior officer of Prime Group
Realty Trust or its successors or assigns.
"Operating Expenses" shall mean the total of all expenses, computed
in accordance with GAAP, of whatever kind relating to the operation, maintenance
and management of the Property that are incurred on a regular monthly or other
periodic basis, including without limitation, utilities, ordinary repairs and
maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related taxes, computer
processing charges, operational equipment or other lease payments, and other
similar costs, but excluding depreciation, Aggregate Debt Service, any write-off
for bad debt and any security, utility or other deposit to the extent that such
deposit is returned or otherwise utilized.
"Other Charges" shall mean all ground rents (including under the
Ground Lease), maintenance charges, impositions other than Taxes, and any other
charges, including, without limitation, vault charges and license fees for the
use of vaults, chutes and similar areas adjoining the Property, now or hereafter
levied or assessed or imposed against the Property or any part thereof.
"Payment Date" shall mean the ninth (9th) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately preceding Business Day.
"Permitted Encumbrances" shall mean collectively, (a) the Liens and
security interests created by the Loan Documents, (b) all Liens, encumbrances
and other matters disclosed in the Title Insurance Policy (as defined in the
Mortgage Loan Agreement), (c) Liens, if any, for Taxes or Other Charges imposed
by any Governmental Authority not yet due or delinquent, (d) such other title
and survey exceptions as Lender has approved or may approve in writing in
Lender's sole discretion, (e) rights of tenants under Leases permitted under
this Agreement, (f) zoning, building and other similar restrictions pursuant to
Legal Requirements, (g) Liens of suppliers, mechanics, carriers, materialmen,
warehousemen or workmen and other liens imposed by law created in the ordinary
course of business for amounts not yet due or that are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained to the extent required by GAAP
and (h) any attachment or judgment Lien unless the judgment it secures has not,
within thirty (30) days after entry of such judgment, been discharged or
execution stayed pending appeal, or has not been discharged within thirty (30)
days after the expiration of such stay.
"Permitted Investments" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Securitization or any
of their respective Affiliates, payable on demand or having a scheduled maturity
date not later than the Business Day immediately prior to the day on which the
funds are needed for payment of an obligation for which the applicable account
was established and meeting one of the appropriate standards set forth below:
(i) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(iv) federal funds, unsecured certificates of deposit, time deposits,
bankers' acceptances and repurchase agreements with maturities of not more than
365 days of any bank, the short term obligations of which at all times are rated
in the highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest
short term rating category and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(v) fully Federal Deposit Insurance Corporation-insured demand and time
deposits in, or certificates of deposit of, or bankers' acceptances issued by,
any bank or trust company, savings and loan association or savings bank, the
short term obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency in the highest short term rating category
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(vi) debt obligations with maturities of not more than 365 days and at all
times rated by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities) in its highest
long-term unsecured rating category; provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(vii) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) with maturities
of not more than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
(viii) units of taxable money market funds, which funds are regulated
investment companies, seek to maintain a constant net asset value per share and
invest solely in obligations backed by the full faith and credit of the United
States, which funds have the highest rating available from each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) for money market funds; and
(ix) any other security, obligation or investment which has been approved
as a Permitted Investment in writing by (a) Lender and (b) each Rating Agency,
as evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Permitted Owner" shall mean a Person who satisfies (i), (ii) or
(iii) below:
(i) a Qualified Transferee;
(ii) any Person, prior to a Securitization, approved by Lender (such
approval not to be unreasonably withheld) or, regarding which, after a
Securitization, Lender has received confirmation from the Rating Agencies that
such transfer shall not result in a downgrade, qualification or withdrawal of
the then-current ratings assigned to the Securities; or
(iii) Sponsor.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Pledge Agreement" shall have the meaning set forth in the recitals
to this Agreement.
"Pledged Company Interests" shall have the meaning set forth in the
recitals to this Agreement.
"Policies" shall have the meaning specified in Section 6.1(b)
hereof.
"Prepayment Release Date" shall mean March 9, 2004.
"Prime Rate" shall mean the annual rate of interest publicly
announced by Citibank, N.A. in New York, New York, as its base rate, as such
rate shall change from time to time. If Citibank, N.A. ceases to announce a base
rate, Prime Rate shall mean the rate of interest published in The Wall Street
Journal from time to time as the "Prime Rate." If The Wall Street Journal ceases
to publish the "Prime Rate," the Lender shall select an equivalent publication
that publishes such "Prime Rate," and if such "Prime Rates" are no longer
generally published or are limited, regulated or administered by a governmental
or quasi-governmental body, then Lender shall select a comparable interest rate
index.
"Prime Rate Loan" shall mean the Loan at such time as interest
thereon accrues at a rate of interest based upon the Prime Rate plus the Prime
Rate Spread.
"Prime Rate Spread" shall mean the difference (expressed as the
number of basis points) between (a) LIBOR Rate plus the LIBOR Spread on the date
LIBOR Rate was last applicable to the Loan and (b) the Prime Rate on the date
that LIBOR Rate was last applicable to the Loan; provided, however, in no event
shall such difference be a negative number and provided further however, that
the Prime Rate Spread shall, to the extent practicable, take into account any
minimum interest rate applicable to the Loan.
"Property" shall have the meaning set forth in the recitals to this
Agreement.
"Provided Information" shall have the meaning set forth in Section
9.1(a) hereof.
"Qualified Transferee" shall mean any one of the following Persons:
(i) a pension fund, pension trust or pension account that (a) has
total real estate assets of at least $1 Billion and (b) is
managed by a Person who controls at least $1 Billion of real
estate equity assets; or
(ii) a pension fund advisor who (a) immediately prior to such
transfer, controls at least $1 Billion of real estate equity
assets and (b) is acting on behalf of one or more pension
funds that, in the aggregate, satisfy the requirements of
clause (i) of this definition; or
(iii) an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a
state or territory of the United States (including the
District of Columbia) (a) with a net worth, as of a date no
more than six (6) months prior to the date of the transfer of
at least $500 Million and (b) who, immediately prior to such
transfer, controls real estate equity assets of at least $1
Billion; or
(iv) a corporation organized under the banking laws of the United
States or any state or territory of the United States
(including the District of Columbia) (a) with a combined
capital and surplus of at least $500 Million and (b) who,
immediately prior to such transfer, controls real estate
equity assets of at least $1 Billion; or
(v) any Person (a) with a long-term unsecured debt rating from
each of the Rating Agencies of at least investment grade or
(b) who (i) owns or operates at least five (5) first class
office buildings totaling at least five (5) million square
feet of gross leasable area, (ii) has a net worth, as of a
date no more than six (6) months prior to the date of such
transfer, of at least $500 Million and (iii) immediately prior
to such transfer, controls real estate equity assets of at
least $1 Billion.
"Qualifying Manager" shall mean any Affiliate of Borrower or
Guarantor or a reputable and experienced management organization possessing
experience in managing properties similar in size, scope and value to the
Property, provided that (a) prior to a Securitization, Borrower shall have
obtained the prior written consent of Lender for such entity which consent shall
not be unreasonably withheld and (b) after a Securitization, Borrower shall have
obtained prior written confirmation from the Rating Agencies that management of
the Property by such entity will not, in and of itself, cause a downgrade,
withdrawal or qualification of the then current ratings of the Securities issued
pursuant to the Securitization.
"Rating Agencies" shall mean each of S&P, Moody's, Fitch, or any
other nationally-recognized statistical rating agency which has been approved by
Lender.
"Reference Bank" means a leading bank engaged in transactions in
Eurodollar deposits in the international Eurocurrency market that has an
established place of business in London. If any such Reference Bank should be
removed from the Telerate Page 3750 or in any other way fail to meet the
qualifications of a Reference Bank, Lender may designate alternative Reference
Banks meeting the criteria specified above.
"Registration Statement" shall have the meaning set forth in Section
9.2(b) hereof.
"Rents" shall mean all rents, rent equivalents, moneys payable as
damages or in lieu of rent or rent equivalents, royalties (including, without
limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation,
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of Mortgage Borrower or
its agents or employees from any and all sources arising from or attributable to
the Property, and proceeds, if any, from business interruption or other loss of
income insurance.
"Replacement Interest Rate Cap Agreement" means an interest rate cap
agreement or similar agreement reasonably acceptable to Lender from an
Acceptable Counterparty with terms identical to the Interest Rate Cap Agreement
except that the same shall be effective as of the date required in Section 2.7;
provided that to the extent any such interest rate cap agreement does not meet
the foregoing requirements, a "Replacement Interest Rate Cap Agreement" shall be
such interest rate cap agreement approved in writing by the Rating Agencies with
respect thereto.
"Reserve Funds" shall mean the Tax, Insurance and Ground Rent Escrow
Fund, the Rollover Reserve Fund, the Asbestos Abatement Reserve Fund or any
other escrow fund established by the Loan Documents.
"Reserve Rate" means the rate per annum which Lender determines to
be either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/1,000%) of the one-month United States dollar lending rates
that at least three major New York City banks selected by Lender are quoting, at
11:00 a.m. (New York time) on the relevant Determination Date, to the principal
London offices of at least two of the Reference Banks, or (ii) in the event that
at least two such rates are not obtained, the lowest one-month United States
dollar lending rate which New York City banks selected by Lender are quoting as
of 11:00 a.m. (New York time) on such Determination Date to leading European
banks.
"Rollover Costs" shall mean the costs of tenant improvements,
leasing commissions and other costs incurred by Borrower in connection with
re-leasing of portions of the Property.
"Rollover Reserve Account" shall have the meaning set forth in
Section 7.3 hereof.
"Rollover Reserve Deposit" shall mean:
(i) for the period commencing on the Payment Date occurring in
January, 2004, until the Payment Date occurring in July, 2005, an amount equal
to the Net Cash Flow After Debt Service for the prior month, not to exceed
$450,000.00; provided, however, if the Net Cash Flow After Debt Service for any
month is less than $450,000.00, the amount of such difference between
$450,000.00 and the actual Net Cash Flow After Debt Service for such month shall
accrue and be funded in subsequent months from the amount by which the Net Cash
Flow After Debt Service in such subsequent month exceeds $450,000.00; and
(ii) for the period commencing on the Payment Date occurring in
August, 2005, until the Payment Date occurring in July, 2006, an amount equal to
the Net Cash Flow After Debt Service for the prior month.
"Rollover Reserve Fund" shall have the meaning set forth in Section
7.3 hereof.
"Rollover Reserve Termination Date" shall mean:
(i) in the event that an IBM Lease Renewal Event has occurred prior
to August 1, 2005, the Payment Date next following the date that the amount
deposited by Borrower into the Rollover Reserve Account first equals or exceeds
the Minimum Rollover Required Deposit; and
(ii) in the event that an IBM Lease Renewal Event has not occurred
prior to August 1, 2005, the Payment Date next following the date that the
amount deposited by Borrower into the Rollover Reserve Account first equals or
exceeds the Maximum Rollover Required Deposit.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.
"Second Extended Maturity Date" shall mean March 9, 2008 or if March
9, 2008 is not a Business Day the first Business Day preceding March 9, 2008.
"Second Required Additional Deposit" shall have the meaning set
forth in Section 7.3.2(b) hereof.
"Second Rollover Trigger Date" shall mean the Payment Date occurring
in August, 2006.
"Securities" shall have the meaning set forth in Section 9.1 hereof.
"Securities Act" shall have the meaning set forth in Section 9.2(a)
hereof.
"Securitization" shall have the meaning set forth in Section 9.1
hereof.
"Servicer" shall have the meaning set forth in Section 9.6 hereof.
"Servicing Agreement" shall have the meaning set forth in Section
9.6 hereof.
"Severed Loan Documents" shall have the meaning set forth in Section
8.2(c) hereof.
"Significant Party" shall mean each of Borrower and Mortgage
Borrower.
"Sponsor" shall mean Prime Group Realty, L.P., a Delaware limited
partnership.
"State" shall mean the State of Illinois.
"Strike Price" shall mean 6.60% per annum.
"Subordination of Management Agreement" shall mean that certain
Subordination of Management Agreement dated the date hereof among Lender,
Borrower, Mortgage Borrower and Manager, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Tax, Insurance and Ground Rent Escrow Fund" shall have the meaning
set forth in Section 7.2.1 hereof.
"Taxes" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof, but shall not include (a) income,
gross receipts and similar taxes imposed upon Lender or any tax imposed in lieu
of and as a direct substitute for any such income, gross receipts and similar
taxes, and/or (b) any taxes levied or assessed in connection with Lender's
transfer, Securitization or syndication of all or any part of its interest in
the Loan.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State.
"Underwriter Group" shall have the meaning set forth in Section
9.2(b) hereof.
"Unfunded Tenant Allowances" shall mean the amounts specifically set
forth in any Lease as a payment to or reimbursement due to a tenant from
Borrower for costs incurred to finish, "build out" or furnish such tenant's
applicable leased premises; the Unfunded Tenant Allowances on the Closing Date
are set forth on Schedule VI.
"U.S. Obligations" shall mean direct non-callable obligations of the
United States of America. Section 1.2 Principles of Construction.
All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. All uses of the
word "including" shall mean "including, without limitation" unless the context
shall indicate otherwise. Unless otherwise specified, the words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined. With respect to terms defined by cross-reference to the
Mortgage Loan Documents, such defined terms shall have the definitions set forth
in the Mortgage Loan Documents as of the date hereof, and no modifications to
the Mortgage Loan Documents shall have the effect of changing such definitions
for the purposes of this Agreement unless Lender expressly agrees that such
definitions as used in this Agreement have been revised.
II. GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrower.
2.1.1 The Loan. Subject to and upon the terms and conditions set forth
herein, Lender hereby agrees to make and Borrower hereby agrees to accept the
Loan on the Closing Date.
2.1.2 Disbursement to Borrower. Borrower may request and receive only one
borrowing hereunder in respect of the Loan and any amount borrowed and repaid
hereunder in respect of the Loan may not be reborrowed.
2.1.3 The Note, Pledge Agreement and Loan Documents. The Loan shall be
evidenced by the Note and secured by the Pledge Agreement and the other Loan
Documents.
2.1.4 Use of Proceeds .Borrower shall use the proceeds of the Loan to make
an equity contribution to the Mortgage Borrower in order to cause the Mortgage
Borrower to make a repayment of the Mortgage Loan.
Section 2.2 Interest; Loan Payments; Late Payment Charge.
2.2.1 Interest Generally .Interest on the outstanding principal amount of
the Loan shall accrue at the Applicable Interest Rate and shall be calculated in
accordance with Section 2.2.2. On the Closing Date, Borrower will pay to Lender
an amount equal to the interest which will accrue on the Loan from the Closing
Date through and including June 14, 2003. Monthly installments of the Debt
Service Payment Amount shall be paid on each monthly Payment Date commencing on
July 9, 2003 and on each succeeding Payment Date up to and including the
Maturity Date. The outstanding principal balance of the Loan together with all
accrued and unpaid interest thereon shall be due and payable on the Maturity
Date (including, without limitation, all interest that would accrue on the
outstanding principal balance of the Loan through the end of the Interest Period
during which the Maturity Date occurs (even if such period extends beyond the
Maturity Date)). Each installment of the Debt Service Payment Amount shall be
applied to interest at the Floating Rate for the applicable Interest Period.
2.2.2 Interest Calculation. Interest on the outstanding principal balance
of the Loan shall be calculated by multiplying (a) the actual number of days
elapsed in the period for which the calculation is being made by (b) a daily
rate based on a three hundred sixty (360) day year by (c) the then-outstanding
principal balance of the Loan.
2.2.3 Payment on Maturity Date. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgage and the other Loan Documents, including, without limitation, all
interest that would accrue on the outstanding principal balance of the Loan
through and including the end of the Interest Period in which the Maturity Date
occurs (even if such Interest Period extends beyond the Maturity Date).
2.2.4 Payments after Default .Upon the occurrence and during the
continuance of an Event of Default, interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan, shall (i) accrue at the Default Rate,
calculated from the date such payment was due until the earliest of the date the
Event of Default is cured or waived, the date upon which the Debt is paid in
full or the date that Lender otherwise elects and (ii) be secured by the Pledge
Agreement. This paragraph shall not be construed as an agreement or privilege to
extend the date of the payment of the Debt, nor as a waiver of any other right
or remedy accruing to Lender by reason of the occurrence and continuance of any
Event of Default; and Lender retains its rights under the Note to accelerate and
to continue to demand payment of the Debt upon the happening and during the
continuance of any Event of Default.
2.2.5 Late Payment Charge. If any principal, interest or any other sums due
under the Loan Documents is not paid by Borrower on or prior to the date on
which it is due, upon election of Lender 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 in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Pledge Agreement and the other Loan Documents to
the extent permitted by applicable law.
2.2.6 Usury Savings. This Agreement and the Note are subject to the express
condition that at no time shall Borrower be obligated or required to pay
interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the Applicable Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal on the date such payments were made and not
on account of the interest due hereunder. Any payments of principal deemed made
pursuant to the previous sentence will not be subject to any penalty or premium
(notwithstanding Section 2.3.1 hereof to the contrary) and, if any such payments
are deemed made, Lender will recalculate the interest that should have been paid
after such payment and Borrower's next occurring interest payment will be
reduced accordingly. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
2.2.7 Determination of Interest Rate. (a) Subject to the terms and
conditions of this Section 2.2.7, the Loan shall bear interest at the Floating
Rate.
(b) In the event that Lender shall have reasonably determined that by
reason of circumstances affecting the interbank eurodollar market LIBOR Rate
cannot be determined as provided in the definition of LIBOR Rate as set forth
herein, then Lender shall forthwith give notice by telephone of such fact,
confirmed in writing, to Borrower at least one (1) Business Day prior to the
last day of the Interest Period in which such fact shall be determined. If such
notice is given, the Loan shall be converted, from and after the first day of
the next succeeding Interest Period, to a Prime Rate Loan.
(c) If, pursuant to the terms of Section 2.2.7 (b) above, the Loan has been
converted to a Prime Rate Loan but thereafter LIBOR Rate can again be determined
as provided in the definition of LIBOR Rate as set forth herein, Lender shall
give notice thereof to Borrower and convert the Prime Rate Loan back to a loan
bearing interest at the Floating Rate by delivering to Borrower notice of such
conversion no later than 11:00 a.m. (New York City Time), one (1) Business Days
prior to the next succeeding Determination Date, in which event the Prime Rate
Loan shall be converted to a loan bearing interest at the Floating Rate from,
after and including the first day of the next succeeding Interest Period.
Notwithstanding any provision of this Agreement to the contrary, in no event
shall Borrower have the right to elect to convert the Loan bearing interest at
the Floating Rate to a Prime Rate Loan.
(d) With respect to the Floating Rate, all payments made by Borrower
hereunder shall be made free and clear of, and without reduction for or on
account of, income, stamp or similar taxes, levies, imposts, duties, charges,
fees, deductions, reserves or withholdings imposed, levied, collected, withheld
or assessed by any Governmental Authority, which are imposed, enacted or become
effective after the date hereof (such non-excluded taxes being referred to
collectively as "Foreign Taxes"), excluding income, gross receipts, franchise
and other similar taxes of the United States of America or any political
subdivision or taxing authority thereof or therein (including Puerto Rico) or
any other jurisdiction or any tax imposed, levied or assessed in connection with
Lender's transfer, Securitization or syndication of all or any part of the Loan
(it being understood that Lender shall be liable for such taxes). If any Foreign
Taxes are required to be withheld from any amounts payable to Lender hereunder,
the amounts so payable to Lender shall be increased to the extent necessary to
yield to Lender (after payment of all Foreign Taxes) interest or any such other
amounts payable hereunder at the rate or in the amounts specified hereunder.
Whenever any Foreign Tax is payable pursuant to applicable law by Borrower, as
promptly as possible thereafter, Borrower shall send to Lender an original
official receipt, if available, or certified copy thereof showing payment of
such Foreign Tax. Except to the extent due to or caused by Lender's negligence
or willful misconduct, Borrower hereby indemnifies Lender for any incremental
taxes, interest or penalties that may become payable by Lender which may result
from any failure by Borrower to pay any such Foreign Tax when due to the
appropriate taxing authority or any failure by Borrower to remit to Lender the
required receipts or other required documentary evidence. Lender shall use
reasonable efforts to minimize the amount of any Foreign Tax payable including
making any filings necessary to maintain any legally available exemptions from
withholding tax and assigning the Loan (or any part thereof) to any branch of
Lender eligible for such exemption. Lender shall notify Borrower of any Foreign
Tax at least five (5) Business Days before such tax is due.
(e) If any requirement of law, or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender to make or maintain the Floating Rate as contemplated hereunder, (i) the
obligation of Lender hereunder to maintain the Floating Rate or to convert a
Prime Rate Loan to the Floating Rate shall be canceled forthwith and (ii) any
portion of the Loan bearing interest at the Floating Rate shall be converted
automatically to a Prime Rate Loan on the first day of the next succeeding
Interest Period or within such earlier period as required by law. Borrower
hereby agrees promptly to pay Lender, upon demand, any additional amounts
necessary to compensate Lender for any costs actually incurred by Lender in
making any conversion in accordance with this Section 2.2.7(e), including,
without limitation, any interest or fees payable by Lender to lenders of funds
obtained by it in order to make or maintain the Loan at the Floating Rate
hereunder; provided that Lender shall use commercially reasonable efforts to
minimize such amounts. Lender's notice of such costs, as certified to Borrower,
shall be set forth in reasonable detail and shall be conclusive absent manifest
error.
(f) In the event that any change in any requirement of law or in the
interpretation or application thereof, or compliance by Lender with any request
or directive (whether or not having the force of law) hereafter issued from any
central bank or other Governmental Authority:
(i) shall hereafter impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
Lender which is not otherwise included in the determination of LIBOR Rate
hereunder;
(ii) shall hereafter have the effect of reducing the rate of return on
Lender's capital as a consequence of its obligations hereunder to a level below
that which Lender would have achieved but for such adoption, change or
compliance (taking into consideration Lender's policies with respect to capital
adequacy) by any amount reasonably deemed by Lender to be material; or
(iii) shall hereafter impose on Lender any other condition and the result
of any of the foregoing is to increase the cost to Lender of making, renewing or
maintaining loans or extensions of credit or to reduce any amount receivable
hereunder;
then, in any such case, Borrower shall promptly pay Lender, upon demand, any
reasonable additional amounts necessary to compensate Lender for such additional
cost or reduced amount receivable which Lender deems to be material as
determined by Lender in its reasonable discretion. If Lender becomes entitled to
claim any additional amounts pursuant to this Section 2.2.3(f), Borrower shall
not be required to pay same unless (a) they are the result of requirements
imposed generally on lenders similar to Lender and not the result of some
specific reserve or similar requirement imposed on Lender as a result of
Lender's special circumstances or (b) such amounts are being charged by Lender
to its other borrower having credit facilities similar to the Loan. If Lender
becomes entitled to claim any additional amounts pursuant to this Section
2.2.7(f), Lender shall provide Borrower with not less than thirty (30) days'
written notice specifying in reasonable detail the event by reason of which it
has become so entitled and the additional amount required to fully compensate
Lender for such additional cost or reduced amount; provided that Lender shall
use reasonable efforts to minimize such amounts to the extent permitted by
applicable law. A certificate as to any additional costs or amounts payable
pursuant to the foregoing sentence submitted by Lender to Borrower shall be
conclusive in the absence of manifest error. Subject to Section 2.2.7(h) hereof,
this provision shall survive payment of the Loan and the satisfaction of all
other obligations of Borrower under this Agreement and the Loan Documents.
(g) Borrower agrees to indemnify Lender and to hold Lender harmless from
any loss or expense (other than consequential or punitive damages and any loss
of the LIBOR Spread on the Loan) which Lender sustains or incurs as a
consequence of (i) any default by Borrower in payment of the principal of or
interest on at the Floating Rate, including, without limitation, any such loss
or expense arising from interest or fees payable by Lender to lenders of funds
actually obtained by it in order to maintain the Floating Rate hereunder, (ii)
any mandatory prepayment of the Loan at the Floating Rate on a day that is not a
Payment Date, including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds actually obtained by it
in order to maintain the Floating Rate hereunder and (iii) the conversion
pursuant to the terms hereof of the Floating Rate to the Prime Rate Loan on a
date other a Payment Date, including, without limitation, such loss or expenses
arising from interest or fees payable by Lender to lenders of funds actually
obtained by it in order to maintain the Floating Rate hereunder (the amounts
referred to in clauses (i), (ii) and (iii) are herein referred to collectively
as the "Breakage Costs"); provided, however, Borrower shall not indemnify Lender
from any loss or expense arising from Lender's willful misconduct or gross
negligence. Lender shall use reasonable efforts to minimize Breakage Costs.
Lender will provide to Borrower a statement of such Breakage Costs and the
calculation thereof in reasonable detail which statement shall be inclusive and
binding on all parties hereto absent manifest error. This provision shall
survive payment of the Loan in full and the satisfaction of all other
obligations of Borrower under this Agreement and the other Loan Documents. In no
event shall Borrower be obligated to pay Breakage Costs in connection with a
prepayment if Borrower pays to Lender interest on the outstanding principal
amount of the Loan as set forth in Section 2.3.
(h) Lender shall not be entitled to claim compensation pursuant to this
Section 2.2.7 for any Foreign Taxes, increased cost or reduction in amounts
received or receivable hereunder, or any reduced rate of return, which was
incurred or which accrued more than the earlier of (i) ninety (90) days before
the date Lender notified Borrower of the change in law or other circumstance on
which such claim of compensation is based and delivered to Borrower a written
statement setting forth in reasonable detail the basis for calculating the
additional amounts owed to Lender under this Section 2.2.7, which statement
shall be conclusive and binding upon all parties hereto absent manifest error,
or (ii) any earlier date (but not earlier than the effective date of such change
in law or circumstance) provided that Lender notified Borrower of such change in
law or circumstance and delivered the written statement referenced in clause (i)
within ninety (90) days after Lender received written notice of such change in
law or circumstance.
Section 2.3 Prepayments.
2.3.1 Voluntary Prepayments.
(a) Except as otherwise provided in this Section 2.3 and Section 2.2.7,
Borrower shall not have the right to prepay the Loan in whole or in part prior
to the Prepayment Release Date.
(b) From and after the Prepayment Release Date, but not prior thereto,
Borrower may prepay the Debt in whole or in part, without any premium or penalty
provided that, subject to the provisions of clause (c) of this Section 2.3.1,
and whether or not such prepayment shall occur on a Payment Date, Borrower shall
pay to Lender, simultaneously with such prepayment, the interest that would have
accrued at the Floating Rate on the amount then prepaid through the end of the
Interest Period in which such prepayment occurs, notwithstanding that such
Interest Period extends beyond the date of prepayment. Such prepayment shall be
applied, first, to interest on the principal amount of the Loan being prepaid
that would have accrued at the Floating Rate on the amount prepaid through the
end of the Interest Period in which such prepayment occurs, notwithstanding that
such Interest Period extends beyond the date of prepayment, and second to all
other amounts then due to Lender under this Agreement or any of the other Loan
Documents and finally to the outstanding principal balance of the Loan.
(c) In addition to the provisions of clause (b) of this Section 2.3.1, it
is agreed that in the event that the Debt is prepaid during the period
commencing on the first day after a Payment Date and ending on (but including)
the last day of Interest Period in which such prepayment occurs (e.g., assuming
solely for the purposes of illustration, that the Payment Date is a Business
Day, the 10th, 11th, 12th, 13th and 14th day, inclusive, of each month),
Borrower will pay to Lender, simultaneously with such prepayment, interest on
the principal amount of the Loan prepaid through the last day of the Interest
Period immediately following the Interest Period in which such prepayment
occurs, calculated at the Floating Rate. In the event that such prepayment
occurs prior to the Determination Date for the Interest Period immediately
following the Interest Period in which such prepayment occurs, it may be
impossible at such time for Borrower and Lender to calculate with certainty the
interest that would have accrued at the Floating Rate on the amount then prepaid
through the end of the Interest Period following the Interest Period in which
such prepayment occurs. Accordingly, in the event that the Debt is prepaid prior
to the Determination Date applicable to the Interest Period following the
Interest Period in which such prepayment occurs, the interest that would have
accrued at the Floating Rate on the amount then prepaid through the end of the
Interest Period following the Interest Period in which such prepayment occurs
shall be calculated based on an interest rate (the "Assumed Note Rate") equal to
the sum of (i) the LIBOR Rate applicable to the Interest Period in which such
prepayment occurs, plus (ii) the LIBOR Spread, plus (iii) 1.00%. Thereafter, on
the Determination Date applicable to the Interest Period following the Interest
Period in which such prepayment occurs, Lender shall determine the Floating Rate
as if such prepayment had not occurred. If it is determined by Lender that the
Floating Rate for the Interest Period following the Interest Period in which
such prepayment occurs is less than the Assumed Note Rate, Lender shall promptly
refund to Borrower, without interest, an amount equal to the difference between
the interest paid by Borrower for the Interest Period following the Interest
Period in which such prepayment occurs calculated at the Assumed Note Rate and
the amount of interest for said Interest Period calculated at the actual
Floating Rate. Alternatively, in the event that it is determined that the actual
Floating Rate applicable to the Interest Period following the Interest Period in
which such prepayment occurs is greater than the Assumed Note Rate, Borrower
shall promptly pay to Lender, without additional interest or other late charges
or penalties (and in no event later than the 9th day of the following month) an
amount equal to the difference between the interest paid by Borrower for the
Interest Period following the Interest Period in which such prepayment occurs on
the prepaid amount calculated at the Assumed Note Rate and the amount of
interest for said Interest Period calculated at the actual Floating Rate.
2.3.2 Liquidation Events .
(a) In the event of (i) any Casualty to the Property or any material
portion thereof, (ii) any Condemnation of the Property or any material portion
thereof, (iii) a transfer of the Property in connection with realization thereon
following an Event of Default under the Mortgage Loan, including without
limitation a foreclosure sale, or (iv) any refinancing of the Property or the
Mortgage Loan (each, a "Liquidation Event"), Borrower shall cause the related
Net Liquidation Proceeds After Debt Service to be deposited directly into the
Mezzanine Debt Service Account. On each date on which Borrower actually receives
a distribution of Net Liquidation Proceeds After Debt Service, Borrower shall
prepay the outstanding principal balance of the Mezzanine Note in an amount
equal to one hundred percent (100%) of such Net Liquidation Proceeds After Debt
Service. No prepayment premium or penalty shall be due in connection with a
prepayment made pursuant to this Section 2.3.2. Such prepayment shall be
applied, first, to interest on the principal amount of the Loan being prepaid
that would have accrued at the Floating Rate on the amount prepaid through the
end of the Interest Period in which such prepayment occurs, notwithstanding that
such Interest Period extends beyond the date of prepayment, and second to all
other amounts then due to Lender under this Agreement or any of the other Loan
Documents and finally to the outstanding principal balance of the Loan. Any
amounts of Net Liquidation Proceeds After Debt Service in excess of the
Mezzanine Debt shall be paid to Borrower. Any prepayment received by Lender
pursuant to this Section 2.3.2(a) on a date other than a monthly Payment Date
shall be held by Lender as collateral security for the Loan in an interest
bearing account, with such interest accruing to the benefit of Borrower, and
shall be applied by Lender on the next monthly Payment Date.
(b) Borrower shall notify Lender of any Liquidation Event not later than
one Business Day following the first date on which Borrower has knowledge of
such event. Borrower shall be deemed to have knowledge of (i) a sale (other than
a foreclosure sale) of the Property on the date on which a contract of sale for
such sale is entered into, and a foreclosure sale, on the date notice of such
foreclosure sale is given, and (ii) a refinancing of the Property, on the date
on which a commitment for such refinancing has been entered into. The provisions
of this Section 2.3.2 shall not be construed to contravene in any manner the
restrictions and other provisions regarding refinancing of the Mortgage Loan or
transfer of the Property set forth in this Agreement and the other Loan
Documents.
2.3.3 Prepayments After Default .If prior to the Prepayment Release Date,
and following an Event of Default which is continuing, payment of all or any
part of the Loan (exclusive of any Debt Service) is tendered by Borrower or
otherwise recovered by Lender, such tender or recovery shall be deemed a
voluntary prepayment by Borrower and Borrower shall pay, in addition to the
Debt, an amount equal to 1% of the principal amount of the Loan prepaid.
Section 2.4 Extension of Maturity Date. Borrower shall have two (2) options
(each such option is hereafter an "Extension Option") to extend the Maturity
Date as set forth in this Section 2.4. The first Extension Option, if exercised
by Borrower pursuant to this Section 2.4, shall automatically extend the
Maturity Date from the Initial Maturity Date to the First Extended Maturity
Date. If Borrower has exercised the first Extension Option described in the
preceding sentence to extend the Maturity Date to the First Extended Maturity
Date, Borrower shall have a second Extension Option to extend the Maturity Date
from the First Extended Maturity Date to the Second Extended Maturity Date. Each
exercise of the Extension Options set forth in this Section 2.4 shall be subject
to the satisfaction of the following terms and conditions:
(a) Mortgage Borrower shall have extended the Mortgage Loan pursuant to and
in accordance with Section 2.4 of the Mortgage Loan Agreement;
(b) no Event of Default shall have occurred and be continuing on the date
that Borrower exercises the Extension Option or on the then-applicable Maturity
Date;
(c) Borrower shall obtain and deliver to Lender, not later than five (5)
Business Days prior to first day of the term of the Loan as extended pursuant to
the Extension Option then being exercised, one or more Replacement Interest Rate
Cap Agreements, which Replacement Interest Rate Cap Agreement shall (i) satisfy
the requirements set forth on Schedule VII, (ii) be otherwise reasonably
acceptable to Lender, (iii) be effective not later than the effective date of
such Extension Option then being exercised and (iv) have a maturity date not
earlier than the Maturity Date as extended pursuant to the Extension Option then
being exercised by Borrower;
(d) Borrower shall notify Lender of its election to exercise the applicable
Extension Option not later than thirty (30) days prior to the date the Loan is
then scheduled to mature; and
(e) Borrower shall have paid to Lender, on the effective date of such
Extension Option then being exercised, the applicable Extension Fee.
Section 2.5 Release. Except as set forth in this Section 2.5, no repayment,
prepayment or defeasance of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the release of any Lien on
the Collateral. Upon payment in full of all principal and interest on the Loan
and all other amounts due and payable under the Loan Documents in accordance
with the terms and provisions of the Note and this Agreement, the Lender's Lien
on the Collateral and other collateral in which a Lien has been granted under
the Loan Documents shall terminate and Lender shall, upon the written request
and at the expense of Borrower, execute such instruments and other documents
necessary to evidence the release of its Lien on the Collateral and the other
collateral in which a Lien has been granted under the Loan Documents.
Section 2.6 Manner of Making Payments.
2.6.1 Making of Payments. Each payment by Borrower hereunder or under the
Note shall be made in lawful money of the United States of America in
immediately available funds. System or other funds immediately available to
Lender by 1:00 p.m., New York City time, on the date such payment is due, to
Lender by deposit to such account as Lender may designate by prior written
notice to Borrower. Whenever any payment hereunder or under the Note shall be
stated to be due on a day which is not a Business Day, such payment shall be
made on the first Business Day preceding such scheduled due date.
2.6.2 No Deductions, etc. All payments made by Borrower hereunder or under
the Note or the other Loan Documents shall be made irrespective of, and without
any deduction for, any setoff, defense or counterclaims.
Section 2.7 Interest Rate Cap Agreement.
(a) On the Closing Date, Borrower shall obtain and shall thereafter
maintain in effect, an Interest Rate Cap Agreement, which shall be coterminous
with the Initial Maturity Date of the Loan and have a notional amount which
shall not at any time be less than the outstanding principal balance of the Loan
and which shall at all times have a strike rate equal to the Strike Price. The
notional amount of the Interest Rate Cap Agreement may be reduced from time to
time in amounts equal to any prepayment of the principal (if any) of the Loan in
accordance with the terms hereof.
(b) Borrower shall collaterally assign to Lender pursuant to a collateral
Assignment of Interest Rate Cap Agreement (the "Assignment of Interest Rate Cap
Agreement") in the form annexed hereto as Schedule VIII, all of its right, title
and interest to receive any and all payments under the Interest Rate Cap
Agreement (and any related guarantee, if any) and shall deliver to Lender an
executed counterpart of such Interest Rate Cap Agreement and notify the
Counterparty of such collateral assignment (either in such Interest Rate Cap
Agreement or by separate instrument). At such time as the Loan is repaid in
full, all of Lender's right, title and interest in the Interest Rate Cap
Agreement shall terminate and Lender shall execute and deliver at Borrower's
sole cost and expense, such documents as may be required to evidence Lender's
release of the Interest Rate Cap Agreement and to notify the Counterparty of
such release.
(c) Borrower shall comply with all of its obligations under the terms and
provisions of the Interest Rate Cap Agreement. The Counterparty shall be
directed to deposit directly in the Mezzanine Debt Service Account all amounts
payable by the Counterparty under the Interest Rate Cap Agreement; provided,
however, in the event that Borrower shall receive any amounts payable by the
Counterparty under the Interest Rate Cap Agreement, Borrower shall deposit same
within two (2) Business Days into the Mezzanine Debt Service Account. Borrower
shall take all actions reasonably requested by Lender to enforce Lender's rights
in respect of the Interest Rate Cap Agreement in the event of a default by the
Counterparty and shall not waive, amend or otherwise modify in any material
respect any of Borrower's rights thereunder.
(d) In the event the Counterparty to any Interest Rate Protection Agreement
obtained by Borrower in accordance with the terms of this Agreement is not an
Acceptable Counterparty after its delivery of such Interest Rate Cap Agreement,
Borrower shall replace such Interest Rate Cap Agreement with a Replacement
Interest Rate Cap Agreement not later than ten (10) Business Days following
receipt of notice from Lender or Servicer of such downgrade, withdrawal or
qualification.
(e) In the event that Borrower fails to purchase and deliver to Lender the
Interest Rate Cap Agreement as and when required hereunder, Lender, upon notice
to Borrower, may purchase the Interest Rate Cap Agreement and the cost incurred
by Lender in purchasing the Interest Rate Cap Agreement shall be paid by
Borrower to Lender with interest thereon at the Default Rate from the date such
cost was incurred by Lender until such cost is paid by Borrower to Lender.
(f) In connection with initial delivery of an Interest Rate Cap Agreement,
Borrower shall obtain and deliver to Lender an opinion of counsel from counsel
for the Counterparty (upon which Lender and its successors and assigns may rely)
which shall provide, in relevant part:
(1) that the Counterparty is duly organized, validly existing, and
in good standing under the laws of its jurisdiction of incorporation and has the
organizational power and authority to execute and deliver, and to perform its
obligations under, the Interest Rate Cap Agreement;
(2) that the execution and delivery of the Interest Rate Cap
Agreement by the Counterparty, and any other agreement which the Counterparty
has executed and delivered pursuant thereto, and the performance of its
obligations thereunder have been and remain duly authorized by all necessary
action and do not contravene any provision of its certificate of incorporation
or by-laws (or equivalent organizational documents) or any law, regulation or
contractual restriction binding on or affecting it or its property;
(3) that all consents, authorizations and approvals required for the
execution and delivery by the Counterparty of the Interest Rate Cap Agreement,
and any other agreement which the Counterparty has executed and delivered
pursuant thereto, and the performance of its obligations thereunder have been
obtained and remain in full force and effect, all conditions thereof have been
duly complied with, and no other action by, and no notice to or filing with any
governmental authority or regulatory body is required for such execution,
delivery or performance;
(4) that the Interest Rate Cap Agreement, and any other agreement
which the Counterparty has executed and delivered pursuant thereto, has been
duly executed and delivered by the Counterparty and constitutes the legal, valid
and binding obligation of the Counterparty, enforceable against the Counterparty
in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law); and
(5) to the extent that any of the requirements on Schedule VII apply
to such opinion, that such opinion complies with the relevant provisions of
Schedule VII.
III. INTENTIONALLY OMITTED.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower Representations.
Borrower represents and warrants as of the date hereof and as of the
Closing Date that:
4.1.1 Organization. Each Significant Party is duly organized and is validly
existing and in good standing with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged. Each
Significant 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, businesses and operations except where failure to so qualify could
not reasonably be expected to have a Material Adverse Effect. Each Significant
Party possesses all rights, licenses, permits and authorizations, governmental
or otherwise, necessary to entitle it to own its properties and to transact the
businesses in which it is now engaged (except where failure to possess such
rights, licenses, permits and authorizations could not reasonably be expected to
have a Material Adverse Effect) and the sole business of Mortgage Borrower is
the ownership, management and operation of the Property. The organizational
structure of each Significant Party is depicted on Schedule III hereof.
4.1.2 Proceedings. Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents. This Agreement and such other Loan Documents have been duly executed
and delivered by or on behalf of Borrower and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
4.1.3 No Conflicts. The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of any Significant Party pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement or other material
agreement or instrument to which any Significant Party is a party or by which
any Significant Party's property or assets is subject, nor will such action
result in any violation of the provisions of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
any Significant Party or any Significant Party's properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental agency or
body required for the execution, delivery and performance by Borrower of this
Agreement or any other Loan Documents has been obtained and is in full force and
effect (other than filings necessary to perfect Lender's Liens) or, if not
obtained, could not reasonably be expected to result in a Material Adverse
Effect.
4.1.4 Litigation. There are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority or other agency now pending or,
to Borrower's actual knowledge, threatened against or affecting Borrower or the
Collateral, which actions, suits or proceedings, if determined against Borrower
or the Collateral, could not reasonably be expected to have a Material Adverse
Effect.
4.1.5 Agreements. Neither Significant Party is a party to any agreement or
instrument or subject to any restriction which could not reasonably be expected
to have a Material Adverse Effect. Neither Significant Party is in default,
after giving effect to applicable notice or cure periods, in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party or by which either Significant Party, the Property or the Collateral is
bound except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect. Neither Significant Party has any material
financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Significant Party is a
party or by which either Significant Party, the Property or the Collateral is
otherwise bound, other than (a) obligations incurred in the ordinary course of
the operation of the Property and (b) obligations under the Loan Documents.
4.1.6 Title .The pledgor under the Pledge Agreement is the record and
beneficial owner of, and has good title to, the Collateral, free and clear of
all Liens whatsoever except the Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by the Loan
Documents. The Pledge Agreement, together with the Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
valid and perfected security interests in and to the Collateral, subject only to
Permitted Encumbrances and the Liens created by the Loan Documents, all in
accordance with the terms thereof.
4.1.7 No Bankruptcy Filing. Neither Significant Party is contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of such Significant
Party's assets or property, and neither Significant Party has any actual
knowledge of any Person contemplating the filing of any such petition against it
or such constituent Persons.
4.1.8 Full and Accurate Disclosure. No statement of fact made by Borrower
in this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There has not been
any material adverse change in any condition, fact, circumstance or event that
would make any financial statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan inaccurate, incomplete or
otherwise misleading in any material adverse respect or could otherwise
reasonably be expected to have a Material Adverse Effect.
4.1.9 No Plan Assets. Borrower is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a)
Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to state statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Loan Agreement.
4.1.10 Compliance. To Borrower's actual knowledge, Borrower and the
Property and the use thereof comply in all material respects with all applicable
Legal Requirements, including, without limitation, building and zoning
ordinances and codes, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect. To Borrower's actual knowledge,
Borrower is not in default or violation of any order, writ, injunction, decree
or demand of any Governmental Authority except such defaults or violations that
could not reasonably be expected to have a Material Adverse Effect. To
Borrower's actual knowledge, there has not been committed by Mortgage Borrower
any act or omission affording the federal government or any other Governmental
Authority the right of forfeiture as against the Property or any part thereof or
any monies paid in performance of Borrower's obligations under any of the Loan
Documents.
4.1.11 Financial Information. All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in respect of the Property (i) are true, complete
and correct in all material respects, (ii) accurately represent in all material
respects the financial condition of the Property as of the date of such reports,
and (iii) to the extent prepared or audited by an independent certified public
accounting firm, have been prepared in accordance with GAAP throughout the
periods covered, except as disclosed therein. Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are actually known to Borrower and could reasonably be expected to have a
Material Adverse Effect, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no event
that could reasonably be expected to have a Material Adverse Effect.
4.1.12 Federal Reserve Regulations. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
4.1.13 Mortgage Loan Representations .All of the representations and
warranties contained in the Mortgage Loan Documents are hereby incorporated into
this Agreement and deemed made hereunder as and when made thereunder and shall
remain incorporated without regard to any waiver, amendment or other
modification thereof by the Mortgage Lender or to whether the related Mortgage
Loan Document has been repaid, defeased or otherwise terminated, unless
otherwise consented to in writing by Lender.
4.1.14 Intentionally Omitted.
4.1.15 Not a Foreign Person. Borrower is not a "foreign person" within the
meaning of ss.1445(f)(3) of the Code.
4.1.16 Intentionally Omitted.
4.1.17 Intentionally Omitted.
4.1.18 Intentionally Omitted.
4.1.19 Enforceability. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable,
and Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
4.1.20 Intentionally Omitted.
4.1.21 Intentionally Omitted.
4.1.22 Intentionally Omitted.
4.1.23 Intentionally Omitted.
4.1.24 Intentionally Omitted.
4.1.25 Intentionally Omitted.
4.1.26 Intentionally Omitted.
4.1.27 Intentionally Omitted.
4.1.28 Intentionally Omitted.
4.1.29 Intentionally Omitted.
4.1.30 Single Purpose Entity/Separateness. Borrower represents, warrants
and covenants as follows:
(a) The purpose for which Mortgage Borrower is organized is and shall be
limited solely to (i) owning, holding, selling, leasing, subleasing,
transferring, exchanging, operating and managing the Property, (ii) entering
into the Mortgage Loan Documents with Mortgage Lender, (iii) refinancing the
Property in connection with a permitted repayment of the Mortgage Loan and (iv)
transacting any and all lawful business for which a Person may be organized
under its constitutive law that is incident, necessary and appropriate to
accomplish the foregoing.
(b) Borrower does not own and will not own any asset or property other than
(i) the Pledged Company Interests and (ii) incidental personal property
necessary for the ownership of such interests. Mortgage Borrower does not own
and will not own any asset or property other than (i) the Property, and (ii)
incidental personal property necessary and convenient for and used or to be used
in connection with the ownership or operation of the Property.
(c) Mortgage Borrower will not engage in any business other than the
purposes as set forth in clause (a) above. Borrower will not engage in any
business other than the ownership of the Pledged Company Interests and entering
into the Loan Documents with Lender, and will conduct and operate its business
as presently conducted and operated.
(d) Other than the Management Agreement, neither Significant Party will
enter into any contract or agreement with any Affiliate of such Significant
Party, any constituent party of such Significant Party, any owner of such
Significant Party, any guarantors of the obligations of such Significant Party
or any Affiliate of any such constituent party, owner or guarantor
(collectively, the "Related Parties"), except upon terms and conditions that are
intrinsically fair, commercially reasonable and substantially similar to those
that would be available on an arms-length basis with third parties not so
affiliated with such Significant Party or such Related Parties.
(e) No Significant Party has incurred and will not (and Borrower agrees it
will not permit Mortgage Borrower to) incur any Indebtedness other than (i) in
the case of Borrower, the Debt and (ii) in the case of Mortgage Borrower, (A)
the Mortgage Loan and (B) trade and operational debt incurred in the ordinary
course of business with trade creditors in amounts as are normal and reasonable
under the circumstances, provided in no event shall such Indebtedness on this
clause (ii)(B) (1) exceed, in the aggregate, $4,000,000, (2) be evidenced by a
note and (3) remain unpaid in excess of sixty (60) days from the date incurred
(unless being contested in good faith by Mortgage Borrower). No Indebtedness
other than the Mortgage Loan may be secured (senior, subordinate or pari passu)
by the Property.
(f) No Significant Party has made and neither Significant Party will make
any loans or advances to any Person and shall not acquire obligations or
securities of any Related Party.
(g) Each Significant Party is and will remain solvent and each Significant
Party will pay its debts and liabilities (including, as applicable, shared
personnel and overhead expenses) from their own assets as the same shall become
due.
(h) Each Significant Party has done or caused to be done and will do all
things necessary to observe organizational formalities and preserve its
existence, and no Significant Party will, nor will any Significant Party permit
any Affiliate of such Significant Party to, amend, modify or otherwise change
the organizational documents of such Significant Party in any material respect
which adversely affects such Significant Party's existence as a single purpose
entity or its other obligations with respect to the Loan or Mortgage Loan
without the prior written consent of Lender or Mortgage Lender, as the case may
be.
(i) Each Significant Party will maintain all of its books, records,
financial statements and bank accounts separate from those of any other Person
and, except as required or permitted under GAAP, such Significant Party's assets
will not be listed as assets on the financial statement of any other Person.
Each Significant Party will file its own tax returns and will not file a
consolidated federal income tax return with any other Person (except that such
Significant Party may file or may be part of a consolidated federal tax return
to the extent required or permitted by applicable law); provided, however, that
there shall be an appropriate notation indicating the separate existence of such
Significant Party and its assets and liabilities. Each Significant Party shall
maintain its books, records, resolutions and agreements as official records.
(j) Each Significant Party will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other Person
(including any Affiliate or other Related Party), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its Affiliates as
a division or part of the other and shall maintain and utilize separate
stationery, invoices and checks or clearly indicate its separate existence in
any correspondence sent by it or on its behalf.
(k) Each Significant Party will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
(l) No Significant Party nor any Related Party will seek the dissolution,
winding up, liquidation, consolidation or merger in whole or in part, or the
sale of material assets of any Significant Party.
(m) No Significant Party will commingle its assets with those of any other
Person and each Significant Party will hold all of its assets in its own name;
(n) No Significant Party will guarantee or become obligated for the debts
of any other Person and each Significant Party does not and will not hold itself
out as being responsible for the debts or obligations of any other Person.
(o) Each Significant Party shall be a single-member limited liability
company organized under the laws of the State of Delaware.
(p) Each Significant Party shall at all times cause there to be at least
two duly appointed Independent Managers of such Significant Party (provided,
however, that no Person may serve as an Independent Manager of both Borrower and
Mortgage Borrower).
(q) Each Significant Party shall allocate fairly and reasonably any
overhead expenses that are shared with an Affiliate, including paying for office
space and services performed by any employee of an Affiliate or Related Party.
(r) No Significant Party shall pledge its assets for the benefit of any
other Person other than with respect to (i) in the case of Borrower, the Loan
and (ii) in the case of Mortgage Borrower, the Mortgage Loan.
(s) Each Significant Party shall maintain a sufficient number of employees
in light of its contemplated business operations or retain the services of
agents or consultants therefor and pay the salaries of such employees, agents or
consultants from its own funds.
(t) Borrower shall conduct its business so that the assumptions made with
respect to Borrower in the Nonconsolidation Opinion shall be true and correct in
all material respects.
4.1.31 Management Agreement. The Management Agreement is in full force and
effect and there is no default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.
4.1.32 Intentionally Omitted.
4.1.33 Intentionally Omitted.
4.1.34 Intentionally Omitted.
4.1.35 Intentionally Omitted.
4.1.36 Permitted Encumbrances. None of the Permitted Encumbrances,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.1.37 Embargoed Person. As of the date hereof, to Borrower's actual
knowledge, (a) none of the funds or other assets of Borrower and Guarantor
constitute property of, or are beneficially owned, directly or indirectly, by
any person, entity or government subject to trade restrictions under U.S. law,
including but not limited to, the International Emergency Economic Powers Act,
50 ▇.▇.▇.▇▇.▇▇. 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1
et seq., and any Executive Orders or regulations promulgated thereunder with the
result that the investment in Borrower or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan made by the Lender is
in violation of law ("Embargoed Person"); (b) no Embargoed Person has any
interest of any nature whatsoever in Borrower or Guarantor, as applicable, with
the result that the investment in Borrower or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law; and (c) none of the funds of Borrower or Guarantor, as applicable, have
been derived from any unlawful activity with the result that the investment in
Borrower or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.
4.1.38 Unfunded Tenant Allowances. On the Closing Date there are no
Unfunded Tenant Allowances except as set forth on Schedule VI.
Section 4.2 Survival of Representations.
Borrower agrees that all of the representations and warranties of Borrower
set forth in Section 4.1 and elsewhere in this Agreement and in the other Loan
Documents shall survive until payment and performance in full of all obligations
of Borrower under the Loan Documents or the earlier release of the Lien of the
Mortgage (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents. All representations, warranties,
covenants and agreements made in this Agreement or in the other Loan Documents
by Borrower shall be deemed to have been relied upon by Lender notwithstanding
any investigation heretofore or hereafter made by Lender or on its behalf.
Section 4.3 Scope of Representations and Warranties.
Notwithstanding anything herein to the contrary, the representations and
warranties made by Borrower under Article IV hereof or in any Loan Document are
not given with respect to (a) the fee portion of the Ground Lease or (ii) unless
otherwise expressly specified, subleases or sub-subleases under any Lease.
V. BORROWER COVENANTS
Section 5.1 Affirmative Covenants.
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Lien of the Pledge Agreement (and all related obligations) in accordance with
the terms of this Agreement and the other Loan Documents, Borrower hereby
covenants and agrees with Lender that:
5.1.1 Existence; Compliance with Legal Requirements; Insurance. Borrower
and each of its Subsidiaries shall do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to it, Mortgage Borrower and the Property (other than rights,
licenses, permits and franchises that could not reasonably be expected to result
in a Material Adverse Effect). Except where failure to comply could not
reasonably be expected to have a Material Adverse Effect, Borrower shall not
allow Mortgage Borrower to commit any act or omission affording the federal
government or any state or local government the right of forfeiture as against
the Property or any part thereof or any monies paid in performance of Mortgage
Borrower's obligations under any of the Mortgage Loan Documents. Borrower hereby
covenants and agrees not to allow Mortgage Borrower to commit, permit or suffer
to exist any act or omission affording such right of forfeiture. Borrower shall
cause Mortgage Borrower to at all times maintain, preserve and protect the
Property in accordance with the standards for operating similar buildings,
similarly situated, ordinary wear and tear and the occurrence of any casualty or
condemnation excepted and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto (other than repairs, renewals, replacements, betterments or
improvements that could not reasonably be expected to result in a Material
Adverse Effect), all as more fully provided in the Mortgage. Borrower shall
cause Mortgage Borrower to keep the Property insured at all times by financially
sound and reputable insurers, to such extent and against such risks, and
maintain liability and such other insurance, as is more fully provided in this
Agreement.
5.1.2 Taxes and Other Charges. Borrower shall cause Mortgage Borrower to
pay all Taxes and Other Charges now or hereafter levied or assessed or imposed
against the Property or any part thereof as the same become due and payable;
provided, however, Borrower's obligation to cause Mortgage Borrower to directly
pay Taxes shall be suspended for so long as Mortgage Borrower complies with the
terms and provisions of Section 7.2 of the Mortgage Loan Agreement and subject
to Mortgage Borrower's right to contest such Taxes and Other Charges pursuant to
and in accordance with the Mortgage Loan Documents. Borrower shall cause
Mortgage Borrower to furnish to Lender receipts for the payment of the Taxes and
the Other Charges prior to the date the same shall become delinquent (provided,
however, that Borrower is not required to cause Mortgage Borrower to furnish
such receipts for payment of Taxes in the event that such Taxes have been paid
by Lender pursuant to Section 7.2 of the Mortgage Loan Agreement). Borrower
shall cause Mortgage Borrower to promptly pay for all utility services provided
to the Property unless such services are billed directly to tenants by the
utility provider. After prior written notice to Lender, Borrower may permit
Mortgage Borrower, at its own expense, to contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any
Taxes or Other Charges, provided that (i) no Event of Default has occurred and
is continuing; (ii) such proceeding shall not be prohibited by the provisions of
any other instrument to which Mortgage Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) neither the
Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall promptly
upon final determination thereof cause Mortgage Borrower to pay the amount of
any such Taxes or Other Charges, together with all costs, interest and penalties
which may be payable in connection therewith; (v) such proceeding shall suspend
the collection of such contested Taxes or Other Charges from the Property; and
(vi) Mortgage Borrower shall have furnished such security as is required in the
Mortgage Loan Agreement to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon.
5.1.3 Litigation. Borrower shall give prompt written notice to Lender of
any litigation or governmental proceedings pending or threatened against
Borrower or Property which, if adversely determined, is reasonably like to have
a Material Adverse Effect.
5.1.4 Access to Property. Borrower shall cause Mortgage Borrower to permit
agents, representatives and employees of Lender to inspect the Property or any
part thereof, at Lender's expense, at reasonable hours upon reasonable advance
notice, subject to the rights of tenants of the Property. Any such inspections
shall be conducted in a manner so as to minimize disruption to the business and
operations of Mortgage Borrower, the Property and any tenants or occupants
thereof.
5.1.5 Notice of Default. Borrower shall promptly advise Lender of any event
or condition that could reasonably be expected to have a Material Adverse
Effect, or of the occurrence of any Event of Default, in each case, of which
Borrower has knowledge.
5.1.6 Cooperate in Legal Proceedings. Borrower shall reasonably cooperate
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which could reasonably be expected to materially affect
the rights of Lender hereunder or any rights obtained by Lender under any of the
other Loan Documents and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.
5.1.7 Perform Loan Documents. Borrower shall observe, perform and satisfy
prior to the expiration of any applicable grace or cure periods all the terms,
provisions, covenants and conditions of, and shall pay when due all costs, fees
and expenses to the extent required under the Loan Documents executed and
delivered by, or applicable to, Borrower.
5.1.8 Intentionally Deleted.
5.1.9 Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
(a) execute and deliver to Lender such reasonable documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
(b) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
5.1.10 Intentionally Deleted.
5.1.11 Financial Reporting.
(a) Borrower will keep and maintain or will cause to be kept and maintained
on a Fiscal Year basis, in accordance with GAAP (or such other accounting basis
acceptable to Lender), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower and all items of income and
expense in connection with the operation of the Property. Lender shall have the
right, at its sole cost and expense, from time to time at all times during
normal business hours upon reasonable notice to examine such books, records and
accounts at the office of Borrower or other Person maintaining such books,
records and accounts and to make such copies or extracts thereof as Lender shall
desire. After the occurrence of an Event of Default, Borrower shall pay any
reasonable out-of-pocket costs and expenses incurred by Lender to examine
Borrower's accounting records with respect to the Property, as Lender shall
determine to be necessary or appropriate in the protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within 120 days following the
end of each Fiscal Year (commencing with Fiscal Year 2003), a complete copy of
Borrower's and Mortgage Borrower's annual financial statements. Borrower's
annual financial statements shall consist of a balance sheet, a statement of
operations and a statement of cash flow. Mortgage Borrower's annual financial
statements shall be audited by a "Big Four" accounting firm or other independent
certified public accountant reasonably acceptable to Lender in accordance with
GAAP (or such other accounting basis acceptable to Lender) covering the Property
for such Fiscal Year and containing statements of operations for Mortgage
Borrower and a balance sheet for Mortgage Borrower. Mortgage Borrower's annual
financial statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for the prior Fiscal
Year, (ii) a certificate executed by the chief financial officer or chief
accounting officer of Prime Group Realty Trust (or its successor or permitted
assign), stating that each such annual financial statement presents fairly in
all material respects the financial condition and the results of operations of
Mortgage Borrower and the Property being reported upon and has been prepared in
accordance with GAAP, (iii) an unqualified opinion of a "Big Four" accounting
firm or other independent certified public accountant reasonably acceptable to
Lender, and (iv) a schedule audited by such independent certified public
accountant setting forth a calculation of Net Cash Flow. All annual financial
statements shall be accompanied by an Officer's Certificate certifying as of the
date thereof whether, to such officer's actual knowledge, there exists an event
or circumstance which constitutes a Default or Event of Default under the Loan
Documents executed and delivered by, or applicable to, Borrower, and if such
Default or Event of Default exists, the nature thereof, the period of time it
has existed and the action then being taken to remedy the same.
(c) Borrower will furnish, or cause to be furnished, to Lender on or before
forty-five (45) days after the end of each calendar quarter the following items,
accompanied by a certificate of the chief financial officer or chief accounting
officer of Prime Group Realty Trust (or its successor or permitted assigns),
stating that such items are true, correct, accurate, and complete in all
material respects and fairly present the financial condition and results of the
operations of Borrower, Mortgage Borrower and the Property (subject to normal
year-end adjustments): (i) a rent roll for the subject quarter accompanied by an
Officer's Certificate with respect thereto; and (ii) quarterly and year-to-date
statements of operations (including Capital Expenditures) prepared for each
calendar quarter. In addition, such certificate shall also be accompanied by a
certificate of the chief financial officer or chief accounting officer of Prime
Group Realty Trust (or its successor or permitted assign) stating that, to such
officer's actual knowledge, the representations and warranties of Borrower set
forth in Section 4.1.30(e) are true and correct as of the date of such
certificate.
(d) Borrower shall submit, or shall cause Mortgage Borrower to submit, to
Lender an Annual Budget for Lender's approval (which approval shall be limited
soley to the items in the Annual Budget constituting Operating Expenses, but
excluding Insurance Premiums, Taxes, operational equipment or other lease
payments and Capital Expenditures) not later than thirty (30) days prior to the
commencement of each Fiscal Year. Each Annual Budget shall be in a form
reasonably satisfactory to Lender and shall set forth in reasonable detail
budgeted monthly operating income and monthly operating expenses and other cash
expenses for the Property. In the event Lender objects to a proposed Annual
Budget, Lender shall advise Borrower of its specific objections in writing
within ten (10) Business Days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections), and Borrower shall provide
for such Annual Budget to be revised within five (5) Business Days after receipt
of notice and resubmit the same to Lender. The proposed Annual Budget will be
deemed to be approved by Lender if Lender does not advise Borrower of any
specific objections thereto within the ten (10) Business Days referred to in the
previous sentence. Lender shall advise Borrower in writing of any objections to
such revised Annual Budget within five (5) Business Days after receipt thereof
(and deliver to Borrower a reasonably detailed description of such objections),
and Borrower shall provide for such Annual Budget to be revised in accordance
with the process described in this Section until Lender approves an Annual
Budget. Such revised proposed Annual Budget will be deemed to be approved by
Lender if Lender does not advise Borrower of any objection thereto within the
five (5) Business Days referred to in the previous sentence. The initial budget
is approved by Lender in connection with the closing of the Loan and each such
Annual Budget approved by Lender in accordance with the terms hereof shall be
referred to herein as an "Approved Annual Budget." Until such time that Lender
approves a proposed Annual Budget, with respect to those Operating Expenses in
the Annual Budget requiring Lender's approval, the most recently Approved Annual
Budget shall apply, provided that, such Approved Annual Budget shall be adjusted
to reflect actual increases in those Operating Expenses requiring Lender's
approval. At the request of Lender, Borrower agrees to cause Mortgage Borrower
to deliver evidence in a form reasonably satisfactory to Lender that amounts
allocated to budgeted expenses have been paid in accordance with the Approved
Annual Budget. Borrower shall have the right to amend any item in the Approved
Annual Budget once a quarter; provided that if such amendment modifies any of
the Operating Expenses of the Approved Annual Budget requiring Lender's
approval, Lender will have the right to approve such modifications (and only
such modifications) pursuant to identical procedures set forth in this Section
5.1.11(d) for the approval of an Approved Annual Budget. Nothing herein
prohibits Borrower from making the payments and expenditures contemplated by the
Annual Budget so long as such payments and expenditures are otherwise permitted
by the Loan Documents. Lender hereby confirms that the Annual Budget for Fiscal
Year 2003 is hereby approved.
(e) Intentionally Omitted.
(f) Borrower shall furnish to Lender, within fifteen (15) Business Days
after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of the Property and
the financial affairs of Borrower as may be reasonably requested by Lender.
(g) Borrower shall furnish, or cause to be furnished, to Lender, copies of
all financial statements, reports, budgets and summaries required to be
delivered to Mortgage Lender under the Mortgage, Mortgage Borrower disbursement
requests and other notices related to the Mortgage Loan or the Loan, at the same
time as each such document is furnished to the Mortgage Lender.
(h) Any reports, statements or other information required to be delivered
under this Agreement shall be delivered (i) in paper form, (ii) if requested by
Lender, on a diskette, and (iii) if requested by Lender and within the
capabilities of Borrower's data systems without change or modification thereto,
in electronic form and prepared using a Microsoft Word for Windows or
WordPerfect for Windows files (which files may be prepared using a spreadsheet
program and saved as word processing files).
5.1.12 Business and Operations. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Property.
Borrower will qualify to do business and will remain in good standing under the
laws of the jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property unless such
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect.
5.1.13 Title to the Collateral. Borrower will warrant and defend the
validity and priority of Lender's security interest in the Collateral. Borrower
shall reimburse Lender for any actual out-of-pocket losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in the Collateral, other than as permitted hereunder, is
claimed by another Person.
5.1.14 Intentionally Omitted.
5.1.15 Estoppel Statement. (a) After written request by Lender, Borrower
shall within ten (10) Business Days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note as of
the date of such certificate, (iii) the Applicable Interest Rate of the Note as
of the date of such certificate, (iv) the date installments of interest and/or
principal were last paid, (v) any known offsets or defenses to the payment of
the Debt as of the date of such certificate, if any, and (vi) that the Note,
this Agreement, the Pledge Agreement and the other Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification; and upon request by Borrower, Lender shall
within ten (10) days furnish Borrower with a statement, duly authorized and
certified setting forth items (i), (ii), (iii) and (iv) above, and whether, to
Lender's knowledge, there then exists any Default or Event of Default.
(b) Borrower shall, or shall cause Mortgage Borrower to, use reasonable
efforts to deliver to Lender upon request, tenant estoppel certificates from
each commercial tenant leasing space at the Property in form and substance
reasonably satisfactory to Lender provided that Borrower shall not be required
to deliver, or to cause Mortgage Borrower to deliver, such certificates more
frequently than once in any calendar year.
5.1.16 Loan Proceeds. Borrower shall use the proceeds of the Loan received
by it on the Closing Date only for the purposes set forth in Section 2.1.4.
5.1.17 Intentionally Deleted.
5.1.18 Confirmation of Representations. Borrower shall deliver, in
connection with any Securitization, one or more Officer's Certificates
certifying to such officer's actual knowledge, as to the accuracy in all
material respects of all representations made by Borrower in the Loan Documents
as of the Closing Date.
5.1.19 Intentionally Deleted.
5.1.20 Leasing Matters.
(a) Any Leases with respect to the Property written by or on behalf of
Mortgage Borrower after the date hereof, for more than the Material Lease
Threshold shall be approved by Lender, which approval shall not be unreasonably
withheld. Lender's approval shall not be required with respect to any Leases
equal to or less than the Material Lease Threshold.
(b) Upon request, Borrower shall cause Mortgage Borrower to furnish Lender
with executed copies of all Leases, (or, as to subleases, such executed copies
as are in Mortgage Borrower's possession).
(c) Borrower shall cause Mortgage Borrower to cause all renewals of Leases
and all proposed Leases to provide for rental rates comparable to existing local
market rates.
(d) Borrower shall cause Mortgage Borrower to cause all proposed Leases to
be on commercially reasonable terms and to not contain any terms which would
materially and adversely affect Lender's rights under the Loan Documents.
(e) Borrower shall cause Mortgage Borrower to cause all Leases executed
after the date hereof to provide that they are subordinate to the Mortgage and
that the lessee agrees to attorn to Lender or any purchaser at a sale by
foreclosure or power of sale.
(f) Borrower shall cause Mortgage Borrower to:
(i) observe and perform, in all material respects, the obligations imposed
upon the lessor under the Leases in a commercially reasonable manner;
(ii) enforce the material terms, covenants and conditions contained in the
Leases upon the part of the lessee thereunder to be observed or performed in a
commercially reasonable manner and in a manner which will not materially impair
the value of the Property;
(iii) not amend or modify any of the material terms of or terminate or
accept the surrender of any Lease covering more than the Material Lease
Threshold without the written consent of Lender which consent shall not be
unreasonably withheld;
(iv) not without the prior written consent of Lender, which consent will
not be unreasonably withheld, (1) amend or modify any Lease covering an area
equal to or less than the Material Lease Threshold except upon terms which are
commercially reasonable and which could not reasonably be expected to have a
Material Adverse Effect and, (2) terminate or accept the surrender of any Lease
covering an area equal to or less than the Material Lease Threshold, unless as a
result of a tenant default and then only in a commercially reasonable manner to
preserve and protect the Property;
(v) not collect any of the Rents more than one (1) month in advance (other
than security deposits);
(vi) not execute any other assignment of lessor's interest in the Leases or
the Rents (except as contemplated by the Loan Documents);
(vii) execute and deliver at the request of Lender all such further
reasonable assurances, confirmations and assignments in connection with the
Leases as Lender shall from time to time reasonably require; and
(viii) promptly deliver to Lender any notice received by Mortgage Borrower
from any tenant under a Lease pursuant to which (a) such tenant exercises any
option or right set forth in its Lease to terminate or otherwise surrender its
Lease as to all or any portion of the Property demised to such tenant pursuant
to such Lease or (b) such tenant voluntarily surrenders all or any portion of
the Property demised to such tenant pursuant to a Lease and in any such event
Borrower shall cause Mortgage Borrower to deliver or cause to be delivered to
Lender, as and when paid by any tenant, any payment or other cash consideration
payable by such tenant in connection with such termination or surrender
provided, however, in the event that the tenant fails to pay such termination
payment as and when required by the terms of the applicable lease Borrower shall
cause Mortgage Borrower to use commercially reasonable efforts to collect such
payment from the applicable tenant. Such amount shall be deposited by Lender in
the Rollover Reserve Account and to be disbursed to Mortgage Borrower in
connection with the payment of (i) tenant improvements and leasing commissions
incurred by Mortgage Borrower from time to time in connection with the leasing
or re-leasing of the Property and/or (ii) Capital Expenditures. Any amounts so
deposited in the Rollover Reserve Account shall not reduce or otherwise affect
the amounts required to be deposited by Mortgage Borrower pursuant to Section
7.3 of the Mortgage Loan Agreement. The provisions of this Section shall control
in the event of any conflict between this Section and any other provision in
this Agreement or in the other Loan Documents.
(g) With regard to any action described in this Section 5.1.20 for which
Lender's approval or consent is required, Lender shall not withhold its approval
or consent or disapproval to any such action for more than ten (10) Business
Days after request for approval or consent thereof has been made by Mortgage
Borrower, accompanied by a detailed description of the request for Lender's
approval or consent in an envelope labeled "Priority" and delivered to Lender by
overnight delivery and otherwise in accordance with the provisions of Section
10.6 and which request shall state at the top of the first page in bold
lettering "LENDER'S RESPONSE IS REQUIRED WITHIN TEN BUSINESS DAYS OF RECEIPT OF
THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED
AND LENDER." In the event that Lender fails to either approve or consent to such
request or disapprove such request (such disapproval stating the reasons for
such disapproval) for more than ten (10) Business Days after receipt thereof,
the action which was the subject of said request shall be deemed approved or
consented to, as applicable.
5.1.21 Alterations. Borrower shall cause Mortgage Borrower to obtain
Lender's prior written consent to any alterations to any Improvements, which
consent shall not be unreasonably withheld except with respect to alterations
that could reasonably be expected to have a Material Adverse Effect.
Notwithstanding the foregoing, Lender's consent shall not be required in
connection with any alterations that could not reasonably be expected to have a
Material Adverse Effect, provided that such alterations are made in connection
with (a) tenant improvement work performed pursuant to the terms of any Lease
executed on or before the date hereof, (b) tenant improvement work performed
pursuant to the terms and provisions of a Lease and not adversely affecting any
structural component of any Improvements, any utility or HVAC system contained
in any Improvements or the exterior of any building constituting a part of any
Improvements, or (c) alterations performed in connection with the restoration of
the Property after the occurrence of a casualty in accordance with the terms and
provisions of this Agreement or (d) alterations performed by a tenant which such
tenant has the right to perform pursuant to the terms of its Lease. If the total
unpaid amounts with respect to alterations to the Improvements at the Property
(other than such amounts to be paid or reimbursed by tenants under the Leases)
shall at any time exceed Three Million and 00/100 Dollars ($3,000,000) (the
"Alterations Threshold Amount"), Borrower shall, upon written request of Lender,
promptly deliver, or cause Mortgage Borrower to deliver, to Lender as security
for the payment of such amounts and as additional security for Mortgage
Borrower's obligations under the Loan Documents any of the following: (A) Cash,
(B) U.S. Obligations, (C) other securities having a rating acceptable to Lender
and that the applicable Rating Agencies have confirmed in writing will not, in
and of itself, result in a downgrade, withdrawal or qualification of the
initial, or, if higher, then current ratings assigned in connection with any
Securitization, or (D) a completion bond or letter of credit issued by a
financial institution having a rating by S&P of not less than A-1+ if the term
of such bond or letter of credit is no longer than three (3) months or, if such
term is in excess of three (3) months, issued by a financial institution having
a rating that is acceptable to Lender and that the applicable Rating Agencies
have confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned in connection with any Securitization. Such security shall be in an
amount equal to the excess of the total unpaid amounts with respect to
alterations to the Improvements on the Property (other than such amounts to be
paid or reimbursed by tenants under the Leases) over the Threshold Amount (plus
any funds in the Required Repair Account (as defined in the Mortgage Loan
Agreement) or the Rollover Reserve Account that have been designated and set
aside for such alterations or Improvements) and applied from time to time at the
option of Lender to pay for such alterations or to terminate any of the
alterations and restore the Property to the extent necessary to prevent any
material adverse effect on the value of the Property. With regard to any action
described in this Section 5.1.21 for which Lender's consent or approval is
required, Lender shall not withhold its consent or approval or disapproval to
any such action for more than ten (10) Business Days after request for consent
or approval thereof has been made by Borrower or Mortgage Borrower, accompanied
by a detailed description of the request for Lender's consent or approval in an
envelope labeled "Priority" and delivered to Lender by overnight delivery and
otherwise in accordance with the provisions of Section 10.6 and which request
shall state at the top of the first page in bold lettering "LENDER'S RESPONSE IS
REQUIRED WITHIN TEN BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE
TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER." In the event that
Lender fails to either consent or approve such request or disapprove such
request (such disapproval stating the reasons for such disapproval) for more
than ten (10) Business Days after receipt thereof, the action which was the
subject of said request shall be deemed approved or consented to, as applicable.
5.1.22 Unfunded Tenant Allowances. Borrower shall pay, or cause Mortgage
Borrower to pay, when required by the applicable Lease all Unfunded Tenant
Allowances due to the applicable tenant.
5.1.23 Notices. Borrower shall give notice, or cause notice to be given, to
Lender promptly upon the occurrence of:
(a) any Default, Mortgage Loan Default or Mortgage Loan Event of Default;
and
(b) a change in the business, operations, property or financial or other
condition or prospects of Borrower, or, to the knowledge of Borrower, Mortgage
Borrower or Guarantor which could reasonably be expected to have a material
adverse effect on Borrower, the ability of Borrower to perform under the Loan
Documents or the rights and remedies of Lender under the Loan Documents.
5.1.24 Special Distributions. On each date on which amounts are required to
be disbursed to the Mezzanine Debt Service Account pursuant to the terms of the
Mezzanine Cash Management Agreement or are required to be paid to Lender under
any of the Loan Documents, Borrower shall exercise its rights under Mortgage
Borrower Company Agreement to cause Mortgage Borrower to make to Borrower a
distribution in an aggregate amount such that Lender shall receive the amount
required to be disbursed to the Mezzanine Debt Service Account or otherwise paid
to Lender on such date.
5.1.25 Curing. Lender shall have the right, but shall not have the
obligation, to exercise Borrower's rights under the Mortgage Borrower Company
Agreement (a) to cure a Mortgage Loan Event of Default and (b) to satisfy any
Liens, claims or judgments against the Property (except for Liens permitted by
the Mortgage Loan Documents), in the case of either (a) or (b), unless Borrower
or Mortgage Borrower shall be diligently pursuing remedies to cure to Lender's
reasonable satisfaction. Borrower shall reimburse Lender on demand for any and
all costs incurred by Lender in connection with curing any such Mortgage Loan
Event of Default or satisfying any Liens, claims or judgments against the
Property.
5.1.26 Mortgage Borrower Covenants. Borrower shall cause Mortgage Borrower
to comply with all obligations with which Mortgage Borrower has covenanted to
comply under the Mortgage Loan Agreement and all other Mortgage Loan Documents
(including, without limitation, those certain affirmative and negative covenants
set forth in Article V of the Mortgage Loan Agreement) whether the related
Mortgage Loan Document has been repaid or otherwise terminated, unless otherwise
consented to in writing by Lender.
5.1.27 Additional Leasing Deposit5.1.28 . Provided such deposit is not or
shall not have been made by Mortgage Borrower or Guarantor under the Mortgage
Loan Agreement, Borrower hereby covenants that on or prior to the date upon
which Lender takes title to the Collateral pursuant to a foreclosure under the
Pledge Agreement or transfer of the Collateral in lieu thereof, Borrower shall
deposit with Lender an amount equal to the amount by which (i) $6,000,000
exceeds (ii) the aggregate amount expended by Mortgage Borrower for asbestos
abatement, if any, provided such amount was not funded from any Reserve Fund
hereunder or under the Mortgage Loan Agreement (the "Post-Possession Re-Leasing
Escrow Deposit"), which Post-Possession Re-Leasing Escrow Deposit is the agreed
upon amount that Lender estimates will be needed for appropriate re-leasing work
to be completed at the Property, including any necessary or desired asbestos
abatement.
Section 5.2 Negative Covenants .
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Lien of the Pledge Agreement in accordance with the terms of this Agreement and
the other Loan Documents, Borrower covenants and agrees with Lender that it will
not do, directly or indirectly, any of the following:
5.2.1 Operation of Property .Borrower shall not allow Mortgage Borrower,
without the prior consent of Lender (which consent shall not be unreasonably
withheld), to terminate the Management Agreement or otherwise replace the
Manager or enter into any other management agreement with respect to the
Property provided; however, Borrower may allow Mortgage Borrower, at Mortgage
Borrower's option, to replace the Manager with a Qualifying Manager provided
that (i) the Qualifying Manager manages the Property pursuant to a Management
Agreement reasonably satisfactory to Lender and (ii) the Qualifying Manager
executes and delivers (A) to Mortgage Lender an agreement substantially similar
to the Assignment of Management Agreement (as defined in the Mortgage Loan
Agreement) and (B) to Lender an agreement substantially similar to the
Subordination of Management Agreement; upon satisfaction of the terms and
conditions of (i) and (ii), the replacement manager shall be considered to be
"Manager" and all references in this Agreement and the other Loan Documents to
"Manager" shall be deemed to refer to said replacement manager, the term
"Management Agreement" shall be deemed to refer to the management agreement
pursuant to which such replacement manager manages the Property, the term
"Assignment of Management Agreement" shall be deemed to refer to the agreement
executed and delivered by the replacement manager to Mortgage Lender and the
term "Subordination of Management Agreement" shall be deemed to refer to the
agreement executed and delivered by the replacement manager to Lender. If
required by the Rating Agencies, Borrower shall cause Mortgage Borrower to
deliver or cause to be delivered to Mortgage Lender a Nonconsolidation Opinion
which may be relied upon by Mortgage Lender, the Rating Agencies and their
respective counsel, successors and assigns, with respect to the new Manager,
which Nonconsolidation Opinion shall be reasonably acceptable to Mortgage Lender
and, after a Securitization, the Rating Agencies as confirmed in writing. With
regard to any action described in this Section 5.2.1 for which Lender's consent
or approval is required, Lender shall not withhold its consent or approval or
disapproval to any such action for more than ten (10) Business Days after
request for consent or approval thereof has been made by Borrower or Mortgage
Borrower, accompanied by a detailed description of the request for Lender's
consent or approval in an envelope labeled "Priority" and delivered to Lender by
overnight delivery and otherwise in accordance with the provisions of Section
10.6 and which request shall state at the top of the first page in bold
lettering "LENDER'S RESPONSE IS REQUIRED WITHIN TEN BUSINESS DAYS OF RECEIPT OF
THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED
AND LENDER." In the event that Lender fails to either consent or approve such
request or disapprove such request (such disapproval stating the reasons for
such disapproval) for more than ten (10) Business Days after receipt thereof,
the action which was the subject of said request shall be deemed approved or
consented to, as applicable.
5.2.2 Liens. Borrower shall not, without the prior written consent of
Lender, create, incur, assume or suffer to exist any Lien on any portion of the
Collateral except as permitted hereunder.
5.2.3 Dissolution. Borrower shall not and shall not permit Mortgage
Borrower to (a) engage in any dissolution, liquidation or consolidation or
merger with or into any other Person, (b) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower or Mortgage Borrower,
as applicable, except to the extent permitted by the Loan Documents or (c)
modify, amend, waive or terminate its organizational documents or its
qualification and good standing in any jurisdiction.
5.2.4 Intentionally Deleted.
5.2.5 Debt Cancellation. Borrower shall not cancel or otherwise forgive or
release any claim or debt owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business. Borrower shall
not permit Mortgage Borrower to cancel or otherwise forgive or release any claim
or debt (other than termination of Leases in accordance with the Mortgage Loan
Documents) owed to Mortgage Borrower by any Person, except for adequate
consideration and in the ordinary course of Mortgage Borrower's business.
5.2.6 Intentionally Deleted.
5.2.7 Zoning. Borrower shall not permit Mortgage Borrower to 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
material non-conforming use under any zoning ordinance or any other applicable
land use law, rule or regulation, without the prior consent of Lender.
5.2.8 Intentionally Deleted.
5.2.9 Intentionally Deleted.
5.2.10 No Joint Assessment. Borrower shall not permit Mortgage Borrower to
suffer, permit or initiate the joint assessment of the Property with (a) any
other real property constituting a tax lot separate from the Property, or (b)
any portion of the Property which may be deemed to constitute personal property,
or any other procedure whereby the Lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to the Property.
5.2.11 Principal Place of Business. Borrower shall not change its principal
place of business set forth on the first page of this Agreement without first
giving Lender thirty (30) days prior written notice. Borrower shall not change
its jurisdiction of organization without first obtaining the consent of Lender.
5.2.12 ERISA. (a) Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (B) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered securities, within
the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. ss.2510.3-101(f)(2); or
(iii)Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. ss.2510.3-101(c) or
(e).
5.2.13 Transfers. (a) Except as otherwise permitted by the provisions of
this Section 5.2.13 or except to the extent permitted elsewhere in the Loan
Documents, Borrower will not (i) permit or suffer (by operation of law or
otherwise) any sale, assignment, conveyance, transfer or other disposition of
legal or equitable interest in all or any part of the Property, (ii) permit or
suffer (by operation of law or otherwise) any sale, assignment, conveyance,
transfer or other disposition of any direct or indirect interest in Borrower,
(iii) permit or suffer (by operation of law or otherwise) any mortgage, lien or
other encumbrance of all or any part of the Property, (iv) permit or suffer (by
operation of law or otherwise) any pledge, hypothecation, creation of a security
interest in or other encumbrance of any direct or indirect interests in
Borrower, or (v) file a declaration of condominium with respect to the Property.
(b) Borrower shall not permit Mortgage Borrower to consent to or permit a
sale or conveyance of the Property unless it obtains the prior consent of
Lender. Lender shall consent to a sale or conveyance by Mortgage Borrower of all
of the Property (but not a mortgage, lien or other encumbrance) provided that
the following conditions are satisfied:
(i) such sale or conveyance has been approved or deemed
approved under the Mortgage Loan Documents and all conditions set
forth in the Mortgage Loan Documents relating thereto have been
satisfied;
(ii) no Event of Default shall have occurred and be
continuing;
(iii) the Person to whom the Property is sold or conveyed
("New Mortgage Borrower") (A) satisfies the requirements of a
special purpose entity set forth in Section 4.1.30 of the Mortgage
Loan Agreement and (B) not less than 51% of the direct or indirect
interests of the Person to whom the Property is sold or conveyed are
owned and controlled by a Permitted Owner;
(iv) Lender has received a Nonconsolidation Opinion which may
be relied upon by Lender, the Rating Agencies and their respective
successors and assigns, with respect to the sale or conveyance,
which Nonconsolidation Opinion shall be reasonably acceptable to
Lender and, after a Securitization, the Rating Agencies;
(v) the New Mortgage Borrower shall assume the Mortgage Loan
and the Mortgage Loan Documents and all the agreements and
obligations of Mortgage Borrower under the Mortgage Loan, subject,
however, to the provisions of Section 9.4 of the Mortgage Loan
Agreement;
(vi) all of the entities which own interests in the New
Mortgage Borrower similar to the interests in Mortgage Borrower
owned by Borrower (the "Mezzanine Entities") (A) shall assume the
Loan and all the agreements of Borrower under the Loan Documents
(and without limiting the foregoing, all of the ownership interests
in the New Mortgage Borrower, all payments thereon and all proceeds
thereof shall be pledged to Lender on terms no less favorable than
the pledge of the Collateral under the Pledge Agreement) and (B)
shall satisfy the requirements of a special purpose entity set forth
in Section 4.1.30 of this Agreement;
(vii) if following such sale or conveyance, Manager will not
be the property manager of the Property, then the property manager
of the Property must be a Qualifying Manager; and
(viii) Borrower shall give written notice to Lender of the
proposed sale or conveyance not later than fifteen (15) days prior
thereto, which notice shall set forth the name of the proposed
transferee, identify the owners of such direct and indirect
interests of the proposed transferee and set forth the date the sale
or conveyance is expected to be effective.
(c) A transfer or sale (but not a pledge, hypothecation, creation of
a security interest in or other encumbrance) of any direct or indirect
interests in Borrower are permitted provided that the following conditions
are satisfied:
(i) such transfer or sale is to a Permitted Owner or to a
Person wholly owned by a Permitted Owner;
(ii) prior to any such transfer or sale of direct or indirect
ownership interests in Borrower, as a result of either of which (and
after giving effect to such transfer or sale), more than 49% of the
direct or indirect ownership interests in Borrower shall have been
transferred to a person or entity not owning at least 49% of the
direct or indirect ownership interests in Borrower on the date of
closing, Borrower shall deliver to Lender a Nonconsolidation Opinion
which may be relied upon by Lender, the Rating Agencies and their
respective successors and assigns, with respect to the proposed
transfer or sale, which Nonconsolidation Opinion shall be reasonably
acceptable to Lender and, after a Securitization, the Rating
Agencies;
(iii) immediately prior to such transfer or sale no Event of
Default has occurred and is continuing;
(iv) if following such transfer or sale, Manager will not be
the property manager of the Property, then the property manager of
the Property must be a Qualifying Manager; and
(v) Borrower shall give or cause to be given written notice to
Lender of the proposed transfer or sale not later than fifteen (15)
days prior thereto, which notice shall set forth the name of the
Person to which the interest in Borrower is to be transferred or
sold, identify the proposed transferee and set forth the date the
transfer or sale is expected to be effective.
(d) Borrower agrees to bear and shall reimburse Lender on demand all
reasonable out-of-pocket expenses incurred by Lender in connection with any
transaction described in subsections (b) and (c) of this Section 5.2.13.
(e) Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon any violation of this
Section 5.2.13.
(f) After a Securitization, the provisions of this Section 5.2.13
shall not be modified or amended by Borrower and Lender unless the Rating
Agencies have confirmed that such amendment or modification will not result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
the Securities.
(g) Notwithstanding any provision in this Agreement or in any other
Loan Document to the contrary, this Section 5.2.13 shall not restrict the right
of (i) any limited partner of Prime Group Realty, L.P. to transfer all or any
portion of its limited partnership interest in Prime Group Realty, L.P. or to
cause or permit all or any portion of its limited partnership interest in Prime
Group Realty, L.P. to be redeemed, (ii) Prime Group Realty, L.P. to issue,
transfer or redeem additional limited or general partner units (so long as Prime
Group Realty Trust remains the sole general partner of Prime Group Realty, L.P.)
or Prime Group Realty Trust to issue additional shares or other equity
interests, (iii) Prime Group Realty, L.P. to cause or permit any of its limited
partnership interests to be exchanged for common shares of Prime Group Realty
Trust, or (iv) the holder of any equity interest, including common or preferred
shares, in Prime Group Realty Trust (each an "Equity Holder") to transfer or
convert such Equity Holder's interest in Prime Group Realty Trust or to cause or
permit such Equity Holder's interest in Prime Group Realty Trust to be redeemed.
(h) This Section 5.2.13 does not restrict Borrower's ability to
enter into any Leases, unless such Leases grant the tenant thereunder any rights
that, if exercised, would violate the transfer restrictions set forth in this
Section 5.2.13.
5.2.14 Limitation on Securities Issuances. Except as otherwise expressly
permitted under the Loan Documents and the Mortgage Loan Documents, none of
Borrower or any of its Subsidiaries shall issue any membership interests or
other securities other than those that have been issued as of the date hereof.
5.2.15 Limitations on Distributions. Following the occurrence and during
the continuance of an Event of Default, Borrower shall not make any
distributions to its members.
5.2.16 Other Limitations. Prior to the payment in full of the Debt, neither
Borrower nor any of its Subsidiaries shall, without the prior written consent of
Lender (which may be furnished or withheld at its sole and absolute discretion),
give its consent or approval to any of the following actions or items:
(a) except as permitted by Lender herein (i) any refinance of the Mortgage
Loan, (ii) any prepayment in full of the Mortgage Loan, (iii) any transfer of
the Property or any portion thereof, or (iv) any action in connection with or in
furtherance of the foregoing (including, but not limited to, any defeasance of
the Mortgage Loan);
(b) creating, incurring, assuming or suffering to exist any additional
Liens on any portion of the Property except for Permitted Encumbrances.
(c) any modification, amendment, consolidation, spread, restatement, waiver
or termination of any of the Mortgage Loan Documents;
(d) the distribution to the partners, members or shareholders of Mortgage
Borrower of property other than Cash;
(e) except as permitted under the Mortgage Loan Documents, any (i)
improvement, renovation or refurbishment of all or any part of the Property to a
materially higher standard or level than that of comparable properties in the
same market segment and in the same geographical area as the Property, (ii)
removal, demolition or material alteration of the improvements or equipment on
the Property or (iii) material increase in the square footage or gross leasable
area of the improvements on the Property if a material portion of any of the
expenses in connection therewith are paid or incurred by Mortgage Borrower;
(f) any material change in the method of conduct of the business of
Borrower or any of its Subsidiaries (including the entering into of an operating
lease with respect to any hotel), such consent to be given in the sole
discretion of the Lender; or
(g) except as required by the Mortgage Loan Documents, any determination to
restore the Property after a casualty or condemnation.
5.2.17 Refinancing. Prior to the repayment in full of the Debt, Borrower
shall not consent to or permit a refinancing of the Mortgage Loan unless it
obtains the prior consent of Lender, provided that Lender shall consent to a
refinancing in full of the Mortgage Loan if, after considering the following
factors, Lender determines in its reasonable discretion that such factors have
been satisfied:
(a) no Event of Default or event which with the giving of notice and/or
lapse of time would constitute an Event of Default under this Agreement shall
have occurred and be continuing;
(b) the refinancing of the Mortgage Loan including, without limitation, any
successive refinancing ("New Mortgage Loan") shall have (A) an interest rate
that is no higher than the current interest rate provided for under the Mortgage
Loan (or in the event the Mortgage Loan is a floating rate loan, an interest
rate that is benchmarked off the same index and with a spread over such index
which is no greater than the then current spread applicable to the Mortgage
Loan), as determined by Lender in its sole discretion (and shall provide for an
interest rate cap substantially identical to the Interest Rate Cap Agreement
under, and as defined in, the Mortgage Loan Agreement), provided, however, that
in connection with a permitted refinancing during the three (3) months prior to
the Maturity Date the interest rate may be at the then prevailing market rate;
(B) a principal balance that is no more than the balance of the Mortgage Loan on
the date of the refinancing plus any advances made by the Mortgage Lender or the
Servicer (as defined in the Mortgage Loan Agreement) in order to protect or
preserve the Property (as defined in the Mortgage Loan Agreement) or the lien of
the Mortgage Loan Documents on the Property; provided, however, that in
connection with a permitted refinancing during the three (3) months prior to the
Maturity Date, the principal balance may also include reasonable and customary
closing costs; (C) if the New Mortgage Loan provides for amortization,
amortization amounts not greater than that calculated on the basis of an equal
monthly payment self liquidating twenty-nine (29) year loan using the initial
interest rate for the permitted refinancing in question for such calculation;
provided, however, that the amount of amortization may be greater than the
amortization under the Mortgage Loan due to an increase in the principal balance
as permitted under subsection (B) above; (D) a maturity date that is no earlier
than that provided for under the Mortgage Loan at the time of the closing
hereof; (E) no provisions providing for the payment of any additional interest,
fees, participating interest or other similar equity feature; (F) no provision
in which collateral not granted for the benefit of Mortgage Lender or otherwise
encumbered with respect to the Mortgage Loan as of the date hereof is granted
for the benefit of or with respect to the New Mortgage Loan; (G) no provision
whereby the New Mortgage Loan is cross-defaulted with any other Indebtedness
(other than the Loan, if applicable); (H) reserves substantially the same as
those maintained under the Mortgage Loan and a cash management and lockbox
arrangement substantially similar to that maintained under the Mortgage Loan;
and (I) no provisions that prohibit the prepayment of the New Mortgage Loan from
and after the Prepayment Release Date (as defined in the Mortgage Loan
Agreement) without the payment of a prepayment premium or penalty that is
greater than the prepayment premium or penalty required under the Mortgage Loan
Agreement;
(c) the terms of the New Mortgage Loan shall permit the Loan, shall provide
the same express rights to the Lender as the Mortgage Loan, if any, and shall
not conflict with the terms of the Loan and the new mortgage lender shall enter
into an intercreditor agreement with Lender no less favorable to Lender than the
Intercreditor Agreement;
(d) the Property may not be transferred in connection with such refinancing
except pursuant to a transfer made in accordance with Section 5.2.13 of this
Agreement;
(e) Borrower shall pay all reasonable, out-of-pocket costs and expenses of
Lender incurred in connection with any such refinancing, including, without
limitation, reasonable fees and expenses of Lender's counsel;
(f) Borrower shall execute and deliver such amendments to this Agreement
and the other Loan Documents as Lender may reasonably request in connection with
such New Mortgage Loan;
(g) Lender shall have received such settlement statements, pay-off letters,
opinions and other documentation as it shall reasonably request in connection
with such refinancing; and
(h) Lender shall have received at least thirty (30) days prior written
notice of such refinancing.
Upon the satisfaction of the foregoing, Borrower may permit or consent to a
refinancing of the Mortgage Loan, whereupon such New Mortgage Loan shall be
deemed to be the Mortgage Loan as defined herein.
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
Section 6.1 Insurance.
(a) Borrower shall cause Mortgagor Borrower to maintain at all times during
the term of the Loan the insurance required under Section 6.1 of the Mortgage
Loan Agreement, including, without limitation, meeting all insurer requirements
thereunder. In addition, Borrower shall cause Lender to be named as an
additional named insured under each of the insurance policies described in
Sections 6.1(a)(ii), (v), (vii) and (viii) of the Mortgage Loan Agreement. In
addition, Borrower shall cause Lender to be named as a named insured together
with Mortgage Lender, as their interest may appear but subject to the terms of
the Intercreditor Agreement, under the insurance policies required under
Sections 6.1.(a)(i), (iii), (iv), (vi) and (ix) of the Mortgage Loan Agreement.
Borrower shall also cause all insurance policies required under this Section 6.1
to provide for at least thirty (30) days prior notice to Lender in the event of
policy cancellation or material and adverse changes. Borrower shall provide
Lender with evidence of all such insurance required hereunder simultaneously
with Mortgage Borrower's provision of such evidence to Mortgage Lender.
(b) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, upon notice to Borrower, to take such action as Lender deems necessary to
protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its reasonable discretion
deems appropriate. All premiums incurred by Lender in connection with such
action or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and shall bear interest at the Default Rate.
Section 6.2 Casualty. If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty (a "Casualty"), Borrower shall give
prompt notice of such damage to Lender and shall cause Mortgage Borrower to
promptly commence and diligently prosecute the completion of the repair and
restoration of the Property to substantially the same or better condition the
Property was in immediately prior to such Casualty and otherwise in accordance
with Section 6.4 of the Mortgage Loan Agreement.
Section 6.3 Condemnation. Upon becoming aware of the same, Borrower shall
promptly give Lender notice of the actual or threatened commencement of any
proceeding for the Condemnation of the Property and shall cause Mortgage
Borrower to deliver to Lender copies of any and all papers served in connection
with such proceedings. Lender may participate in any such proceedings, and
Borrower shall from time to time deliver to Lender all instruments reasonably
requested by it to permit such participation. Borrower shall, at its expense,
diligently prosecute any such proceedings, and shall consult with Lender, its
attorneys and experts, and cooperate with them in the carrying on or defense of
any such proceedings. Notwithstanding any taking by any public or quasi-public
authority through Condemnation or otherwise (including but not limited to any
transfer made in lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Debt at the time and in the manner provided
for its payment in the Note and in this Agreement and the Debt shall not be
reduced until any Award shall have been actually received and applied by Lender,
after the deduction of expenses of collection, to the reduction or discharge of
the Debt.
Section 6.4 Restoration .Borrower shall, or shall cause Mortgage Borrower
to, deliver to Lender all reports, plans, specifications, documents and other
materials that are delivered to Mortgage Lender under Section 6.4 of the
Mortgage Loan Agreement in connection with a restoration of the Property after a
Casualty or Condemnation.
VII. RESERVE FUNDS
Section 7.1 Intentionally Omitted.
Section 7.2 Tax, Insurance and Ground Rent Escrow Fund
(a) Borrower shall pay to Lender on each Payment Date (a) one-twelfth of
the Taxes that Lender estimates will be payable during the next ensuing twelve
(12) months in order to accumulate with Lender sufficient funds to pay all such
Taxes at least thirty (30) days prior to their respective due dates, and (b)
one-twelfth of the Insurance Premiums that Lender reasonably 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 and (c) commencing with the Payment Date occurring in February,
2004, one-twelfth of the Ground Rents that Lender reasonably estimates will be
payable under the Ground Lease in order to accumulate with Lender sufficient
funds to pay all such Ground Rents when due (said amounts in (a), (b) and (c)
above hereinafter called the "Tax, Insurance and Ground Rent Escrow Fund"). The
Tax, Insurance and Ground Rent Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note, shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the
Tax, Insurance and Ground Rent Escrow Fund to payments of Taxes, Insurance
Premiums and Ground Rents required to be made by Borrower pursuant to this
Agreement and under the Mortgage. Lender will not pay Taxes if Borrower
instructs Lender that Borrower is contesting the Taxes and provided that
Borrower complies with Section 5.1.2. In making any payment relating to the Tax,
Insurance and Ground Rent Escrow Fund, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), 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 the amount of the Tax, Insurance and Ground Rent Escrow Fund shall
exceed the amounts due for Taxes, Insurance Premiums and Ground Rents pursuant
to this Agreement, Lender shall, in its sole discretion, return any excess to
Borrower or credit such excess against future payments to be made to the Tax,
Insurance and Ground Rent Escrow Fund. Any amount remaining in the Tax,
Insurance and Ground Rent Escrow Fund after the Debt has been paid in full shall
be returned to Borrower. If at any time Lender reasonably determines that the
Tax, Insurance and Ground Rent Escrow Fund is not or will not be sufficient to
pay Taxes, Insurance Premiums and Ground Rents by the dates set forth in (a),
(b) and (c) above, Lender shall notify Borrower of such determination and
Borrower shall increase its monthly payments to Lender by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes and/or thirty (30) days prior to expiration of
the Policies and/or thirty (30) prior to the date the Ground Rents are due under
the Ground Lease, as the case may be. Notwithstanding the foregoing, so long as
(A) Borrower provides to Lender evidence reasonably satisfactory to Lender that
all insurance premiums otherwise due hereunder have been paid pursuant to
Borrower's blanket insurance policy, which policy shall satisfy the conditions
of Section 6.1 hereof, and (B) there shall be no Event of Default then
continuing, then Borrower shall have no obligation to escrow insurance premiums
as set forth in this Section 7.2 with respect to any such insurance covered by
Borrower's blanket insurance policy.
(b) Borrower shall be relieved of its obligation to make deposits of Taxes,
Insurance Premiums and Ground Rents under Section 6.2(a) above, provided that
(a) Mortgage Borrower is required to and does make monthly deposits to a tax,
insurance and ground rent escrow account under the Mortgage Loan and (b) Lender
receives evidence reasonably acceptable to it of the making of such deposits and
of the payment of all such Taxes, Insurance and Ground Rents.
Section 7.3 Rollover Reserve.
7.3.1 Deposits to Rollover Reserve Fund. Commencing on the Payment Date
occurring in January, 2004 and on each Payment Date thereafter until and
including the Rollover Reserve Termination Date, Borrower shall deposit with
Lender an amount equal to the Rollover Reserve Deposit, which amounts shall be
deposited with and held by Lender in an interest bearing account for the benefit
of Borrower for payment of Rollover Costs. Amounts so deposited shall
hereinafter be referred to as the "Rollover Reserve Fund" and the account to
which such amounts are held shall hereinafter be referred to as the "Rollover
Reserve Account".
7.3.2 Additional Deposits to the Rollover Reserve Account.
(a) In the event that on the First Rollover Trigger Date, (i) an IBM Lease
Renewal Event shall not have occurred and the amount on deposit in the Rollover
Reserve Account does not equal or exceed $9,000,000.00, Borrower shall without
notice or demand deposit into the Rollover Reserve Account on the First Rollover
Trigger Date an amount equal to the difference between (y) $9,000,000.00 and (z)
the sum of (1) the amount then on deposit in the Rollover Reserve Account plus
(2) the amount of any disbursements from the Rollover Reserve Account for
Rollover Costs or (ii) an IBM Lease Renewal Event shall have occurred and the
amount on deposit in the Rollover Reserve Account does not equal or exceed
$6,000,000.00 (after payment of all Rollover Costs in connection with the IBM
Lease) Borrower shall, without notice or demand, deposit an amount equal to the
difference between (y) $6,000,000.00 and (z) the amount then on deposit in the
Rollover Reserve Account (such difference being the "First Required Additional
Deposit").
(b) Provided that an IBM Renewal Event shall not have occurred, in the
event that on the Second Rollover Trigger Date, the amount on deposit in the
Rollover Reserve Account does not equal or exceed $15,000,000.00, Borrower shall
without notice or demand deposit into the Rollover Reserve Account on the Second
Rollover Trigger Date an amount equal to the difference between (y)
$15,000,000.00 and (z) the sum of (i) the amount then on deposit in the Rollover
Reserve Account plus (ii) the amount of any disbursements from the Rollover
Reserve Account for Rollover Costs (such difference being the "Second Required
Additional Deposit"). If an IBM Renewal Event shall have occurred, then no
payments shall be required to be made pursuant to this subsection (b).
7.3.3 Release of Rollover Reserve Funds. Lender shall make disbursements
from the Rollover Reserve Fund to pay Rollover Costs or to reimburse Borrower
for Rollover Costs paid or to be paid by Borrower. Lender shall make
disbursements as requested by Borrower on a monthly basis in increments of no
less than $10,000.00 within ten (10) Business days following receipt by Lender
of request for disbursement accompanied by copies of the invoices for the
Rollover Costs for which payment is requested. If Borrower requests that the
disbursement from the Rollover Reserve Fund be made directly to Borrower to
reimburse Borrower for Rollover Costs paid by Borrower, the request for
disbursement shall be accompanied by evidence reasonably satisfactory to Lender
of payment of such costs by Borrower. In addition, if required by Lender,
Borrower shall deliver to Lender copies of lien waivers and releases from all
parties furnishing materials and/or services in connection with the requested
payment. In connection with any disbursement in excess of $250,000 from the
Rollover Reserve Fund (excluding disbursements for leasing commissions) Lender
may require an inspection of the Property at Borrower's reasonable expense prior
to making a disbursement from the Rollover Reserve Fund in order to verify
completion of improvements constituting the Rollover Costs for which
reimbursement is sought. All earnings or interest on the Rollover Reserve Fund
shall be credited to the Rollover Reserve Fund. Any funds remaining on deposit
in the Rollover Reserve Fund upon repayment of all Rollover Costs shall be
released to Borrower. Borrower shall make a capital contribution to Mortgage
Borrower in an amount equal to any Rollover Funds disbursed to Borrower as and
when such disbursements are made pursuant to this Section 7.3.3. Borrower shall
cause Mortgage Borrower to pay the related tenant improvement costs and
brokerage commissions.
7.3.4 Letter of Credit.
(a) In addition to or in lieu of making the payments to the Rollover
Reserve Fund, Borrower may deliver to Lender a Letter of Credit in accordance
with the provisions of this Section 7.3.4. The aggregate amount of any Letter of
Credit and cash on deposit with respect to the Rollover Reserve Fund shall at
all times be at least equal to the aggregate amount which Borrower is required
to have on deposit in the Rollover Reserve Fund pursuant to this Agreement;
provided that if the aggregate amount of any Letter of Credit and cash on
deposit in the Rollover Reserve Account exceeds the amount required to be on
deposit in the Rollover Reserve Account under this Agreement, upon written
request of Borrower and provided that no Event of Default is then continuing,
Lender will release cash on deposit in the Rollover Reserve Account to Borrower
in the amount of such excess.
(b) Borrower shall give Lender no less than ten (10) days revocable notice
of Borrower's election to deliver a Letter of Credit on account of any Rollover
Reserve Fund and Borrower shall pay to Lender all of Lender's reasonable
out-of-pocket costs and expenses in connection therewith, if any. Borrower shall
not be entitled to draw from any such Letter of Credit. Upon thirty (30) days
revocable notice to Lender, Borrower may replace a Letter of Credit with a cash
deposit to the Rollover Reserve Fund if a Letter of Credit has been outstanding
for more than six (6) months. Prior to the return of a Letter of Credit,
Borrower shall deposit an amount equal to the amount that would have accumulated
in the Rollover Reserve Fund (excluding any interest that may have accrued) and
not been disbursed in accordance with this Agreement if such Letter of Credit
had not been delivered.
(c) Each Letter of Credit delivered under this Agreement shall be
additional security for the payment of the Debt. Upon the occurrence and during
the continuance of an Event of Default, Lender shall have the right, at its
option, to draw on any Letter of Credit and to apply all or any part thereof to
the payment of the items for which such Letter of Credit was established or to
apply each such Letter of Credit to payment of the Debt in such order,
proportion or priority as Lender may determine.
(d) In addition to any other right Lender may have to draw upon a Letter of
Credit pursuant to the terms and conditions of this Agreement, Lender shall have
the additional rights to draw in full any Letter of Credit: (a) with respect to
any evergreen Letter of Credit, if Lender has received a notice from the issuing
bank that the Letter of Credit will not be renewed and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (b) with respect to any
Letter of Credit with a stated expiration date, if Lender has not received a
notice from the issuing bank that it has renewed the Letter of Credit at least
thirty (30) days prior to the date on which such Letter of Credit is scheduled
to expire and a substitute Letter of Credit is not provided at least thirty (30)
days prior to the date on which the outstanding Letter of Credit is scheduled to
expire; (c) upon receipt of notice from the issuing bank that the Letter of
Credit will be terminated (except if the termination of such Letter of Credit is
permitted pursuant to the terms and conditions of this Agreement or a substitute
Letter of Credit is provided); or (d) if Lender has received notice that the
bank issuing the Letter of Credit shall cease to be an Approved Bank; provided,
however, that in the event Lender receives any notice referred to in clause (d)
hereof and Lender, in its reasonable discretion, determines that the security
intended to be provided to Lender by the related Letter of Credit is not thereby
materially jeopardized, Borrower shall have ten (10) Business Days following
receipt of notice from Lender in which to deliver to Lender a replacement Letter
of Credit issued by an Approved Bank; provided, further, that in the event
Lender draws on any Letter of Credit upon the happening of an event specified in
(a), (b), (c) or (d) above (but specifically excluding any draw related to the
occurrence of an Event of Default), Lender shall return to Borrower the funds so
drawn in the event Borrower provides Lender with a replacement Letter of Credit
issued by an Approved Bank within thirty (30) days following such draw.
Notwithstanding anything to the contrary contained in the above, Lender is not
obligated to draw any Letter of Credit upon the happening of an event specified
in (a), (b), (c) or (d) above and shall not be liable for any losses sustained
by Borrower due to the insolvency of the bank issuing the Letter of Credit if
Lender has not drawn the Letter of Credit.
7.3.5 Waiver of Rollover Escrow.
Borrower shall be relieved of its obligation to make the monthly deposits
of Rollover Reserve Funds, the First Required Additional Deposit and the Second
Required Additional Deposit under Section 7.3 above, provided that (a) Mortgage
Borrower is required to and does make monthly deposits and the other deposits to
a rollover reserve account in respect of tenant improvement costs and leasing
commissions under the Mortgage Loan and (b) Lender receives evidence reasonably
acceptable to it of the making of such deposits.
Section 7.4 Asbestos Abatement Reserve.
7.4.1 Deposits to Asbestos Abatement Reserve Fun. Commencing on the Payment
Date occurring in January, 2004 and on each Payment Date thereafter until and
including December, 2005, Borrower shall deposit with Lender an amount equal to
the Asbestos Abatement Deposit, which amounts shall be deposited with and held
by Lender in an interest bearing account for the benefit of Borrower for payment
of Asbestos Abatement Costs. Amounts so deposited shall hereinafter be referred
to as the "Asbestos Abatement Reserve Fund" and the account to which such
amounts are held shall hereinafter be referred to as the "Asbestos Abatement
Reserve Account".
7.4.2 Release of Asbestos Abatement Reserve Funds. Lender shall make
disbursements from the Asbestos Abatement Reserve Fund to pay Asbestos Abatement
Costs or to reimburse Borrower for Asbestos Abatement Costs paid or to be paid
by Borrower. Lender shall make disbursements as requested by Borrower on a
monthly basis in increments of no less than $10,000.00 within ten (10) Business
days following receipt by Lender of request for disbursement accompanied by
copies of the invoices for the Asbestos Abatement Costs for which payment is
requested. If Borrower requests that the disbursement from the Asbestos
Abatement Reserve Fund be made directly to Borrower to reimburse Borrower for
Asbestos Abatement Costs paid by Borrower, the request for disbursement shall be
accompanied by evidence reasonably satisfactory to Lender of payment of such
costs by Borrower. In addition, if reasonably required by Lender (and such
requirement being customary in such circumstances), Borrower shall deliver to
Lender copies of lien waivers and releases from all parties furnishing materials
and/or services in connection with the requested payment. In connection with any
disbursement in excess of $250,000 from the Asbestos Abatement Reserve Fund,
Lender may require an inspection of the Property at Borrower's reasonable
expense prior to making a disbursement from the Asbestos Abatement Reserve Fund
in order to verify completion of the abatement work constituting the Asbestos
Abatement Costs for which reimbursement is sought. All earnings or interest on
the Asbestos Abatement Reserve Fund shall be credited to the Asbestos Abatement
Reserve Fund. Any funds remaining on deposit in the Asbestos Abatement Reserve
Fund upon repayment of all Asbestos Abatement Costs shall be released to
Borrower. Borrower shall make a capital contribution to Mortgage Borrower in an
amount equal to any Asbestos Abatement Reserve Funds disbursed to Borrower as
and when such disbursements are made pursuant to this Section 7.3.3.
7.4.3 Waiver of Asbestos Abatement Escrow .Borrower shall be relieved of
its obligation to make the monthly deposits of Asbestos Abatement Funds under
Section 7.4.1 above, provided that (a) Mortgage Borrower is required to and does
make monthly deposits to an asbestos abatement reserve account in respect of
asbestos abatement under the Mortgage Loan and (b) Lender receives evidence
reasonably acceptable to it of the making of such deposits.
Section 7.5 Transfer of Reserve Funds under Mortgage Loan .
If Mortgage Lender waives any reserves or escrow accounts required in
accordance with the terms of the Mortgage Loan Agreement, which reserves or
escrow accounts are also required in accordance with the terms of this Article
VII, or if the Mortgage Loan is refinanced or paid off in full (without a
prepayment of the Loan) and Reserve Funds that are required hereunder are not
required under the new mortgage loan, if any, then Borrower shall cause any
amounts that would have been deposited into any reserves or escrow accounts in
accordance with the terms of the Mortgage Loan Agreement to be transferred to
and deposited with Lender in accordance with the terms of this Article VII (and
Borrower shall enter into a cash management and lockbox agreement for the
benefit of Lender substantially similar to the arrangement entered into at the
time of the closing of the Mortgage Loan), and, if any letters of credit have
been substituted by Mortgage Borrower for any such reserves or escrows as may be
specifically permitted by the Mortgage Loan Agreement, then Borrower shall also
cause such letters of credit to be transferred to Lender to be held by Lender
upon the same terms and provisions as set forth in the Mortgage Loan Agreement.
Section 7.6 Reserve Funds, Generally.
7.6.1 Borrower grants to Lender a first-priority perfected security
interest in each of the Reserve Funds and any and all monies now or hereafter
deposited in each Reserve Fund as additional security for payment of the Debt.
Until expended or applied in accordance herewith, the Reserve Funds shall
constitute additional security for the Debt.
7.6.2 Upon the occurrence of an Event of Default, Lender may, in addition
to any and all other rights and remedies available to Lender, apply any sums
then present in any or all of the Reserve Funds to the payment of the Debt in
any order in its sole discretion.
7.6.3 The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.
7.6.4 The Reserve Funds shall be held in interest bearing accounts and all
earnings or interest on a Reserve Fund shall be added to and become a part of
such Reserve Fund and shall be disbursed in the same manner as other monies
deposited in such Reserve Fund.
7.6.5 Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any Reserve
Fund or the monies deposited therein or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto.
VIII. DEFAULTS
Section 8.1 Event of Default.
(a) Each of the following events shall constitute an event of default
hereunder (an "Event of Default"):
(i) if (A) any payment of principal or interest due pursuant to the
Note, this Agreement or any of the other Loan Documents including the payment
due on the Maturity Date is not paid on or prior to the date when due or (B) any
other portion of the Debt is not paid on or within five (5) days after the same
is due;
(ii) if any representation or warranty made by Borrower herein or in
any other Loan Document, or in any report, certificate, financial statement or
other instrument, agreement or document furnished to Lender shall have been
false or misleading in any material and adverse respect as of the date the
representation or warranty was made; provided, however, if any representation or
warranty made by Borrower herein or in any report, certificate, financial
statement or other instrument, agreement or document furnished to Lender by
Borrower shall have been false or misleading in any material respect as of the
date the representation or warranty was made, and Borrower, in good faith, did
not actually know that the representation or warranty was false or misleading
and such representation or warranty is susceptible of being cured, Borrower
shall have the right to cure or cause to be cured, such representation or
warranty within thirty (30) days of receipt of written notice from Lender; or in
the case of any such representation or warranty that is susceptible of cure but
cannot reasonably be cured within such thirty (30) day period and Borrower shall
have (A) commenced to cure or cause the cure of such representation or warranty
to be commenced within such thirty (30) day period, (B) submitted to Lender a
certificate setting forth an explanation of the inability to cure such
representation or warranty within such thirty (30) day period and describing
Borrower's past and intended efforts to cure or cause the cure of, such
representation or warranty and (C) thereafter diligently proceeds to cure the
same, such thirty (30) day period shall be extended for up to an additional
ninety (90) days;
(iii) if any Significant Party or any guarantor under any guaranty
issued in connection with the Loan shall make an assignment for the benefit of
creditors;
(iv) if a receiver, liquidator or trustee shall be appointed for any
Significant Party or any guarantor under any guarantee issued in connection with
the Loan or if any Significant Party or such guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, any
Significant Party or such guarantor, or if any proceeding for the dissolution or
liquidation of any Significant Party or such guarantor shall be instituted;
provided, however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by any Significant Party or such guarantor,
upon the same not being discharged, stayed or dismissed within sixty (60) days;
(v) if Borrower attempts to assign its rights under this Agreement
or any of the other Loan Documents or any interest herein or therein in
contravention of the Loan Documents;
(vi) if any Significant Party breaches (A) any of its negative
covenants contained in Section 5.2 or any covenant contained in Section 7.3
hereof or (B) any covenant set forth in Section 4.1.30 hereof if (1) such
breach, individually or in the aggregate, could reasonably be expected to
terminate Borrower's status as a special purposes entity or (2) such breach
continues for ten (10) days after notice to Borrower from Lender, in the case of
any breach 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 breach; provided,
however, that if such non-monetary breach is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further that Borrower
shall have commenced to cure such breach within such 30-day period and
thereafter diligently and expeditiously proceeds to cure the same, such 30-day
period shall be extended for such time as is reasonably necessary for Borrower
in the exercise of due diligence to cure such breach , such additional period
not to exceed ninety (90) days;
(vii) if there is any breach of any representation, warranty or
covenant contained in Section 4 of the Pledge Agreement;
(viii) if any of Borrower or Borrower's Subsidiaries (as
applicable) shall breach any of the terms of:
A. Section 2.3.2(a) (Payments upon Liquidation Event);
B. Section 5.1.24 (Special Distributions);
C. Section 5.2.2 (Liens);
D. Section 5.2.13 (Limitations on Transfers);
E. Section 5.2.14 (Limitation on Securities Issuances);
F. Section 5.2.15 (Limitations on Distributions);
G. Section 5.2.16 (other than Section 5.2.16(b), (e), (f) or (g))
(Other Limitations); or
H. Section 5.2.17 (Refinancing).
(ix) if any of the assumptions with respect to Borrower
contained in the Nonconsolidation Opinion delivered to Lender in connection with
the Loan are or shall become untrue in any material respect unless a replacement
Nonconsolidation Opinion acceptable to Lender in its sole discretion is
delivered to Lender within ten (10) Business Days of Borrower's receipt of
notice of such default;
(x) if a default by Borrower under the Ground Lease occurs and
such default shall not have been remedied within the time limit in the Ground
Lease for the remedying of such default and as a result thereof, the Ground
Lessor cancels or terminates or attempts to cancel or terminate the Ground
Lease;
(xi) except as otherwise specifically provided herein or in any
other Loan Document, if the Ground Lease is surrendered, cancelled or
terminated, or the Ground Lease is materially modified, changed, supplemented,
altered or amended without the prior written consent of Lender except in
connection with an acquisition by Mortgage Borrower of the fee estate in
accordance with Section 9.7 of the Mortgage Loan Agreement;
(xii) if Borrower shall fail to comply with any of the other
terms, covenants or conditions of this Agreement not specified in subsections
(i) to (xi) above, within the time limit specified in this Agreement or, if no
such time limit is specified, for ten (10) days after notice to Borrower from
Lender, in the case of any failure 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
failure; provided, however, that if such non-monetary failure is susceptible of
cure but cannot reasonably be cured within such 30-day period and provided
further that Borrower shall have commenced to cure such failure within such
30-day period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such failure,
such additional period not to exceed ninety (90) days;
(xiii) if there shall be a default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
whether as to Borrower or the Property, or if any other such event shall occur
or condition shall exist, if the effect of such event or condition is to
accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt;
(xiv) if (A) this Agreement, the Note or any other Loan Document
shall, in whole or in part, terminate, cease to be effective or cease to be a
legally valid, binding and enforceable obligation of Borrower; (B) Borrower or
any subsidiary of Borrower shall take any action in connection therewith or in
furtherance thereof; or (C) any party to any Loan Document (other than the
Lender) shall assert in writing that such document has ceased to be in full
force and effect; or (D) the Liens created pursuant to any Loan Document shall
cease to be a fully perfected enforceable first priority security interest or
any portion of the Collateral is Transferred without Lender's prior written
consent; or
(xv) a Mortgage Loan Event of Default shall occur.
(b) Upon the occurrence and during the continuance of an Event of Default
(other than an Event of Default described in clauses (iii), (iv) or (v) above)
and at any time thereafter, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, Lender may take such action available under applicable law or
the Loan Documents, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and in the Collateral,
including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents and may exercise all the rights and remedies of a
secured party under the Uniform Commercial Code, as adopted and enacted by the
State or States where any of the Collateral is located, against Borrower and the
Collateral, including, without limitation, all rights or remedies available at
law or in equity; and upon any Event of Default described in clauses (iii), (iv)
or (v) above, the Debt and all other obligations of Borrower hereunder and under
the other Loan Documents shall immediately and automatically become due and
payable, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
Section 8.2 Remedies.
(a) Upon the occurrence 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 this Agreement or any of the other
Loan Documents executed and delivered by, or applicable to, Borrower or at law
or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents with respect to the Collateral. Any such actions taken by Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing (i) 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 Collateral and the
Collateral has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
(b) With respect to Borrower and the Collateral, nothing contained herein
or in any other Loan Document shall be construed as requiring Lender to resort
to the Collateral for the satisfaction of any of the Debt in preference or
priority to the Collateral, and Lender may seek satisfaction out of the
Collateral or any part thereof, in its absolute discretion in respect of the
Debt. In addition, Lender shall have the right from time to time to partially
foreclose the Collateral in any manner and for any amounts secured by the
Collateral then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event
Borrower defaults beyond any applicable grace period in the payment of one or
more scheduled payments of principal and interest, Lender may foreclose the
Collateral to recover such delinquent payments, or (ii) in the event Lender
elects to accelerate less than the entire outstanding principal balance of the
Loan, Lender may foreclose the Collateral to recover so much of the principal
balance of the Loan as Lender may accelerate and such other sums secured by the
Collateral as Lender may elect. Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to the Pledge Agreement to
secure payment of sums secured by the Pledge Agreement and not previously
recovered.
(c) After the occurrence and during the continuance of an Event of Default,
Lender shall have the right from time to time to sever the Note and the other
Loan Documents into one or more separate notes and other security documents (the
"Severed Loan Documents") in such denominations as Lender shall determine in its
sole discretion but otherwise on the same terms for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall reasonably 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 the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender's intent to exercise its
rights under such power and Borrower fails to so sign. Except as may be required
in connection with a securitization pursuant to Section 9.1 hereof, (i) Borrower
shall not be obligated to pay any costs or expenses incurred in connection with
the preparation, execution, recording or filing of the Severed Loan Documents,
and (ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by Borrower only as of the Closing Date.
Section 8.3 Remedies Cumulative; Waivers.
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.
IX. SPECIAL PROVISIONS
Section 9.1 Sale of Notes and Securitization.
At the request of the holder of the Note and, to the extent not already
required to be provided by Borrower under this Agreement, Borrower shall use
reasonable efforts to satisfy the market standards to which the holder of the
Note customarily adheres or which may be reasonably required in the marketplace
or by the Rating Agencies in connection with the sale of the Note or
participations therein or the first successful securitization (such sale and/or
securitization, the "Securitization") of rated single or multi-class securities
(the "Securities") secured by or evidencing ownership interests in the Note and
the Pledge Agreement, including, without limitation, to:
(a) (i) provide, or cause Mortgage Borrower to provided such financial and
other information with respect to the Property, Borrower, Mortgage Borrower and
the Manager, (ii) provide budgets relating to the Property and (iii) to perform
or permit or cause to be performed or permitted such site inspection,
appraisals, market studies, environmental reviews and reports (Phase I's and, if
appropriate, Phase II's), engineering reports and other due diligence
investigations of the Property, as may be reasonably requested by the holder of
the Note or the Rating Agencies or as may be reasonably necessary or appropriate
in connection with the Securitization (the "Provided Information"), together, if
customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to Lender and the Rating Agencies;
(b) cause counsel to render opinions, which may be relied upon by the
holder of the Note, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation, and true sale and/or lease or any
other opinion reasonable and customary in securitization transactions, which
counsel and opinions shall be reasonably satisfactory to the holder of the Note
and the Rating Agencies;
(c) confirm (or update as appropriate) the representations and warranties
as of the closing date of the Securitization set forth in this Agreement; and
(d) execute such amendments to the Loan Documents and organizational
documents, enter into a lockbox or similar arrangement with respect to the Rents
and establish and fund such reserve funds (including, without limitation,
reserve funds for deferred maintenance and capital improvements) as may be
reasonably requested by the holder of the Note or the Rating Agencies or
otherwise to effect the Securitization; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (i) change the interest rate, the stated maturity or the
amortization of principal set forth in the Note, or (ii) modify or amend any
other material or economic term of the Loan or (iii) otherwise materially
increase Borrower's or Guarantor's obligations or liabilities, or materially
decrease Borrower's or Guarantor's rights, under the Loan Documents.
All third party costs and expenses reasonably incurred by Lender or
Borrower in connection with Borrower's complying with requests made under this
Section 9.1 shall be paid by Lender.
Section 9.2 Securitization Indemnification.
(a) Borrower understands that certain of the Provided Information may be
included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus, prospectus supplement or private
placement memorandum (each, a "Disclosure Document") and may also be included in
filings with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), or the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), or provided or made available to
investors or prospective investors in the Securities, the Rating Agencies, and
service providers relating to the Securitization. In the event that the
Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower will reasonably cooperate with the holder of the Note, at
such holder's cost and expense, in updating the Disclosure Document by providing
all current information necessary to keep the Disclosure Document accurate and
complete in all material respects.
(b) Borrower agrees to provide in connection with each of (i) a preliminary
and a private placement memorandum or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable, an indemnification certificate (A)
certifying that Borrower has examined the sections of such memorandum or
prospectus, as applicable, relating to Borrower, Mortgage Borrower, their
respective Affiliates and the Property specified to Borrower by Lender and such
sections, as they relate to Borrower, Mortgage Borrower, their respective
Affiliates and the Property, 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, (B) indemnifying Lender (and for purposes of this Section 9.2,
Lender hereunder shall include its officers and directors), the Affiliate of
▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇") that has filed the registration statement
relating to the securitization (the "Registration Statement"), each of its
directors, each of its officers who have signed the Registration Statement and
each Person or entity who controls the Affiliate within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act (collectively, the
"▇▇▇▇▇▇ Group"), and ▇▇▇▇▇▇, each of its directors and each Person who controls
▇▇▇▇▇▇ within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act (collectively, the "Underwriter Group") for any reasonable,
actual and out-of-pocket losses, claims, damages or liabilities (collectively,
the "Liabilities") to which Lender, the ▇▇▇▇▇▇ Group or the Underwriter Group
may become subject insofar as the Liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such sections or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated in such sections or
necessary in order to make the statements in such sections or in light of the
circumstances under which they were made, not misleading and (C) agreeing to
reimburse Lender, the ▇▇▇▇▇▇ Group and the Underwriter Group for any reasonable,
actual and out-of-pocket legal or other expenses reasonably incurred by Lender
and ▇▇▇▇▇▇ in connection with investigating or defending the Liabilities;
provided, however, that Borrower will be liable in any such case under clauses
(B) or (C) above only to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or omission
made therein in reliance upon and in conformity with information furnished to
Lender by or on behalf of Borrower in connection with the preparation of the
memorandum or prospectus or in connection with the underwriting of the debt,
including, without limitation, financial statements of Borrower, operating
statements, rent rolls, environmental site assessment reports and property
condition reports with respect to the Property. This indemnity agreement will be
in addition to any liability which Borrower may otherwise have.
(c) In connection with filings under the Exchange Act, Borrower agrees to
(i) indemnify Lender, the ▇▇▇▇▇▇ Group and the Underwriter Group for Liabilities
to which Lender, the ▇▇▇▇▇▇ Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged 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 ▇▇▇▇▇▇ Group or the Underwriter
Group for any reasonable, actual and out-of-pocket legal or other expenses
reasonably incurred by Lender, the ▇▇▇▇▇▇ Group or the Underwriter Group in
connection with defending or investigating the Liabilities; provided, however,
that Borrower will be liable in any such case under clauses (i) or (ii) above
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or omission made therein in reliance
upon and in conformity with information furnished to Lender by or on behalf of
Borrower in connection with the preparation of the memorandum or prospectus or
in connection with the underwriting of the debt, including, without limitation,
financial statements of Borrower, operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Property.
(d) Promptly after receipt by an indemnified party under this Section 9.2
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party 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 from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party under this
Section 9.2 the indemnifying party 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 the indemnified party
and the indemnifying party and the 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
the indemnifying party, 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 to
parties. The indemnifying party shall not be liable for the expenses of more
than one such separate counsel unless an indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 9.2(b)
or (c) is or are for any reason held to be unenforceable by an indemnified party
in respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or 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
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) ▇▇▇▇▇▇'▇ and Borrower's relative
knowledge and access to information concerning the matter with respect to which
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 would not be equitable
if the amount of such contribution were determined by pro rata or per capita
allocation.
(f) The liabilities and obligations of both Borrower and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction
and discharge of the Debt.
Section 9.3 Intentionally Omitted.
Section 9.4 Exculpation.
Subject to the qualifications below, the liabilities and obligations of
Borrower under the Note, this Agreement, the Pledge Agreement and the other Loan
Documents are and shall be non-recourse, and Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Pledge Agreement or the other Loan
Documents by any action or proceeding wherein a money judgment shall be sought
against Borrower, except that Lender may bring a foreclosure action, an action
for specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Pledge Agreement and the other Loan Documents, or in the Collateral, 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 Collateral and in any other collateral given to
Lender, and Lender, by accepting the Note, this Agreement, the Pledge Agreement
and the other Loan Documents, agrees that it shall not ▇▇▇ for, seek or demand
any deficiency judgment against Borrower in any such action or proceeding under
or by reason of or under or in connection with the Note, this Agreement, the
Pledge Agreement or the other Loan Documents. The provisions of this section
shall not, however, (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by any of the Loan Documents; (b) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Pledge Agreement; (c) affect the validity or
enforceability of any guaranty made in connection with the Loan or any of the
rights and remedies of Lender thereunder; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) constitute a prohibition against
Lender to seek a deficiency judgment against Borrower in order to fully realize
the security given by Borrower in connection with the Loan or to commence any
other appropriate action or proceeding in order for Lender to exercise its
remedies against such security; or (f) 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:
(i) fraud or intentional material misrepresentation by Borrower or any
guarantor in connection with the Loan;
(ii) intentional waste or willful misconduct of Borrower or Mortgage
Borrower;
(iii)the breach of any material representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in the
Mortgage concerning environmental laws, hazardous substances and
asbestos and any indemnification of Lender with respect thereto in
either document subject, however, to any limitations set forth in such
documents;
(iv) the removal or disposal by Borrower of any portion of the Property or
the Collateral in violation of the Loan Documents after the occurrence
and during the continuance of an Event of Default;
(v) the misapplication in violation of the Loan Documents or conversion by
Borrower or Mortgage Borrower of Net Liquidation Proceeds or other
amounts due to the Lender or any Rents following the occurrence and
during the continuance of an Event of Default;
(vi) any security deposits, advance deposits or any other deposits
collected with respect to the Property which are not delivered to
Lender upon a foreclosure of the Property or action in lieu thereof,
except to the extent any such security deposits were applied in
accordance with the terms and conditions of any of the Leases prior to
the occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof;
(vii)Borrower fails to obtain Lender's prior written consent to any
voluntary lien (other than subordinate financing) encumbering the
Property; and
(viii) any breach of any representation, warranty or covenant contained in
Section 4 of the Pledge Agreement other than the representations set
forth in Section 4(d) and Section 4(i) thereof.
Notwithstanding anything to the contrary in this Agreement, the Note 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 secured by the Mortgage or to require that all collateral shall
continue to secure all of the Debt owing to Lender in accordance with the Loan
Documents, and (B) the Debt shall be fully recourse to Borrower in the event
that: (i) Borrower violates any of the covenants set forth in Section 4.1.30 of
this Agreement and as a result thereof, the assets of Borrower are ordered
pursuant to a final, non-appealable order to be substantively consolidated with
those of any other Person by a court having jurisdiction over a case filed under
the Bankruptcy Code, Title 11 of the United States Code; (ii) Borrower fails to
obtain Lender's prior written consent to any subordinate financing encumbering
the Property or the Collateral; (iii) Borrower fails to obtain Lender's prior
written consent to any assignment, transfer, or conveyance of the Collateral or
the Property or any interest therein as required hereunder; or (iv) Borrower
files a voluntary petition under the Bankruptcy code or any other Federal or
state bankruptcy or insolvency law. Section 9.5 Termination of Manager.
(a) Upon the occurrence and during the continuance of an Event of Default
and the acceleration of the Debt under Section 8.1(b) or upon the occurrence of
any of the events described in (b) below, Lender may terminate the Management
Agreement and require Manager to transfer its responsibility for the management
of the Property to a management company selected by Lender in Lender's sole
discretion, effective as of the date set forth in Lender's notice to Manager.
(b) In the event that Manager defaults under any of the terms and
provisions of the Management Agreement, which default continues beyond any
applicable notice and grace or cure period applicable thereto set forth in the
Management Agreement, Lender may direct Borrower to cause Mortgage Borrower to
terminate Manager as manager of the Property and terminate the Management
Agreement and to replace Manager with a management company acceptable to Lender
in Lender's reasonable discretion. Section 9.6 Servicer.
At the option of Lender, the Loan may be serviced by a servicer/trustee
(the "Servicer") selected by Lender and Lender may delegate all or any portion
of its responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "Servicing Agreement") between
Lender and Servicer. Lender shall be responsible for any reasonable set-up fees
or any other initial costs relating to or arising under the Servicing Agreement
and for payment of the regular monthly servicing fee due to the Servicer under
the Servicing Agreement. X. MISCELLANEOUS Section 10.1 Survival.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect until payment
and performance in full of all obligations of Borrower under the Loan Documents
or the earlier release of the Lien of the Mortgage (and all related obligations)
in accordance with the terms of this Agreement and the other Loan Documents
unless a longer period is expressly set forth herein or in the other Loan
Documents. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the legal representatives, successors
and assigns of such party. All covenants, promises and agreements in this
Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender. Section 10.2 Lender's
Discretion.
Whenever pursuant to this Agreement, Lender exercises any right given to it
to approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender.
Whenever pursuant to this Agreement or any other Loan Documents, Lender agrees
that its consent or approval will not be unreasonably withheld, the applicable
provision shall be interpreted to mean that Lender's consent or approval will
not be unreasonably withheld, delayed or conditioned. Section 10.3 Governing
Law.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE 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, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, 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 (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED
PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE
INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND
ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT
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 SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY LEGAL SUIT, ACTION OR
PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW
OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. Section 10.4
Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement, or of the Note, or of any other Loan Document,
nor consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
Section 10.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting upon
strict performance of any term, condition, covenant or agreement, or exercising
any right, power, remedy or privilege hereunder, or under the Note or under any
other Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
Section 10.6 Notices.
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and (c) by telecopier (with answer
back acknowledged and also sent by a method described in clause (a) or (b) above
), addressed as follows (or at such other address and Person as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the manner provided for in this
Section):
If to Lender: ▇▇▇▇▇▇ Brothers Holdings Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇ Brothers Bank FSB
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: c/o Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: c/o Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
Section 10.7 Trial by Jury.
BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND 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. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER
PARTY HERETO.
Section 10.8 Headings.
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 10.9 Severability.
Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 10.10 Preferences.
Lender shall have the continuing and exclusive right to apply or reverse
and reapply any and all payments by Borrower to any portion of the obligations
of Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Lender.
Section 10.11 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
Section 10.12 Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its agents
have acted unreasonably or unreasonably delayed acting in any case where by law
or under this Agreement or the other Loan Documents, Lender or such agent, as
the case may be, has an obligation to act reasonably or promptly, Borrower
agrees that neither Lender nor its agents shall be liable for any monetary
damages, and Borrower's sole remedies shall be limited to commencing an action
seeking injunctive relief or declaratory judgment unless it is determined in
such action that Lender acted arbitrarily, capriciously or in bad faith. The
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.
Section 10.13 Expenses; Indemnity.
(a) Except to the extent otherwise provided in this Agreement or the other
Loan Documents, Borrower covenants and agrees to pay or, if Borrower fails to
pay, to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Collateral); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) except as specifically stated
otherwise, Lender's ongoing performance and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iv) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (v) securing Borrower's
compliance with any requests made pursuant to the provisions of this Agreement;
(vi) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Lien in favor of Lender pursuant to this Agreement and the other Loan Documents;
(vii) enforcing or preserving any rights, in response to third party claims or
the prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Borrower, this Agreement, the other Loan
Documents, the Collateral, or any other security given for the Loan; and (viii)
enforcing any obligations of or collecting any payments due from Borrower under
this Agreement, the other Loan Documents or with respect to the Collateral or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender. Any cost and expenses due and payable to Lender may be paid from any
amounts in the Mezzanine Debt Service Account. (b) Borrower shall indemnify,
defend and hold harmless Lender from and against any and all other actual,
out-of-pocket liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "Indemnified Liabilities"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
Section 10.14 Schedules Incorporated.
The Schedules annexed hereto are hereby incorporated herein as a part of
this Agreement with the same effect as if set forth in the body hereof.
Section 10.15 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement, the Note and
the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower;
provided, however, that nothing herein is intended to or shall act as a waiver
of release of (a) such assignor, or (b) any such assignee if such assignee
continues the act or omission giving rise to such offset, counterclaim or
defense.
Section 10.16 No Joint Venture or Partnership; No Third Party
Beneficiaries.
(a) Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing
herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender.
(b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 10.17 Publicity.
All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents, to Lender, ▇▇▇▇▇▇,
or any of their Affiliates shall be subject to the prior written approval of
Lender which consent shall not be unreasonably withheld and provided, however,
Lender's prior written approval shall not be required with regard to any filings
required by applicable law to be made by Borrower with any Governmental
Authority. Lender will be deemed to have approved any news releases, publicity
or advertising under this Section 10.17 if Lender does not object in writing to
such news releases, publicity or advertising within three (3) Business Days of
receipt thereof from Borrower.
Section 10.18 Waiver of Marshalling of Assets.
To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Collateral, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale
of the Collateral for the collection of the Debt without any prior or different
resort for collection or of the right of Lender to the payment of the Debt out
of the net proceeds of the Collateral in preference to every other claimant
whatsoever.
Section 10.19 Waiver of Counterclaim.
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.
Section 10.20 Conflict; Construction of Documents; Reliance.
In the event of any conflict between the provisions of this Loan Agreement
and any of the other Loan Documents, the provisions of this Loan Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents and that such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same. Borrower
acknowledges that, with respect to the Loan, Borrower shall rely solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any
parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any
limitation whatsoever in the exercise of any rights or remedies available to it
under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender's exercise of
any such rights or remedies. Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.
Section 10.21 Brokers and Financial Advisors.
Borrower and Lender hereby represent to the other that it has dealt with no
financial advisors, brokers, underwriters, placement agents, agents or finders
in connection with the transactions contemplated by this Agreement. Borrower and
Lender hereby agrees to indemnify the other, defend and hold the other harmless
from and against any and all claims, liabilities, costs and expenses of any kind
(including reasonable attorneys' fees and expenses) in any way relating to or
arising from a claim by any Person that such Person acted on behalf of Borrower
or Lender, as the case may be, in connection with the transactions contemplated
herein. The provisions of this Section 10.21 shall survive the expiration and
termination of this Agreement and the payment of the Debt.
Section 10.22 Component Notes. Lender, without in any way limiting
Lender's other rights hereunder, in its sole and absolute discretion, shall have
the right at any time prior to or in connection with a Securitization to require
Borrower to execute and deliver "component" notes (including senior and junior
notes), which notes may be paid in such order of priority as may be designated
by Lender, provided that (i) the aggregate principal amount of such "component"
notes shall equal the outstanding principal balance of the Loan immediately
prior to the creation of such "component" notes, (ii) the weighted average
interest rate of all such "component" notes shall on the date created equal the
interest rate which was applicable to the Loan immediately prior to the creation
of such "component" notes, (iii) the debt service payments on all such
"component" notes shall on the date created equal the debt service payment which
was due under the Loan immediately prior to the creation of such component notes
and (iv) the other terms and provisions of each of the "component" notes shall
be identical in substance and substantially similar in form to the Loan
Documents. Borrower, at Lender's cost and expense, shall cooperate with all
reasonable requests of Lender in order to establish the "component" notes and
shall execute and deliver such documents as shall reasonably be required by
Lender and any Rating Agency in connection therewith, all in form and substance
reasonably satisfactory to Lender and satisfactory to any Rating Agency,
including, without limitation, the severance of security documents if requested.
It shall be an Event of Default under this Agreement, the Note, the Pledge
Agreement and the other Loan Documents if Borrower fails to comply with any of
the terms, covenants or conditions of this Section 10.22 after expiration of ten
(10) Business Days after notice thereof.
Section 10.23 Reallocation of Loan Amounts.
Lender, without in any way limiting Lender's other rights hereunder, in its
sole and absolute discretion, shall have the right at any time prior to
Securitization to reallocate the amount of the Loan and the Mortgage Loan, at no
cost to Borrower, provided that (i) the aggregate principal amount of the Loan
and the Mortgage Loan immediately following such reallocation shall equal the
outstanding principal balance of the Loan and the Mortgage Loan immediately
prior to such reallocation and (ii) the weighted average interest rate of the
Loan and the Mortgage Loan immediately following such reallocation shall equal
the interest rate which was applicable to the Loan and the Mortgage Loan
immediately prior to such reallocation. Borrower, at Lender's cost and expense,
shall cooperate with all reasonable requests of Lender in order to reallocate
the amount of the Loan and the Mortgage Loan and shall execute and deliver such
documents as shall reasonably be required by Lender and required by any Rating
Agency in connection therewith, all in form and substance reasonably
satisfactory to Lender and satisfactory to any Rating Agency.
It shall be an Event of Default under the Loan Documents if Borrower fails
to comply with any of the terms, covenants or conditions of this Section 10.23
after expiration of ten (10) Business Days after notice thereof.
Section 10.24 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 among or between such parties,
whether oral or written, including, without limitation, the application dated
January 30, 2003 (as amended) between Borrower and Lender are superseded by the
terms of this Agreement and the other Loan Documents.
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.
▇▇▇ ▇. ▇▇▇▇▇▇ Mezzanine, L.L.C., a
Delaware limited liability company
By: 77 West ▇▇▇▇▇▇ Limited Partnership,
an Illinois limited partnership, its
Sole Member
By: Prime Group Realty, L.P., a
Delaware limited partnership,
its Administrative Member
By: Prime Group Realty Trust,
a Maryland real estate
investment trust, its
Managing General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Co-President
▇▇▇▇▇▇ BROTHERS HOLDINGS INC., a Delaware corporation
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
SCHEDULE I
RESERVED
SCHEDULE II
RESERVED
SCHEDULE III
ORGANIZATIONAL STRUCTURE
[Intentionally Omitted]
SCHEDULE IV
DESCRIPTION OF GROUND LEASE
Lease dated December 20, 1968 between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as Trustees, as to an undivided one-half interest; ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇ III, as Trustees, as to an undivided one-half interest
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇ (collectively, "Lessor") and
International Business Machines Corporation ("Lessee"), a memorandum of which
was filed for record on January 10, 1969, as document number 20724873 in the
Office of the Recorder, ▇▇▇▇ County, Illinois, the interest of Lessee having
been assigned by International Business Machines Corporation to BRE/Wabash
L.L.C. by Assignment, Acceptance and Assumption Agreement dated August 30, 1996
and recorded September 3, 1996 as document number 96671600, the interest of
Lessee having been further assigned by BRE/Wabash L.L.C. to ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, L.L.C. by Assignment, Acceptance and Assumption Agreement dated December
13, 1999 and recorded December 16, 1999 as document number 09168808.
SCHEDULE V
RESERVED
SCHEDULE VI
UNFUNDED TENANT ALLOWANCES
Tenant Nature of Allowance Amount Outstanding
Wm. Wrigley Jr. Company Remaining Tenant $75,467
Improvement Allowance
IBM Credit Union Remaining Tenant $10,680
Improvement Allowance
Better Business Bureau Remaining Tenant $24,155.43
Improvement Allowance
Aronberg, Goldgehn Redecorating Allowance $21,000
SCHEDULE VII
REQUIREMENTS FOR REPLACEMENT INTEREST RATE CAP AGREEMENTS
The Replacement Interest Rate Protection Agreement shall comply with the
following requirements:
o be issued by an Acceptable Counterparty and must at all time be issued
by an Acceptable Counterparty;
o be based on the 1992 ISDA Agreement subject to the 2000 Definitions;
o once the cap premium is paid by or on behalf of Borrower, it cannot
default (Paragraph 4 of the May 1989 ISDA Addendum to Schedule to
Interest Rate and Currency Exchange Agreement or similar language must
be incorporated by reference);
o be coterminous with the Loan (after giving effect to any Extension
Options to extend the Maturity Date of the Loan then being exercised);
o have a notional amount which shall not at any time be less than the
outstanding principal balance of the Loan;
o obligate the Counterparty thereunder to pay an amount equal to the
amount by which the LIBOR Rate on the Loan exceeds the Strike Price
applicable to the then outstanding principal balance of the Loan;
Payments made by the Counterparty must be based on accrual periods,
payment dates, accrual methodologies and LIBOR that matches those
under the Loan;
o if the Counterparty is a Multi-Branch party, the Counterparty must be
operating out of a U.S. or London branch;
o have the following provisions incorporated in the 1992 ISDA Agreement
subject to the 2000 Definitions:
o Section 5(a)(ii), (iii), (iv), (v), (vii) and (viii) defaults will not
apply to Borrower;
o Cross Default will not apply;
o Credit Event upon Merger will not apply;
o "Automatic Early Termination" provision in Section 6(a) will not
apply; o No legal opinion will be provided by Borrower; o Market
Quotation and Second Method will be used for the purposes of computing
amounts payable on early termination;
o The definition of Affiliate will not apply;
o Specified Entities will not apply;
o Transaction will be governed by New York law;
o For the purposes of Section 6(e) of the ISDA Master Agreement, set-off
will not apply.
o The Counterparty will not be permitted to terminate the cap under
Section 5(b)(ii) of the ISDA Master Agreement if the Counterparty is
the Affected Party.
o The Counterparty will not be permitted to terminate the cap under
Section 5(b)(iii) of the ISDA Master Agreement if the Counterparty is
the Burdened Party
o If the transaction will be guaranteed by a parent of the Counterparty
to provide a required rating, the guarantee obviously needs to be
unconditional, irrevocable, continuing and a guarantee of payment, not
collection;
o Counterparty (and any guarantor) must provide a New York opinion of
counsel satisfactory to the Rating Agencies substantially in the form
required by Section 2.7(f) and if the Counterparty is a non-US entity,
a foreign opinion must be provided as well which must include the
following:
o Agreement is legal/valid/binding against Counterparty;
o Payment under cap are equal priority with all Counterparty's other
obligations
o Jurisdiction where Counterparty is located will regard law of NY o
Judgment from NY will be enforced in jurisdiction where Counterparty
is located o If Counterparty or a guarantor is located in a foreign
jurisdiction, no withholding or similar taxes will apply to any
payments made under the Interest Rate Cap Agreement or under any
guaranty.
o Additional Termination Event on a downgrade of the Counterparty below
AA-/Aa3, with the Counterparty responsible for paying breakage.
o Except as set forth above, be identical to the Interest Rate
Protection Agreement delivered to Lender on the Closing Date.
SCHEDULE VIII
FORM OF ASSIGNMENT OF INTEREST RATE CAP AGREEMENT
COLLATERAL ASSIGNMENT
OF INTEREST RATE PROTECTION AGREEMENT
This Collateral Assignment of Interest Rate Protection Agreement (this
"Assignment"), made as of May __, 2003, by ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, L.L.C., a
Delaware limited liability company ("Assignor"), in favor of ▇▇▇▇▇▇ Brothers
Holdings Inc. ("Assignee").
WHEREAS, Assignor and Assignee have entered into that certain Loan
Agreement of even date herewith (as amended, modified or supplemented and in
effect from time to time, the "Loan Agreement"); and
WHEREAS, the parties wish to set forth certain understandings with respect
to the Collateral (as defined below);
NOW, THEREFORE, the parties agree as follows:
1. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor has assigned, as collateral, to
Assignee, all of its right, title and interest in, to and under that certain
confirmation attached hereto as Exhibit A (including, without limitation, all
schedules thereto) (collectively, the "Agreement"), by and between Assignor and
▇▇▇▇▇▇ Brothers Derivative Products Inc., as counterparty ("Counterparty"), and
all of Assignor's right, title and interest in, to and under all other documents
executed and/or delivered in connection with and/or secured by the Agreement,
including, without limitation, all of Assignor's right, title and interest in
any collateral, demands, causes of action, bank accounts, other accounts,
investment property, general intangibles and supporting obligations, and any
other collateral or documents arising out of and/or executed and/or delivered
with respect to the Agreement, all rights and benefits of Assignor related to
the Agreement, and such claims and choses in action related to the Agreement and
such documents, and all of Assignor's rights, title and interests therein and
thereto, and the Assignor hereby grants to Assignee a security interest in and
to the Agreement and the foregoing and all proceeds (within the meaning of
Sections 9-102(a)(64) and 9-315 of the Uniform Commercial Code adopted in the
State of New York) thereof (the "Collateral"), to have and to hold the same,
unto Assignee, its successors and assigns.
2. Each party to the Agreement, by its execution of this Assignment, hereby
consents to the assignment of the Collateral and the other terms hereof
(including, without limitation, the second sentence of Paragraph 3 hereof), and
Assignor and Counterparty agree that Counterparty will make any payments to
become payable under or pursuant to the Agreement directly to the Assignee until
such time as this Assignment is terminated or otherwise canceled (written notice
of which termination or cancellation shall be promptly provided by Assignee to
Counterparty), at which time the Counterparty will be authorized to make
payments to or on behalf of Assignor. All such payments by Counterparty to
Assignee made in accordance with the Agreement and this Assignment shall
discharge any obligation Counterparty would otherwise have to Assignor with
respect thereto. Assignor and Counterparty agree that Assignee shall have no
obligation to make any payments required to be made by Assignor under the
Agreement.
3. Assignor hereby covenants and agrees that Assignor shall not, without
first obtaining Assignee's or its successor's or assign's written consent,
convey, assign, sell, mortgage, encumber, pledge, hypothecate, grant a security
interest in, grant an option or options with respect to, or otherwise dispose of
(directly or indirectly, voluntarily or involuntarily, by operations of law or
otherwise, and whether or not for consideration) the Agreement except in
connection with transfers permitted without Assignee's consent or approved by
Assignee pursuant to the Loan Agreement. Assignor and Counterparty hereby
covenant and agree that until such time as this Assignment is terminated or
otherwise canceled pursuant to Paragraph 4 hereof, Assignor and Counterparty
shall not, without first obtaining Assignee's or its successor's or assign's
written consent, amend, modify, cancel or terminate the Agreement.
4. This Assignment shall terminate upon the payment in full of the Debt (as
defined in the Loan Agreement); it is agreed that the Debt shall be deemed to
exist if the collateral for the Loan (as defined in the Loan Agreement) is
transferred by judicial or non-judicial foreclosure or transfer in lieu thereof.
5. In consideration of the foregoing agreements by Counterparty, Assignor
and Assignee agree that (i) Counterparty shall be entitled to conclusively rely
(without any independent investigation) on any notice or instructions from
Assignee in respect of this Assignment, (ii) without limitation on the
immediately preceding clause, in the event of any inconsistency between any
notice or instructions from Assignee and any notice or instructions from
Assignor, Counterparty shall be entitled to conclusively rely (without any
independent investigation) on those from Assignee and (iii) Counterparty shall
be held harmless and shall be fully indemnified by Assignor from and against any
and all claims, other than those ultimately determined to be caused by the gross
negligence or willful misconduct of Counterparty, and from and against any
damages, penalties, judgments, liabilities, losses or expenses (including
reasonable attorneys' fees and disbursements) incurred by Counterparty as a
result of the assertion of any claim, by any person or entity, arising out of,
or otherwise related to, any actions taken or omitted to be taken by
Counterparty in reliance upon any such instructions or notice provided by
Assignee.
6. If Assignee receives any payments under the Agreement (other than a
payment by reason of a Termination Event under the Agreement) and no Event of
Default has occurred and is continuing under the Loan Agreement, Assignee shall
promptly deposit same in the Mezzanine Debt Service Account under that certain
Cash Management Agreement between Assignor, Assignee, the Agent thereunder and
Prime Realty Group, L.P. of even date herewith. If Assignee receives any
payments under the Agreement during the existence of an Event of Default under
the Loan Agreement or by reason of a Termination Event under the Agreement,
Assignee shall have the right to hold same, to deposit same in such Mezzanine
Debt Service Account or to apply same to any portion of the Debt (as defined in
the Loan Agreement) in any order it desires or, if the Agreement has been
partially or wholly terminated, to apply same to the cost of acquiring another
interest rate protection agreement in form and substance, and from a
counterparty, satisfactory to Assignee in all respects.
7. This Assignment shall be governed by and construed in accordance with
the laws of the State of New York, without reference to choice of law doctrine.
8. This Assignment shall be binding upon and shall inure to the benefit of
Assignor and Assignee and their respective successors and assigns. The rights of
Assignee under this Assignment may be assigned to any holder of the Loan in its
entirety and the Counterparty by its signature below consents to such
assignment.
9. This Assignment may be amended or modified only by a written instrument
signed by the parties hereto.
10. This Assignment may be executed in any number of counterparts, each of
which shall be an original but all of which shall constitute one instrument. 11.
The provisions of Section 9.4 of the Loan Agreement are hereby incorporated by
reference into this Assignment to the same extent and with the same force as if
fully set forth herein.
[Signature page follows]
IN WITNESS WHEREOF, Assignor and Assignee have caused this instrument to
be executed and delivered as of the date set forth above.
Assignor:
By:
▇▇▇ ▇. ▇▇▇▇▇▇ Mezzanine, L.L.C., a
Delaware limited liability company, its
Sole Member
By: 77 West ▇▇▇▇▇▇ Limited Partnership,
an Illinois limited partnership, its
Sole Member
By: Prime Group Realty, L.P., a
Delaware limited partnership,
its Administrative Member
By: Prime Group Realty Trust,
a Maryland real estate
investment trust, its
Managing General Partner
By: -----------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Co-President
Assignee:
▇▇▇▇▇▇ Brothers Holdings Inc.,
a Delaware corporation
By:____________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
Counterparty:
▇▇▇▇▇▇ Brothers Derivative Products Inc.
By:___________________________
Name:
Title:
EXHIBIT A
Confirmation
SCHEDULE IX
IDENTIFICATION OF IBM LEASE
Lease dated August 30, 1996 by and between BRE/Wabash L.L.C., as landlord and
International Business Machines Corporation, as tenant.