EXHIBIT 10.18
================================================================================
$34,000,000
LOAN AND SECURITY AGREEMENT
BETWEEN
LEX-GEN WOODLANDS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
AS BORROWER
AND
ISTAR FINANCIAL INC.,
AS LENDER
DATED AS OF APRIL 21, 2004
================================================================================
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT") dated as of April 21,
2004, by LEX-GEN WOODLANDS, L.P., a Delaware limited partnership ("BORROWER"),
having an address at c/o Lexicon Genetics Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and iSTAR FINANCIAL INC., a Maryland
corporation (together with its successors and assigns, hereinafter referred to
as "LENDER"), with offices at 1114 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
RECITALS
A. The Mortgaged Property. Borrower is the fee owner of the Land and
Improvements (as such terms are defined herein).
B. The Loan. Borrower desires to borrow from Lender and Lender desires to
lend to Borrower, a loan in the amount of $34,000,000.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrower and Lender agree as
follows:
SECTION 1
DEFINITIONS
1.1 GENERAL DEFINITIONS.
In addition to any other terms defined in this Agreement, the following
terms shall have the following meanings:
"ACCEPTABLE FINANCIAL INSTITUTION" means a depository institution or trust
company incorporated under the laws of the United States of America or any state
thereof and subject to supervision and examination by federal or state banking
authorities, so long as (a) at all times the short-term commercial paper,
certificates of deposit or other debt obligations of such depository institution
or trust company are rated at least A-1 by S&P and P-1 by ▇▇▇▇▇'▇ and the
long-term unsecured debt obligations of which are rated at least A by S&P and
the equivalent thereof by ▇▇▇▇▇'▇ or (b) such depository institution or trust
company has otherwise been approved by Lender, such approval not to be
unreasonably withheld.
"ACCOUNTING CHANGES" means (a) changes in accounting principles required by
GAAP consistently applied and implemented by Borrower; and (b) changes in
accounting principles recommended or approved by Borrower's certified public
accountant, with the approval of Lender, which approval shall not be
unreasonably withheld; provided that Lender's approval shall not be required so
long as (i) Borrower's financial statements are prepared on a consolidated basis
with the financial statements of Guarantor, (ii) Guarantor is a reporting
company under the Exchange Act, and (iii) Guarantor's financial statements are
audited by a so-called "Big-4" accounting firm.
"ACCOUNTS" means Borrower's present and future rights to payment of money,
accounts and accounts receivable including (a) rights to payment of money,
accounts and accounts receivable arising from or relating to the construction,
use, leasing, occupancy or operation of the Mortgaged Property, the rental of,
or payment for, space, goods sold or leased or services rendered, whether or not
yet earned by performance, and all other "accounts" (as defined in the UCC), (b)
rights to payment, accounts, and accounts receivable arising from any consumer
credit, charge, entertainment or travel card or service organization or entity,
(c) all reserves, deferred payments, refunds, cost savings payments and deposits
no matter how evidenced and whether now or later to be received from third
parties (including all ▇▇▇▇▇▇▇ money sales deposits) or deposited with, or by,
Borrower by, or with, third parties (including all utility deposits), (d) all
chattel paper, instruments, documents, notes, drafts and letters of credit
(other than any letters of credit in favor of Lender), (e) the Reserve Accounts
and any and all other accounts held by or on behalf of Lender and/or Borrower
pursuant to this Agreement, (f) all "deposit accounts" (as defined in the UCC),
(g) all "securities accounts" (as defined in the UCC), and (h) all contracts and
agreements which relate to any of the foregoing.
"AFFILIATE" means any Person: (A) directly or indirectly controlling,
controlled by, or under common control with, another Person; (B) directly or
indirectly owning or holding ten percent (10%) or more of any equity interest in
another Person; or (C) ten percent (10%) or more of whose voting stock or other
equity interest is directly or indirectly owned or held by such other Person.
When used with respect to Borrower, the term "Affiliate" shall also include the
spouse, ancestors, descendants and siblings of an Affiliate of Borrower (such
Persons being sometimes referred to as "FAMILY MEMBERS"), Affiliates of such
Family Members and trusts for the benefit of another Affiliate of Borrower.
"AGREEMENT" means this Loan and Security Agreement (including all
schedules, exhibits, annexes and appendices hereto), as amended, modified or
supplemented from time to time.
"ALTERATION" is defined in Section 7.14.
"ANNUAL BUDGET" is defined in Section 5.1(D) hereof.
"APPROVED BUDGET" means the Budget and Capital Plan approved by Lender from
time to time as described in Section 5.1(D) hereof.
"APPROVED CAPITAL PLAN" means the Capital Plan approved by Lender as part
of the Approved Budget.
"APPROVED OPERATING EXPENSES" means Expenses set forth in an Approved
Budget.
"ASSIGNMENT(S)" means individually and collectively, the assignment of
leases and rents, assignments of contracts, agreements and equipment leases, the
assignments of licenses, permits and approvals, the assignments of management
agreement, if any, the assignment of trademarks, tradenames and copyrights, if
any, and such other assignments of even date herewith from Borrower to or for
the benefit of Lender, each granting a security interest in collateral for the
Loan.
-2-
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as amended from time to time and all rules and regulations
promulgated thereunder.
"BANK(S)" means the Acceptable Financial Institution at which the Reserve
Accounts are maintained.
"BASE RATE" means a fixed rate per annum equal to eight and 23/100ths
percent (8.23%).
"BORROWER ACCOUNT" means a demand, time or deposit account maintained by
the Borrower at the Bank or other financial institution selected by the
Borrower, as required under the Loan Agreement.
"BORROWER REPRESENTATIVE" means Lex-Gen Woodlands GP, LLC, a Delaware
limited liability company, the sole general partner in Borrower.
"BUDGET" means a budget setting forth the projected revenues and budgeted
costs and expenses for the ownership, operation and management for the Mortgaged
Property for each calendar year commencing with calendar year 2004.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state is closed.
"CAPITAL LEASE" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"CAPITAL PLAN" means Borrower's budget for capital improvements and
equipment for the Mortgaged Property for each calendar year.
"CASH MANAGEMENT AGREEMENT" shall mean the Cash Management Agreement dated
as of the date hereof, among Borrower, Lender and Bank.
"CHANGE IN CONTROL" means the occurrence of any one or more of the
following: (i) a sale of all or substantially all of the assets of Guarantor, in
a single transaction or series of transactions, (ii) a Person or Group shall
have acquired, in one or more transactions, ownership or control of forty-nine
percent (49%) or more of the voting Securities of Guarantor, (iii) Guarantor
shall cease to directly or indirectly Control the business and affairs of the
Borrower or (iv) Guarantor shall cease to directly or indirectly own fifty-one
percent (51%) or more of the voting Securities of Borrower.
"CLAIMS" is defined in Section 5.3(A).
"CLOSING" means that all conditions for disbursement of the proceeds of the
Loan to or for the benefit of Borrower have been satisfied or waived in writing
by Lender and the disbursement of the proceeds of the Loan shall have been made
to, or upon the order of, Borrower.
"CLOSING CHECKLIST" means the closing checklist attached hereto as Exhibit
F.
-3-
"CLOSING DATE" means the date on which the Closing occurs.
"CODE" means the United States Internal Revenue Code of 1986, and any rule
or regulation promulgated thereunder from time to time.
"COLLATERAL" means the Mortgaged Property, the Reserve Account Collateral
and all other real and personal property of Borrower or any other Person pledged
or mortgaged to Lender as collateral security for repayment of the Loan, if any.
"CONFIDENTIAL INFORMATION" is defined in Section 11.12.
"CONSTRUCTION" means the Restoration, the Alterations, the construction,
equipping and fixturing of the Required Capital Improvements or any other
construction, equipping, fixturing and furnishing, approved (or deemed approved)
by Lender.
"CONSTRUCTION LEGAL COMPLIANCE" means Borrower's satisfaction of all of the
following: (A) (i) the applicable Construction through the applicable date of
determination, has been constructed substantially in accordance with the
applicable Plans and Specifications (other than deviations therefrom that are
immaterial individually and in the aggregate); and (ii) the applicable
Construction has been, or will be, constructed in substantial compliance with
all Legal Requirements; (B) all material entitlements, approvals, allocations,
certificates, authorizations, permits and licenses required through the
then-current stage of construction have been obtained from all appropriate
Governmental Authorities and have been validly and irrevocably obtained without
qualification, appeal or existence of unexpired appeal periods; (C) all
conditions to the issuance of, and the requirements under, all permits,
conditional use permits and licenses required through the current stage of
construction have been satisfied in all material respects; and (D) no appeals,
suits or other actions are pending or threatened in writing by any Governmental
Authority which, if determined adversely to the interests of Borrower or the
Mortgaged Property, would result in the revocation, suspension or qualification
of any of such permits or approvals.
"CONTINGENT OBLIGATION," as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (A) with respect to
any indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (B) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (C) under
any interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement or other similar agreement or arrangement designed to protect
the applicable Person against fluctuations in interest rates; or (D) under any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect that Person against fluctuations in currency
values. Contingent Obligations shall include (1) the direct or indirect
guaranty, endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of the obligation of another, (2) the obligation to make
take-or-pay or similar payments if required regardless of nonperformance by any
other party or parties to an agreement, and (3) any liability of such Person for
the obligations of
-4-
another through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"CONTRACTOR" means the contractor(s) or construction manager(s) for the
Construction as Lender may, from time to time approve, which approval shall not
be unreasonably withheld, conditioned or delayed.
"CONTRACTS" means all contracts, agreements, warranties and representations
relating to or governing the use, occupancy, design, construction, operation,
management, repair and service of any other component of the Mortgaged Property,
as amended, modified or supplemented from time to time.
"CONTRACTUAL OBLIGATION," as applied to any Person, means any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject including the Loan Documents.
"CONTROL" (including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") means the possession directly
or indirectly of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"CREDIT RATING" means the senior unsecured debt rating issued by S&P and
▇▇▇▇▇'▇ or if either or both no longer exist or no longer issue ratings then,
for either or both as so applicable, another Rating Agency. All references to
specific levels of a Credit Rating mean such rating with a "stable" or
"positive" outlook, but not a "negative" outlook or "on watch" associated with
such rating.
"DEFAULT" means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default if that condition or event were not
cured or removed within any applicable grace or cure period.
"DEFAULT INTEREST" is defined in Section 2.2(A).
"DEFAULT RATE" means a rate per annum equal to the Base Rate plus five
percent (5%).
"DISTRIBUTION" is defined in Section 7.12.
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"EBITDA INTEREST COVERAGE" means, at any reporting date, for a Person, the
ratio calculated by dividing (A) the earnings from continuing operations
(including interest income and equity earnings, but excluding nonrecurring
items) before interest, taxes, depreciation and
-5-
amortization for such Person by (B) gross interest incurred by such Person
before subtracting (i) capitalized interest and (ii) interest income.
"ELIGIBLE ACCOUNT" means a segregated account maintained at an Acceptable
Financial Institution. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.
"EMPLOYEE BENEFIT PLAN" means an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Part 3 of Title I of ERISA or Section 412 of the Code and is either (a)
maintained by any Person or any ERISA Affiliate for employees of such Person or
any ERISA Affiliate or (b) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which such Person or any ERISA Affiliate is then making or
has any obligation to make contributions or, within the preceding five (5) plan
years, has made or has had any obligation to make contributions.
"ENVIRONMENTAL CLAIMS" is defined in Section 4.13.
"ENVIRONMENTAL INDEMNITY AGREEMENT" means the Environmental Indemnity
Agreement, dated of even date herewith, executed by Borrower and Guarantor in
favor of Lender, together with all amendments, modifications, renewals,
substitutions and extensions thereto.
"ENVIRONMENTAL LAWS" means all present and future federal, state and/or
local laws, statutes, ordinances, codes, rules, regulations, orders, decrees,
licenses, decisions, orders, injunctions, requirements and/or directives of
Governmental Authorities, as well as common law, imposing liability, standards
of conduct or otherwise pertains or relates to, or for, for the environment,
industrial hygiene, the regulation of Hazardous Substances, natural resources,
pollution or waste management.
"ENVIRONMENTAL REPORTS" means those reports and audits itemized on Schedule
1.1(B) hereto.
"EQUIPMENT, FIXTURES AND PERSONALTY" means all fixtures and all of the
equipment and personalty listed on Exhibit B hereto, together with all
accessions, replacements and substitutions thereto and the proceeds thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, and all
rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person who is a member of a group which is
under common control with another Person, who together with such other Person is
treated as a single employer within the meaning of Sections 414(b), (c), (m) and
(o) of the IRC or Sections 4001 of ERISA. Guarantor shall be deemed to be an
ERISA Affiliate of Borrower for purposes of this Agreement, irrespective of
whether it and Borrower would be treated as a single employer.
"EVENT OF DEFAULT" is defined in Section 9.1.
"EXCESS INTEREST" is defined in Section 2.2(C).
-6-
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING INDEBTEDNESS" means the synthetic lease encumbering the Mortgaged
Property immediately prior to the Closing.
"EXPENSES" means the costs and expenditures accrued or incurred by
Borrower, without duplication, in connection with the ownership, operation and
management of the Mortgaged Property, specifically including in Expenses (1)
periodic deposits required to be made into the Reserves; (2) capital
expenditures incurred pursuant to an Approved Budget to the extent not paid from
any Reserves or the proceeds of the Loan; and (3) management fees and
specifically excluding from Expenses, however, (i) all expenditures to the
extent funded from any Reserves, (ii) principal, interest and all other payments
made by Borrower to Lender under the Loan Documents, (iii) federal or state
income taxes, and (iv) depreciation and other non-cash expenses of the Mortgaged
Property.
"FINANCING STATEMENTS" means the UCC-1 Financing Statements naming
Borrower, as debtor, and Lender, as secured party, and filed with such filing
offices as Lender may require.
"FIRREA" means The Financial Institutions Reform, Recovery and Enforcement
Act of 1989, Pub. L. No. 101-73 Stat. 183 (1989) and the regulations adopted
pursuant thereto, as the same may be amended from time to time.
"GAAP" means generally accepted accounting principles in the United States
of America, consistently applied, as of the date in question.
"GENERAL INTANGIBLES" means all of the items listed on Exhibit C hereto. In
addition, the General Intangibles also include all of Borrower's right, title
and interest in and to all Contracts.
"GOVERNMENTAL AUTHORITY" means the United States of America, any state, any
foreign governments and any political subdivision or regional division of the
foregoing, and any agency, department, court, regulatory body, commission,
board, bureau or instrumentality of any of them.
"GROSS REVENUES" means, for the applicable period, all Rents and all other
income, rents, revenues, issues, profits, deposits, proceeds of rent loss
insurance, lease termination or similar payments and all other payments actually
received by or for the benefit of Borrower in cash or current funds or other
consideration from any source whatsoever from or with respect to the Mortgaged
Property; provided, however, that Gross Revenues shall exclude Proceeds (other
than insurance proceeds in respect of rent loss insurance), litigation proceeds,
sale or refinancing proceeds and any other non-recurring income from
extraordinary events.
"GROUP" means any Person or Persons acting together which would constitute
a "group" for purposes of Section 13(d) of the Exchange Act, as in effect on the
date hereof, together with all affiliates and associates (as defined in Rule
12b-2 under the Exchange Act, as in effect on the date hereof) thereof.
"GUARANTOR" means Lexicon Genetics Incorporated, a Delaware corporation and
its successors.
-7-
"GUARANTOR LEASE" means that Lease Agreement dated as of even date
herewith, by and between Borrower and Guarantor for the Lease by Guarantor of
the Improvements.
"GUARANTY" means that certain Guaranty of Guarantor in favor of Lender of
even date herewith.
"HAZARDOUS MATERIALS" means (a) any pollutants, toxic pollutants, oil,
gasoline, petroleum products, asbestos, materials or substances containing
asbestos, explosives, chemical liquids or solids, radioactive materials,
polychlorinated biphenyls or related or similar materials, or any other solid,
liquid or other emission, substance, material, product or by-product, in each
case defined, listed or regulated as a hazardous, noxious, toxic or solid
substance, material or waste or defined, listed or regulated as causing cancer
or reproductive toxicity, or otherwise defined, listed or regulated as hazardous
or toxic in, pursuant to, or by any federal, state or local law, ordinance,
rule, or regulation, now or hereafter enacted, amended or modified, in each case
to the extent applicable to the Mortgaged Property including the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601,
et seq.); the Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et
seq.); the Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et
seq.); any so-called "Superfund" or "Superlien" law; the Toxic Substance Control
Act of 1976 (15 U.S.C. Section 2601 et seq.); the Clean Water Act (33 U.S.C.
Section 1251 et seq.); and the Clean Air Act (42 U.S.C. Section 7901 et seq.);
(b) any substance which is or contains asbestos, radon, polychlorinated
biphenyl, urea formaldehyde foam insulation, explosive or radioactive material,
lead paint, motor fuel or other petroleum hydrocarbons, and/or (c) fungus, mold,
mildew, or other biological agents the presence of which may adversely affect
the health of individuals or other animals or materially adversely affect the
value or utility of the Mortgaged Property.
"IMPOSITIONS" means all real estate and personal property taxes, and vault
charges and all other taxes, levies, assessments and other similar charges,
general and special, ordinary and extraordinary, foreseen and unforeseen, of
every kind and nature whatsoever, which at any time prior to, at or after the
execution hereof may be assessed, levied or imposed by, in each case, (i) a
Governmental Authority or (ii) The Woodlands Community Association or The
Woodlands Commercial Owners Association (or their respective successor entities)
upon the Mortgaged Property or upon the ownership, use, occupancy or enjoyment
thereof, and any interest, cost or penalties imposed by such entity with respect
to any of the foregoing. Impositions shall not include any sales or use taxes or
any income taxes payable by Borrower.
"IMPROVEMENTS" means all buildings, improvements, alterations or
appurtenances now, or at any time hereafter, located upon, in, under or above
the Land or any part thereof. The term "Improvements" also includes all
buildings, improvements, alterations or appurtenances not located on, in, under
or above the land to the extent of Borrower's right, title and interest therein.
"INDEBTEDNESS" means with respect to any Person, without duplication, (a)
any indebtedness of such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of any property or asset of
such Person to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such property from such Person), (b) any
obligations of such Person for the deferred purchase price of property or
services, (c) any obligations of such Person evidenced by notes, bonds,
debentures or other
-8-
similar instruments, (d) any obligations of such Person created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) any obligations of such Person as lessee under
leases that have been or should be, in accordance with GAAP, recorded as capital
leases, (f) any obligations of such Person as a result of any final judgment
rendered against such Person or any settlement agreement entered into by such
Person with respect to any litigation unless such obligations are stayed upon
appeal (for so long as such appeal shall be maintained) or are fully discharged
or bonded within thirty (30) days after the entry of such judgment or execution
of such settlement agreement, (g) any obligations, contingent or otherwise, of
such Person in respect of acceptances, letters of credit or similar extensions
of credit, (h) any Contingent Obligations, (i) any Indebtedness of others
referred to in clauses (a) through (h) above or clause (j) below guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (1) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (2) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (3) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (4) otherwise to assure a creditor against loss, and (j) any Indebtedness
referred to in clauses (a) through (i) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness.
"INDEMNIFIED LIABILITIES" is defined in Section 11.3.
"INDEMNITEES" is defined in Section 11.3.
"INDEPENDENT ARCHITECT" is defined in Section 7.14.
"INDEPENDENT PERSON" has the meaning ascribed to it in Schedule 7.13.
"INSPECTION CERTIFICATE" means a certificate from an architect or other
design professional approved by Lender in form and substance reasonably
acceptable to Lender.
"INSURANCE RESERVE" is the reserve for insurance premiums established
pursuant to Section 5.5.
"INSURANCE RESERVE ACCOUNT" is defined in Section 6.1.
"INTEREST PERIOD" means the period of time beginning on the 10th day of a
Loan Month and ending on the 9th day of the following Loan Month, provided,
however, the first Interest Period shall commence on the date the Loan commences
to bear interest and continues to and includes May 9, 2004.
"INTEREST RATE" means the applicable of the Base Rate or the Default Rate.
-9-
"INVENTORY" means "inventory" (as defined in the UCC), including any and
all goods, merchandise and other personal property, whether tangible or
intangible, now owned or hereafter acquired by Borrower which is held for sale,
lease or license to customers, furnished to customers under any contract or
service or held as raw materials, work in process, or supplies or materials used
or consumed in Borrower's business, if any.
"INVESTMENT" means (A) any direct or indirect purchase or other acquisition
by Borrower of any beneficial interest in, including stock, partnership interest
or other Securities of, any other Person or (B) any direct or indirect loan,
advance or capital contribution by Borrower to any other Person, including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business.
"LAND" means the real estate comprising the Mortgaged Property, as more
specifically described in the Mortgage, including all of Borrower's right, title
and interest in and to all oil, gas and mineral rights, oil, gas and minerals
(whether before or after extraction), easements, appurtenances, water rights,
water stock, rights in and to streets, roads and highways (whether before or
after vacation thereof), hereditaments and privilege relating, in any manner
whatsoever, to the Land. The Land is legally described on Exhibit A.
"LATE CHARGE" is defined in Section 2.2(D).
"LEASES" means any and all leases, subleases, occupancy agreements or
grants of other possessory interests, whereby Borrower acts as the lessor,
sublessor, licensor, grantor or in another similar capacity, now or hereafter in
force, oral or written, covering or affecting the Land or Improvements, or any
part thereof, together with all rights, powers, privileges, options and other
benefits of Borrower thereunder and any and all guaranties of the obligations of
the lessees, sublessees, occupants, and grantees thereunder, as such leases,
subleases, occupancy agreements or grants may be extended, renewed, modified or
replaced from time to time (exclusive of any ground lease having Borrower as
ground lessee).
"LEGAL REQUIREMENTS" means all applicable laws, statutes, ordinances,
rulings, regulations, codes, decrees, orders, judgments, covenants, conditions,
restrictions, approvals, permits and requirements under any Permitted
Encumbrances or of, from or by any Governmental Authority, including zoning,
subdivision, land use, environmental, building, safety, health, wetlands and
landmark preservation, housing and fire laws and the Americans with Disabilities
Act.
"LENDER'S REPRESENTATIVE" means an independent consulting architect,
inspector and/or engineering designated by Lender in Lender's sole discretion.
"LIEN" means (a) any lien, mortgage, pledge, security interest, charge or
monetary encumbrance of any kind, whether voluntary or involuntary (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and (b) any negative
pledge or analogous agreement including any agreement not to directly or
indirectly convey, assign, sell, mortgage, pledge, hypothecate, grant a security
interest in, grant options with respect to, transfer or otherwise dispose of,
voluntarily or
-10-
involuntarily, by operation of law or otherwise, any direct or indirect interest
in an asset or direct or indirect interest in the ownership of an asset.
"LOAN" means the loan in the aggregate amount of $34,000,000 from Lender to
Borrower as evidenced by the Note.
"LOAN DOCUMENTS" means this Agreement, the Note, the Mortgage, the
Assignments, the Environmental Indemnity Agreement, the Cash Management
Agreement, the Financing Statements, the Guaranty and all other documents,
instruments, certificates and other deliveries made by Borrower or Guarantor to
Lender in accordance herewith or which otherwise evidence, secure and/or govern
the Loan.
"LOAN MONTH" means a calendar month.
"LOAN QUARTER" means a calendar quarter.
"LOCKOUT EXPIRATION DATE" means the third anniversary of the Closing.
"MANAGEMENT AGREEMENT" means the property management agreement for the
Mortgaged Property between Borrower and Manager, if any.
"MANAGER" means the Person which is the manager of the Mortgaged Property
from time to time, which Person must be a Qualified Manager.
"MATERIAL ADVERSE EFFECT" means (A) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of Borrower, Guarantor or the Mortgaged Property taken as a whole, or (B) the
impairment, in any material respect, of the ability of Borrower or Guarantor to
perform its respective obligations under any of the Loan Documents or of Lender
to enforce any of the Obligations. In determining whether any individual event
would result in a Material Adverse Effect, notwithstanding that such event does
not of itself have such effect, a Material Adverse Effect shall be deemed to
have occurred if the cumulative effect of such event and all other then existing
events would result in a Material Adverse Effect.
"MATERIAL CONTRACTS" means (a) the Permitted Encumbrances (not otherwise
referred to in this definition of Material Contracts), and (b) those (i)
Contracts set forth on Schedule 4.6(C) attached hereto and (ii) other Contracts
which, if not complied with by Borrower, could reasonably be expected to have a
Material Adverse Effect.
"MATURITY DATE" means the Maturity Date, as defined in Section 2.4(B), or
such earlier date as the Loan is prepaid in full or accelerated.
"MAXIMUM RATE" is defined in Section 2.2(C).
"MOODY'S" means ▇▇▇▇▇'▇ Investors Services, Inc. and its successors and
assigns.
-11-
"MORTGAGE" means the Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing of even date herewith from Borrower to or
for the benefit of Lender, constituting a first Lien on the Mortgaged Property
as collateral for the Loan.
"MORTGAGED PROPERTY" means the Land, the Improvements and the Equipment,
Fixtures and Personalty, and all of Borrower's now and/or hereafter existing
right, title and interest in and to the Inventory, the Accounts, the General
Intangibles, the Leases, the Rents and other Gross Revenues, the Proceeds, the
Plans and Specifications and all other property of every kind and description
used or useful in connection with the ownership, occupancy, operation and
maintenance of the other components of the Mortgaged Property and all
substitutions therefor, replacements and accessions thereto, and proceeds
including "proceeds" (as defined in the UCC) derived therefrom, all as more
specifically described in the Mortgage.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate is making, or is
accruing an obligation to make, contributions or has made, or been obligated to
make, contributions within the preceding six (6) years, or for which Borrower or
any ERISA Affiliate has any liability, including contingent liability.
"NET WORTH" means, at any reporting date, for a Person, which shall include
such Person's subsidiaries, if any, on either a combined or consolidated basis
pursuant to and determined in accordance with GAAP (such combined or
consolidated entities are collectively herein called the "SUBJECT PERSON") the
total assets of the Subject Person less (i) intangible assets of such Subject
Person (including, goodwill, anticipated future benefits of tax loss carry
forwards, and organization or developmental expenses and specifically excluding
from the definition of intangible assets solely for purposes of this definition,
patents, trademarks, service marks, trade names and copyrights) otherwise
determined in accordance with GAAP, and less (ii) the total liabilities of such
Subject Person, all on either a combined or consolidated basis, as applicable,
determined in accordance with GAAP, in each case without duplication.
"NOTE" means the Promissory Note, together with the Substitute Notes and
all future advances, extensions, renewals, substitutions, modifications and
amendments of the Promissory Note and Substitute Notes.
"OBLIGATIONS" means, in the aggregate, all obligations, liabilities and
indebtedness of every nature of Borrower from time to time owed to Lender under
the Loan Documents, including the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable to Lender under the
Loan Documents whether before or after the filing of a proceeding under the
Bankruptcy Code by or against Borrower. The term "Obligations" shall also
include any judgment against Borrower or the Mortgaged Property with respect to
such obligations, liabilities and indebtedness of Borrower.
"OFAC" is defined in Section 4.9.
-12-
"OFFICER'S CERTIFICATE" means the certificate of a president, vice
president, or other officer or representative with knowledge of the matters
addressed in such certificate.
"ORGANIZATIONAL DOCUMENTS" means, as applicable, for any Person, such
Person's articles or certificate of incorporation, by-laws, partnership
agreement, trust agreement, certificate of limited partnership, articles of
organization, certificate of formation, shareholder agreement, voting trust
agreement, operating agreement, limited liability company agreement and/or
analogous documents, as amended, modified or supplemented from time to time.
"ORIGINATION FEE" means an amount of money equal to $510,000.
"PAYMENT DATE" means the 10th day of each calendar month commencing on June
10, 2004.
"PERMITTED CONTEST" is defined in Section 5.3(B).
"PERMITTED ENCUMBRANCES" means the matters identified on Exhibit D .
"PERMITTED INDEBTEDNESS" means (a) ordinary and customary trade payables
incurred in the ordinary course of business of ownership and operation of the
Mortgaged Property which are payable not later than thirty (30) days after
receipt of the original invoice which are in fact not more than sixty (60) days
overdue, and do not at any one time exceed $500,000 in the aggregate (not
including any payables for Impositions or insurance premiums for which amounts
have been deposited by Borrower in the Reserve Accounts) and (b) the Loan.
"PERMITTED INVESTMENTS" means any of the investments identified on Schedule
6.4, and any other investments that are approved by Lender in its sole
discretion, provided that at all times Lender has a perfected first priority
security interest in such investment, and Borrower has provided evidence of
such, in form and substance satisfactory to Lender, and provided further that
the Lender has approved the maturity of such investments.
"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof
and their respective permitted successors and assigns (or in the case of a
governmental person, the successor functional equivalent of such Person).
"PHYSICAL CONDITION REPORT" means the report(s) regarding the physical
inspection of the Land and Improvements listed on Schedule 1.1(C).
"PLANS AND SPECIFICATIONS" means the final drawings and specifications for
the development and construction of each component part of the applicable
Construction (as the same may be amended in accordance with the provisions
permitted by this Agreement), as applicable, which plans and specifications and
all amendments thereto shall be (i) subject to Lender's approval, which approval
shall not be unreasonably withheld or delayed, and (ii) in accordance with all
applicable Legal Requirements.
-13-
"PREPAYMENT PREMIUM" means the Yield Maintenance Amount. However, if an
Event of Default occurs on or before the Lockout Expiration Date and the Loan is
accelerated to a date on or before the Lockout Expiration Date, the Prepayment
Premium shall be equal to the sum of (a) the Yield Maintenance Amount and (b)
five percent (5%) of the principal balance of the Loan.
"PROCEEDS" is defined in Section 8.1.
"PROMISSORY NOTE" means the Promissory Note dated of even date herewith
made by Borrower to the order of Lender in the original principal amount of
$34,000,000.
"PROPRIETARY RIGHTS" is defined in Section 4.11.
"PUNCH-LIST ITEMS" means details of construction, decoration and mechanical
and electrical adjustment which in the aggregate are minor in character and do
not materially interfere with the intended use and operation of the applicable
Construction.
"QUALIFIED MANAGER" shall mean any property manager reasonably acceptable
to Lender that, as of the date of such designation, is a nationally recognized
management firm engaged in the business, operation and management of office
buildings, laboratories, vivariums, life service facilities or facilities for
other similar uses containing in the aggregate at least 1,000,000 square feet of
gross leaseable office space which are located in the United States and which is
approved by Lender and with respect to which a Rating Agency Confirmation is
provided.
"RATING AGENCY CONFIRMATION" shall mean, collectively, an affirmation from
each of the Rating Agencies that the credit rating by such Rating Agency of the
securities issued in connection with a securitization of the Loan or otherwise
secured by a pledge of the Note immediately prior to the occurrence of the event
with respect to which such Rating Agency Confirmation is sought will not be
qualified, downgraded or withdrawn as a result of the occurrence of such event,
which affirmation may be granted or withheld in such Rating Agency's sole and
absolute discretion provided, however if the Loan has not been securitized in
connection with a Securitization in which some or all of the securities have
been rated by one or more of the Rating Agencies, Rating Agency Confirmation
means Lender's approval, which approval is not to be unreasonably withheld or
delayed.
"RATING AGENCIES" shall mean S&P and Moody's or, if any of such firms shall
for any reason no longer perform the functions of a securities rating agency,
any other nationally recognized statistical rating agency reasonably designated
by Lender; provided, however, that at any time during which the Loan is an asset
of a securitization, "Rating Agencies" shall mean the rating agencies that from
time to time rate the securities issued in connection with such securitization.
If the Loan is not an asset in a securitization, Rating Agency shall mean those
rating agencies designated by Lender from time to time.
"RENTS" shall mean all of Borrower's right, title and interest in and to
rents, income, receipts, royalties, profits, issues, service reimbursements,
fees, termination payments receivables, accounts receivable and payments from or
related to the Land and/or Improvements from time to time accruing from the
operation of the Land and/or Improvements.
-14-
"REQUEST FOR RELEASE" means a request from Borrower to Lender in connection
with a request for disbursement from the applicable Reserve accompanied by the
following items, which request and items are subject to the approval of Lender
not to be unreasonably withheld, conditioned or delayed: (a) currently dated
certificate approved by Borrower from a Contractor, the Independent Architect,
if any, and Lender's Representative, if any, on a form to be reasonably approved
by Lender; (b) the Required Lien Waivers in form and substance reasonably
satisfactory to Lender; (c) if requested by Lender, from time to time, the
requisitions for payment then the subject of such Request for Release from
subcontractors and material suppliers engaged in the construction of the
applicable Construction in form and content reasonably satisfactory to Lender;
(d) an Inspection Certificate of an architect approved by Lender based upon an
on-site inspection of the applicable Construction made by the Independent
Architect and confirmed by Lender's Representative, if any, which shall certify
to all work for which such Request for Release has been completed; (e) evidence
reasonably satisfactory to Lender of Construction Legal Compliance in the form
of (i) a certificate of an Independent Architect as to items (a), (b) and (c) of
the definition of Construction Legal Compliance (together with copies of the
applicable entitlements, approvals, allocations, permits, licenses and
conditional use permits), (ii) a certificate from the Borrower Representative as
to item (d) of the definition of Construction Legal Compliance (which
certificate may, as to "threatened" matters, be qualified to "such Person's
knowledge following due inquiry") and (iii) such other showings, certificates,
reports and items as Lender or Lender's Representative, if any, may reasonably
request to confirm Construction Legal Compliance; (f) a date-down endorsement to
the Title Policy dating the Title Policy down to the date and time of the
requested disbursement; and (g) such other information and documents as may be
reasonably requested or required by Lender or Lender's Representative, if any,
including, but not limited to, certificates, inspections, date-down and other
title policy endorsements, invoices, receipts, estoppel certificates, permits,
licenses and certificates of occupancy, affidavits and other documents,
appropriate for the applicable stage of Construction.
"REQUIRED CAPITAL IMPROVEMENTS" is defined in Section 5.12.
"REQUIRED COMPLETION DATE" means with respect to the Required Capital
Improvements the applicable date for the applicable component of the Required
Capital Improvements identified on Exhibit E.
"REQUIRED LIEN WAIVERS" means, waivers of liens executed by (a) for each
Request for Release, Contractor and each design professional with whom Borrower
has a direct agreement, respectively, waiving their respective rights, if any,
and any right of a subcontractor claiming through or under any of them, to file
or maintain any construction liens or claims, all in such form containing such
provisions as may be reasonably required by Lender and in accordance with
applicable law and (b) for each Request for Release that includes a request for
final payment to any subcontractor, such subcontractor, waiving its right to
file or maintain any construction liens or claims, all in such form and
containing such provisions as may be reasonably required by Lender executed with
respect to and applicable to the extent such subcontractor has received payment.
Such waivers may be conditioned upon payment for work performed and materials
supplied; provided, that the Request for Release that includes the request
described in clause (b) above shall include (and in the case of the final
Request for Release, within ten (10) days after the funding of such final
Request for Release, Borrower shall
-15-
deliver to Lender) a duly executed, unconditional waiver for each Person
described in clauses (a) or (b) above.
"REQUIRED RESTORATION DATE" is defined in Section 8.1.
"RESERVE ACCOUNT COLLATERAL" is defined in Section 6.5.
"RESERVE ACCOUNTS" means the Insurance Reserve Account, the Tax Reserve
Account and any other securities or deposit accounts required to be maintained
pursuant to this Agreement or the other Loan Documents.
"RESERVES" means the Tax Reserve and the Insurance Reserve.
"RESTORATION" is defined in Section 8.1.
"S&P" means Standard & Poor's Rating Service and its successors and
assigns.
"SECURE AREAS" means the restricted access areas located within (i) that
certain building containing approximately 29,600 square feet of rentable area,
commonly referred to as the "Original Vivarium" and (ii) that certain building
containing approximately 60,000 square feet of rentable area, commonly referred
to as the "New Vivarium" in which access to such areas is restricted in order to
provide a specific pathogen free environment, such restricted access areas being
commonly referred to as the "area behind the barrier."
"SECURITIES" means any stock, shares, voting trust certificates, bonds,
debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"SECURITIZATION" is defined in Section 10.1.
"SERVICER" is defined in Section 10.1.
"SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY" is defined in Schedule 7.13.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than
fifty percent (50%) of the equity or more than fifty percent (50%) of the
ordinary voting power or, in the case of a partnership, more than fifty percent
(50%) of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more Subsidiaries of the parent or by the parent and one or
more Subsidiaries of the parent.
-16-
"SUBSTANTIAL COMPLETION AND SUBSTANTIALLY COMPLETED" means the satisfaction
of all of the following conditions: (a) the date when the applicable
Construction shall have been completed (except for Punch List Items and minor
items which can be fully completed without material interference with the use
and operation of the Mortgaged Property) in accordance with the applicable Plans
and Specifications as certified by the Independent Architect on standard
AIA-G702 forms and approved by Lender's Representative, if any, and Lender, such
approval not to be unreasonably withheld or delayed; (b) all material permits
and approvals required for the normal use and occupancy of the applicable
Construction (including a certificate of occupancy if required for occupancy
under applicable Legal Requirements) shall have been issued by the appropriate
Governmental Authority and shall be in full force and effect; and (c) the
applicable Construction shall have been equipped with all fixtures and equipment
required for the intended use and operation of the Required Capital
Improvements.
"SUBSTITUTE NOTE" means all notes given in substitution or exchange for the
Promissory Note or another Substitute Note.
"TAX ABATEMENT AGREEMENTS" means, collectively, the Tax Abatement Agreement
dated as of December 1, 2000, by and among ▇▇▇▇▇ Fargo Bank Northwest, National
Association (formerly First Security Bank, National Association), not in its
individual capacity but solely as the Owner Trustee under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇,
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ County, Texas, as amended, and that certain Assessment
Abatement Agreement dated as of December 4, 2000, by and between ▇▇▇▇▇ Fargo
Bank Northwest, National Association (formerly First Security Bank, National
Association), not in its individual capacity but solely as the Owner Trustee
under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇, ▇▇▇▇▇▇▇▇▇ and The Woodlands Commercial Owners
Association, as amended.
"TAX RESERVE" is the reserve for Impositions established pursuant to
Section 5.5.
"TAX RESERVE ACCOUNT" shall have the meaning provided in Section 6.1.
"TENANT IMPAIRMENT EVENT" means any one or more of the following has
occurred: (a) the tenant under the Guarantor Lease has commenced or is the
subject of a proceeding under the Bankruptcy Code; or (b) a default by the
tenant under the Guarantor Lease shall have occurred which is not cured prior to
the expiration of the applicable grace or curative period, if any, in such
Lease.
"TITLE COMPANY" means Commonwealth Land Title Insurance Company.
"TITLE POLICY" means a the mortgagee's policy of title insurance issued on
the standard Texas form by the Title Company, together with such reinsurance and
direct access agreements as Lender may require, insuring that the Mortgage is a
valid first and prior enforceable lien on Borrower's fee simple interest in the
Mortgaged Property (including any easements appurtenant thereto but excluding
any non-real estate property interests included in the definition of Mortgaged
Property) subject only to the Permitted Encumbrances. The Title Policy shall
contain such endorsements as Lender may require.
"TOTAL DEBT/CAPITALIZATION" means, at any reporting date, for a Person, the
percentage equal to (A) the sum of the long term debt (including any amounts for
operating lease debt
-17-
equivalents) of such Person plus the amount of any current maturities,
commercial paper and other short-term borrowings (the "TOTAL DEBT") divided by
(B) the sum of the Total Debt plus the amount of shareholder's equity (including
any preferred stock) plus minority interests.
"TOTAL LOSS" means (i) a casualty, damage or destruction of the Mortgaged
Property, the cost of restoration of which (as reasonably determined by Lender)
would exceed $40,000,000, (ii) a permanent taking of fifty percent (50%) or more
of the gross leasable area of the Land or Improvements, (iii) a permanent taking
of fifty percent (50%) or more of the automobile parking spaces located on the
Land or such number of parking spaces as would cause the Borrower or the
Mortgaged Property to cease to comply with applicable Legal Requirements or
Material Contracts, or (iv) a permanent taking of so much of the Land or
Improvements, in either case, such that it would be impracticable, in Lender's
reasonable discretion, even after restoration, to operate the Mortgaged Property
as an economically viable whole.
"TRANSFER" means, (a) when used as a verb, to, directly or indirectly,
lease, sell, assign, convey, give, exchange, devise, mortgage, encumber, pledge,
hypothecate, alienate, grant a security interest, or otherwise create or suffer
to exist any Lien, transfer or otherwise dispose, or to contract or agreement to
do any of the foregoing, whether by operation of law, voluntarily, involuntarily
or otherwise as well as any other action or omission which has the practical
effect of initiating or completing the foregoing and (b) when used as a noun, a
direct or indirect, lease, sale, assignment, conveyance, gift, exchange, devise,
mortgage, encumbrance, pledge, hypothecation, alienation, grant of a security
interest or other creation or sufferance of a Lien, transfer of other
disposition, or contract or agreement by which any of the foregoing may be
effected, whether by operation of law, voluntary or involuntary and any other
action or omission which has the practical effect of initiating or completing
the foregoing.
"TREASURY RATE" means the annualized yield on securities issued by the
United States Treasury having a maturity corresponding to the remaining term to
the originally scheduled Maturity Date, as quoted in Federal Reserve Statistical
Release H. 15(519) under the heading "U.S. Government Securities - Treasury
Constant Maturities" for the Treasury Rate Determination Date (as defined
below), converted to a monthly equivalent yield. If yields for such securities
of such maturity are not shown in such publication, then the Treasury Rate shall
be determined by Lender by linear interpolation between the yields of securities
of the next longer and next shorter maturities. If said Federal Reserve
Statistical Release or any other information necessary for determination of the
Treasury Rate in accordance with the foregoing is no longer published or is
otherwise unavailable, then the Treasury Rate shall be reasonably determined by
Lender based on comparable data.
"TREASURY RATE DETERMINATION DATE" means the date which is five (5)
Business Days prior to the scheduled prepayment date.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
"UCC COLLATERAL" is defined in Section 2.9.
"U.S. GOVERNMENT OBLIGATIONS" means any direct obligations of, or
obligations guaranteed as to principal and interest by, the United States
Government or any agency or
-18-
instrumentality thereof, provided that such obligations are backed by the full
faith and credit of the United States. Any such obligation must be limited to
instruments that have a predetermined fixed dollar amount of principal due at
maturity that cannot vary or change. If any such obligation is rated by S&P, it
shall not have an "r" highlighter affixed to its rating. Interest must be fixed
or tied to a single interest rate index plus a single fixed spread (if any), and
move proportionately with said index. U.S. Government Obligations include, but
are not limited to: U.S. Treasury direct or fully guaranteed obligations,
Farmers Home Administration certificates of beneficial ownership, General
Services Administration participation certificates, U.S. Maritime Administration
guaranteed Title XI financing, Small Business Administration guaranteed
participation certificates or guaranteed pool certificates, U.S. Department of
Housing and Urban Development local authority bonds, and Washington Metropolitan
Area Transit Authority guaranteed transit bonds. In no event shall any such
obligation have a maturity in excess of one hundred eighty (180) days.
"YIELD MAINTENANCE AMOUNT" means (A) the net present value of all future
payments of principal and interest due for the remainder of the Term,
discounted, each from the date such payments are due to the date of the
prepayment, at the result of the Treasury Rate divided by 12, less (B) the then
outstanding principal balance of the Loan; such Yield Maintenance Amount can
never be less than zero; provided, however, for purposes of any partial
prepayment, all references to the remaining outstanding principal balance of the
Loan shall instead refer to the amount of such partial prepayment. For purposes
of computing the Yield Maintenance Amount with regard to Section 2.4(C)(iii),
the date of prepayment shall be deemed the date the Loan is accelerated.
1.2 TERMS; UTILIZATION OF GAAP FOR PURPOSES OF FINANCIAL STATEMENTS UNDER
AGREEMENT.
For purposes of this Agreement, all accounting terms not otherwise defined
herein shall have the meanings assigned to such terms in conformity with GAAP.
Financial statements and other information furnished to Lender pursuant to
subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation. No Accounting Changes shall affect financial
covenants, standards or terms in this Agreement; provided, that Borrower shall
prepare footnotes to the financial statements required to be delivered hereunder
that show the differences between the financial statements delivered (which
reflect such Accounting Changes) and the basis for calculating financial
covenant compliance (without reflecting such Accounting Changes).
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "SECTIONS," "EXHIBITS" and "SCHEDULES" shall be to Sections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Section 1.1 may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference. In this Agreement, "HEREOF," "HEREIN," "HERETO," "HEREUNDEr" and
the like mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include the other genders; references to "WRITING"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "INCLUDING,"
-19-
"INCLUDES" and "INCLUDE" shall be deemed to be followed by the words "WITHOUT
LIMITATION"; the phrase "AND/OR" shall mean that either "and" or "or" may apply;
the phrases "ATTORNEYS' FEES," "LEGAL FEES" and "COUNSEL FEES" shall include any
and all attorneys', paralegal and law clerk fees and disbursements, including
court costs, fees and disbursements at the pre-trial, trial and appellate levels
incurred or paid by Lender in protecting its interest in the Mortgaged Property
and the Collateral and enforcing its rights hereunder and/or the other Loan
Documents; references to agreements and other contractual instruments shall be
deemed to include subsequent amendments, assignments, and other modifications
thereto, but only to the extent such amendments, assignments and other
modifications are not prohibited by the terms of this Agreement or any other
Loan Document; references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; references to a Person's
"KNOWLEDGE" in this Agreement or the other Loan Documents refers to the actual
knowledge of the Person in question and such knowledge as a reasonably prudent
Person would have acquired by virtue of such inquiry and due diligence as a
reasonably prudent Person would have undertaken and all references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations.
SECTION 2
AMOUNTS AND TERMS OF THE LOAN
2.1 LOAN DISBURSEMENT AND NOTE. Subject to the terms and conditions of this
Agreement, Lender shall lend the Loan to Borrower on the Closing Date. The
proceeds of the Loan shall be used to (i) satisfy the Existing Indebtedness
encumbering the Mortgaged Property; and (ii) satisfy actual, documented closing
costs related to the Loan and approved by Lender. The disbursement of the Loan
in accordance with the foregoing shall be made on the Closing Date. The Loan
shall be evidenced by the Note. The Obligations of Borrower under this
Agreement, the Note and the other Loan Documents are secured by, among other
things, the Mortgage and the Liens created or arising under the other Loan
Documents.
2.2 INTEREST.
(A) INTEREST RATE. Subject to the provisions of Section 2.2(C) hereof, the
outstanding principal balance of the Loan shall bear interest at the Base Rate.
However, (a) during the existence of any Event of Default, or (b) after the
Maturity Date or earlier upon acceleration of the Loan, the principal amount of
the Loan shall bear interest ("DEFAULT INTEREST") at the Default Rate. With
respect to any scheduled payments of principal and interest (excluding the
payment due on the Maturity Date), Borrower will be entitled to a grace period
of five (5) days from such date before Default Interest is imposed by reason of
such late payment; provided, however, such grace period will not be available
more than once in any twelve (12) Loan Month period and if Borrower fails to
make the required payment within said five (5) day period, Default Interest will
be calculated from the original due date. Except as set forth in the preceding
sentence, the Default Interest shall commence, without notice, immediately upon
and from the occurrence of (a) or (b) above, as the case may be, and shall
continue until all Events of Default are cured and all sums then due and payable
under the Loan Documents are paid in full; provided that in the event of any
monetary Event of Default, Default Interest shall be calculated from the date
the
-20-
applicable Default actually occurred. Default Interest shall be payable upon
demand, and, to the extent unpaid, shall be compounded monthly at the Default
Rate.
(B) COMPUTATION AND PAYMENT OF INTEREST. Interest on the Loan and all
other Obligations owing to Lender shall be computed on the daily principal
balance of the Note on the basis of actual days elapsed and a three hundred
sixty (360)-day year. Interest on the Loan is payable in arrears. Payments of
interest shall be paid to Lender as specified in Section 2.3. In addition, all
accrued and unpaid interest shall be paid to Lender on the earlier of the date
of prepayment (to the extent prepayment is permitted under Section 2.4) and
maturity, whether by acceleration or otherwise. The Loan shall commence to bear
interest on the date the proceeds of the Loan are to be disbursed to or for the
order of Borrower, provided, however, if the proceeds are disbursed to an
escrowee, the Loan shall commence to bear interest from and including the date
of disbursement to such escrowee regardless of the date such proceeds are
disbursed from escrow.
(C) INTEREST LAWS. Notwithstanding any provision to the contrary contained
in this Agreement or the other Loan Documents, Borrower shall not be required to
pay, and Lender shall not be permitted to collect, any amount of interest in
excess of the maximum amount of interest permitted by law ("EXCESS INTEREST").
If any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Agreement or in any of the other
Loan Documents, then in such event: (1) the provisions of this Section shall
govern and control; (2) Borrower shall not be obligated to pay any Excess
Interest; (3) any Excess Interest that Lender may have received hereunder shall
be, at Lender's option, (a) applied as a credit against the outstanding
principal balance of the Obligations due and owing to Lender (without any
prepayment penalty or premium therefor) or for accrued and unpaid interest
thereunder (not to exceed the maximum amount permitted by law), (b) refunded to
the payor thereof, or (c) any combination of the foregoing; (4) the interest
rate(s) provided for herein shall be automatically reduced to the maximum lawful
rate allowed from time to time under applicable law (the "MAXIMUM RATE"), and
this Agreement and the other Loan Documents shall be deemed to have been and
shall be, reformed and modified to reflect such reduction; and (5) Borrower
shall not have any action against Lender for any damages arising out of the
payment or collection of any Excess Interest. Notwithstanding the foregoing, if
for any period of time interest on any Obligation due and owing to Lender is
calculated at the Maximum Rate rather than the applicable rate under this
Agreement, and thereafter such applicable rate becomes less than the Maximum
Rate, the rate of interest payable on such Obligations due and owing to Lender
shall, to the extent permitted by law, remain at the Maximum Rate until Lender
shall have received or accrued the amount of interest which Lender would have
received or accrued during such period on Obligations due and owing to Lender
had the rate of interest not been limited to the Maximum Rate during such
period. All sums paid or agreed to be paid to Lender for the use, forbearance or
detention of the Obligations of Borrower to Lender shall, to the extent
permitted by applicable law, (i) be amortized, prorated, allocated and spread
throughout the full term of such Obligations until payment in full so that the
actual rate of interest on account of such Obligations does not exceed the
Maximum Rate throughout the term thereof, (ii) be characterized as a fee,
expense or other charge other than interest, and/or (iii) exclude any voluntary
prepayments and the effects thereof.
-21-
(D) LATE CHARGES. If any scheduled payment of principal and/or interest or
other amount owing pursuant to this Agreement or the other Loan Documents
(excluding the payment due on the Maturity Date) is not paid when due, Borrower
shall pay to Lender, in addition to all sums otherwise due and payable, a late
charge ("LATE CHARGE") in an amount equal to five percent (5%) of the unpaid
amount. With respect to regular monthly payments of principal and/or interest,
Borrower will be entitled to a grace period of five (5) days (five (5) Business
Days with respect to any non-scheduled payment due pursuant to this Agreement or
the other Loan Documents) from the date due before a late charge is imposed by
reason of such late payment; provided, however, such grace period will not be
available more than once in any consecutive twelve (12) month period. Any unpaid
late charge shall bear interest at the Default Rate until paid.
2.3 PAYMENTS.
Interest for the period commencing on the date of disbursement of the Loan
and ending on May 9, 2004 shall be paid on the Closing Date. On each Payment
Date thereafter commencing with the Payment Date occurring on June 10, 2004,
Borrower shall pay to Lender interest on the outstanding principal of the Loan
accrued from and including the immediately preceding Payment Date, to, but not
including, the Payment Date on which such payment is to be made. Commencing on
June 10, 2004, and on each Payment Date thereafter, principal of the Loan
evidenced by the Note shall be paid to Lender in monthly installments of
principal and interest in an amount equal to Two Hundred Eighty-Nine Thousand
Two Hundred Seventy-Five and 64/100 Dollars ($289,275.64) per month, which
amount shall be sufficient to amortize the full principal amount outstanding as
of the date of disbursement of the Loan over a twenty (20) year term (such
amortization schedule is attached hereto as Schedule 2.3). A balloon payment
will be required on the Maturity Date as set forth on Schedule 2.3.
2.4 PAYMENTS AND PREPAYMENTS ON THE LOAN.
(A) MANNER AND TIME OF PAYMENT. Borrower agrees to pay all of the
Obligations relating to the Loan as such amounts become due or are declared due
pursuant to the terms of this Agreement and the other Loan Documents. All
payments shall be made without deduction, defense, setoff or counterclaim by the
wire transfer of good immediately available wire transferred federal funds to
Lender's account at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank for the account of Lender, Reference:
The Lexicon Campus, or at such other place as Lender may direct from time to
time by five (5) days' advance written notice to Borrower. Borrower shall
receive credit for such funds on the date received if such funds are received by
Lender by 1:00 P.M. (New York time) on such day. In the absence of timely
receipt, such funds shall be deemed to have been paid by Borrower on the
following Business Day. Whenever any payment to be made under the Loan Documents
shall be stated to be due on a day that is not a Business Day, or any time
period relating to a payment to be made hereunder is stated to expire on a day
that is not a Business Day, the payment may be made on the following Business
Day and the period will not expire until the following Business Day.
(B) MATURITY. The outstanding principal balance of the Loan, all accrued
and unpaid interest thereon and all other sums owing to Lender pursuant to the
Loan Documents, shall be due and payable on April 21, 2014 (the "MATURITY
DATE").
-22-
(C) PREPAYMENTS.
(i) Except as otherwise provided in Section 5.3(C), Section 8.1 or
Section 11.17 herein, no prepayment of the Loan shall be allowed in whole
or in part, on or prior to the Lockout Expiration Date other than principal
payments required pursuant to Section 2.3. Thereafter, the Loan may be
prepaid, in whole, but not in part, upon not less than thirty (30) days'
prior notice to Lender. Any prepayments on the principal balance of the
Loan evidenced by the Note whether voluntary or involuntary, shall be
accompanied by payment of interest accrued to the date of prepayment,
together with the applicable Prepayment Premium.
(ii) In the event of (a) the payment of any principal of any Loan
other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default) or (b) the failure to borrow
or prepay the Loan on the date specified in any notice delivered pursuant
to this Agreement or the other Loan Documents (regardless of whether such
notice was revoked by Borrower prior to such prepayment), then, in any such
event and, in addition to the payments to be made to Lender pursuant to
2.4(C)(i), Borrower agrees to compensate Lender for all out-of-pocket
losses, costs, expenses and damages Lender may incur attributable to such
event. A certificate of Lender setting forth any amount or amounts that
Lender is entitled to receive pursuant to this Section shall be delivered
to Borrower and shall be conclusive absent manifest error. Borrower shall
pay Lender the amount shown as due on any such certificate within ten (10)
days after receipt thereof.
(iii) If, following an Event of Default, payment of all or any part of
the Loan is tendered by Borrower or otherwise recovered by Lender, such
tender or recovery shall be deemed a voluntary prepayment by Borrower in
violation of the prohibition against prepayment set forth in Section
2.4(C)(i) and Borrower shall pay to Lender, in addition to the other
Obligations, the Prepayment Premium. If the Maturity Date is accelerated,
due to an Event of Default or otherwise, or if any prepayment of all or any
portion of the Loan hereunder occurs, whether in connection with Lender's
acceleration of the Loan or otherwise, or if the Mortgage is satisfied or
released by foreclosure (whether by power of sale or judicial proceeding),
deed in lieu of foreclosure or by any other means, then the Prepayment
Premium shall become immediately due and owing and Borrower shall
immediately pay the Prepayment Premium to Lender. Nothing contained in this
Section 2.4(C)(iii) shall create any right of prepayment.
2.5 LENDER'S RECORDS; MUTILATED, DESTROYED OR LOST NOTES. The balance on
Lender's books and records shall be presumptive evidence (absent manifest error)
of the amounts due and owing to Lender by Borrower; provided that any failure to
so record or any error in so recording shall not limit or otherwise affect
Borrower's obligation to pay the Obligations. In case any Note shall become
mutilated or defaced, or be destroyed, lost or stolen, Borrower shall, upon
request from Lender, execute and deliver a new Note of like principal amount in
exchange and substitution for the mutilated or defaced Note, or in lieu of and
in substitution for the destroyed, lost or stolen Note. In the case of a
mutilated or defaced Note, the mutilated or defaced Note shall be surrendered to
Borrower upon delivery to Lender of the new Note. In the case of any destroyed,
lost or stolen Note, Lender shall furnish to Borrower, upon delivery to Lender
of the
-23-
new Note (i) certification of the destruction, loss or theft of such Note and
(ii) such security or indemnity as may be reasonably required by Borrower to
hold Borrower harmless.
2.6 TAXES. Any and all payments or reimbursements made under the Agreement, the
Note or the other Loan Documents shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto arising out of or in
connection with the transactions contemplated by the Loan Documents; excluding,
however, the following: taxes imposed on the income of Lender by any
jurisdiction or any political subdivision thereof; taxes that are not directly
attributable to the Loan; and any "doing business" taxes, however denominated,
charged by any state or other jurisdiction (all such taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto,
excluding such taxes imposed on income, taxes not directly attributable to the
Loan and any "doing business" taxes, herein "TAX LIABILITIES"). If Borrower
shall be required by law to deduct any such amounts from or in respect of any
sum payable hereunder to Lender, then the sum payable hereunder shall be
increased as may be necessary so that, after making all required deductions,
Lender receives an amount equal to the sum it would have received had no such
deductions been made. In the event that, subsequent to the Closing Date, (1) any
changes in any existing law, regulation, treaty or directive or in the
interpretation or application thereof, (2) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof, or (3)
compliance by Lender with any new request or directive (whether or not having
the force of law) from any governmental authority, agency or instrumentality
does or shall subject Lender to any tax of any kind whatsoever with respect to
this Agreement, the other Loan Documents or the Loan, or change the basis of
taxation of payments to Lender of principal, fees, interest or any other amount
payable hereunder (except for income taxes, or franchise taxes imposed in lieu
of income taxes, imposed generally by federal, state or local taxing authorities
with respect to interest or commitment or other fees payable hereunder or
changes in the rate of interest or tax on the overall income of Lender, taxes
that are not directly attributable to the Loan and any "doing business" taxes,
however denominated, charged by any state or other jurisdiction) and the result
of any of the foregoing is to increase the cost to Lender of making or
continuing its Loan hereunder, as the case may be, or to reduce any amount
receivable hereunder, then, in any such case, Borrower shall promptly pay to
Lender, within thirty (30) days after its demand, any additional amounts
necessary to compensate Lender, on an after-tax basis, for such additional cost
or reduced amount receivable, as determined by Lender with respect to this
Agreement or the other Loan Documents. If Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.6, it shall promptly notify
Borrower of the event by reason of which Lender has become so entitled.
2.7 APPLICATION OF PAYMENTS. Except as otherwise expressly provided in the last
sentence of this Section 2.7, all payments made hereunder shall be applied
first, to the payment of any Late Charges and other sums (other than principal
and interest) due from Borrower to Lender under the Loan Documents, second, to
any interest then due at the Default Rate, third to interest then due at the
Base Rate, and last to the principal amount. Following and during the
continuance of an Event of Default, all sums collected by Lender shall be
applied in such order of priority to such items set forth below as Lender shall
determine in its sole discretion: (i) to the costs and expenses, including
reasonable attorneys' and paralegals' fees and costs of appeal, incurred in the
collection of any or all of the Loan due or the realization of any collateral
securing any or all
-24-
of the Loan; and (ii) to any or all unpaid amounts owing pursuant to the Loan
Documents in any order of application as Lender, in its sole discretion, shall
determine.
2.8 ORIGINATION FEE. Borrower shall pay the Origination Fee to Lender on the
Closing Date.
2.9 SECURITY AGREEMENT. To secure the payment, performance and discharge of the
Obligations, Borrower hereby grants, assigns, transfers, conveys and sets over
unto Lender, and hereby grants to Lender a continuing first priority, perfected
security interest in all of Borrower's right, title and interest in, to and
under any and all of the following, whether now and/or existing and/or now owned
and/or hereafter acquired and/or arising:
(1) the Accounts;
(2) the Contracts;
(3) the Reserve Accounts and other Reserve Account Collateral;
(4) the Equipment, Fixtures and Personalty;
(5) the General Intangibles;
(6) the Leases;
(7) the Inventory;
(8) the Management Agreement(s);
(9) the Rents and other Gross Revenues;
(10) the Proceeds; and
(11) together with all accessions to, substitutions for, and replacements
of, any of the foregoing and any and all products and cash and non-cash proceeds
of any of the foregoing (collectively, the "UCC COLLATERAL").
With respect to all UCC Collateral constituting a part of the Mortgaged
Property, including, without limitation, the Accounts, this Agreement shall
constitute a "security agreement" within the meaning of, and shall create a
security interest under, the UCC. Borrower hereby acknowledges and agrees that
Lender shall be permitted to file one or more financing statements naming
Borrower as debtor and Lender as secured party identifying "the Accounts, the
Contracts, the Reserve Accounts and other Reserve Account Collateral, the
Equipment, Fixtures and Personalty, the General Intangibles, the Leases, the
Inventory, the Management Agreements, the Rents and other Gross Revenues and the
Proceeds" of Borrower in the collateral description thereon. As to the UCC
Collateral, the grant, transfer, and assignment provisions of this Section 2.9
shall control over the grant provision of Section 2.1 of the Mortgage. Borrower
represents and warrants that, except for any financing statement filed by
Lender, no presently effective financing statement covering the Collateral or
any part thereof has been filed with any filing officer, and no other security
interest has attached to or has been perfected in the Collateral or any part
thereof. Borrower shall from time to time within fifteen (15) days after request
by Lender, execute, acknowledge and deliver, or authorize the filing of any
financing statement, renewal, affidavit, certificate, continuation statement or
other document as Lender may reasonably request in order to evidence, perfect,
preserve, continue, extend or maintain this security agreement and the security
interest created hereby as a first priority Lien on the UCC Collateral, subject
only to the Permitted Encumbrances.
2.10 CERTAIN SECURED PARTY REMEDIES. If an Event of Default shall have occurred
and be continuing, Lender shall have all the remedies of a secured party under
the UCC and all other
-25-
rights and remedies now or hereafter provided or permitted by law, including,
without limitation, the right to take immediate and exclusive possession of the
UCC Collateral, or any part thereof, and for that purpose Lender may, as far as
Borrower can give authority therefor, with or without judicial process, enter
(if this can be done without breach of the peace) upon any premises on which any
of the Collateral or any part thereof may be situated. Without limitation of the
foregoing, Lender shall be entitled to hold, maintain, preserve and prepare all
of the Collateral for sale and to dispose of said Collateral, if Lender so
chooses, from the Mortgaged Property provided that Lender may require Borrower
to assemble such UCC Collateral and make it available to Lender for disposition
at a place to be designated by Lender from which the UCC Collateral would be
sold or disposed of, and provided further that, for a reasonable period of time
prior to the disposition of such UCC Collateral, Lender shall have the right to
use same in the operation of the Mortgaged Property. Borrower will execute and
deliver to Lender any and all forms, documents, certificates and registrations
as may be necessary or appropriate to enable Lender to sell and deliver good and
clear title to the UCC Collateral to the buyer at the sale as herein provided.
Unless the UCC Collateral is of the type customarily sold on a recognized
market, Lender will give Borrower at least ten (10) days' written notice of the
time and place of any public sale of such UCC Collateral or of the time after
which any private sale or any other intended disposition thereof is to be made.
The requirements of reasonable notice shall be met if such notice is given to
Borrower in writing at least ten (10) days before the time of the sale or
disposition. Lender may buy at any public sale and, if the UCC Collateral is of
a type customarily sold in a recognized market or is a type which is the subject
of widely distributed standard price quotations, it may buy at private sale.
Unless Lender shall otherwise elect, any sale of the UCC Collateral shall be
solely as a unit and not in separate lots or parcels, it being expressly agreed,
however, that Lender shall have the absolute right to dispose of such UCC
Collateral in separate lots or parcels. Lender shall further have the absolute
right to elect to sell the UCC Collateral as a unit with, and not separately
from, the Land and Improvements constituting a portion of the Mortgaged
Property. The net proceeds realized upon any disposition of the UCC Collateral,
after deduction for the expenses of retaining, holding, preparing for sale,
selling and the like and the attorneys' fees and legal expenses incurred by
Lender shall be applied towards satisfaction of such of the Obligations secured
hereby, and in such order of application, as Lender may elect. If all of the
Obligations are satisfied, Lender will account to Borrower for any surplus
realized on such disposition.
SECTION 3
CONDITIONS TO LOAN
3.1 CONDITIONS TO FUNDING OF THE LOAN ON THE CLOSING DATE.
The obligation of Lender to disburse the Loan is subject to the prior or
concurrent satisfaction of the conditions set forth below.
(A) PERFORMANCE OF AGREEMENTS; TRUTH OF REPRESENTATIONS AND WARRANTIES; NO
INJUNCTION. Borrower, Guarantor and all other Persons executing any Loan
Document on behalf of Borrower and Guarantor shall have performed in all
material respects all agreements which any of the Loan Documents provide shall
be performed on or before the Closing Date. The representations and warranties
contained in the Loan Documents shall be true, correct and complete in all
material respects on and as of the Closing Date to the same extent as though
-26-
made on and as of that date. No Legal Requirements shall have been adopted, no
order, judgment or decree of any Governmental Authority shall have been issued
or entered, and no litigation shall be pending or threatened, which in the
reasonable judgment of Lender would enjoin, prohibit or restrain, or impose or
result in an adverse effect upon the making, borrowing or repayment of the Loan
or the execution, delivery or performance of the Loan Documents. No Default or
Event of Default shall have occurred and then be continuing.
(B) OPINION OF COUNSEL. Lender shall have received and approved written
opinions of counsel for Borrower, Guarantor and Borrower Representative, in form
and substance reasonably satisfactory to Lender and its counsel, dated as of the
Closing Date. By execution of this Agreement, Borrower authorizes and directs
its counsel to render and deliver such opinions to Lender.
(C) LOAN DOCUMENTS. On or before the Closing Date, Borrower shall execute
and deliver and cause to be executed and delivered, to Lender all of the Loan
Documents, each, unless otherwise noted, dated the Closing Date, duly executed,
in form and substance satisfactory to Lender and in quantities designated by
Lender (except for the Promissory Note, of which only the original shall be
executed). Borrower hereby authorizes Lender to file the financing statements in
such filing offices as Lender elects.
(D) [Intentionally Omitted.]
(E) INSURANCE POLICIES AND ENDORSEMENTS. Lender shall have received and
approved the original policies of insurance required to be maintained under this
Agreement and the other Loan Documents, together with endorsements satisfactory
to Lender naming Lender as additional insured under such policies. If such
policies are not delivered to Lender, Lender must receive and approve a copy of
the insurance policies in question and evidence of such insurance required to be
maintained in connection with this Agreement.
(F) ORGANIZATIONAL AND AUTHORIZATION DOCUMENTS. Lender shall have received
all documents reasonably requested by Lender, including all Organizational
Documents, with regard to the due organization, existence, internal governance,
power and authority, due authorization, execution and delivery, authorization to
do business and good standing of Borrower, Guarantor and the Borrower
Representative, the validity and binding effect of the Loan Documents and other
matters relating thereto, in form and substance reasonably satisfactory to
Lender.
(G) CLOSING STATEMENT. Lender shall have received and approved a closing
and disbursement statement executed by Borrower with respect to the disbursement
of the proceeds of the Loan.
(H) FINANCIAL STATEMENTS. Lender shall have received financial statements
of Guarantor as of December 31, 2003. Lender shall have received (a) audited
historical operating statements for the Mortgaged Property (such statements may
be unaudited, to the extent audited statements are not available), for the
calendar years 2002 and 2003, and unaudited financial statements for 2004 (to
date); (b) audited financial statements for Guarantor for the calendar years
2002 and 2003, and unaudited financial statements for the calendar year 2004 (to
date); and (c) a pro forma balance sheet of Borrower dated the Closing Date
giving effect to the making of
-27-
the Loan and the transactions occurring on the Closing Date, each accompanied by
an Officer's Certificate of the Borrower Representative.
(I) BUDGET AND CAPITAL PLAN. Lender shall have received and approved the
initial Budget and initial Capital Plan for Borrower.
(J) APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. Lender shall have
received and approved a letter appointing (and accepted by) CT Corporation
System as Borrower's and Guarantor's agent for service of process.
(K) MATERIAL CONTRACTS AND OTHER AGREEMENTS. Lender shall have received
and approved true, correct and complete certified copies of each Material
Contract, all other operating agreements, service contracts and equipment leases
and all permits, licenses and documents pertaining to the Proprietary Rights
relating to the Mortgaged Property. Lender shall have received executed estoppel
certificates from all Parties to the Material Contracts designated by Lender
(and not otherwise addressed in this Section 3.1).
(L) ENVIRONMENTAL ASSESSMENTS, PHYSICAL CONDITION REPORTS AND LENDER'S
INSPECTION AND PLANS AND SPECIFICATIONS. Lender shall have received and
approved the Environmental Reports and Physical Condition Reports relating to
the Mortgaged Property, together with letters from the preparer(s) thereof
permitting Lender to rely upon the Environmental Reports and Physical Condition
Reports. To the extent in the possession of, or reasonably obtainable by, the
Borrower, a true, correct and complete copy of "as-built" plans and
specifications for the Improvements.
(M) TITLE POLICY, SURVEY, SEARCHES, PERFECTION AND PRIORITY. Lender shall
have received and approved (i) the Title Policy and (ii) a plat of survey of the
Land, Improvements and other components of the Mortgaged Property constituting
real estate certified to such Persons as Lender may designate and prepared in
accordance with Lender's requirements. Lender shall have received and approved
copies of Uniform Commercial Code financing statement, judgment, tax lien,
bankruptcy and litigation search reports of such jurisdictions and offices as
Lender may reasonably designate with respect to Borrower, Guarantor, Borrower
Representative and such other Persons as Lender may reasonably require. Lender
shall have received such other evidence as Lender may require confirming that
Lender has a perfected first priority security interests and Lien upon the
Collateral.
(N) LICENSES, PERMITS AND APPROVALS, ZONING AND LAND USE COMPLIANCE.
Lender shall have received and approved (i) a copy of the certificate of
compliance issued by The Community Standards Committee of The Woodlands
Commercial Owners Association and The Woodlands Community Association issued
with respect to the Mortgaged Property and all other applicable licenses,
permits and approvals required to own, use, occupy, operate and maintain the
Mortgaged Property, including all necessary licenses and permits relating to
wetlands compliance, and use of water; (ii) evidence satisfactory to Lender of
the existence, ownership and status of all Proprietary Rights and Material
Contracts; and (iii) evidence satisfactory to Lender as to the compliance of the
Mortgaged Property with all applicable Legal Requirements.
-28-
(O) RESERVE ACCOUNTS AND DEPOSITS. The Reserve Accounts shall have been
established in a manner satisfactory to Lender. The initial deposits into the
Reserves on the Closing Date, shall have been made (which amounts may, with
Lender's approval, be made from the proceeds of the Loan).
(P) ORIGINATION FEE. Lender shall have received its Origination Fee.
(Q) LEASES. Lender shall have received (a) an estoppel certificate and
subordination, nondisturbance and attornment agreement executed by each tenant
of the Mortgaged Property and (b) true, correct and complete certified copies of
each of the Leases.
(R) OTHER DOCUMENTS AND DELIVERIES. Borrower shall have delivered such
other documents and deliveries as are set forth on the Closing Checklist
attached hereto as Schedule 1.1(A).
(S) LEGAL FEES; CLOSING EXPENSES. Borrower shall have paid any and all
legal fees and expenses of counsel to Lender, together with all recording fees
and taxes, title insurance premiums, and other costs and expenses related to the
Loan.
(T) GUARANTY. Guarantor shall have executed and delivered the Guaranty.
SECTION 4
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that, after giving effect to the
Loan, as of the Closing Date:
4.1 ORGANIZATION, POWERS, QUALIFICATION AND ORGANIZATION CHART. Borrower is a
limited partnership duly formed, validly existing and in good standing under the
laws of its state of formation. Each of Borrower and Borrower Representative has
all requisite power and authority to own and operate its properties, to carry on
its business as now conducted and proposed to be conducted, and to enter into
each Loan Document to which it is a party and to perform the terms thereof.
Guarantor is a corporation, duly organized, validly existing and in good
standing under the laws of its state of formation and has all requisite power
and authority to own and operate its properties, to carry on its business as now
conducted, and to enter into each Loan Document to which it is a party and to
perform the terms thereof. Borrower's U.S. taxpayer identification number is set
forth on Schedule 4.1(A)-1. Borrower and Guarantor are each duly qualified and
in good standing wherever necessary to carry on its present business and
operations. Borrower Representative is a limited liability company, duly
organized and validly existing under the laws of the State of Delaware and is
the sole general partner in Borrower. Guarantor owns one hundred percent (100%)
of the ownership interests in Borrower Representative. Guarantor owns,
indirectly, one hundred percent (100%) of the ownership interests in Borrower.
The organization chart attached hereto as Schedule 4.1(A)-2 correctly identifies
each Subsidiary of Borrower and each Person directly owning (and/or indirectly
owning five percent (5%) or more of) the ownership interests in Borrower and
Borrower Representative; provided that such organizational chart shall not
identify any Person owning, directly or in directly, any ownership interests of
Guarantor. The principal place of business and chief executive office of
Borrower is set forth on
-29-
Schedule 4.1(A)-3. Borrower has filed in a timely manner all reports, documents
and other materials required to be filed by it with any Governmental Authorities
and the information contained in each of such filings is true, correct and
complete in all respects). Borrower has retained all records and documents
required to be retained by it pursuant to any law, ordinance, rule, regulation,
order, policy, guideline or other requirement of any Governmental Authority.
Borrower has no Subsidiaries and has not made an Investment in any Person.
Borrower Representative's sole asset is its interest in Borrower.
4.2 AUTHORIZATION OF BORROWING; NO CONFLICTS; GOVERNMENTAL CONSENTS; BINDING
OBLIGATIONS AND LICENSE AND SECURITY INTERESTS OF LOAN DOCUMENTS. Borrower has
the power and authority to incur the Obligations evidenced by the Note and other
Loan Documents to which it is a party, to execute and deliver the Loan Documents
to which it is a party and to perform its Obligations, to own the Mortgaged
Property and to continue its businesses and affairs as presently conducted.
Guarantor has the power and authority to execute and deliver the Guaranty, the
Environmental Indemnification Agreement and the other Loan Documents to which it
is a party. The incurring of the Obligations and the execution, delivery and
performance by Borrower and Guarantor of each of the Loan Documents to which
either is a party and the consummation of the transactions contemplated thereby
have been duly authorized by all necessary partnership, corporate or limited
liability company action, as the case may be. The incurring of the Obligations
and the execution, delivery and performance by Borrower and Guarantor of the
Loan Documents to which either is a party and the consummation of the
transactions contemplated thereby do not and will not: (1) violate any provision
of law applicable to Borrower, Guarantor or the Mortgaged Property, the
respective other Organizational Documents of, or applicable to, Borrower or
Guarantor, as the case may be, or any order, judgment or decree of any court or
other agency of government binding on Borrower or Guarantor or their respective
properties including the Mortgaged Property; (2) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contracts or any other agreement or document to which such
Person is a party or by which such Person or its property may be bound; (3)
result in or require the creation or imposition of any Lien upon the Mortgaged
Property or assets of Borrower or Guarantor (other than the Liens of Lender); or
(4) require any approval or consent of any Person under any Material Contracts
or any other agreement or document to which such Person is a party or by which
such Person or its property may be bound (except to the extent such approvals or
consents have been unconditionally obtained on or before the Closing Date). The
incurring of the Obligations, the execution, delivery and performance by
Borrower and Guarantor of the Loan Documents and the consummation of the
transactions contemplated thereby do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other Governmental Authority or regulatory body (except to the
extent unconditionally obtained on or before the Closing Date). The Loan
Documents, when executed and delivered by Borrower and Guarantor, as applicable,
will be the legally valid and binding obligations of Borrower and Guarantor, as
applicable, enforceable against Borrower and Guarantor, subject to bankruptcy,
insolvency, moratorium, reorganization and other similar laws affecting
creditors' rights generally and to the application of general equitable
principles in connection with the enforcement thereof. The Mortgage, together
with the Financing Statements to be filed in connection therewith, create a
valid, enforceable and perfected first priority lien and security interest in
the Mortgaged Property subject to no other interests, Liens or encumbrances,
other than the Permitted Encumbrances. Article 6 of this Agreement creates a
valid, enforceable
-30-
and perfected first priority security interest in the Reserve Account
Collateral. Borrower is a "registered organization" (as defined in the UCC)
organized under the laws of the State of Delaware.
4.3 FINANCIAL STATEMENTS. All financial statements concerning Borrower and
Guarantor which have been or will hereafter be furnished by Borrower and
Guarantor to Lender pursuant to this Agreement have been or will be prepared in
accordance with GAAP consistently applied (except as disclosed therein, to the
extent Lender approves such disclosure) and do or will, in all material
respects, present fairly the financial condition of the Persons covered thereby
as at the dates thereof and the results of their operations for the periods then
ended.
4.4 INDEBTEDNESS. As of the Closing Date, after giving effect to the
transactions contemplated hereby, Borrower does not have any Indebtedness except
for Permitted Indebtedness. Other than ordinary operating expenses pertaining to
the Mortgaged Property, all Expenses owing or accrued as of the Closing Date,
have been paid in full or have been reserved for by deposit into the Reserves.
No claim of any creditor of Borrower exists which would have a Material Adverse
Effect.
4.5 NO MATERIAL ADVERSE CHANGE. Since December 31, 2003, no event or change has
occurred that has caused or evidences, either individually or together with such
other events or changes, a Material Adverse Effect.
4.6 TITLE TO PROPERTY; LIENS; ZONING; CONTRACTS; CONDITION OF THE MORTGAGED
PROPERTY.
(A) Borrower has good and indefeasible fee simple title to the Land, the
Improvements and the other components of the Mortgaged Property, subject only to
the Permitted Encumbrances. Borrower owns all real and personal property
necessary for the operation of the Mortgaged Property subject only to the
Permitted Encumbrances. Except for the Permitted Encumbrances, the Mortgaged
Property is free and clear of Liens and other encumbrances. Except as otherwise
identified on Schedule 4.6(a), there are no outstanding Claims and all work,
services or materials the provision of which might ripen into a Claim have been
fully paid for. There are no assessments for improvements or other similar
outstanding charges or Impositions affecting the Mortgaged Property. Except as
otherwise identified on the survey provided to Lender, no Improvements lie
outside the boundaries and building restriction lines of the Land or encroach
onto any easements to any extent (unless affirmatively insured by the Title
Policy), and no improvements on adjoining properties encroach upon the Land to
any extent which would materially impair the Mortgaged Property. The Title
Policy premium has been fully paid. Except for the affidavit as to debts, liens
and possession provided by Borrower to the Title Company at Closing, neither
Borrower, nor, to Borrower's knowledge, any other Person, has provided any title
indemnities (or analogous documentation) or deposits of cash or other security
to the title insurer to obtain the Title Policy. The Permitted Encumbrances do
not and will not materially interfere with the security intended to be provided
by the Mortgage, the use or operation of the Mortgaged Property or the
marketability or value of the Mortgaged Property. Borrower will preserve its
right, title and interest in and to the Mortgaged Property for so long as the
Obligations remain outstanding and will warrant and defend same and the validity
and priority of the Mortgage and the Liens arising pursuant to the Loan
Documents from and against any and all claims whatsoever other than the
Permitted Encumbrances.
-31-
(B) The Mortgaged Property is restricted for use as an office, laboratory,
vivarium, research, marketing, sales, storage, experimentation and production of
laboratory animals, which restriction is in full force and effect, and is beyond
all applicable appeal periods. Borrower is not in violation of, and, the
Mortgaged Property is in full compliance with all applicable zoning,
subdivision, land use and other Legal Requirements. No legal proceedings are
pending or, to Borrower's knowledge threatened, with respect to the compliance
of the Mortgaged Property with Legal Requirements. Neither the zoning nor any
other right to construct, use or operate the Mortgaged Property is in any way
dependent upon or related to any real estate other than the Mortgaged Property
and validly created, existing appurtenant perpetual easements insured in the
Title Policy or use of public rights of way. In the event that all or any part
of the Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other Legal
Requirements applicable thereto and without the necessity of obtaining any
variances or special permits. The Mortgaged Property contains not less than 468
parking spaces, which is enough permanent parking spaces to satisfy all
requirements imposed by applicable Legal Requirements with respect to parking.
All licenses, permits and other Proprietary Rights necessary to operate the
Mortgaged Property as it is currently operated are in full force and effect
including all water permits and approvals. Borrower has not received any written
notice of any violation of any such licenses, permits, authorizations,
registrations or approvals that materially impair the value of the Mortgaged
Property for which such notice was given or which would affect the use or
operation of the Mortgaged Property in any material respect, which noticed
violation remains uncured.
(C) Borrower has provided Lender with true and complete copies of all
Material Contracts, all of which are specifically listed on Schedule 4.6(C)
hereof, other than the Permitted Encumbrances. Except for the Loan Documents and
as set forth on Schedule 4.6(C), Borrower is not a party to and neither it nor
the Mortgaged Property is bound by any material agreement, document or
instrument which is binding upon the Mortgaged Property other than the Loan
Documents, the Permitted Encumbrances, the other Material Contracts, if any, and
such party's organizational documents, true, correct and complete copies of
which have been delivered to Lender. Except for the Loan Documents and the
Material Contracts, none of Borrower, Borrower Representative and Guarantor are
parties to or bound by, nor is any of their respective property subject to or
bound by, any contract or other agreement which restricts its ability to conduct
its business at the Mortgaged Property in the ordinary course or, either
individually or in the aggregate, has a Material Adverse Effect or could
reasonably be expected to have a Material Adverse Effect. Borrower, Borrower
Representative and Guarantor are not in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in
any Material Contract of any such Person which could have a Material Adverse
Effect. No Default or Event of Default exists.
(D) All of the Improvements are in good condition and repair except with
respect to the Required Capital Improvements. To Borrower's knowledge, except as
disclosed in the Physical Condition Report, there are no latent or patent
structural or other significant defects or deficiencies in the Improvements or
Equipment, Fixtures and Personalty. Municipal or private water supply, storm and
sanitary sewers, and electrical, gas and telephone facilities are available to
the Mortgaged Property to the boundary lines of the Mortgaged Property through
publicly dedicated streets or highways or perpetual appurtenant easements
insured on the Title Policy as
-32-
appurtenant easements, are sufficient to meet the reasonable needs of the
Mortgaged Property as now used or as otherwise presently contemplated to be
used, and are connected to, and is in full unimpaired operation with respect to
the Improvements and no other utility facilities are necessary to meet the
reasonable needs of the Mortgaged Property as now used. The design and as-built
conditions of the Mortgaged Property are such that surface and storm water does
not accumulate on the Mortgaged Property and does not drain from the Mortgaged
Property across land of adjacent property owners or others in any manner which
would have a Material Adverse Effect or which require any approvals or easements
not already obtained. Except as set forth on Schedule 4.6(D) or on the plat of
survey delivered to Lender, no part of the Mortgaged Property is within a flood
plain or in a flood hazard area as currently shown on the most recent Flood
Hazard Boundary Maps prepared by the Department of Housing and Urban Development
and (except to the extent validly created and existing perpetual appurtenant
easements insured in the Title Policy have been created therefor) none of the
Improvements create encroachments over, across or upon any of the Mortgaged
Property's boundary lines, rights of way or easements, and no building or other
improvements on adjoining land create such an encroachment. All irrigation lines
servicing the Mortgaged Property are entirely located on the Mortgaged Property
or are located on adjacent property pursuant to validly created and existing
perpetual appurtenant easements insured as appurtenant easements in the Title
Policy. The Land and Improvements have legally adequate contiguous rights of
access to public ways. All roads necessary for the full utilization of the Land
and Improvements for their current purpose have been completed and dedicated to
public use and accepted by all Governmental Authorities. No offsite improvements
are necessary or used for the ownership, use or operation of the Mortgaged
Property, other than public utilities. The Improvements, the Land, the
Equipment, Fixtures and Personalty and the Inventory located on the Land
constitutes all of the real property, equipment, fixtures and other tangible
property currently owned or leased by Borrower or used in the operation of the
Mortgaged Property and the Equipment, Fixtures and Personalty owned by the
Borrower are sufficient to own, operate and use the Land and Improvements as
currently operated. Except as identified in the Permitted Encumbrances, Borrower
has not entered into any agreement or option, and is not otherwise bound, to
sell the Mortgaged Property (or any part thereof). Borrower has not entered into
any agreement or option, and is not otherwise bound, to acquire any additional
real estate or Investments. As of the date hereof, no portion of the
Improvements constituting part of the Mortgaged Property or on the Land has been
materially damaged, destroyed or injured by fire or other casualty which has not
been fully restored.
4.7 LITIGATION. Except as set forth on Schedule 4.7, there are no judgments
outstanding against Borrower or Guarantor or are binding upon the Mortgaged
Property or any property of, Borrower Representative or Guarantor, nor is there
any litigation, governmental investigation or arbitration pending or, to
Borrower's knowledge, threatened against Borrower, Borrower Representative or
Guarantor. The judgments, litigation, investigations and arbitrations set forth
on Schedule 4.7 will not result, if adversely determined, and could not
reasonably be expected to result, either individually or in the aggregate, in
any Material Adverse Effect and do not relate to and will not affect the
consummation of the transactions contemplated hereby. No petition in bankruptcy,
whether voluntary or involuntary, or assignment for the benefit of creditors, or
any other action involving debtors' and creditors' rights has ever been filed
under the laws of the United States of America or any state thereof, or
threatened, by or against, Borrower, Guarantor or Borrower Representative.
Except as set forth on Schedule 4.7, there are no mechanics' or materialmen's
liens, alienable bills or other claims constituting or that may constitute a
Lien on
-33-
the Mortgaged Property or any part thereof, and no work for which any such Lien
could be asserted has been performed which has not been fully paid for. Borrower
has not received any notice from any governmental or quasi-governmental body or
agency or from any person or entity with respect to (and Borrower does not know
of) any actual or threatened taking of the Land or Improvements, or any portion
thereof, for any public or quasi-public propose or of any moratorium which may
affect the use, operation or ownership of the Mortgaged Property.
4.8 PAYMENT OF TAXES. All tax returns and reports of Borrower, Borrower
Representative and Guarantor required to be filed by such Persons have been
timely filed, and all taxes, assessments, fees and other governmental charges
upon such Person and upon the Mortgaged Property, assets, income and franchises
which are due and payable have been paid in full. To Borrower's knowledge, no
tax returns of Borrower, Borrower Representative or Guarantor is under audit. No
tax liens have been filed and, to Borrower's knowledge no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves on
the books of Borrower, Borrower Representative and Guarantor in respect of any
taxes or other governmental charges are in accordance with GAAP. Except as
described in Schedule 4.8, none of Borrower, Guarantor and Borrower
Representative has given or been requested to give waivers or extensions (or is
or would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of taxes of Borrower, Guarantor
and Borrower Representative or for which Borrower, Guarantor and Borrower
Representative may be liable. All taxes that Borrower, Guarantor and Borrower
Representative is or was required by Legal Requirements to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the applicable Governmental Authority. All tax returns filed by (or that
include on a consolidated basis) Borrower, Guarantor and Borrower Representative
are true, correct and complete. There is no tax sharing agreement that will
require any payment by Borrower, Guarantor and Borrower Representative after the
date of this Agreement.
4.9 GOVERNMENTAL REGULATION; MARGIN LOAN. Borrower, Borrower Representative and
Guarantor are not, nor after giving effect to the Loan, will be, subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to any federal or state
statute or regulation limiting its ability to incur indebtedness for borrowed
money. Borrower shall use the proceeds of the Loan only for the purposes set
forth in this Agreement and consistent with all applicable laws, statutes, rules
and regulations. No portion of the proceeds of the Loan shall be used by
Borrower in any manner that might cause the borrowing or the application of such
proceeds to violate Regulation U, Regulation T or Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Exchange Act or any other Legal Requirements. The Loan is an exempt
transaction under the Truth-in-Lending Act (15 U.S.C.A. Sections 1601 et seq.).
Borrower is not a non-resident alien for purposes of U.S. income taxation and
neither Borrower nor Borrower Representative is a foreign corporation,
partnership, foreign trust or foreign estate (as said terms are defined in the
United States Internal Revenue Code). Borrower, Borrower Representative,
Guarantor or any of their respective Subsidiaries are not, and shall not become,
a Person with whom Lender is restricted from doing business with under
regulations of the Office of Foreign Asset Control ("OFAC") of the Department of
the Treasury (including, but not limited to, those named on OFAC's Specially
Designated and Blocked Persons list) or under any statute, executive order
(including, but not limited to, the September 24, 2001 Executive Order Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or
-34-
Support Terrorism) or other governmental action relating to terrorism financing,
terrorism support and/or otherwise relating to terrorism and are not and shall
not engage in any dealings or transaction or otherwise be associated with
Persons named on OFAC's Specially Designated and Blocked Persons list.
4.10 EMPLOYEE BENEFIT PLANS; ERISA; EMPLOYEES. Except for the Employee Benefit
Plans set forth on Schedule 4.10, neither Borrower nor any ERISA Affiliate of
Borrower maintains or contributes to, or has any obligation under, any Employee
Benefit Plans. Borrower is not an "employee benefit plan" (within the meaning of
section 3(3) of ERISA) to which ERISA applies and the Mortgaged Property and
Borrower's assets do not constitute plan assets. No actions, suits or claims
under any laws and regulations promulgated pursuant to ERISA are pending or, to
Borrower's knowledge, threatened against Borrower. Borrower has no knowledge of
any material liability incurred by Borrower which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan, or of any lien which has been imposed on Borrower's assets
pursuant to section 412 of the Code or section 302 or 4068 of ERISA. The Loan,
the execution, delivery and performance of the Loan Documents and the
transactions contemplated by this Agreement do not constitute a non-exempt
prohibited transaction under ERISA. Borrower is not a party to any collective
bargaining or other employment agreement other than the agreements identified on
Schedule 4.10.
4.11 INTELLECTUAL PROPERTY. Schedule 4.11 sets forth a true, correct and
complete list of all of the patents, trademarks, tradenames, technology, other
intellectual property rights and other Proprietary Rights owned by Borrower and
used in connection with the ownership, operation and management of the Mortgaged
Property. Borrower possesses, owns or has valid licenses, permits, certificates
of public convenience, service marks, authorizations, licenses, patents, patent
rights or licenses, trademarks, trademark rights, trade name rights, trade
styles, trade dress, logos and other source or business affiliation identifiers,
and copyrights, certificates, consents, orders, approvals and other
authorizations from, and have made all declarations and filings with, all
federal, state, local and other Governmental Authority, all self-regulatory
organizations and all courts and other tribunals (collectively, together with
the goodwill associated therewith, "PROPRIETARY RIGHTS") presently required or
necessary to own or lease, as the case may be, and to operate, the Mortgaged
Property and to carry on its business as now conducted in accordance with the
Approved Budget and Approved Capital Plan, except where the failure to obtain
same would not, individually or in the aggregate, have a Material Adverse
Effect. Borrower has fulfilled and performed all of its obligations with respect
to such permits, and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or could result in
any other material impairment of the rights of the holder of any such permit;
and Borrower has not received any notice of any proceeding relating to
unenforceability, invalidity, revocation or modification of any Proprietary
Rights, except where such revocation, unenforceability, invalidity, or
modification would not, individually or in the aggregate, have a Material
Adverse Effect. Borrower has not received any notice that any Proprietary Rights
have been declared unenforceable or otherwise invalid by any court or
Governmental Authority other than notices relating to Proprietary Rights the
loss of which would not, individually or in the aggregate, have a Material
Adverse Effect. Borrower has not received any notice of infringement of, or
conflict with, and Borrower does not know of any such infringement of or
conflict with, asserted rights of others with respect to any Proprietary Rights
-35-
which, if such assertion of infringement or conflict were sustained, would have
a Material Adverse Effect.
4.12 BROKER'S FEES. No broker's or finder's fee, commission or similar
compensation will be payable with respect to the Loan, the issuance of the Note
or any of the other transactions contemplated hereby or by any of the Loan
Documents based upon any broker or lender engaged by Borrower, Guarantor or any
affiliate of Borrower. Borrower shall indemnify and hold Lender harmless from
and against any and all claims of all brokers or finders claiming by, through or
under Borrower and in any way related to the Loan or any of the transactions
contemplated hereby.
4.13 ENVIRONMENTAL COMPLIANCE. There are no claims, liabilities,
investigations, litigation, administrative proceedings, whether pending or, to
Borrower's knowledge threatened, or judgments or orders relating to any
Hazardous Materials (collectively called "ENVIRONMENTAL CLAIMS") asserted or
threatened against Borrower, any predecessor owner, tenant or operator or
relating to any real property currently or formerly owned, leased or operated by
Borrower including the Mortgaged Property. Except as disclosed in the
Environmental Reports, to Borrower's knowledge, neither Borrower nor any other
Person has caused or permitted any Hazardous Material to be used, generated,
reclaimed, transported, released, treated, stored or disposed of in a manner
which could form the basis for an Environmental Claim against Borrower. Except
as disclosed in the Environmental Reports, to Borrower's knowledge, no Hazardous
Materials in violation of applicable Environmental Laws are or were stored or
otherwise located, and no underground storage tanks or surface impoundments are
or were located, on real property currently or formerly owned, leased or
operated by Borrower, including the Mortgaged Property, or to the knowledge of
Borrower, on adjacent parcels of real property, and no part of such real
property or, to the knowledge of Borrower no part of such adjacent parcels of
real property, including the groundwater located thereon, is presently
contaminated by Hazardous Materials in violation of applicable Environmental
Laws or to any extent which has, or might reasonably be expected to have, a
Material Adverse Effect. Except as disclosed in the Environmental Reports, to
Borrower's knowledge, Borrower and the Mortgaged Property has been and is
currently in compliance with all applicable Environmental Laws, including
obtaining and maintaining in effect all permits, licenses or other
authorizations required by applicable Environmental Laws.
4.14 SOLVENCY. As of the date of this Agreement and after giving effect to the
consummation of the transactions contemplated by the Loan Documents, Borrower:
(A) owns and will own assets the fair saleable value of which are (1) greater
than the total amount of liabilities (including Contingent Obligations) of
Borrower, and (2) greater than the amount that will be required to pay the
probable liabilities of Borrower's then existing debts as they become absolute
and matured considering all financing alternatives and potential asset sales
reasonably available to Borrower; (B) has capital that is not insufficient in
relation to its business as presently conducted or any contemplated or
undertaken transaction; and (C) does not intend to incur and does not believe
that it will incur debts beyond its ability to pay such debts as they become
due. Borrower has not entered into the Loan Documents or the transactions
contemplated under the Loan Documents with the actual intent to hinder, delay,
or defraud any creditor. After giving effect to the Loan and the transactions
occurring on the Closing Date, Borrower's net unreimbursed investment in the
Mortgaged Property is not less than $21,000,000. After giving
-36-
effect to the transactions occurring on the Closing Date, no Default or Event of
Default exists. No material adverse change in the financial conditions or
operation of the business of Borrower and Guarantor has occurred since the
applicable dates of the financial statements of the applicable Person provided
on or before the Closing Date.
4.15 DISCLOSURE. The representations and warranties of Borrower and Guarantor
contained in the Loan Documents, the financial statements referred to in Section
5.1(A), and any other documents, certificates or written statements furnished to
Lender by or on behalf of Borrower or Guarantor for use in connection with the
Loan do not contain any untrue statement of a material fact or omit or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the same
were made. There is no material fact known to Borrower that has had or will have
a Material Adverse Effect that has not been disclosed in this Agreement or in
such other documents, certificates and statements furnished to Lender by or, on
behalf of, Borrower for use in connection with the Loan.
4.16 INSURANCE. Schedule 4.16 sets forth a complete and accurate description of
all policies of insurance that will be in effect as of the Closing Date for
Borrower and such policies of insurance satisfy all of the requirements of
Section 5.4. All premiums thereon have been paid in full through December 1,
2004, no notice of cancellation has been received with respect to such policies
and Borrower is in compliance, in all material respects, with all conditions
contained in such policies.
4.17 BUDGET. The Approved Budget submitted to Lender for the Mortgaged Property
is a true, correct and complete copy of the Budget and Capital Plan in effect on
and as of the Closing Date. A true, correct and complete copy of the initial
Approved Budget for the period ending December 31, 2004 is attached hereto as
Schedule 4.17. The Approved Budget and all of the amounts set forth therein,
present a true, full and complete line itemization (by category for the fiscal
year to which such Annual Budget applies) of all reasonably estimated Gross
Revenues and all reasonably estimated Expenses which Borrower expects to pay or
anticipates becoming obligated to pay relating to the Mortgaged Property. No
material capital expenditures with respect to the Mortgaged Property are being
incurred, contemplated or are reasonably necessary, except as specified in the
Approved Budget.
4.18 ACCOUNTS. Schedule 4.18 sets forth a complete and accurate itemization of
all of Borrower's time, demand, securities or similar Accounts that are in
existence as of the Closing Date.
4.19 MANAGEMENT AGREEMENT. Borrower is not party to any Management Agreement
nor has it otherwise contracted with any managing agent to assist Borrower in
the management and operation of the Mortgaged Property.
4.20 SPECIAL ASSESSMENTS; TAXES. There are no pending or, to the knowledge of
Borrower proposed, special or other assessments for public improvements or
otherwise affecting the Mortgaged Property, nor, to Borrower's knowledge, are
there any contemplated improvements to the Mortgaged Property that may result in
such special or other assessments. Borrower has provided Lender with true,
correct and complete copies of all bills and invoices for Impositions
-37-
which have been levied or assessed against or are outstanding with respect to
the Mortgaged Property. Borrower has provided Lender with a true, correct and
complete schedule of the assessment of the Mortgaged Property in effect as of
the Closing Date. Borrower has not received any notice that any portion of the
Mortgaged Property has been re-assessed or is currently the subject of a
reassessment. Except for abatements pursuant to the Tax Abatement Agreements, no
portion of the Mortgaged Property is exempt from taxation or constitutes an
"omitted" tax parcel. No Impositions are currently delinquent or outstanding
with respect to the Mortgaged Property. The conveyance of the Mortgaged Property
to Borrower did not, in and of itself, constitute the basis for any reassessment
of all or any part of the Mortgaged Property or the basis for any increase in
any currently outstanding or previously satisfied Impositions which has not
already been imposed and disclosed in writing to Lender by Borrower. No tax
contests of any Impositions or assessments are currently pending. The Land and
Improvements constitute a separate tax lot or lots, with a separate tax
assessment or assessments, independent of any other land or improvements not
constituting a part of the Mortgaged Property and no other land or improvements
is assessed and taxed together with any portion of the Mortgaged Property.
4.21 LEASES. Except for the Guarantor Lease, there are no Leases or other
arrangements for occupancy of space within the Mortgaged Property that are
currently in effect. Borrower has provided Lender with a true, complete and
correct copy of the Guarantor Lease, including any amendments or modifications
thereto. The Mortgaged Property is occupied solely by Guarantor.
4.22 REPRESENTATIONS REMADE. Borrower warrants and covenants that the foregoing
representations and warranties will be true and shall be deemed remade as of the
date of the Closing. All representations and warranties made in the other Loan
Document or in any certificate or other document delivered to Lender by or on
behalf of Borrower pursuant to the Loan Documents shall be deemed to have been
relied upon by Lender, notwithstanding any investigation made by or on behalf of
Lender. All such representations and warranties shall survive the making of the
Loan and shall continue in full force and effect until such time as the Loan has
been paid in full.
SECTION 5
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as this Agreement shall remain
in effect or the Note shall remain outstanding, Borrower shall perform and
comply with all covenants in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS. Borrower will maintain a system of
accounting in accordance with sound business practices to permit preparation of
financial statements in conformity with GAAP and proper and accurate books,
records and accounts reflecting all of the financial affairs of Borrower with
respect to all items of income and expense in connection with the operation of
the Mortgaged Property.
(A) FINANCIAL STATEMENTS. Within one hundred twenty (120) days after the
end of each calendar year, Borrower shall provide to Lender true and complete
annual audited consolidated financial statements for Guarantor and true and
complete annual unaudited financial statements for Borrower and the operation of
the Mortgaged Property, all prepared in accordance
-38-
with GAAP. All audited financial statements shall be audited by a so-called
"Big-4" accounting firm or another independent certified public accounting firm
reasonably satisfactory to Lender. All financial statements (whether or not
audited) shall include a balance sheet as of the end of such year, profit and
loss statements for such year and a statement of cash flow for such year, with
such detailed supporting schedules covering the operation of the Mortgaged
Property as Lender shall reasonably require including a reconciliation to the
monthly reports and statements delivered to Lender and include an itemized
accounting of all Gross Revenues and Expenses for the Mortgaged Property. As
soon as reasonably practicable (but in any event within forty-five (45) days)
after the end of each calendar quarter, Borrower shall provide to Lender a true
and complete quarterly cash flow, balance sheet, and operating statement for
Borrower, Guarantor and the Mortgaged Property (none of which are required to be
audited) certified by the president or vice president of Borrower Representative
and Guarantor which quarterly statements shall be in form and substance
acceptable to Lender. Such quarterly statements shall be compared to the prior
year's quarter and year-to-date and to the then applicable Approved Budget.
Borrower shall also provide (and cause Guarantor to provide), such other
financial information as Lender may, from time to time, reasonably request
certified (if requested by Lender) by the applicable chief financial officer (or
similar position). Borrower will deliver, concurrently with the annual and
quarterly statements, a certificate of its chief financial officer (or analogous
position) certifying that no Default or Event of Default has occurred. In the
event Borrower enters into a Management Agreement subsequent to the date hereof,
as soon as available, and in any event within twenty (20) days after the end of
each Loan Month, Borrower will deliver to Lender a copy of the periodic
reporting package required to be delivered to Borrower by a Manager pursuant to
such Management Agreement.
(B) ACCOUNTANTS' CERTIFICATION. Together with each delivery of annual
financial statements of Borrower and Guarantor pursuant to subsection 5.1(A),
Borrower shall request as part of the engagement of its independent certified
public accountant, and shall use best efforts to obtain, a written statement by
such independent certified public accountant (1) stating that the examination
has included a review of the terms of this Agreement as such terms relate to
accounting matters, (2) stating whether, in connection with the examination, any
condition or event that constitutes a Default or an Event of Default (of which
said accountants may be aware from said review, and without obligation to review
other aspects of this Agreement or to review any of the other Loan Documents)
has come to their attention, and (3) if such a condition or event has come to
their attention, specifying the nature and period of existence thereof; provided
that the requirements set forth in this subsection (B) shall be waived for so
long as (i) Borrower's financial statements are prepared on a consolidated basis
with the financial statements of Guarantor and (ii) Guarantor is a reporting
company under the Exchange Act, and provided further that, for purposes of the
foregoing, "best efforts" shall not require a change in Borrower's independent
certified public accountant.
(C) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, Borrower will
deliver copies of all significant reports submitted to Borrower or Guarantor, as
applicable, by independent public accountants in connection with each annual,
interim or special audit of the financial statements of Borrower or Guarantor,
as applicable, made by such accountants, including the comment letter submitted
by such accountants to management in connection with their annual audit;
provided that the requirements set forth in this subsection (C) shall be waived
for so long as (i) Borrower's financial statements are prepared on a
consolidated basis with the
-39-
financial statements of Guarantor and (ii) Guarantor is a reporting company
under the Exchange Act.
(D) ANNUAL BUDGETS AND CAPITAL PLANS. Not later than November 30th of each
calendar year, Borrower shall deliver a Budget and a Capital Plan for the
following calendar year for the Mortgaged Property to Lender for its review and
approval (the Budget and Capital Plan are collectively referred to as the
"ANNUAL BUDGET" and the Annual Budget approved by Lender is referred to herein
as the "APPROVED BUDGET"), which approval shall not be unreasonably withheld,
conditioned or delayed. Lender shall have fifteen (15) Business Days to approve
or reject each proposed Annual Budget. Concurrently, Borrower shall deliver an
annual business plan for the Mortgaged Property. If Lender disapproves the
Annual Budget, which disapproval shall specify the respects in which it is
unacceptable, Borrower shall resubmit same to Lender for its review until such
time as the Annual Budget is approved by Lender. Borrower shall not modify any
Approved Budget without Lender's approval, which approval shall not be
unreasonably withheld, conditioned or delayed. Borrower shall not incur any
Expenses which are not set forth in the Approved Budget except as otherwise
approved by Lender, which approval shall not be unreasonably withheld,
conditioned or delayed. Borrower shall, within one hundred twenty (120) days
after the end of each calendar year during the term of the Loan, deliver to
Lender an annual summary of any and all capital expenditures made at the
Mortgaged Property during the prior twelve (12)-month period.
(E) NOTICES, EVENTS OF DEFAULT AND LITIGATION. Borrower shall promptly
deliver, or cause to be delivered, copies of all notices, demands, reports or
requests given to, or received by Borrower from, any Governmental Authorities or
with respect to any Indebtedness of Borrower or any Material Contracts, and
shall notify Lender within two (2) Business Days after Borrower receives notice
or acquires knowledge of, any violation of Legal Requirements, investigation,
subpoena or audit by any Governmental Authority or default with respect to the
Mortgaged Property or any Indebtedness or Material Contracts. Promptly upon
Borrower obtaining knowledge of any of the following events or conditions,
Borrower shall deliver to Lender a written notice specifying the nature and
period of existence of such condition or event and what action Borrower has
taken, is taking and proposes to take with respect thereto: (1) any condition or
event that constitutes an Event of Default or Default; and/or (2) or any fact,
circumstance, event or condition which has, or would reasonably be expected to
have, a Material Adverse Effect. Promptly upon Borrower obtaining knowledge of
(i) the institution of any action, suit, proceeding, governmental investigation
or arbitration against or affecting Borrower or Guarantor or the Mortgaged
Property, or any other property of Borrower that would reasonably be expected to
have a Material Adverse Effect or (ii) any material development in any action,
suit, proceeding, governmental investigation or arbitration at any time pending
against or affecting Borrower or Guarantor or the Mortgaged Property or any
other property of Borrower that would reasonably be expected to have a Material
Adverse Effect, Borrower will give notice thereof to Lender and provide such
other information as may be available to it to enable Lender and its counsel to
evaluate such matters.
(F) ERISA. Borrower shall deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan, as Lender, in its
sole discretion, may reasonably request, 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
-40-
plan" within the meaning of Section 3(32) of ERISA; (B) Borrower is not subject
to state statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (C) one or more of the following circumstances is
true: (i) equity interests in Borrower are publicly offered securities, within
the meaning of 29 C.F.R. Section 2510.3-101(b)(2); (ii) less than twenty-five
percent (25%) of each outstanding class of equity interests in Borrower is held
by "benefit plan investors" within the meaning of 29 C.F.R. Section
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. Section
2510.3-101(c) or (e).
(G) TAX RETURNS. Borrower will deliver to Lender copies of all federal and
state income and other tax returns, schedules, statements and reports to its
owners within ten (10) Business Days after the earlier of filing or delivery of
such tax returns or other items with the Internal Revenue Service or the
applicable Governmental Authority or delivery to its owners.
(H) ESTOPPEL CERTIFICATES. Within ten (10) Business Days following a
request by Lender, Borrower shall provide to Lender, a duly acknowledged written
statement confirming the amount of the outstanding Obligations, the terms of
payment and maturity date of the Note, the date to which interest has been paid,
and whether, to Borrower's knowledge, any offsets or defenses exist against the
Obligations, and if any such offsets or defenses are alleged to exist, the
nature thereof shall be set forth in detail.
(I) OTHER. With reasonable promptness, Borrower will deliver such other
information and data with respect to Borrower as from time to time may be
reasonably requested by Lender. Borrower shall also provide Lender with a copy
of each 8K, 10Q and 10K (each as defined in the Exchange Act) or their successor
forms under the Exchange Act, filed by Guarantor from time to time with the
United States Securities and Exchange Commission not later than five (5)
Business Days after the filing thereof. Borrower shall deliver, or cause to be
delivered, to Lender annually, concurrently with the renewal of the insurance
policies required hereunder, an Officer's Certificate stating that the insurance
policies required to be delivered to Lender pursuant to Section 5.4 are
maintained with insurers who comply with the terms of Section 5.4, setting forth
a schedule describing all premiums required to be paid by Borrower to maintain
the policies of insurance required under Section 5.4, and confirming full
payment of all such premiums.
(J) ELECTRONIC FORMAT. To the extent then available, Borrower will provide
to Lender a copy of any reports, notices, statements or other deliveries
required pursuant to this Section 5.1 in an electronic format reasonably
satisfactory to Lender.
5.2 EXISTENCE; QUALIFICATION. Borrower will be, and will cause Guarantor to be,
and continue to be, qualified in the jurisdiction in which the Mortgaged
Property is located and keep in full force and effect its existence in the
jurisdiction in which the Mortgaged Property is located.
5.3 PAYMENT OF IMPOSITIONS AND LIEN CLAIMS; PERMITTED CONTESTS.
(A) Subject to Section 5.3(B), Borrower will pay, or cause payment of, (i)
all Impositions before in each instance any penalty or fine is incurred with
respect thereto, (ii) all
-41-
claims ("CLAIMS") (including claims for labor, services, materials and supplies)
for sums that have become due and payable and that by law have or may become a
Lien upon the Mortgaged Property or Borrower, before in each instance any
penalty or fine is incurred with respect thereto, and (iii) all federal, state
and local income taxes, sales taxes, excise taxes and all other taxes and
assessments levied, imposed, confirmed or assessed against Borrower, its
business, income, liabilities or assets or the Mortgaged Property, before in
each instance any penalty or fine is incurred with respect thereto.
(B) With prior notice to Lender, Borrower shall have the right to pay
Impositions, in full, under "protest." Notwithstanding Section 5.3(A), Borrower
shall not be required to pay, discharge or remove or cause payment, discharge or
removal of any Imposition or Claims pertaining to labor, services, materials and
supplies supplied to the Land and Improvements so long as Borrower contests
(each such contest, a "PERMITTED CONTEST") in good faith such Imposition or
Claims or the validity, applicability or amount thereof by an appropriate legal
proceeding which operates to prevent the collection of such amounts and the sale
of the Mortgaged Property or any portion thereof so long as: (a) at least thirty
(30) days prior to the date on which such Imposition or Claims would otherwise
have become delinquent, Borrower shall have given Lender notice of its intent to
contest said Imposition, (b) at least thirty (30) days prior to the date on
which such Imposition would otherwise have become delinquent, Borrower shall
have deposited with Lender (or with a court of competent jurisdiction or other
appropriate Person approved by Lender) such additional amounts or other security
as are necessary to keep on deposit at all times, an amount equal to at least
one hundred twenty-five percent (125%) (or such higher amount as may be required
by applicable law) of the total of (x) the balance of such Imposition or Claims
then remaining unpaid, and (y) all interest, penalties, costs and charges
accrued or accumulated thereon, (c) no risk of sale, forfeiture or loss of any
interest in the Mortgaged Property or any part thereof arises, in Lender's
reasonable judgment, during the pendency of such contest, (d) such contest does
not, in Lender's reasonable discretion, have a Material Adverse Effect and (e)
in the case of Claims, the liens, if any, securing the Claims in question have
been defeased or bonded against in a manner satisfactory to Lender. Each
Permitted Contest shall be prosecuted, at Borrower's sole cost and expense, with
reasonable diligence, and Borrower shall promptly pay, or cause payment of, the
amount of such Imposition or Claims as finally determined, together with all
interest and penalties payable in connection with such Permitted Contest.
Lender, in its sole discretion, may apply any amount or other security deposited
with Lender under this subsection or otherwise to the payment of any unpaid
Imposition or Claims to prevent the sale, loss or forfeiture of the Mortgaged
Property or any portion thereof. Lender shall not be liable for any failure to
so apply any amount or other security deposited. Any surplus retained by Lender
after payment of the Imposition or Claims for which a deposit was made shall be
repaid to Borrower unless an Event of Default exists, in which case the surplus
may be applied by Lender to the Obligations. Notwithstanding any provision of
this Section 5.3 to the contrary, Borrower shall promptly pay any Imposition or
Claims which it might otherwise be entitled to contest if, in reasonable
determination of Lender, the Mortgaged Property or any portion thereof is in
jeopardy or in danger of being forfeited or foreclosed. If Borrower refuses to
pay any such Imposition or Claims, Lender may (but shall not be obligated to)
make such payment and Borrower shall reimburse Lender within five (5) Business
Days of written notice by Lender for all such advances which advances will bear
interest at the Default Rate.
-42-
(C) Subject to Section 2.6, Borrower shall pay any and all taxes, charges,
filing, registration and recording fees, excises and levies imposed upon Lender
by reason of its interests in, or measured by amounts payable under, the Note,
this Agreement, the Mortgage or any other Loan Document (other than income,
franchise and doing business taxes), and shall pay all stamp taxes and other
taxes required to be paid on the Note or any of the other Loan Documents. If
Borrower fails to make such payment within five (5) days after notice thereof
from Lender, Lender may (but shall not be obligated to) pay the amount due, and
Borrower shall reimburse Lender within five (5) Business Days of written notice
by Lender for all such advances which will bear interest at the Default Rate. If
applicable law prohibits Borrower from paying such taxes, charges, filing,
registration and recording fees, excises, levies, stamp taxes or other taxes,
then Lender may declare Borrower's Obligations to be immediately due and
payable, upon ninety (90) days' prior written notice.
5.4 INSURANCE.
(A) Borrower shall at all times provide, maintain and keep in force or
cause to be provided, maintained and kept in force, at no expense to Lender, the
following policies of insurance with respect to the Mortgaged Property and
Borrower, as applicable:
(i) Property insurance on an "all risk" and "special perils" basis
(special form cause of loss) for one hundred percent (100%) of the
replacement value of the Mortgaged Property with customary deductibles as
approved by Lender. The policy should contain the following endorsements:
(a) Replacement Cost (without any deduction made for depreciation), (b)
Agreed Amount (waiving co-insurance penalties), (c) Building Ordinance and
Law coverage and (d) a standard mortgagee clause acceptable to Lender. Such
policy will also include the following coverage: (i) comprehensive boiler
and machinery coverage in amounts as reasonably determined by Lender; (ii)
earthquake and earth movement coverage with a $2,500,000 limit; however if
in Lender's reasonable judgment, the risks associated with such coverage
have increased whereby additional coverage would be maintained by a prudent
operator of property similar in use and locale, in sufficient amount as
reasonably determined by Lender; and (iii) flood insurance coverage with a
$2,500,000 limit; however, if the Improvements are located in a special
flood hazard area as designated by the Director of the Federal Emergency
Management Agency, in sufficient amount as reasonably determined by Lender.
(ii) Insurance against rent loss for not less than eighteen months
gross rent or gross income from the Mortgaged Property including stabilized
management fees and applicable reserve deposits plus debt service. The
perils covered by this policy shall be the same as those accepted on the
Mortgaged Property including flood, earthquake and earth movement.
(iii) Commercial general liability insurance covering bodily injury
and property damage occurring on, in or about the Mortgaged Property and
any adjoining streets, sidewalks, and passageways arising out of or
connected with the possession, use, leasing, operation, or condition of the
Mortgaged Property. Policy limits will be not less than $1,000,000 per
occurrence, $2,000,000 per location in the aggregate with respect to the
Mortgaged Property and $1,000,000 per occurrence, $2,000,000 per location
in the
-43-
aggregate with respect to Borrower. Such coverage shall include but not be
limited to premises/ operations, personal injury and liquor liability (if
applicable).
(iv) Umbrella excess liability insurance for not less than $10,000,000
in the aggregate with respect to the Mortgaged Property and Borrower.
(v) During the course of construction of Improvements, Borrower will
obtain (1) commercial general liability insurance including contractual
liability, in the amount of $1,000,000 primary and $10,000,000 excess
liability in the aggregate (the policy shall provide coverage on an
occurrence basis against claims for personal injury, bodily injury and
death or property damage occurring on, in or about the Mortgaged Property
and the adjoining streets, sidewalks and passageways). In addition,
Borrower shall require all contractors and subcontractors, architects and
engineers to provide appropriate insurance coverage); and (2) Builder's
risk completed value form insurance against "all risks" of physical loss,
including collapse, water damage, flood, earthquake and transit coverage
(coverage should be on a non-reporting form, covering the total value of
work performed and equipment, supplies and materials furnished (with an
appropriate limit for soft costs in the case of construction) with
deductibles approved by Lender). Borrower agrees to consult with Lender
prior to commencing the construction of any Improvements and to comply with
all reasonable special insurance requirements of Lender pertaining to any
construction.
(B) No policies shall contain any exclusion for terrorism, terrorist
activities or similar activities defined under the Terrorism Risk Insurance Act
of 2002 ("TRIA") and will be endorsed to insure such risks. Notwithstanding the
foregoing, should the cost of TRIA coverage and/or endorsements for the full
replacement cost of the Mortgaged Property be greater than 10% of the premium
for the applicable all risk property policy, then Borrower shall purchase the
maximum terrorism insurance available for 10% of the then applicable all risk
property insurance premium.
(C) All insurance policies required pursuant to this Agreement shall be
endorsed to provide that: (i) Lender, its successors, and/or assigns, is named
as mortgagee with respect to the all risk property; as a loss payee with respect
to all rent loss coverage; as additional named insured on all liability
coverage, with the understanding that any obligation imposed upon the insureds
(including the liability to pay premiums) shall be the sole obligation of
Borrower and not of any other insured; (ii) the interests of Lender shall not be
invalidated by any action or inaction of Borrower or any other Person, and such
policies shall insure Lender regardless of any breach or violation by Borrower
or any other Person of any warranties, declaration or conditions in such
policies; (iii) the insurer under each such policy shall waive all rights of
subrogation against Lender, any right to set-off and counterclaim and any other
right to deduction, whether by attachment or otherwise; (iv) such insurance
shall be primary and without right of contribution of any other insurance
carried by or on behalf of Lender with respect to its interest in the Mortgaged
Property; (v) if such insurance is canceled for any reason whatsoever, including
nonpayment of premium or, if any substantial modification, change or reduction
is made in the coverage which affects the interests of Lender, such
cancellation, modification, change or reduction in coverage shall not be
effective as to Lender until thirty (30) days after receipt by Lender of written
notice sent by registered mail from such insurer; (vi) any such
-44-
insurance shall be endorsed to provide in as much as the policy is written to
cover more than one insured, all terms, conditions, insuring agreements and
endorsements with the exception of limits of liability, shall operate in the
same manner as if there were a separate policy covering each insured; and (vii)
if required by Lender, such insurance shall contain "cut-through" endorsements
providing Lender with direct access to any re-insurers.
(D) Borrower shall deliver to Lender a copy of each insurance policy with
further evidence of such insurance acceptable to Lender, together with a copy of
the declaration page for each such policy. Renewal certificates should be
provided no later than five (5) days prior to the expiration of each policy.
Upon request of Lender, Borrower shall deliver a renewed policy or policies, or
duplicate original or originals thereof, marked "premium paid," or accompanied
by such other evidence of payment satisfactory to Lender with standard
non-contributory mortgagee clause in favor of and acceptable to Lender. Borrower
shall comply promptly with and conform to (i) all provisions of each such
insurance policy and (ii) all requirements of the insurers applicable to
Borrower as respects use, occupancy, possession, operation, maintenance,
alteration or repair of the Mortgaged Property. Borrower shall not use or permit
the use of the Mortgaged Property in any manner that would permit any insurer to
cancel any insurance policy or void coverage required to be maintained by this
Agreement. No insurance policy may provide for assessments to be made against
Lender or Lender's servicer, if any. The insurance coverage required under this
Section 5.4 may be effected under a blanket policy or policies covering the
Mortgaged Property and other properties and assets not constituting a part of
the Mortgaged Property; provided that any such blanket policy shall specify the
portion of the total coverage of such policy that is allocated to the Mortgaged
Property, and any sublimits in such blanket policy applicable to the Mortgaged
Property, which amounts shall not be less than the amounts required pursuant to
this Section 5.4 and which shall in any case comply in all other respects with
all of the requirements of this Section 5.4. Borrower shall comply with all
insurance requirements and shall not bring or keep or permit to be brought or
kept any article upon the Mortgaged Property or cause or permit any condition to
exist thereon which would be prohibited by any insurance requirement, or would
invalidate insurance coverage required hereunder to be maintained by Borrower on
or with respect to any part of the Mortgaged Property pursuant to this Section
5.4. Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed that any insurance which Borrower shall cause any tenant
to provide that shall otherwise be in compliance with all of the terms and
conditions of this Section 5.4 shall satisfy Borrower's obligations with respect
thereto hereunder. Borrower shall cause each tenant to provide business
interruption, products/completed operations and workers compensation coverage in
amounts reasonably acceptable to Borrower to insure risks of each tenant's
business. Borrower will not take out separate insurance contributing in the
event of loss with that required to be maintained pursuant to this Section 5.4
unless such insurance complies with this Section 5.4. All insurance policies
shall be in form, with endorsements, risk coverage, deductibles and amounts and
maintained with companies approved by Lender, such approval not to be
unreasonably withheld, conditioned or delayed. Without limiting Lender's ability
to approve the aforementioned, an insurance company shall not be reasonably
satisfactory unless such insurance company (a) has a rating of a least A with
financial size of Class X or better as specified in Best's Key Rating Guide, (b)
is licensed or authorized to do business, as required under applicable law, in
the State where the Mortgaged Property is located and (c) a claims-paying
ability rating by S&P of not less than "A" and an equivalent rating by another
Rating Agency. All insurance policies insuring against casualty, rent loss and
other appropriate policies shall provide that no claims be paid
-45-
thereunder without twenty (20) days' advance written notice to Lender. Such
notice may be given by Borrower. Lender shall not, by the fact of approving,
disapproving, accepting, preventing, obtaining or failing to obtain any
insurance, incur any liability for or with respect to the amount of insurance
carried, the form or legal sufficiency of insurance contracts, solvency of
insurance companies, or payment or defense of lawsuits, and Borrower hereby
expressly assumes full responsibility therefore and all liability, if any, with
respect thereto. If Borrower fails to provide to Lender the policies of
insurance required by this Section 5.4 or any other Loan Documents, Lender may
(but shall have no obligation to) procure such insurance or single-interest
insurance for such risks covering Lender's interest and Borrower will pay all
premiums thereon within five (5) Business Days of written notice by Lender, and
until such payment is made by Borrower, the amount of all such premiums shall
bear interest at the Default Rate and shall constitute additions to the
Obligations.
5.5 TAX RESERVE AND INSURANCE RESERVE. Borrower shall deposit (or cause to be
deposited) with Lender (or such agent of Lender as Lender may designate in
writing to Borrower from time to time), monthly, on each Payment Date, 1/12th of
the annual charges (as estimated by Lender) for all Impositions relating to the
Mortgaged Property and all insurance premiums with respect to the insurance
required pursuant to Section 5.4(A)(i)-(iv). Borrower shall also deposit with
Lender, simultaneously with such monthly deposits and/or on the Closing Date, a
sum of money which, together with such monthly deposits, will be sufficient to
make the payment of each such charge at least thirty (30) days prior to the date
finally delinquent. Should such charges not be ascertainable at the time any
deposit is required to be made, the deposit shall be made on the basis of
Lender's reasonable estimate. When the charges are fixed for the then current
year or period, Borrower shall deposit any deficiency within fifteen (15) days
following Lender's written demand. Should an Event of Default occur and be
continuing, the funds so deposited may be applied in payment of the charges for
which such funds shall have been deposited or to the payment of the Obligations
or any other charges affecting the Mortgaged Property as Lender in its sole and
absolute discretion may determine, but no such application shall be deemed to
have been made by operation of law or otherwise until actually made by Lender as
herein provided. Borrower shall provide Lender with bills and all other
documents necessary for the payment of the foregoing charges at least ten (10)
days prior to the date on which each payment thereof shall first become
delinquent. So long as (i) no Event of Default exists, (ii) Borrower has
provided Lender with the foregoing bills and other documents in a timely manner,
and (iii) sufficient funds are held by Lender for the payment of the Impositions
and insurance premiums relating to the Mortgaged Property, as applicable, Lender
shall pay said items or allow such funds to be used to pay said items or to
reimburse Borrower for such items upon Lender's receipt of reasonable evidence
documenting Borrower's payment of such items. All refunds of Impositions and
insurance premiums shall be deposited into the applicable of the Tax Reserve
Account or the Insurance Reserve Account.
5.6 MAINTENANCE OF MORTGAGED PROPERTY. Borrower will maintain or cause the
Mortgaged Property to be maintained in compliance with all Legal Requirements
and in good repair, working order and condition and will make or cause to be
made all appropriate repairs, renewals and replacements thereof. Without regard
as to whether Proceeds are made available to Borrower for such purposes,
Borrower will promptly restore and repair all loss or damage occasioned by (i)
any casualty which has occurred to at least the condition existing prior to any
such casualty or (ii) any condemnation to an economically and structurally
integrated unit.
-46-
Borrower will prevent any act or thing which might materially impair the value
or usefulness of the Mortgaged Property. Borrower will not commit or permit any
waste of the Mortgaged Property or any part thereof.
5.7 INSPECTION; LENDER MEETING. Borrower shall, upon request from Lender,
permit (and cause to be permitted) Lender's designated representatives to (a)
visit, examine, audit, and inspect the Mortgaged Property, (b) examine, audit,
inspect, copy, duplicate and abstract Borrower's financial, accounting and other
books and records, and (c) discuss Borrower's and the Mortgaged Property's
affairs, finances and business with Borrower Representative's officers,
representatives, independent public accountants and agents (including the
Manager). Lender acknowledges and agrees that any inspection or entry to the
Mortgaged Property by Lender or Lender's designated representatives shall be
conducted (i) during Borrower's normal business hours, (ii) in accordance with
Borrower's safety and security procedures then applicable to the Mortgaged
Property in general and to the Secure Areas in particular that are, in each
instance, in effect from time to time, (iii) at Borrower's option, accompanied
by an employee or representative of Borrower and/or Guarantor, (iv) in
accordance with the confidentiality requirements of Section 11.12 and (v) in
such a manner so as to minimize any disruption or interference with Borrower's
use or operation of the Mortgaged Property. Borrower shall cause its books and
records to be maintained at Borrower's principal offices located at c/o Lexicon
Genetics Incorporated, 8800 Technology ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇. Borrower will not change its principal offices or the location where
its books and records are kept without giving at least thirty (30) days' advance
notice to Lender. Borrower shall pay Lender's costs and expenses incurred in
connection with such audit if an Event of Default has occurred and is continuing
or if any audit reveals any material discrepancy, in Lender's reasonable
judgment, in the financial information provided by Borrower. All audits,
inspections and reports shall be made for the sole benefit of Lender. Neither
Lender nor Lender's auditors, inspectors, representatives, agents or contractors
assumes any responsibility or liability (except to Lender) by reason of such
audits, inspections or reports. Borrower will not rely upon any of such audits,
inspections or reports. The performance of such audits, inspections and reports
will not constitute a waiver of any of the provisions of the Loan Documents.
Neither Lender nor any other of Lender's inspectors, representatives, agents or
contractors, shall be responsible for any matters related to design or
construction of the Improvements or any Construction. Borrower shall cooperate,
from time to time, with Lender and use reasonable efforts to assist Lender in
obtaining an appraisal of the Mortgaged Property. Such cooperation and
assistance from Borrower shall include reasonable access to the Mortgaged
Property and books and records pertaining to the Mortgaged Property for Lender
and its appraiser. The appraiser performing any such appraisal shall be engaged
by Lender. Borrower shall not be responsible for the expenses of any such
appraisal, provided, however, Borrower shall pay the fees of such appraiser in
connection with one appraisal of the Mortgaged Property during the term of the
Loan and any such appraisal when conducted following the occurrence and during
the continuation of an Event of Default. Borrower shall cooperate with Lender
with respect to any proceedings before any Governmental Authority which may in
any way affect the rights of Lender under any of the Loan Documents and, in
connection therewith, not prohibit Lender, at its election, from participating
in any such proceedings.
5.8 ENVIRONMENTAL COMPLIANCE. Borrower shall: (a) comply (or cause compliance)
at all times with all applicable Environmental Laws, and (b) promptly take, or
cause to be taken, any
-47-
and all necessary remedial actions upon obtaining knowledge of the presence,
storage, use, disposal, transportation, release or discharge of any Hazardous
Materials on, under or about the Mortgaged Property which has a Material Adverse
Effect or is in violation of any Environmental Laws. Borrower shall cause all
remedial action with respect to Hazardous Material on, under or about the
Mortgaged Property, to comply with all applicable Environmental Laws and the
applicable policies, orders and directives of all federal, state and local
Governmental Authorities. If Lender at any time has a reasonable basis to
believe that there may be a violation of any Environmental Law by, or any
liability arising thereunder of, Borrower or related to the Mortgaged Property,
Borrower shall, upon request from Lender, provide Lender with such reports,
certificates, engineering studies and other written material or data as Lender
may reasonably require to confirm compliance by Borrower and the Mortgaged
Property with all applicable Environmental Laws. Borrower shall permit Lender,
its authorized representatives, consultants or other Persons retained by Lender
to enter upon, examine, test and inspect the Mortgaged Property with regard to
compliance with Environmental Laws, the presence of Hazardous Materials and the
environmental condition of the Mortgaged Property and properties adjacent to the
Land. Such entry, examination, testing and inspecting and reporting shall be at
the expense of Borrower if (x) an Event of Default has occurred or (y) Lender
has reasonably determined that there may be a violation of Environmental Law or
any liability arising under Environmental Law, which expense shall be paid by
Borrower to Lender within five (5) Business Days of written notice by Lender.
5.9 ENVIRONMENTAL DISCLOSURE. Borrower shall immediately upon becoming aware
thereof advise Lender in writing and in reasonable detail of: (1) any release,
disposal or discharge of any Hazardous Material at the Mortgaged Property
required to be reported to any federal, state or local governmental or
regulatory agency under all applicable Environmental Laws; (2) any and all
written communications sent or received by Borrower or its agents with respect
to any Environmental Claims or any release, disposal or discharge of Hazardous
Material required to be reported to any federal, state or local governmental or
regulatory agency; (3) any remedial action taken by Borrower or any other Person
in response to any Hazardous Material on, under or about any real property
owned, leased or operated by Borrower or the Mortgaged Property or its agents,
the existence of which could result in an Environmental Claim; (4) the discovery
by Borrower or its agents of any occurrence or condition on any real property
adjoining or in the vicinity of the Mortgaged Property that could cause such
real property or any part thereof to be classified as "border-zone property" or
to be otherwise subject to any restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws; and (5) any request
for information from any Governmental Authority that indicates such Governmental
Authority is investigating whether Borrower or another present or former
occupant of the Mortgaged Property may be potentially responsible for a release,
disposal or discharge of Hazardous Materials from any of the Mortgaged Property.
Borrower shall promptly notify Lender of any proposed action to be taken by
Borrower to commence any operations that could reasonably be expected to subject
Borrower to additional laws, rules or regulations, including laws, rules and
regulations requiring additional or amended environmental permits or licenses.
Borrower shall, at its own expense, provide copies of such documents or
information as Lender may reasonably request in relation to any matters
disclosed pursuant to this Section 5.9.
5.10 COMPLIANCE WITH LAWS, EMPLOYEE BENEFIT PLANS AND CONTRACTUAL OBLIGATIONS.
Borrower will promptly and faithfully (A) comply and cause the Mortgaged
Property to comply,
-48-
in all material respects, with the requirements of all Legal Requirements and
the orders and requirements of any Governmental Authority in all jurisdictions
in which it is now doing business or may hereafter be doing business and of
every board of fire underwriters or similar body exercising similar functions,
(B) maintain all licenses, certificates of occupancy, permits and Proprietary
Rights now held or hereafter acquired by it or with respect to which a Material
Adverse Effect will result if same are not existing and held by Borrower and (C)
perform, observe, comply and fulfill all of its obligations, covenants and
conditions contained in the Loan Documents and the Material Contracts. Borrower
shall: (i) promptly notify Lender of any claim made against Borrower that
Borrower is in default under any Material Contract or that any other party is in
default under any Material Contract; (ii) not terminate, or permit termination
of, any Material Contract, and (iii) not enter into, amend or modify any
Material Contract without first obtaining the prior written approval of Lender.
Except for the plans described in Schedule 4.10, Borrower is not a party to, and
will not establish, any Employee Benefit Plan. Except for the plans described in
Schedule 4.10, Borrower will not commence making contributions to (or obligate
itself to make contributions to) any Employee Benefit Plan.
5.11 FURTHER ASSURANCES. Borrower shall, from time to time, at its sole cost
and expense, execute and/or deliver, or cause execution and/or delivery of, such
documents, agreements and reports, and perform such acts as Lender at any time
may reasonably request to carry out the purposes and otherwise implement the
terms and provisions provided for in the Loan Documents. Borrower shall execute
any documents and take any other actions necessary to provide Lender with a
first priority, perfected security interest in the Reserves and the other
Collateral. Borrower shall, at Borrower's sole cost and expense: (i) upon
Lender's request therefore given from time to time (but not more frequently than
once per calendar year unless an Event of Default then exists) pay for (a)
current reports of Uniform Commercial Code, federal tax lien, state tax lien,
judgment and pending litigation searches with respect to Borrower and Borrower
Representative, (b) current good standing and existence certificates with
respect to Borrower and Borrower Representative and (c) current searches of
title to the Mortgaged Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations reasonably
designated by Lender; and (ii) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary, to evidence, preserve and/or protect the Reserve Account
Collateral and the other Collateral at any time securing or intended to secure
the Obligations, as Lender may require in Lender's reasonable discretion.
Borrower shall promptly execute, acknowledge, deliver, file or do, at its sole
cost and expense, all acts, assignments, notices, agreements or other
instruments as Lender may require in order to effectuate, assure, convey,
secure, assign, transfer and convey unto Lender any of the rights granted by
this Agreement and to more fully perfect and protect any assignment, pledge,
lien and security interest confirmed or purported to be created under the Loan
Documents or to enable Lender to exercise and enforce their rights and remedies
hereunder, in respect of the Collateral.
5.12 REQUIRED CAPITAL IMPROVEMENTS. Each of the capital improvement items
listed on Exhibit E hereto ("REQUIRED CAPITAL IMPROVEMENTS") shall be completed
by the applicable Required Completion Date .
5.13 [Intentionally Omitted.]
-49-
5.14 [Intentionally Omitted.]
5.15 [Intentionally Omitted.]
5.16 [Intentionally Omitted.]
5.17 [Intentionally Omitted.]
5.18 MANAGEMENT. Borrower shall provide competent, responsible management for
the Mortgaged Property, which management, Lender acknowledges, is currently
being provided, at no expense or cost to Borrower, by employees of Guarantor. In
the event Borrower enters into a Management Agreement subsequent to the date
hereof, the Manager and such Management Agreement must contain subordination and
termination provisions and must be otherwise satisfactory to Lender. Borrower
shall not enter into any management agreement or arrangement with any Person
with respect to the management of the Mortgaged Property without Lender's prior
written consent. Borrower shall cause management subordination agreements in
form and substance satisfactory to Lender to be executed by the Manager.
Borrower shall not modify, amend or terminate any approved management agreement
without Lender's prior written consent. Borrower shall provide Lender with
written notice of the occurrence of any event of default or condition which with
the giving of notice or passage of time, or both, would constitute an event of
default under any Management Agreement or which would entitle the Manager to
terminate the Management Agreement. Any Management Agreement entered into by
Borrower shall be terminated by Borrower, at Lender's request, upon thirty (30)
days' prior notice to Borrower (i) upon the occurrence of an Event of Default or
(ii) if such Manager commits any act which would permit termination by Borrower
under such Management Agreement. If a Manager is terminated pursuant hereto,
Borrower shall immediately seek to appoint a replacement manager which is a
Qualified Manager, and Borrower's failure to appoint an acceptable Manager
within thirty (30) days after Lender's request of such Borrower to terminate the
Management Agreement shall constitute an immediate Event of Default.
5.19 CONSTRUCTION MATTERS. Without limitation of Lender's rights and Borrower's
Obligations set forth elsewhere in the Loan Documents, Borrower shall: (1) cause
the Restoration and all other Construction to proceed with reasonable diligence
and continuously, with sufficient workers employed and sufficient materials
supplied for that purpose so that the applicable Construction is substantially
completed by the applicable Required Completion Date, or, if no Required
Completion Date is applicable, as promptly as reasonably practicable or, in the
case of Restoration, the Restoration is Substantially Completed prior to the
Required Restoration Date; (2) cause all Construction to be performed in
accordance with the applicable Plans and Specifications or plans and
specifications for the work in question, in substantial conformity with the
Legal Requirements, the requirements of all insurers and fire underwriters, and
with the requirements set forth herein and in the other Loan Documents, in
compliance with the Material Contracts and in a good, safe and workmanlike
manner; (3) cause all materials acquired or furnished in connection with the
Construction and Restoration to be new and stored under adequate safeguards to
minimize the possibility of loss, theft, damage or commingling with other
materials or projects; (4) utilize, or permit utilization of, only contractors
approved by Lender (such approval not to be unreasonably withheld, conditioned
or delayed); (5) not permit the revision of Plans and Specifications without
consent of Lender (not to be unreasonably withheld,
-50-
conditioned or delayed); and (6) from time to time upon the reasonable request
of Lender deliver to Lender such certificates and other documentation confirming
the matters set forth in the preceding clauses (1) through (5). Promptly upon
the giving or receipt of such notice, Borrower shall forward to Lender copies of
all material written notices given or received by, or on behalf of, Borrower
with respect to the Construction to or from: (x) Contractor or any subcontractor
or material supplier, or any of the design professionals (including notices
relating to any nonconforming construction, any refusal or inability to pay or
perform pursuant to the terms of any contract or other agreement or any delay,
default or change order) or (y) any claim of default, or relating to any work
stoppage, notice of violation or cease and desist order, stop order,
construction liens, strike, claim, litigation, damage, loss or any other
materially adverse condition, circumstance or event. Borrower shall pay and
discharge or cause to be paid and discharged promptly all payments due for
labor, materials and supplies unless the same shall be contested by Borrower in
accordance with Section 5.3(B). Borrower shall make available for inspection at
all times by Lender and its representatives copies of all contracts for
Construction and, to the extent available to or reasonably obtained by Borrower,
entered into by Contractor and design professionals relating to the
Construction. Within ninety (90) days after Substantial Completion of applicable
Construction activities, Borrower shall (i) complete, or cause to be completed,
all Punch-List Items, (ii) deliver to Lender two (2) copies of the as-built
Plans and Specifications and such other as-built surveys and plans and
specifications as Lender may reasonably require and (iii) obtain all final
permits and approvals required for the normal use and occupancy of the
Improvements in question (including a permanent certificate of occupancy if
required for occupancy under applicable laws or its equivalent for the
Improvements in question, to the extent available) provided, however, to the
extent that applicable Legal Requirements require satisfaction of items (i),
(ii) or (iii) prior to the expiration of such ninety (90)-day period, the date
such items must be satisfied prior to the date satisfaction is required pursuant
to the applicable Legal Requirements.
SECTION 6
ACCOUNTS/CASH MANAGEMENT
6.1 ESTABLISHMENT OF ACCOUNTS.
(A) Accounts. Borrower and Lender confirm that Lender has established, and
agrees that Borrower and Lender shall maintain at Bank, the following segregated
securities accounts (each a "RESERVE ACCOUNT" and, collective the "RESERVE
ACCOUNTS") shall be maintained by Borrower with Bank:
(i) Account No. _____, captioned "Lex-Gen Woodlands, L.P./iStar
Financial Inc./Tax Reserve" for the retention of collateral in respect of
insurance premiums for the Mortgaged Property as provided in Section 5.5
(the "INSURANCE RESERVE ACCOUNT"); and
(ii) Account No. ____, captioned "Lex-Gen Woodlands, L.P./iStar
Financial Inc./Tax Reserve" for the retention of collateral for the payment
of Impositions for the Mortgaged Property as provided in Section 5.5 ("TAX
RESERVE ACCOUNT").
(B) Type and Control of Accounts. Borrower represents, warrants, covenants
and agrees that (A) each of the Reserve Accounts are and shall be maintained as
a "securities
-51-
account" (as in Section 8-501(a) of the UCC); (B) Lender is entitled to exercise
the rights that comprise any financial asset credited to such Reserve Accounts;
(C) Borrower shall have no right to give entitlement orders with respect to such
Reserve Accounts and, except as provided in this Agreement, no Reserve Account
Collateral shall be released to Borrower from such Reserve Accounts; and (D) all
securities or other property underlying any financial assets credited to the
Reserve Accounts shall be registered in the name of Bank or indorsed to Bank or
in blank and in no case will any financial asset credited to the Reserve
Accounts be registered in the name of Borrower, payable to the order of Borrower
or specially indorsed to Borrower.
(C) Eligible Accounts. Each of the Reserve Accounts shall be an Eligible
Account.
(D) Cash Management Agreement. Borrower agrees that: (i) the Reserve
Accounts shall be maintained in accordance with the terms hereof and of the Cash
Management Agreement; and (ii) prior to the indefeasible re-payment in full of
the Loan and indefeasible satisfaction of the Obligations, the Cash Management
Agreement shall not be amended, supplemented or modified without the prior
written consent of Lender, which consent Lender may grant or withhold in its
sole and absolute discretion.
(E) No Other Accounts. Borrower represents and warrants that there are no
deposit, securities or similar Accounts other than the Reserve Accounts
maintained by Borrower or any other Person with respect to the collection of
Gross Revenues. Borrower agrees that, until the Loan is indefeasibly re-paid in
full and the indefeasible satisfaction of the Obligations neither Borrower nor
any other Person shall open any Accounts for the collection or holding of Gross
Revenues, except for the Reserve Accounts. The foregoing shall not prohibit
Borrower from (i) utilizing one or more separate accounts for the disbursement
or retention of funds that have been transferred to Borrower pursuant to Section
6.3 of this Agreement or (ii) maintaining a separate bank account for the
collection of Rents under the Guarantor Lease. Borrower covenants and agrees
that it will not pledge, or create or permit to exist any security interest in,
the foregoing accounts.
(F) Miscellaneous Account Provisions. The Reserve Accounts shall be
subject to such applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other banking or governmental
authority, as may now or hereafter be in effect. Interest accruing on the
Reserve Accounts, if any, shall be periodically added to the principal amount of
the applicable Reserve Account and shall be held, disbursed and applied in
accordance with the provisions of this Agreement. All statements relating to the
Reserve Accounts shall be issued simultaneously by Bank to Lender and Borrower.
Borrower shall be the beneficial owner of the Reserve Accounts for federal and
state income tax purposes and shall report all income on the Reserve Accounts.
6.2 DEPOSITS INTO ACCOUNTS.
(A) Initial Deposits. On the Closing Date, Borrower agrees, represents and
warrants that it has deposited or caused to be deposited the following amounts
into the Accounts: (i) $156,000 into the Insurance Reserve Account; and (ii)
$590,000.00 into the Tax Reserve Account.
-52-
(B) Continuing Deposits. Borrower agrees to deposit on each Payment Date
funds in the following amounts:
(i) funds in an amount equal to the deposit for insurance premiums due
under Section 5.5 on the applicable Payment Date shall be deposited into
the Insurance Reserve Account; and
(ii) funds in an amount equal to the deposit for Impositions due under
Section 5.5 on the applicable Payment Date shall be deposited into the Tax
Reserve Account.
6.3 PAYMENTS FROM RESERVE ACCOUNTS.
(A) No Event of Default. Borrower hereby irrevocably authorizes Lender to
withdraw, and, Lender shall withdraw or re-allocate, the following payments or
allocations, as applicable, from the applicable Reserve Accounts to the extent
of the monies on deposit in the applicable Reserve Account if no Event of
Default exists:
(i) funds from the Tax Reserve Account and Insurance Reserve Account
sufficient to pay (A) Impositions and (B) insurance premiums for the
insurance required to be maintained pursuant to the terms of the Agreement,
on the due date therefore, and pay such funds to the Governmental Authority
or insurance company having the right to receive such funds, provided, that
Lender shall only be required to make such payments if Borrower has
delivered to Lender an Officer's Certificate identifying (1) the amount of
such required payments, (2) the due date of such payments and (3) the
person entitled to receive such payments, at least five (5) Business Days
prior to the due date thereof, provided further, if Borrower shall have
paid Impositions or insurance proceeds directly, the funds will be paid to
Borrower in reimbursement thereof provided no Event of Default exists and
Borrower provides evidence reasonably satisfactory to Lender of payment of
the item in question.
(B) Event of Default Exists. If an Event of Default exists, Borrower
hereby irrevocably authorizes Lender to make any and all withdrawals from and
transfers between any Reserve Account, as Lender shall determine in Lender's
sole and absolute discretion.
6.4 ACCOUNTS. Borrower shall not, without the prior written consent of Lender,
change the account location of any Reserve Account and, as a condition precedent
to any such change, the bank to which Borrower proposes to relocate such Reserve
Account shall have executed an appropriate acknowledgment letter, in accordance
with the provisions set forth above. With respect to the Reserve Account
Collateral, Lender shall not be liable for any acts, omissions, errors in
judgment or mistakes of fact or law, except for those arising as a result of
Lender's investment of such Reserve Account Collateral in other than Permitted
Investments or from gross negligence or willful misconduct. Funds in the
Borrower Account shall (a) be used only to pay Expenses related to the Mortgaged
Property prior to any distributions by Borrower and (b) not be disbursed in
violation of any provision of this Agreement.
6.5 CREATION OF SECURITY INTEREST IN ACCOUNTS. Borrower hereby pledges,
transfers and assigns to Lender, and grants to Lender, as additional security
for the Obligations, a continuing
-53-
perfected first priority security interest in and to, and a first lien upon: (i)
the Reserve Accounts and all amounts which may from time to time be on deposit
in each of the Reserve Accounts; (ii) all of Borrower's right, title and
interest in and to all cash, property or rights transferred to or deposited in
each of the Reserve Accounts from time to time; (iii) all certificates and
instruments, if any, from time to time representing or evidencing any such
Reserve Account or any amount on deposit in any thereof, or any value received
as a consequence of possession thereof, including all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the
Reserve Accounts; (iv) all monies, chattel paper, checks, notes, bills of
exchange, negotiable instruments, documents of title, money orders, commercial
paper, and other security instruments, documents, deposits and credits from time
to time in the possession of Lender representing or evidencing such Reserve
Accounts; (v) all other property, held in, credited to, or constituting part of
any of the Reserve Accounts; (vi) all earnings and investments held in any
Reserve Account in accordance with this Agreement; and (vii) to the extent not
described above, any and all proceeds of the foregoing, (collectively, the
"RESERVE ACCOUNT COLLATERAL"). This Agreement and the pledge, assignment and
grant of security interest made hereby secures payment of all Obligations in
accordance with the provisions set forth herein. This Agreement shall be deemed
a security agreement within the meaning of the Uniform Commercial Code.
6.6 CERTAIN MATTERS REGARDING LENDER FOLLOWING AN EVENT OF DEFAULT. Borrower
agrees that the Bank shall pay over to Lender all amounts deposited in the
Reserve Accounts on demand, without notice to Borrower, if, in making such
demand, Lender shall give notice, in writing, signed by Lender or an authorized
agent thereof, that an Event of Default exists. Lender may exercise in respect
of the Reserve Account Collateral all rights and remedies available to Lender
hereunder or under the other Loan Documents, or otherwise available at law or in
equity. If an Event of Default exists, Lender may exercise in respect of the
Reserve Account Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all of the rights and remedies of a
secured party upon default under the Uniform Commercial Code then in effect in
the applicable jurisdiction. Without limiting the generality of the foregoing,
Borrower agree(s) that, upon the occurrence and during the continuance of an
Event of Default, it will have no further right to request or otherwise require
Lender to disburse funds from any Account in accordance with the terms of this
Agreement, it being agreed that Lender may, at its option, (i) direct the Bank
to continue to hold the funds in the Reserve Accounts, (ii) continue, from time
to time, to apply all or any portion of the funds held in the Reserve Accounts
to any payment(s) which such funds could have been applied to prior to such
Event of Default (or to pay Expenses directly), to the extent and in such order
and manner as Lender in its sole discretion may determine, and/or (iii) direct
the Bank to disburse all or any portion of the funds held in the Reserve
Accounts or other Reserve Account Collateral then or thereafter held by the Bank
to Lender, in which event Lender may apply the funds held in the Reserve
Accounts or other Reserve Account Collateral to the Obligations, in any order
and in such manner as Lender may determine in its sole discretion. If an Event
of Default exists, Lender may, at any time or from time to time: (1) collect,
appropriate, redeem, realize upon or otherwise enforce its rights with respect
to the Reserve Account Collateral, or any part thereof, without notice to any
Borrower and without the need to institute any legal action, make demand to or
upon any Borrower or any other Person, exhaust any other remedies or otherwise
proceed to enforce its rights; (2) execute (in the name, place and stead of
Borrower) any endorsements, assignments or other instruments of conveyance which
may be required for the withdrawal and negotiation of the Reserve Account
-54-
Collateral; and/or (3) exercise all other rights and remedies available to
Lender hereunder and under any of the other Loan Documents. Notwithstanding
anything to the contrary contained herein: (w) Borrower shall remain liable
under the Loan Documents to the extent set forth herein and therein to perform
all of its respective obligations thereunder, to the same extent as if this
Agreement had not been executed; (x) the exercise by Lender of any of its rights
hereunder shall not release Borrower from its obligations under any of the Loan
Documents, nor shall it constitute an election of remedies by Lender or a waiver
by Lender of any of its rights and remedies under the Loan Documents; (y) except
as expressly set forth in this Agreement or in any of the other Loan Documents,
Lender shall not have any obligation or liability by reason of this Agreement,
nor shall Lender be obligated to perform any of the obligations or duties of
Borrower hereunder or to take any action, in each case, to collect or enforce
any claim for payment assigned hereunder; and (z) Lender shall not have to
resort to using the Reserve Account Collateral before making demand upon or
bringing an action against Borrower under any Loan Document under any guaranty
given in connection with the Loan. No failure on the part of Lender to exercise,
and no delay in exercising, any right under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right under this Agreement or the other Loan Documents. The remedies provided in
this Agreement, the Note and the other Loan Documents are cumulative and not
exclusive of any remedies provided at law or in equity.
6.7 REPRESENTATIONS AND WARRANTIES REGARDING RESERVE ACCOUNT COLLATERAL. In
addition to any representations or warranties contained in this Agreement,
Borrower represents and warrants as follows: (a) Borrower is the legal and
beneficial owner of the Reserve Account Collateral, respectively, free and clear
of any Liens, except for the Liens in favor of Lender created by this Agreement
and the other Loan Documents; (b) upon execution by Borrower of this Agreement,
the pledge and assignment of the Reserve Account Collateral pursuant to this
Agreement will create a valid, first priority security interest in the such
Reserve Account Collateral, securing the payment and performance of the
Obligations; and (c) Borrower is not a party to any credit agreement or other
borrowing facility including, but not limited to, a line of credit or overdraft
line, with the Bank.
6.8 COVENANTS REGARDING RESERVE ACCOUNT COLLATERAL. Borrower will not, without
the prior consent of Lender, (a) sell, assign (by operation of law or
otherwise), pledge, or grant any option with respect to, any of the Gross
Revenues or any interest in the Reserve Account Collateral or (b) create or
permit to exist any assignment, lien, security interest, option or other charge
or encumbrance upon or with respect to any Gross Revenues or any Reserve Account
Collateral, except for the Liens in favor of Lender under this Agreement and the
other Loan Documents. Borrower will give Lender not less than thirty (30) days'
prior written notice of any change in the address of its chief executive office
or its principal office. Borrower agrees that all records of Borrower with
respect to the Reserve Account Collateral will be kept at Borrower's principal
office and will not be removed from such addresses without the prior written
consent of Lender. Borrower will not make or consent to any amendment or other
modification or waiver with respect to any Reserve Account Collateral, or enter
into any agreement, or permit to exist any restriction, with respect to any
Reserve Account Collateral. Borrower will, at its expense, defend Lender's
right, title and security interest in and to the Reserve Account Collateral
against the claims of any Person. Borrower will not take any action which would
in any manner impair the enforceability of this Agreement or the security
interests created hereby. Borrower will not
-55-
enter into any credit agreement or other borrowing facility including a line of
credit or overdraft line, with Bank. Nothing contained in this Section 6 shall
impair or otherwise limit Borrower's obligations to timely make the payments
(including interest and principal) required by the Note and the other Loan
Documents, it being understood that such payments shall be so timely made in
accordance with the Loan Documents, regardless of the amounts on deposit in any
Account. Lender may, from time to time, at its sole option, perform any act
which Borrower agrees hereunder to perform which Borrower shall fail to perform
after being requested in writing to so perform and Lender may from time to time
take any other action which Lender deems necessary for the maintenance,
preservation or protection of any of the rights granted to Lender hereunder.
With respect to the powers conferred on Lender hereunder, Lender shall not have
any duty as to the Accounts or the other Reserve Account Collateral, or any
responsibility for (i) ascertaining or taking action with respect to any matters
relative to the Accounts or the other Reserve Account Collateral, whether or not
Lender has or is deemed to have knowledge of such matters or (ii) taking any
necessary steps to preserve rights against prior parties or any other rights
pertaining to the Accounts or the other Reserve Account Collateral.
6.9 CASH MANAGEMENT FEES. All fees, costs and expenses associated with the Cash
Management Agreement and Reserve Account Collateral shall be paid by Borrower
when due.
SECTION 7
NEGATIVE COVENANTS
Borrower covenants and agrees that from the date hereof and so long as this
Agreement shall remain in effect or the Note remains outstanding, Borrower shall
comply with all covenants and agreements in this Section 7.
7.1 INDEBTEDNESS. Borrower will not directly or indirectly create, incur,
assume, guaranty, or otherwise become or remain directly or indirectly liable
with respect to any Indebtedness except Permitted Indebtedness.
7.2 LIENS AND RELATED MATTERS. Borrower will not directly or indirectly create,
incur, assume or permit to exist any Lien on or with respect to the Mortgaged
Property or other Collateral whether now owned or hereafter acquired, or any
income or profits therefrom, except the Liens in favor of Lender under this
Agreement and the Permitted Encumbrances. Borrower shall have the right to
contest any such Lien securing Claims in accordance with Section 5.3(B), except
by their own terms or in accordance with a specific termination right granted
thereunder.
7.3 MATERIAL RIGHTS. Without Lender's consent, which consent shall not be
unreasonably withheld, conditioned or delayed, Borrower shall not (a) amend,
modify or waive the performance of material obligations with regard to the
Material Contracts or Proprietary Rights, (b) request a waiver or consent from,
any party to, or issuer of any of the Material Contracts or Proprietary Rights
or (c) terminate or permit termination of any Material Contracts or Proprietary
Rights.
7.4 RESTRICTION ON FUNDAMENTAL CHANGES. Neither Borrower nor Borrower
Representative will: (1) amend, modify or waive in any material respect any term
or provision of its Organizational Documents, (2) liquidate, wind-up or dissolve
itself (or suffer any liquidation or
-56-
dissolution); or (3) acquire by purchase or otherwise all or any part of the
business or assets of, or stock or other evidence of beneficial ownership of,
any Person. Neither Borrower nor Borrower Representative will issue, sell,
assign, pledge, convey, dispose or otherwise encumber any partnership, stock,
membership, beneficial or other ownership interests or grant any options,
warrants, purchase rights or other similar agreements or understandings with
respect thereto. Borrower will not establish any Subsidiaries. Borrower will not
make any Investments in any other Person.
7.5 RESTRICTION ON LEASES. Except for the Guarantor Lease and as set forth
below, Borrower shall not hereafter enter into any Lease or other rental or
occupancy arrangement or concession agreement with respect to the Mortgaged
Property or any portion thereof or otherwise permit any occupancy of the
Mortgaged Property other than by Guarantor. Borrower shall not modify, amend or
terminate any Lease, give any consents, waive any obligations under any leases
or release any tenant of any Lease, without, in each instance, Lender's consent,
such consent not to be unreasonably withheld, conditioned or delayed. Borrower
shall perform and comply, in all material respects, with all of the landlord's
obligations under each Lease and shall not suffer or permit any material breach
or default on the part of the landlord to occur thereunder. In addition to the
Guarantor Lease, Guarantor shall have the right to enter into subleases with
third parties for occupancy of the Improvements without Lender's consent,
provided that (i) any such sublease shall be subject and subordinate to the
Liens in favor of Lender under this Agreement and (ii) all subleases, in the
aggregate, shall be for (1) less than 50% of the leasable space of any single
building and (2) less than 30% of the aggregate leasable improved space for the
Mortgaged Property. Borrower shall provide Lender with written notice of any
such permitted sublease prior to Guarantor entering into any such sublease. In
no event will Borrower enter into any Capital Leases.
7.6 TRANSACTIONS WITH AFFILIATES. Except for the Guarantor Lease, Borrower
shall not directly or indirectly enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any director, officer, employee or Affiliate of
Borrower, Borrower Representative or Guarantor, except transactions in the
ordinary course of and pursuant to the reasonable requirements of the business
of Borrower and upon fair and reasonable terms which are fully disclosed to
Lender and are no less favorable to Borrower than would be obtained in a
comparable arm's length transaction with a Person that is not an Affiliate,
director, officer or employee of Borrower. Each such agreement with any
Affiliate, director, officer or employee of Borrower shall provide that the same
may be terminated by Lender at its option if an Event of Default exists. Other
than pursuant to the Management Agreement approved by Lender, Borrower shall not
pay any management, consulting, director or similar fees to any director,
officer, employee or Affiliate of Borrower or Guarantor.
7.7 MANAGEMENT FEES AND COMPENSATION; CONTRACTS. Borrower will not enter into
or become obligated under any management (property and asset), brokerage or
other such similar agreement, whether with an Affiliate or any other Person,
with respect to the Mortgaged Property, without Lender's prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed, and
unless the same may be terminated, without cause and without payment of a
penalty or fee, on not more than thirty (30) days' prior written notice. In no
event will Borrower pay a management fee in excess of the then prevailing market
rates.
-57-
7.8 CONDUCT OF BUSINESS. From and after the Closing Date, Borrower will not
engage in any business other than the ownership and operation of the Mortgaged
Property. Borrower shall not use the Mortgaged Property or any part thereof, or
allow the same to be used or occupied, for any purpose other than for the
purposes of an office, laboratory, vivarium or other facility for similar use
and related amenities, or for any unlawful purpose, or in violation of any Legal
Requirement. Borrower will not suffer any act to be done or any condition to
exist on the Mortgaged Property or any part thereof or any article to be brought
thereon, which may be dangerous (unless safeguarded as required by Legal
Requirement) or which may constitute a nuisance, public or private, or which may
void or make voidable any insurance then in force with respect thereto. No tract
map, parcel map, condominium plan, condominium declaration, or plat of
subdivision (or analogous document) will be recorded with respect to the
Mortgaged Property without Lender's consent, which consent shall not be
unreasonably withheld, conditioned or delayed. The Mortgaged Property shall not
be converted to the condominium or "cooperative" form of ownership. Borrower
will not initiate or consent to any change in the zoning of the Mortgaged
Property. Borrower shall at all times maintain good and indefeasible fee title
to the Mortgaged Property free and clear of any encumbrances other than the
Liens in favor of Lender under the Loan Documents and the Permitted
Encumbrances. Borrower shall not change its fiscal year without giving advance
notice thereof to Lender.
7.9 USE OF LENDER'S NAME. Borrower shall not use the names of Lender or any of
Lender's Subsidiaries or Affiliates in connection with the development,
marketing, leasing, use and operation of the Mortgaged Property. Borrower shall
not disclose or permit any Subsidiary of Guarantor or Borrower, or any officer,
director, partner, manager, member or employee of Borrower to disclose any of
the terms and conditions of the Loan to any Person except (a) to the extent
disclosed in the Mortgage and the Financing Statements, (b) to the extent such
disclosure is required pursuant to the Loan Documents or applicable legal
process, (c) to the extent, and only to the extent, such disclosure is required
pursuant to Guarantor's reporting requirements under the Exchange Act, (d) to
the extent the content of such disclosure is already generally available to the
public, or (e) to the extent Lender consents to such disclosure.
7.10 COMPLIANCE WITH ERISA. Borrower shall not adopt, modify or terminate any
Employee Benefit Plans except as described in Schedule 4.10. Borrower shall not
fail to maintain and operate each existing Employee Benefit Plan in compliance
in all material respects with the provisions of ERISA, the Code and all other
applicable laws and the regulations and interpretations thereof. Borrower shall
not engage in any transaction which would cause the Obligations or any action
taken or to be taken under this Agreement or the other Loan Documents or
otherwise (or the exercise by Lender of any of its rights under the Loan
Documents) to be a non-exempt prohibited transaction under ERISA. Borrower shall
not become an "employee benefit plan" (within the meaning of Section 3(3) of
ERISA) to which ERISA applies and Borrower shall not permit its assets to be
plan assets.
7.11 DUE ON SALE OR ENCUMBRANCE. Without Lender's consent, which consent may be
given or withheld in the sole discretion of Lender, neither Borrower nor any
other Person directly or indirectly holding any direct or indirect legal,
beneficial, equitable or other interest in Borrower (at each and every tier or
level of ownership) shall, or permit other Persons to, Transfer (whether or not
for consideration or of record) all or any portion of the Mortgaged Property or
any direct or indirect legal, equitable, beneficial or other interest (1) in all
or any portion of the Mortgaged
-58-
Property; (2) in Borrower; or (3) at each and every tier or level of ownership,
in Borrower's direct or indirect partners, members, shareholders, beneficial or
constituent owners including Guarantor, Borrower Representative, any owners of
Borrower Representative (or the direct or indirect owners of any direct or
indirect interests in any such constituent owners), including (a) an installment
sales agreement for a price to be paid in installments; (b) except as otherwise
permitted pursuant to Section 7.5, any Leases or a sale, assignment or other
transfer of, or the grant of a security interest in, Borrower's right, title and
interest in and to any Leases or any Rents; (c) any direct or indirect voluntary
or involuntary sale of any ownership interest in Borrower or other Person
directly or indirectly owning any direct or indirect interest in Borrower; (d)
the creation, issuance or redemption of direct or indirect ownership interests
by Borrower or any Person owning a direct or indirect interest in Borrower (at
each every tier or level of ownership); (e) any merger, consolidation,
dissolution or liquidation; and (f) without limitation of any of the foregoing,
any direct or indirect voluntary or involuntary Transfer by any Person which
indirectly controls Borrower (by operation of law or otherwise) of its direct or
indirect controlling interests in Borrower. Notwithstanding the foregoing, the
following shall not be deemed to be prohibited under this Section 7.11: (i) a
Transfer of an indirect ownership interest in Borrower, by the current owner
thereof to a wholly-owned subsidiary of Guarantor and (ii) Transfers of
ownership interests in a Person whose stock is publicly traded, so long as (x)
no such transfers described in parts (i) and (ii) of this sentence result in any
Person or Group acquiring, directly or indirectly, more than a forty-nine
percent (49%) direct or indirect interest in Borrower (if such Person or Group
did not prior to the Transfer, own at least forty-nine percent (49%) of the
direct or indirect ownership interests in Borrower), unless such Person or Group
acquiring, directly or indirectly, more than a forty-nine percent (49%) direct
or indirect interest in Borrower has a Credit Rating of "Baa2" or higher from
▇▇▇▇▇'▇ or "BBB" or higher from S&P, or, as applicable, an equivalent rating
from another Rating Agency, or, if such Person or Group is not rated by a Rating
Agency, has (A) a Net Worth of $1,000,000,000 or more, (B) an EBITDA Interest
Coverage of 6.0 or greater and (C) a Total Debt/Capitalization no greater than
40%, and (y) no Change in Control occurs by virtue of such Transfers (other than
pursuant to clause (ii) of the definition of "Change of Control").
Notwithstanding the foregoing, Borrower may sell Inventory in the ordinary
course of business and transfer or dispose of tangible personal property to
Persons that are not Borrower's Affiliates, which tangible personal property is
immediately replaced by an article of equivalent suitability and value or which
is no longer necessary in connection with the operation of the Mortgaged
Property provided that such transfer or disposal will (i) not have a Material
Adverse Effect; (ii) not materially impair the utility of the Mortgaged
Property, and (iii) not result in a reduction or abatement of, or right of
offset against, the Gross Revenues payable under any Lease or otherwise, and
provided that any tangible personal property acquired by Borrower (and not so
disposed of) shall be subject to the Lien of the Mortgage. Borrower acknowledges
that Lender has examined and relied on the experience of Borrower and Guarantor
in owning and operating properties such as the Mortgaged Property in agreeing to
make the Loan and will continue to rely on such ownership of the Mortgaged
Property and Borrower and Guarantor as a means of maintaining the value of the
Mortgaged Property as security for repayment of the Loan and the performance of
the other Obligations. Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Borrower default in the repayment of the Loan or the performance of the other
Obligations, Lender can recover the Loan by a sale of the Mortgaged Property.
Lender shall not be required to demonstrate any actual impairment of its
-59-
security or any increased risk of default hereunder in order to declare the Loan
immediately due and payable upon any Default under this Section 7.11.
7.12 PAYMENTS; DISTRIBUTIONS. Except for payments of management fees otherwise
permitted to be paid to Manager under this Agreement pursuant to a Management
Agreement approved by Lender at a time when no Event of Default exists, Borrower
shall not pay any distributions, dividends or other payments or return any
capital to any of its respective partners, members, owners or shareholders or
any other Affiliate or make any distribution of assets, rights, options,
obligations or securities to any of its respective partners, members,
shareholders or owners or any other Affiliate (individually, or collectively, a
"DISTRIBUTION") unless (a) on the date of the proposed Distribution, and after
giving effect to the subsequent Distribution, no Default or Event of Default
exists; (b) funds are not then required to be deposited into any Reserves; (c)
Borrower is not "insolvent" (as defined in the Bankruptcy Code) and will not be
rendered insolvent by virtue of such Distribution; (d) Borrower shall deliver,
at least ten (10) days in advance of the proposed Distribution, to Lender, an
Officer's Certificate executed by the chief financial officer or similar officer
of Borrower, stating that the foregoing conditions (a), (b) and (c) have been
satisfied.
7.13 SINGLE PURPOSE BANKRUPTCY REMOTE ENTITIES. Borrower hereby represents,
warrants, agrees and covenants that Borrower and Borrower Representative have,
at all times, from their formation, been, and, at all times will be, a Special
Purpose Bankruptcy Remote Entity. Neither Borrower nor Borrower Representative
will, directly or indirectly, make any change, amendment or modification to its
Organizational Documents or otherwise take any action which could result in
Borrower or Borrower Representative not being a Special Purpose Bankruptcy
Remote Entity.
7.14 ALTERATIONS. Borrower shall not alter, remove or demolish or permit the
alteration, removal or demolition of, any Improvement except as the same may be
necessary in connection with (i) a Restoration in connection with a taking or
casualty in accordance with the terms and conditions of the Agreement, (ii)
Required Capital Improvements in accordance with the terms and conditions of the
Agreement and (iii) other Alterations permitted in accordance with the terms and
conditions of this Section 7.14. If no Event of Default exists, Borrower may
undertake any alteration, improvement, demolition or removal of Improvements or
any portion thereof (any such alteration, improvement, demolition or removal, an
"ALTERATION") so long as (1) Borrower provides Lender with at least thirty (30)
days' prior notice of any such Alteration, (2) such Alteration is undertaken in
accordance with the applicable provisions of this Agreement, is not prohibited
by, and is in full compliance with, and does not violate, any Material Contracts
or Legal Requirements and does not, during Construction and upon completion,
have a Material Adverse Effect, (3) Borrower provides Lender with evidence,
satisfactory to Lender, that Borrower has sufficient funds to complete and pay
all of the costs of the Alterations, (4) such Alteration does not eliminate or
materially modify any amenity (e.g., health club) available to tenants and their
employees or customers, (5) such Alteration is in the nature of (x) Required
Capital Improvements permitted under this Agreement, (y) a Restoration required
or permitted under the Agreement or (z) if not in the nature of the Alterations
contemplated by (x) or (y), such Alteration has been consented to by Lender
(such consent will not be unreasonably withheld, conditioned or delayed in the
case of Alterations the cost of which, as estimated by Lender, does not exceed
$50,000) and (6) prior to commencement and from time to time upon request from
Lender, Borrower delivers an Officer's Certificate certifying that conditions
(1)-(5), inclusive,
-60-
have been satisfied. Any Alteration shall, unless Lender otherwise approves or
the Agreement otherwise provides, be conducted under the supervision of an
independent architect approved by Lender (an "INDEPENDENT ARCHITECT"). No
Alteration shall be undertaken until Lender has approved plans and
specifications and cost estimates for the Alterations, prepared by such
Independent Architect or another Person approved by Lender, such approvals not
to be unreasonably withheld, conditioned or delayed. Notwithstanding anything
contained in this Section 7.14 to the contrary, Borrower shall have the right to
make non-structural Alterations to the Improvements, the cost of which does not
exceed $500,000 per Alteration, without Lender's consent and without complying
with clauses (3)-(5) set forth above; provided, however, that Borrower shall
provide Lender with prior written notice at least ten (10) days prior to
commencing such Alteration and prior to commencing any permitted Alteration,
Borrower shall have delivered to Lender a copy of the proposed plans and
specifications for such Alteration.
SECTION 8
CASUALTY AND CONDEMNATION
8.1 RESTORATION FOLLOWING CASUALTY OR CONDEMNATION. After the happening of any
casualty or condemnation to the Mortgaged Property or any part thereof, Borrower
shall give prompt notice thereof to Lender.
(a) In the event of any damage or destruction of all or any part of
the Mortgaged Property, all Proceeds shall be payable to Lender. Borrower
hereby authorizes and directs any affected insurance company or condemning
Governmental Authority or other Persons to make payment of such proceeds
directly to Lender. Borrower shall obtain Lender's approval prior to any
settlement, adjustment or compromise of any claims for loss, damage or
destruction under any policy or policies of insurance or with respect to
any condemnation, and Lender shall have the right to participate with
Borrower in negotiation of any such settlement, adjustment or compromise
provided, however, Borrower shall be permitted, so long as no Event of
Default exists, to settle insurance claims of $250,000 or less without
Lender's approval (but with reasonable advance notice to Lender) and
utilize any such funds for Restoration. Lender shall also have the right to
appear with Borrower in any action against an insurer based on a claim for
loss, damage or destruction under any policy or policies of insurance.
(b) All compensation, proceeds, damages, claims, insurance recoveries,
rights of action and payments which Borrower may receive or to which
Borrower may become entitled with respect to the Mortgaged Property or any
part thereof as a result of any casualty or condemnation, except as set
forth below in this Section 8.1 (the "PROCEEDS"), shall be paid over to
Lender and shall be held in an escrow account with an Acceptable Financial
Institution. The Proceeds shall be applied first toward reimbursement of
all costs and expenses of Lender in connection with recovery of the same,
and then, except as set forth below in this Section 8.1, shall be applied
in the sole and absolute discretion of Lender, without regard to the
adequacy of Lender's security hereunder, to the payment or prepayment of
the Obligations in such order as Lender may determine, and any amounts so
applied shall reduce the Obligations pro tanto (without any Prepayment
Premium due in connection therewith). Any application of the Proceeds or
any portion
-61-
thereof to the Obligations shall not be construed to cure or waive any
Default or Event of Default or invalidate any act done pursuant to any such
Default or Event of Default.
(c) Subject to the other provisions of this Section 8.1, and provided
that (i) all Proceeds have been deposited with an Acceptable Financial
Institution; (ii) no Event of Default shall exist; (iii) a Total Loss with
respect to the Property shall not have occurred; (iv) the Restoration is
capable, as reasonably determined by Lender, of being completed before the
earlier (the "REQUIRED RESTORATION DATE") to occur of (x) the date which is
six (6) months prior to the Maturity Date, (y) the date on which the
insurance carried by Borrower pursuant to Section 5.4(a)(ii), with respect
to the Mortgaged Property shall expire and (z) eighteen (18) months after
the occurrence of the casualty or condemnation in question; (v) Lender
shall have been furnished with an estimate of the cost of restoration
accompanied by an architect's certificate as to such costs and appropriate
final plans and specifications for reconstruction of the Improvements, all
of which shall be approved by Lender, which approval shall not be
unreasonably withheld, conditioned or delayed; (vi) the Improvements so
restored or rebuilt shall be of at least equal value and substantially the
same character as prior to the damage or destruction and appropriate for
the purposes for which they were originally erected (and, if requested by
Lender, Borrower will furnish, at its expense, an appraisal confirming such
valuation); (vii) Borrower shall have furnished Lender with evidence
reasonably satisfactory to Lender that all Improvements so restored and/or
reconstructed and their use fully comply with all applicable zoning,
building laws, ordinances and regulations and other Legal Requirements and
that all required licenses and approvals required for use, operation and
occupancy of the Improvements can be obtained, to the extent available;
(viii) if the estimated cost of restoration exceeds the Proceeds available,
Borrower shall have deposited with Lender such sums or other security as
may be necessary, in Lender's reasonable judgment, to pay such excess costs
and (ix) Lender shall have received notice within thirty (30) days of the
fire or other hazard or of the condemnation proceedings specifying the date
of such fire or other hazard or the date the notice of condemnation
proceedings was received and the request to Lender to make said Proceeds
available to Borrower; then the Proceeds, less the actual costs, fees and
expenses, if any, incurred in connection with adjustment of loss and
Lender's reasonable administrative expenses relating to such loss and the
disbursement of the Proceeds shall be made available by Lender to the
payment of all the costs of the aforesaid restoration, repairs,
replacement, rebuilding or alterations, including the cost of temporary
repairs or for the protection of property pending the completion of
permanent restoration, repairs, replacements, rebuilding or alterations
(all of which temporary repairs, protection of property and permanent
restoration, repairs, replacement, rebuilding or alterations are
hereinafter collectively referred to as the "RESTORATION"), and shall be
paid out from time to time as such Restoration progresses upon the request
of Borrower if the work for which payment is requested has been done in a
good and workmanlike manner, in compliance with applicable Legal
Requirements and substantially in accordance with the plans and
specifications therefor. Each request by Borrower for disbursement of
Proceeds shall (unless Lender otherwise elects, in its sole discretion,
with respect to a Restoration estimated by Lender to cost $100,000 or less
to complete, to waive any of the following requirements) be accompanied by
the required Lien Waivers, a Request for Release, and, to the extent not
subsumed within a Request for Release, the following:
-62-
(1) A certificate signed by Borrower, dated not more than thirty
(30) days prior to such request, setting forth the following: (A) That
the sum then requested either has been paid, or is justly due to
contractors, subcontractors, materialmen, engineers, architects or
other persons who have rendered services or furnished materials for
the restoration therein specified or have paid for the same, the names
and addresses of such persons, a brief description of such services
and materials, the several amounts so paid or due to each of said
persons in respect thereof (together with supporting statements and
invoices for the same), that no part of such expenditures has been or
is being made the basis of any previous or then pending request for
the withdrawal of Proceeds or has been made out of any of the Proceeds
received by Borrower, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
and (B) That the costs, as estimated by the persons signing such
certificate, of the Restoration required to be done subsequent to the
date of such certificate in order to complete and pay for the same, do
not exceed the Proceeds, plus any amount or security approved by
Lender and deposited with such Acceptable Financial Institution by
Borrower to defray such costs and remaining in the hands of Lender
after payment of the sum requested in such certificate.
(2) A title insurance report or other evidence satisfactory to
Lender to the effect that there has not been filed with respect to the
Mortgaged Property, or any part thereof, any vendor's, contractor's,
mechanics', laborer's, materialmen's or other Lien which has not been
discharged of record or bonded or insured over, except such as will be
disbursed by payment of the amount then requested.
(3) A certificate signed by the Independent Architect and/or
engineer in charge of the Restoration, who shall be selected by
Borrower and approved in writing by Lender, certifying that the
Restoration is proceeding in accordance with the plans and
specifications approved by Lender and in accordance with all zoning,
subdivision and other Legal Requirements. Upon compliance with the
foregoing provisions, Lender shall, out of Proceeds (and the amount of
security approved by Lender, if any, deposited by Borrower to defray
the costs of the Restoration), pay or cause to be paid to Borrower or
the Persons named (pursuant to clause (1)(A) above) in such
certificate the respective amounts stated therein to have been paid by
Borrower or to be due to them, as the case may be.
(d) If the Proceeds at the time held by the Acceptable Financial
Institution, less the actual costs, fees and expenses, if any, incurred in
connection with the adjustment of the loss and Lender's administrative
expenses relating to such loss and the disbursement of the Proceeds, shall
be, in Lender's reasonable judgment, insufficient to pay the entire cost of
the Restoration, Borrower shall deposit with such Acceptable Financial
Institution any such deficiency prior to disbursement of any additional
portion of the Proceeds. Lender shall at all times have a perfected
security interest on all Proceeds and other amounts held by such Acceptable
Financial Institution pursuant to this Section 8. No payment made prior to
the final completion of the Restoration shall exceed ninety percent (90%)
of the value of the work performed from time to time (provided that,
notwithstanding the foregoing, subcontractors who have completed their
-63-
work may be paid in full), and at all times the undisbursed balance of said
Proceeds remaining in the hands of Lender shall be at least sufficient to
pay for the cost of completion of the Restoration free and clear of liens.
In addition to the requirements and conditions set forth in Section 5.19,
final payment shall be upon an architect's certificate of completion in
accordance with the final plans and specifications and compliance with all
applicable zoning, building, subdivision and other governmental laws,
ordinances, rules, and regulations, the filing of a notice of completion
and the expiration of the period provided under applicable law for the
filing of mechanic's and materialmen's liens and delivery to Lender of a
certified copy of a final unconditional permanent (i) certificate of
occupancy regarding the Restoration, to the extent available, and (ii)
certificate of compliance from The Woodlands Community Association and The
Woodlands Community Owners Association (or their successor entities). To
the extent available, Lender may, at its option, require an endorsement to
the Title Policy insuring the continued priority of the lien of the
Mortgage as to all sums advanced hereunder, such endorsement to be paid for
by Borrower. Upon completion of the Restoration in a good and workmanlike
manner in accordance herewith, and provided that Lender has received
satisfactory evidence that the Restoration has been paid for in full and
the Mortgaged Property is free and clear of all Liens, other than the Liens
created in favor of Lender by the Loan Documents and the Permitted
Encumbrances (including signed lien waivers from all contractors and
subcontractors conditioned only on payment of amounts specified therein),
any balance of the Proceeds at the time held by Lender (after reimbursement
to Lender of all costs and expenses of Lender, including administrative
expenses, in connection with recovery of the same and disbursement of such
Proceeds for the Restoration), if any, shall be applied as follows: (i) to
the extent that such balance of the Proceeds is equal to or less than the
amount, if any, by which the value of the Mortgaged Property prior to such
damage or destruction exceeds the value of the Mortgaged Property after
such Restoration (for these purposes, the value of the Mortgaged Property
shall be determined by Lender in its discretion), then the portion of the
balance of the Proceeds equal to such excess amount shall be applied to the
payment or prepayment of the principal balance of the Obligations in such
order as Lender may determine, and any amounts so applied shall reduce the
Obligations pro tanto (without any Prepayment Premium due in connection
therewith); and (ii) to the extent that the balance of the Proceeds exceeds
such excess amount, such portion of the balance of the Proceeds shall be
paid to Borrower.
(e) Nothing herein contained shall be deemed to excuse Borrower from
repairing or maintaining the Mortgaged Property as provided in the
Agreement hereof or restoring all damage or destruction to the Mortgaged
Property, regardless of whether or not there are insurance proceeds
available or whether any such Proceeds are sufficient in amount, and the
application or release by Lender of any Proceeds shall not cure or waive
any Default or Event of Default or invalidate any other act done by Lender
to exercise its remedies under this Agreement or the other Loan Documents;
provided, however, if, prior to the last two (2) years of the term of the
Loan, Lender elects not to make such Proceeds available to Borrower for
restoration, then Borrower may prepay the Loan without payment of the
Prepayment Premium, so long as an Event of Default is not then in
existence.
-64-
SECTION 9
DEFAULT, RIGHTS AND REMEDIES
9.1 EVENT OF DEFAULT. "EVENT OF DEFAULT" means the occurrence or existence of
any one or more of the following:
(A) PAYMENT. Failure of Borrower to pay (i) on the Maturity Date, the
outstanding principal of, accrued interest in, and other Indebtedness owing
pursuant to the Agreement, the Note and the other Loan Documents, (ii) within
five (5) days after the due date, any installment of principal or interest due
under the Note; provided, however, the aforesaid five (5) day grace period may
be utilized by Borrower no more than once in any consecutive twelve (12) Loan
Month period, or (iii) within five (5) days after the respective due date, any
other amount due under the other Loan Documents, provided, however, the
aforesaid five (5)-day grace period may e utilized by Borrower no more than once
in any consecutive twelve (12) Loan Month period.
(B) BREACH OF CERTAIN PROVISIONS.
(i) Failure of Borrower to perform or comply with any term, agreement,
covenant, representation, warranty or condition contained in Sections
5.1(E), 5.1(F), 5.1(G), 5.1(H), 5.13, 6.2, 7.2, 7.5, 7.9, 7.12, 7.13, 7.14,
8.1(a), 8.1(b) or 10 and such failure is not remedied or waived within five
(5) Business Days after receipt by Borrower of notice from Lender of such
failure.
(ii) Failure of Borrower to perform or comply with any term,
agreement, covenant, representation, warranty or condition contained in
Sections 5.4 (except any such failure which does not result in any
insurance coverage required by Section 5.4 not in fact being in place),
7.1, 7.3, 7.4, 7.10 or 7.11.
(C) BREACH OF REPRESENTATION AND WARRANTY. Any representation, warranty,
certification or other statement made by Borrower or Guarantor in any Loan
Document or in any statement or certificate at any time given in writing
pursuant or in connection with any Loan Document (other than occurrences
described in other provisions of this Section 9.1 for which a different grace or
cure period is specified or which constitute immediate Events of Default) is
false in any material respect on the date made which remains uncured for five
(5) Business Days after notice, but no grace or curative period will apply if
the representation, warranty, certification or other statement was known by
Borrower or Guarantor to be false when made or deemed made.
(D) OTHER DEFAULTS UNDER LOAN DOCUMENTS. A default by Borrower shall occur
in the performance of or compliance with any term contained in this Agreement or
the other Loan Documents and such default is not remedied or waived within
thirty (30) days after receipt by Borrower of notice from Lender of such default
(other than occurrences described in other provisions of this Section 9.1 for
which a different grace or cure period is specified or which constitute
immediate Events of Default); provided, however, that (i) if such default cannot
be remedied with reasonably diligent effort within a period of thirty (30) days,
but is susceptible to cure within a period of one hundred twenty (120) days and
(ii) the continued default in performance will not have a Material Adverse
Effect, such longer period, not to exceed ninety
-65-
(90) additional days, as Borrower may need to remedy such default, if Borrower
is proceeding with diligent effort to remedy such default throughout said one
hundred twenty (120)-day period; provided, further, however, that (A) if
Borrower has been, and will continue to be, diligent in its efforts to cure such
default, and (B) the continued default has not, and will not, have a Material
Adverse Effect, Borrower shall have such longer period, not to exceed an
additional sixty (60) days (for a total of one hundred eighty (180) days), as
Borrower may need to remedy such default. The rights to notice and cure periods
granted herein shall not be cumulative with any other rights to notice or a cure
period in any other Loan Document and the giving of notice or a cure period
pursuant to this section shall satisfy any and all obligations of Lender to
grant any such notice or cure period pursuant to any of the Loan Documents.
(E) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) A court
enters a decree or order for relief with respect to Borrower, Guarantor or
Borrower Representative in an involuntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed or other similar relief is not
granted under any applicable federal or state law; or (2) the continuance of any
of the following events for ninety (90) days unless dismissed, bonded or
discharged: (a) an involuntary case is commenced against any Borrower, Borrower
Representative or Guarantor under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect; or (b) a decree or order of a court for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Borrower, Borrower Representative or
Guarantor or over all or a substantial part of its property, is entered; or (c)
an interim receiver, trustee or other custodian is appointed without the consent
of Borrower, Borrower Representative or Guarantor for all or a substantial part
of the property of Borrower, Borrower Representative or Guarantor; or
(F) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) An order for
relief is entered with respect to Borrower, Borrower Representative or Guarantor
or Borrower, Borrower Representative or Guarantor commences a voluntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case or to the conversion of an involuntary case to a
voluntary case under any such law or consents to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or (2) Borrower, Borrower Representative or Guarantor
makes any assignment for the benefit of creditors; or (3) partners,
shareholders, or members in Borrower, Borrower Representative or Guarantor
adopts any resolution or otherwise authorizes action to approve any of the
actions referred to in this Section 9.1(F); or
(G) GOVERNMENTAL LIENS. Any lien, levy or assessment is filed or recorded
with respect to or otherwise imposed upon all or any part of the Mortgaged
Property by the United States or any department or instrumentality thereof or by
any state, county, municipality or other governmental agency (other than
Permitted Encumbrances) and such lien, levy or assessment is not stayed,
vacated, paid, discharged or insured or bonded over within thirty (30) days;
(H) JUDGMENT AND ATTACHMENTS. Any money judgment, writ or warrant of
attachment, or similar process (other than those described in Section 9.1(G))
involving (1) an
-66-
amount in any individual case in excess of $100,000 or (2) an amount in the
aggregate at any time in excess of $250,000 (in either case not adequately
covered by insurance as to which the insurance company has acknowledged
coverage) is entered or filed against Borrower, Borrower Representative or
Guarantor and remains undischarged, unvacated, unbonded, uninsured or unstayed
for a period of thirty (30) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder;
(I) DISSOLUTION. Any order, judgment or decree is entered against
Borrower, Borrower Representative or Guarantor decreeing the dissolution or
split up of Borrower, Borrower Representative or Guarantor and such order
remains undischarged or unstayed for a period in excess of twenty (20) days; or
(J) INJUNCTION. Either (i) Borrower, Borrower Representative or any
Guarantor is enjoined, restrained or in any way prevented by the order of any
court or any administrative or regulatory agency from conducting all or any
material part of its business relating to the any Mortgaged Property and such
order continues for more than thirty (30) days; or (ii) any order or decree is
entered by any court of competent jurisdiction directly or indirectly enjoining
or prohibiting Lender, Borrower, Borrower Representative or Guarantor from
performing any of their obligations under this Agreement or any of the other
Loan Documents; or
(K) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms of the
Loan Documents, ceases to be in full force and effect or is declared to be null
and void by a court of competent jurisdiction, or any of Borrower, Borrower
Representative or Guarantor denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or
(L) EVENT OF DEFAULT. The occurrence of an Event of Default specified
elsewhere in this Agreement or in any of the other Loan Documents or the
occurrence of an Event of Default by Guarantor under the Guaranty; or
(M) CROSS-DEFAULT. The occurrence of any of the following with respect to
Guarantor: (i) the acceleration of any Indebtedness in the aggregate amount of
$10,000,000 or more; (ii) the occurrence of a default under any Indebtedness in
the aggregate amount of $10,000,000 or more not cured within the grace or
curative period applicable to such Indebtedness, (iii) the occurrence of a
default or breach under any Material Contracts not cured within any applicable
grace period or notice and cure period, which, in Lender's reasonable judgment,
could have a Material Adverse Effect, or (iv) the loss or termination of any
Proprietary Rights which, in Lender's reasonable judgment, could have a Material
Adverse Effect.
(N) DEATH, ETC. Dissolution, cessation of existence or felony or other
criminal conviction or indictment of Borrower, Borrower Representative and/or
Guarantor, a punishment for which could result in forfeiture of any assets of
the Borrower, Guarantor or any direct or indirect equity interest to Borrower or
loss of eligibility for any material Proprietary Rights, which in Lender's
reasonable judgment could have a Material Adverse Effect; or
-67-
(O) INDEPENDENT PERSON. Borrower or Borrower Representative shall at any
time cease to have at least one (1) Independent Person or, if requested by
Lender in writing in connection with a contemplated Securitization, two (2)
Independent Persons for more than ten (10) consecutive Business Days; or
(P) ZONING. The Land and Improvements or any portion thereof are zoned
either voluntarily or involuntarily, such that the zoning or other applicable
land use restriction prohibits the Borrower from operating the Land and
Improvements or any portion thereof as an office, laboratory, vivarium, life
sciences facility or other facility for similar use;
(Q) TENANT IMPAIRMENT EVENT. The occurrence of a Tenant Impairment Event;
(R) CHANGE IN CONTROL. The occurrence of any direct or indirect Change in
Control with respect to Borrower or Guarantor, except as permitted pursuant to
Section 7.11; or
(S) LEASE. The occurrence of any default by Borrower in any of its
obligations under the Guarantor Lease.
9.2 ACCELERATION AND REMEDIES. Upon the occurrence of any Event of Default
specified in Sections 9.1(E) and 9.1(F), payment of all Obligations shall be
accelerated without notice, presentment, demand, protest or notice of protest
and shall be immediately due and payable and, in addition, Lender may in
addition to any other rights and remedies available to Lender at law or in
equity or under any other Loan Documents, exercise one of more of the following
rights and remedies as it, in its sole discretion, deems necessary or advisable.
Upon the occurrence of any Event of Default (other than Events of Default
specified in Sections 9.1(E) and 9.1(F)), Lender, in addition to any other
rights or remedies available to Lender at law or in equity, or under any of the
other Loan Documents, may exercise any one or more of the following rights and
remedies as it, in its sole discretion, deems necessary or desirable:
(a) ACCELERATION. Declare immediately due and payable, without further
notice, protest, presentment, notice of protest or demand, all Obligations
including all monies advanced under this Agreement, the Note, the Mortgage
and/or any of the Loan Documents which are then unpaid, together with all
interest then accrued thereon and all other amounts then owing (including any
Default Interest, or prepayment premium owed as a result of such acceleration).
If payment of the Obligations is accelerated, Lender may, in its sole
discretion, exercise all rights and remedies hereunder and under the Note, the
Mortgage and/or any of the other Loan Documents at law, in equity or otherwise.
(b) POSSESSION. Enter upon and take possession of the Mortgaged Property
and proceed in the name of Lender or Borrower as the attorney-in-fact of
Borrower (which authority, to the extent permitted by law, is hereby granted by
Borrower, is coupled with an interest, and is irrevocable), as Lender shall
elect. If Lender elects to so enter upon and take possession of the Mortgaged
Property, Lender (i) may enforce or cancel all contracts entered into by
Borrower or make other contracts which are in Lender's sole opinion advisable,
and (iii) shall be reimbursed by Borrower upon demand any reasonable amount or
amounts expended by Lender for such performance together with any reasonable
costs, charges, or expenses incident thereto or otherwise incurred or expended
by Lender or its representatives (including an appraisal) on
-68-
behalf of Borrower in connection with the Mortgaged Property, and the amounts so
expended shall be considered part of the Loan evidenced by the Note and secured
by the Loan Documents and shall bear interest at the Default Rate.
(c) INJUNCTIVE RELIEF. Institute appropriate proceedings for injunctive
relief (including specific performance of the obligations of Borrower).
(d) ACCOUNTS. Release all funds contained in the Reserve Accounts to be
applied to Borrower's Obligations.
9.3 REMEDIES CUMULATIVE; WAIVERS; REASONABLE CHARGES. All of the remedies given
to Lender in the Loan Documents or otherwise available at law or in equity to
Lender shall be cumulative and may be exercised separately, successively or
concurrently. Failure to exercise any one of the remedies herein provided shall
not constitute a waiver thereof by Lender, nor shall the use of any such
remedies prevent the subsequent or concurrent resort to any other remedy or
remedies vested in Lender by the Loan Documents or at law or in equity. To be
effective, any waiver by Lender must be in writing and such waiver shall be
limited in its effect to the condition or default specified therein, and no such
waiver shall extend to any subsequent condition or default. It is agreed that
(i) the actual costs and damages that Lender would suffer by reason of an Event
of Default (exclusive of the attorneys' fees and other costs incurred in
connection with enforcement of Lender's rights under the Loan Documents) or a
prepayment would be difficult and needlessly expensive to calculate and
establish, and (ii) the amounts of the Default Rate, the Late Charge, payments
to be made pursuant to Section 2.4(c)(ii) and the Prepayment Premium are
reasonable, taking into consideration the circumstances known to the parties at
this time, and (iii) the Default Rate, the Late Charges and Lender's reasonable
attorneys' fees and other costs and expenses incurred in connection with
enforcement of Lender's rights under the Loan Documents shall be due and payable
as provided herein, and (iv) the Default Rate, Late Charges, Prepayment Premium,
the payments to be made pursuant to Section 2.4(c)(ii) and the obligation to pay
Lender's reasonable attorneys' fees and other enforcement costs do not,
individually or collectively, constitute a penalty.
SECTION 10
SECONDARY MARKET TRANSACTION
10.1 SECONDARY MARKET TRANSACTION. Borrower agrees that Lender has the absolute
right to securitize, syndicate, grant participations in, or otherwise Transfer
all or any portion of the Loan (each such transaction, a "SECURITIZATION").
Lender may determine to Transfer some or all of the Loan or retain title to some
or all of the Loan as part of a Securitization. Borrower further agrees that
Lender may delegate any or all of Lender's rights, powers and privileges to a
servicer ("SERVICER") and Borrower shall, upon notice from Lender, recognize the
Servicer as the agent of Lender. In the event this Loan becomes or is designated
by Lender to become an asset of a Securitization, upon Lender's request,
Borrower shall meet, from time to time, with representatives of the Rating
Agencies in connection with such a Securitization to discuss the business and
operations of the Mortgaged Property and, in that regard, agrees to cooperate
with the reasonable requests of the Rating Agencies. Lender may retain the
Rating Agencies to provide rating surveillance services on any certificates
issued in a Securitization. In no event shall Borrower be required to pay any
servicer fees, Securitization trustee fees or other
-69-
Securitization administrative expenses except as may be expressly provided in
this Agreement. Borrower shall, upon request from Lender, from time to time,
cooperate, and Borrower shall, cause Guarantor and Borrower's partners and/or
members to cooperate, in all reasonable respects in connection with a
Securitization. Such cooperation may, in Lender's discretion, include
documentation changes, changes in organizational documents, changes in Accounts,
Reserves, Payment Dates, Interest Periods, insurance endorsement changes, tenant
payment direction changes, site inspections, updated appraisals, preparation and
delivery of financial information or other diligence requested by Lender and/or
any Rating Agency; provided, however, any third party costs incurred by Borrower
related to such changes shall be reimbursed by Lender and such changes shall not
materially and adversely diminish Borrower's rights under the Loan Documents nor
increase Borrower's burdens and obligations under the Loan Documents. Such
cooperation may include, in Lender's discretion, execution of one or more
promissory notes and the creation of Liens securing such notes of differing
priority and/or the creation of mezzanine debt secured by pledges of all of the
membership interests in the Borrower so long as the principal amount, interest
rate, payment terms and other monetary terms of the Loan do not, in the
aggregate change. Borrower will not be required to incur any expenses or costs
pursuant to this Section 10.1. Borrower will, upon request from Lender, in
connection with a Securitization, enter into such acknowledgments and
confirmations of the applicable assignments as Lender may request. Borrower
shall, subject to the terms and provisions of this Section 10.1, use reasonable
efforts to satisfy the market standards which Lender determines are reasonably
required in the marketplace or by the Rating Agencies in connection with a
Securitization. Notwithstanding anything else contained to the contrary herein,
Borrower will not, pursuant to any of the provisions of this Section 10.1,
incur, suffer or accept (i) any lesser rights or greater obligations as are
currently set forth in the Loan Documents or Borrower's Organizational Documents
(unless Borrower is made whole by the holder of the Note) or (ii) subject to
Section 11.13 hereof, any personal liability other than as set forth in the Loan
Documents. Borrower will also, if requested by Lender, cause independent counsel
to render opinions customary in securitization transactions with respect to the
Mortgaged Property and Borrower and Borrower's and Guarantor's Subsidiaries (but
not a true sale, 10b-5 opinion or nonconsolidation opinion), which counsel and
opinions shall be reasonably satisfactory to Lender and the Rating Agencies and
which shall be addressed to such Persons as shall be reasonably designated by
the holder of the Note. Borrower's failure to deliver the opinions required
hereby within ten (10) Business Days after written request therefore shall
constitute an Event of Default hereunder. If requested by Lender, Borrower's
cooperation will also include (but subject to Section 11.3) certifications and
agreements pursuant to which Borrower will certify that it has examined the
portion of applicable preliminary and final private placement memorandum or
preliminary, final and supplement or prospectus specified by Lender as
pertaining to Borrower, the Loan, Guarantor, the Mortgaged Property and the
Manager, and that each such designated portion, as it relates to Borrower,
Guarantor, the Mortgaged Property, Manager and all other aspects of the Loan,
does 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. All reasonable
costs of Borrower's cooperation as described in this Section 10.1 shall be at
the expense of Lender, except (a) any costs and expenses for the appointment of
a second Independent Person for Borrower and Borrower Representative, which
costs shall be paid by Borrower, and (b) any reasonable fees and expenses of the
Servicer which
-70-
Borrower may be obligated to pay based upon actions, consents or waivers
requested by Borrower.
SECTION 11
MISCELLANEOUS
11.1 EXPENSES AND ATTORNEYS' FEES. Whether or not the transactions contemplated
hereby shall be consummated, Borrower agrees to promptly pay all fees, costs and
expenses (including reasonable attorneys' fees, court costs, cost of appeal and
the reasonable fees, costs and expenses of other professionals retained by
Lender) incurred by Lender in connection with the following, and all such fees,
costs and expenses shall be part of the Obligations, payable on five (5)
Business Days written notice: (A) the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (B) the giving or withholding of any consents, approvals,
or permissions, administration of the Loan, disbursements of the Loan and
disbursements from the Accounts and in connection with any amendments,
modifications and waivers relating to the Loan Documents requested by Borrower;
(C) the review, documentation, negotiation and closing of any subordination or
intercreditor agreements, Lease reviews, and subordination, nondisturbance and
attornment agreements; (D) Lender's Representative; and (E) enforcement of this
Agreement or the other Loan Documents, the collection of any payments due from
Borrower or Guarantor under the Loan Documents or any refinancing or
restructuring of the credit arrangements provided under the Loan Document,
whether in the nature of a "workout" or in connection with any insolvency or
bankruptcy proceedings or otherwise; provided, however, in no event shall
Borrower be liable for any fees incurred by Lender in connection with a
Securitization.
11.2 CERTAIN LENDER MATTERS. Lender may, in accordance with Lender' customary
practices, destroy or otherwise dispose of all documents, schedules, invoices or
other papers, delivered by Borrower to Lender unless Borrower requests, at the
time of delivery, in writing that same be returned. Borrower and Lender intend
that the relationships created hereunder and under the other Loan Documents be
solely that of borrower and lender. Nothing herein or therein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lender nor to grant Lender any interest in the
Mortgaged Property other than that of mortgagee, beneficiary or lender. No
provision in this Agreement or in any of the other Loan Documents and no course
of dealing between the parties shall be deemed to create any fiduciary duty by
Lender to Borrower or any other Person. All attorneys, accountants, appraisers,
and other professional Persons and consultants retained by Lender shall have the
right to act exclusively in the interest of Lender and shall have no duty of
loyalty, duty of care or any other duty to Borrower or any of Borrower's
partners, shareholders, members, managers, Affiliates or any other Person. By
accepting or approving anything required to be observed, performed or fulfilled
or to be given to Lender pursuant to the Loan Documents, Lender shall not be
deemed to have warranted or represented the sufficiency, legality, effectiveness
or legal effect of the same, or of any term, provision or condition thereof, and
such acceptance or approval thereof shall not be or constitute any warranty or
representation with respect hereto or thereto by Lender. 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 or their respective
attorneys, advisors,
-71-
accountants, officers, representatives, directors, employees, partners,
shareholders, trustees, members or managers. 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, in either case, 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. LENDER SHALL HAVE NO LIABILITY
HEREUNDER FOR ANY CONSEQUENTIAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES. In the
case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting Borrower or Borrower
Representative or Guarantor, or their respective creditors or property, Lender,
to the extent permitted by law, shall be entitled to file such proofs of claim
and other documents as may be necessary or advisable in order to have the claims
of Lender allowed in such proceedings for the entire secured Obligations at the
date of the institution of such proceedings and for any additional amount which
may become due and payable by Borrower after such date. Lender shall have the
right from time to time to designate, appoint and replace one or more servicers
and to allow servicer to exercise any and all rights of Lender under the Loan
Documents. All documents and other matters required by any of the provisions of
this Agreement to be submitted or provided to Lender shall be in form and
substance satisfactory to Lender. Borrower shall not be entitled to (and does
hereby waive any and all rights to receive) any notices of any nature whatsoever
from Lender except with respect to matters for which the Loan Documents
expressly provide for the giving of notice by Lender to Borrower. In any action
or proceeding brought by Borrower against Lender claiming or based upon an
allegation that Lender unreasonably withheld its consent to or approval of a
proposed act by Borrower which requires Lender's consent hereunder, Borrower's
sole and exclusive remedy in said action or proceeding shall be injunctive
relief or specific performance requiring Lender to grant such consent or
approval.
11.3 INDEMNITY. In addition to the payment of expenses pursuant to Section 11.1
and the indemnification obligations set forth in other portions of this
Agreement, the Environmental Indemnification Agreement or the other Loan
Documents, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay, defend and hold Lender, its
officers, directors, members, partners, shareholders, participants,
beneficiaries, trustees, employees, agents, successors and assigns, any
subsequent holder of the Note, any trustee, fiscal agent, servicer, underwriter
and placement agent, (collectively, the "Indemnitees") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, causes of action, suits, claims, tax liabilities, broker's or finders
fees, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, based upon any third party claims against such Indemnitees in any
manner related to or arising out of (A) any breach by Borrower or Guarantor of
any representation, warranty, covenant, or other agreement contained in any of
the Loan Documents, (B) the actual or threatened presence, release, disposal,
spill, escape, leakage, transportation, migration, seepage, discharge, removal,
-72-
or cleanup of any Hazardous Material located on, about, within, under,
affecting, from or onto the Mortgaged Property or any violation of any
applicable Environmental Law by Borrower or the Mortgaged Property, or (C) the
use or intended use of the proceeds of any of the Loan (the foregoing
liabilities herein collectively referred to as the "INDEMNIFIED LIABILITIES");
provided that Borrower shall have no obligation to an Indemnitee hereunder with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of that Indemnitee as determined in a final order by a court of
competent jurisdiction. Borrower shall be relieved of its obligation under
clause (B) of this Section 11.3 with respect to Hazardous Materials first
introduced to the Land and Improvements after either (1) the foreclosure of the
Mortgage or (2) the delivery by Borrower to, and acceptance by, Lender or its
designee of a deed-in-lieu of foreclosure with respect to the Mortgaged
Property. To the extent that the undertaking to indemnify, pay, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute 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 the
Indemnitees or any of them. If any such action or other proceeding shall be
brought against Lender, upon written notice from Borrower to Lender (given
reasonably promptly following Lender's notice to Borrower of such action or
proceeding), Borrower shall be entitled to assume the defense thereof, at
Borrower's expense, with counsel reasonably acceptable to Lender; provided,
however, Lender may, at its own expense, retain separate counsel to participate
in such defense, but such participation shall not be deemed to give Lender a
right to control such defense, which right Borrower expressly retains.
Notwithstanding the foregoing, each Indemnitee shall, following notice to and
consultation with Borrower, have the right to employ separate counsel at
Borrower's expense if, in the reasonable opinion of legal counsel, a conflict or
potential conflict exists between the Indemnitee and Borrower that would make
such separate representation advisable. Borrower shall have no obligation to
indemnify an Indemnitee for damage or loss resulting from such Indemnitee's
gross negligence or willful misconduct.
11.4 AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement, the Note
or any other Loan Document, or consent to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by Lender
(and, with respect to any amendment or modification, unless also signed by
Borrower). Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on Borrower in any case shall entitle
Borrower, or any other Person to any other or further notice or demand in
similar or other circumstances. 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 or members and others
with interests in Borrower, and of the Mortgaged Property, or to a sale in
inverse order of alienation in the event of foreclosure of all or any of the
Mortgage, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Mortgaged Property for the collection of the
obligations without any prior or different resort for collection or of the right
of Lender to the payment of the obligations owing Lender on account of the Loan
Documents out of the net proceeds of the Mortgaged Property in preference to
every other claimant whatsoever. In addition, Borrower, for itself and its
successors and assigns, waives in
-73-
the event of foreclosure of the Mortgage, any equitable right otherwise
available to Borrower which would require the separate sale of any of any
portion of the Mortgaged Property or require Lender to exhaust its remedies
against any portion of the Mortgaged Property or any combination of the
Mortgaged Property before proceeding against any other portion; and further in
the event of such foreclosure, Borrower expressly consents to and authorizes, at
the option of Lender, the foreclosure and sale either separately of all or any
portion of the Mortgaged Property. Borrower hereby waives the right to assert a
counterclaim, other than a compulsory counterclaim or defense of performance, in
any action or proceeding brought against it by Lender or its agents. Subject to
the remaining terms of the Loan Documents, Borrower shall have the right to
bring a separate action against Lender for breaches of Lender's obligations
under the Loan Documents. No failure or delay on the part of Lender or any
holder of any Note in the exercise of any power, right or privilege hereunder or
under the Note or any other Loan Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under this Agreement, the Note and
the other Loan Documents are cumulative to, and not exclusive of, any rights or
remedies otherwise available. Lender shall not be under any obligation to
marshal any assets in favor of any Person or against or in payment of any or all
of the Obligations. To the extent that any Person makes a payment or payments to
Lender, or Lender enforces its remedies or exercise its rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/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 recovery, the Obligations or part
thereof originally intended to be satisfied, and all Liens, if any, rights and
remedies therefore, shall be revived and continued in full force and effect as
if such payment had not been made or such enforcement or setoff had not
occurred. Borrower agrees (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive Borrower from paying all or any portion of the principal of,
premium, if any, or interest on Loan contemplated herein or in any of the other
Loan Documents or which may affect the covenants or the performance of this
Agreement; and Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the holders, but will suffer and permit the execution of every such power as
though no such law had been enacted.
11.5 NOTICES. Unless otherwise specifically provided herein, any notice or
other communication required or permitted to be given shall be in writing
addressed to the respective party as set forth below and may be personally
served, telecopied (with request for confirmation) or sent by overnight courier
service or United States registered mail return receipt requested, postage
prepaid. Any notice so given shall be deemed effective upon delivery or on
refusal or failure of delivery during normal business hours. Notices shall be
addressed to the parties at the addresses specified on Schedule 11.5 or to such
other address as the party addressed shall have previously designated by written
notice to the serving party, given in accordance with this Section 11.5.
-74-
11.6 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loan hereunder and the execution
and delivery of the Notes. Notwithstanding anything in this Agreement or implied
by law to the contrary, the provisions of Sections 2.6, 5.8, 11.1, 11.2, 11.3,
11.12, 11.13 and 11.15 shall survive the payment of the Loan and the termination
of this Agreement. Subject to this Section 11.6, all other representations,
warranties and agreements of Borrower and Lender set forth in this Agreement
shall terminate upon indefeasible payment in full of the Loan and the
termination of this Agreement.
11.7 MISCELLANEOUS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect. All covenants and
agreements hereunder shall be given in any jurisdiction independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement, the Note or
other Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
the Note or other Loan Documents or of such provision or obligation in any other
jurisdiction. This Agreement is made for the sole benefit of Borrower and
Lender, and no other Person shall be deemed to have any privity of contract
hereunder nor any right to rely hereon to any extent or for any purpose
whatsoever, nor shall any other person have any right of action of any kind
hereon or be deemed to be a third party beneficiary hereunder. This Agreement,
the Note, and the other Loan Documents referred to herein embody the final,
entire agreement among the parties hereto and supersede any and all prior
commitments, agreements, representations, and understandings, whether written or
oral, relating to the subject matter hereof and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto. There are no oral agreements among the
parties hereto. Borrower and Lender acknowledge that each of them has had the
benefit of legal counsel of its own choice and has been afforded an opportunity
to review this Agreement and the other Loan Documents with its legal counsel and
that this Agreement and the other Loan Documents shall be construed as if
jointly drafted by Borrower and Lender. If any term, condition or provision of
this Agreement shall be inconsistent with any term, condition or provision of
any other Loan Document, this Agreement shall control. This Agreement and any
amendments, waivers, consents, or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which counterparts together shall constitute but one and the same instrument.
This Agreement shall become effective upon the execution of a counterpart hereof
by each of the parties hereto.
11.8 APPLICABLE LAW. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE LOAN AND LOAN
DOCUMENTS HAVE A SUBSTANTIAL NEXUS TO THE STATE OF NEW YORK AND AGREE THAT THIS
AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-75-
11.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
except that Borrower may not assign its rights or obligations hereunder or under
any of the other Loan Documents without the written consent of Lender. Any
assignee of Lender's interest in the Loan Documents shall take the same free and
clear of all offsets, counterclaims or defenses which are unrelated to the Loan
Documents which Borrower may otherwise have against any assignor of the Loan
Documents.
11.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. BORROWER HEREBY CONSENTS
TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF
NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS MORTGAGED PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE
NOTE, SUCH OTHER LOAN DOCUMENTS OR SUCH OBLIGATION. BORROWER DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM AND SUCH OTHER PERSONS AS MAY HEREAFTER BE
SELECTED BY BORROWER WITH LENDER'S APPROVAL WHICH IRREVOCABLY AGREE IN WRITING
TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY
SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO BORROWER AT ITS
ADDRESS PROVIDED IN SUBSECTION 11.5 EXCEPT THAT UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY BORROWER AS ITS AGENT FOR SERVICE
OF PROCESS REFUSES TO ACCEPT SERVICE OF PROCESS, BORROWER HEREBY AGREES THAT
SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT SERVICE. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND LENDER/BORROWER
RELATIONSHIP THAT IS BEING ESTABLISHED. BORROWER AND LENDER ALSO WAIVE ANY BOND
OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF BORROWER OR LENDER.
-76-
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER AND LENDER ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.12 PUBLICITY. Lender (and Lender's Affiliates) may, subject to the
applicable limitations on distribution of Confidential Information set forth in
this Section 11.12 and subject to the approval of Guarantor, such approval not
to be unreasonably withheld, and Borrower does hereby authorize Lender (and its
Affiliates) to, refer, in its sole discretion, to the Loan in tombstone
advertisements, offering memoranda in connection with Securitizations and
reports to investors, which references, may include use of photographs, drawings
and other depictions, images of the Land and Improvements (provided that such
photographs, drawings and other depictions, and/or images shall not include
floor plans of the area behind the barrier or other trade secrets), a
description of the Loan, use of Borrower's name, the address of the Mortgaged
Property and the logo of Borrower and/or Guarantor. Borrower shall cause the
owner of such "logo" rights to consent to such use upon request from Lender at
the Closing. Lender hereby agrees that (i) any written information, data,
documents, etc. delivered in connection with the making of the Loan which has
been expressly designated as such by notice to Lender from Borrower, (ii) any
information contained in the books and records of Borrower, Guarantor or
Borrower Representative which is either confidential, proprietary, or otherwise
not generally available to the public (but excluding information Lender has
obtained independently from third-party sources without Lender's knowledge that
the source has violated any fiduciary or other duty not to disclose such
information) and which has been expressly designated as such by notice to Lender
from Borrower, (iii) any financial statements of Borrower provided pursuant to
this Agreement which are not publicly available and which has been expressly
designated as confidential by notice to Lender from Borrower, and (iv) any other
information, data, documents, etc. which are delivered to or received by Lender
and which are conspicuously stamped or marked "CONFIDENTIAL", or, if delivered
or received pursuant to an oral communication, such communication is
subsequently referred to in a writing memorializing such communication delivered
to Lender within thirty (30) days of such communication and marked as
"CONFIDENTIAL" (collectively, the "CONFIDENTIAL INFORMATION"), will be kept
confidential by
-77-
Lender, using the same standard of care in safeguarding the Confidential
Information as Lender employs in protecting its own proprietary information
which Lender desires not to disseminate or publish. Notwithstanding the
foregoing, Confidential Information may be disseminated (a) pursuant to the
requirements of applicable law, (b) pursuant to judicial process, administrative
agency process or order of Governmental Authority, (c) in connection with
litigation, arbitration proceedings or administrative proceedings before or by
any Governmental Authority or stock exchange, (d) to Lender's attorneys,
accountants, advisors and actual or prospective financing sources who will be
instructed to comply with this Section 11.12, (e) to the Rating Agencies, (f) to
actual or prospective trustees, assignees, pledgees, participants, agents,
servicers, or securities holders in a Securitization, and (g) pursuant to the
requirements or rules of a stock exchange or stock trading system on which the
Securities of Lender or its Affiliates may be listed or traded. In addition,
notwithstanding any other provision, any party (and its employee, representative
or other agent) may disclose to any and all persons, without limitation of any
kind, any information with respect to the tax treatment and tax structure of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment and tax structure, if required by applicable law. For purposes of
this Section 11.12, Confidential Information will not be deemed to include the
Loan amount and the other terms, conditions and provisions of the Loan
Documents, the street address and common name, if any, of the Land and
Improvements and the name of Borrower and Guarantor, the logo of Borrower and
/or Guarantor and photographs or other depictions of the Mortgaged Property
(provided that such photographs or other depictions shall not include floor
plans of the area behind the barrier or other trade secrets). Notwithstanding
the foregoing, in the event Borrower or Guarantor conspicuously marks specific
information, data, documents, etc. or with respect to an oral communication, in
a subsequent writing memorializing such communication delivered to Lender within
thirty (30) days of such communication marked as, "CONFIDENTIAL: FOR LENDER'S
INTERNAL USE ONLY; NOT FOR DISTRIBUTION," then Lender may only disseminate such
information, data, documents, etc. pursuant to the requirements of applicable
law (including pursuant to an order of a Governmental Authority) or pursuant to
the written consent of Borrower or Guarantor.
11.13 RECOURSE LOAN. Borrower shall have full personal recourse liability for
the Obligations incurred under this Agreement, this Note or any of the other
Loan Documents.
11.14 PERFORMANCE BY LENDER/ATTORNEY-IN-FACT. In the event that Borrower shall
at any time fail to duly and punctually pay, perform, observe or comply with any
of its covenants and agreements hereunder or under the other Loan Documents or
if any Event of Default hereunder shall exist, then Lender may (but shall in no
event be required to) make any such payment or perform any such term, provision,
condition, covenant or agreement or cure any such Event of Default. Lender shall
not take action under this Section 11.14 prior to the occurrence of an Event of
Default unless in Lender's good faith judgment reasonably exercised, such action
is necessary or appropriate in order to preserve the value of the Collateral, to
protect Persons or property, or Borrower has abandoned the Mortgaged Property or
any portion thereof. Lender shall not be obligated to continue any such action
having commenced the same and may cease the same without notice to Borrower. Any
amounts expended by Lender in connection with such action shall constitute
additional advances hereunder, the payment of which is additional Indebtedness,
secured by the Loan Documents and shall become due and payable within five (5)
Business Days of written notice by Lender upon demand by Lender, with interest
at the Default
-78-
Rate from the date of disbursement thereof until fully paid. No further
direction or authorization from Borrower shall be necessary for such
disbursements. The execution of this Agreement by Borrower shall and hereby does
constitute an irrevocable direction and authorization to Lender to so disburse
such funds. To the extent permitted by law, Borrower hereby irrevocably appoints
Lender, as its attorney-in-fact, coupled with an interest, with full authority
in the place and stead of Borrower and in the name of Borrower or otherwise (A)
during the existence of an Event of Default in the discretion of Lender, to take
any action and to execute any instrument which Lender may deem necessary to
accomplish the purpose of this Agreement or any other Loan Document, including
the following: (i) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for monies due and to become due under
or in respect of the Accounts and/or any of the Reserve Account Collateral; (ii)
to receive, endorse, and collect (x) any Gross Revenues, (y) any instruments
made payable to any Borrower representing any dividend, payment of principal,
interest, redemption price, purchase price or other distribution or payment in
respect of any Reserve Account Collateral, or (z) any other instruments,
documents and chattel paper received in connection with this Agreement or any
other Loan Document; and (iii) to file any claims, or take any action or
institute any proceedings which Lender shall deem necessary or desirable for the
collection of any Gross Revenues in the event Borrower shall fail to do so, or
to otherwise enforce the rights of Lender with respect to this Agreement; (B) to
execute and/or file, without the signature of Borrower any Uniform Commercial
Code financing statements, continuation statements, or other filing, and any
amendment thereof, relating to the Reserve Account Collateral; (C) to give
notice to any third parties which may be required to perfect Lender's security
interest in the Reserve Account Collateral; and (D) during the existence of an
Event of Default, to register, purchase, sell, assign, transfer, pledge or take
any other action with respect to any Reserve Account Collateral in accordance
with this Agreement or any Loan Document. Lender shall notify Borrower of
Lender's taking of any action as attorney-in-fact, or otherwise in Borrower's
name, pursuant to the provisions of this Section.
11.15 BROKERAGE CLAIMS. Borrower shall protect, defend, indemnify and hold
Lender harmless from and against all loss, cost, liability and expense incurred
as a result of any claim for a broker's or finder's fee against Lender or any
Person, in connection with the transaction herein contemplated, provided such
claim is made by or arises through or under Borrower or is based in whole or in
part upon alleged acts or omissions of Borrower. Lender shall protect, defend,
indemnify and hold Borrower harmless from and against all loss, cost, liability
and expense incurred as a result of any claim for a broker's or finder's fee
against Borrower or any other Person in connection with the transaction herein
contemplated, provided such claim is made by or arises through or under Lender
or is based in whole or in part upon alleged acts or omissions of Lender.
11.16 AGREEMENT. THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,
AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN LENDER AND BORROWER CONCERNING
THE SUBJECT MATTER HEREOF AND OF THE OTHER LOAN DOCUMENTS ARE SUPERSEDED BY AND
MERGED INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS MAY NOT BE VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS
THAT
-79-
OCCUR BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION OF THIS
LOAN AGREEMENT OR THE LOAN DOCUMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
11.17 RELEASE OF EXCESS LAND. In the event that Borrower wishes to develop an
additional building on a portion of the Excess Land containing not more than
91,000 rentable square feet (the "ADDITIONAL DEVELOPMENT") at any time prior to
the Maturity Date, then Borrower shall deliver written notice (the "ADDITIONAL
DEVELOPMENT NOTICE") to Lender which shall include the following: (i) a
statement of Borrower's intent to construct the Additional Development, (ii) a
statement of Borrower's belief that the Release Conditions (defined below) have
been satisfied, and (iii) a copy of the Appraisal (defined below). During the
thirty (30)-day period following Lender's receipt of the Additional Development
Notice, Lender and Borrower shall negotiate in good faith to arrange
construction and/or permanent financing with respect to the Additional
Development. During such thirty (30)-day period, Borrower shall negotiate
exclusively and in good faith with Lender with respect to said financing. If
Borrower and Lender are unable to agree upon terms with respect to such
construction and/or permanent financing within the aforementioned thirty
(30)-day period, then upon written notice to Lender, Borrower may pursue the
arrangement of construction and/or permanent financing with respect to the
Additional Development from a third party lender.
Simultaneously with the closing for the construction and/or permanent
financing with respect to the Additional Development, provided that the Release
Conditions have been satisfied and Lender has received the Excess Land Principal
Reduction Amount (defined below), Lender shall release the Excess Land from the
Liens created in favor of Lender pursuant to the Loan Documents and amend the
Loan Documents to exclude the Excess Land from the Mortgaged Property.
Simultaneously with, and in consideration of, Lender's release of the Excess
Land from the Liens created in favor of Lender pursuant to the Loan Documents,
Borrower shall pay to Lender an amount equal to the sum of (A) the Fair Market
Value (as defined below) of the Excess Land ("EXCESS LAND PRINCIPAL REDUCTION
AMOUNT"), which payment shall be used to reduce the then outstanding principal
balance of the Loan, and (B) the Prepayment Premium payable as a result of the
partial prepayment of the Loan by Borrower's delivery of the Excess Land
Principal Reduction Amount to Lender.
In connection with the Additional Development, Lender hereby agrees that if
same is required by Borrower or Borrower's Mortgagee (defined below), Lender
shall enter into reciprocal easement agreements, temporary construction
easements, and/or other easement agreements reasonably acceptable to Borrower,
Lender and Borrower's mortgagee with respect to the Excess Land (if such
mortgagee is other than Lender ("BORROWER'S MORTGAGEE")), providing for (1)
mutual restrictive covenants regarding the use of each of the Excess Land and
the remaining Mortgaged Property in a manner that does not adversely affect the
operation of the remaining Mortgaged Property and that does not violate any
Permitted Encumbrance; and (2) appropriate rights with respect to access,
egress, utilities and parking, and for the maintenance of
-80-
access roads, curb cuts, utilities and common facilities (including parking
facilities) to be shared by each of the Excess Land and the remaining Mortgaged
Property.
Lender hereby acknowledges and agrees that Section 2.4(C) of the Loan
Agreement pertaining to the restriction imposed against Borrower making
non-scheduled principal payments prior to the Lockout Expiration Date shall not
apply to the payment of the Excess Land Principal Reduction Amount by Borrower
prior to said Lockout Expiration Date, nor shall the restriction set forth in
Section 2.4(C) of the Loan Agreement pertaining to partial prepayments of the
Loan apply to the payment of the Excess Land Principal Reduction Amount by
Borrower to Lender. Any and all reasonable costs and expenses approved in
advance by Borrower that are incurred by, or on behalf of Lender in connection
with releasing the Excess Land from the Liens created in favor of Lender under
the Loan Documents or the attempt by Lender to arrange financing with respect to
the Additional Development, shall be reimbursed by Borrower within ten (10)
Business Days following Lender's written request therefore.
For purposes hereof, "EXCESS LAND" shall mean the portion of the Land
marked as "Excess Land" on Exhibit G hereto.
For purposes hereof, the following shall constitute the "RELEASE
CONDITIONS" that must be satisfied prior to Borrower having the right to cause
Lender to release the Excess Land from the Liens created in favor of Lender
pursuant to the Loan Documents:
(i) at the time of Borrower's request for the release of the Excess
Land, no Event of Default must then exist or be continuing;
(ii) at the time of Borrower's request for release of the Excess Land,
Borrower shall have obtained an appraisal of the Excess Land performed by
an MAI certified appraiser selected by Borrower, and approved by Lender,
said approval not to be unreasonably withheld, conditioned or delayed,
which appraisal shall be in a form reasonably acceptable to Lender (the
"APPRAISAL"), and
(iii) neither the release of the Excess Land from the Liens created by
the Loan Documents nor Borrower's development of the Additional Development
shall result in a Material Adverse Effect.
For purposes hereof, the "FAIR MARKET VALUE" shall be the fair market value
of the Excess Land as agreed upon by the Borrower and Lender; provided that if
Borrower and Lender are unable to reach an agreement on the fair market value
after reasonable negotiations, the fair market value of the Excess Land shall be
determined by the agreement of two (2) appraisers (each, an "INITIAL
APPRAISER"), one of which shall be selected by Borrower and the other of which
shall be selected by Lender. Each of Borrower and Lender shall direct, in
writing with a copy to the other party, its Initial Appraiser to work with the
other party's Initial Appraiser to endeavor to determine and reach agreement
upon the fair market value of the Excess Land, and thereafter to deliver in
writing to Borrower and Landlord within thirty (30) days (such thirty (30)-day
period, the "VALUATION PERIOD") the agreed-upon fair market value (the
"VALUATION NOTICE"). The costs and expenses of each Initial Appraiser shall be
paid by Borrower.
-81-
If the Initial Appraisers are not able to reach agreement upon the fair
market value within the Valuation Period, within ten (10) days after the end of
the Valuation Period each Initial Appraiser shall deliver a written notice to
Borrower, Lender, and the other Initial Appraiser setting forth (i) such Initial
Appraiser's valuation of the fair market value (each, an "INITIAL VALUATION")
and (ii) the name, address and qualifications of a third appraiser selected
jointly by the Initial Appraisers (the "THIRD APPRAISER"); provided that if the
higher of the valuations of the two Initial Appraisers is within ten percent
(10%) of the lower valuation, then the arithmetic average of the valuations of
the Initial Appraisers shall be the "Fair Market Value" for the Excess Land and
the parties shall not be required to engage the Third Appraiser. The Initial
Appraisers shall, in writing with a copy to Borrower and Lender, direct the
Third Appraiser (or substitute Third Appraiser) to determine a valuation of the
fair market value of the Excess Land, and to deliver in writing to Borrower,
Lender and the Initial Appraisers such valuation (the "THIRD VALUATION") within
twenty (20) days of the date of the written direction retaining such Third
Appraiser. The fair market value shall be the arithmetic mean of (A) the Third
Valuation and (B) the Initial Valuation closer to the Third Valuation. If the
Third Valuation is exactly between the two Initial Valuations, then the fair
market value shall be the Third Valuation. If the Initial Appraisers are unable
to agree upon the designation of a Third Appraiser within the requisite time
period or if the Third Appraiser selected does not make a valuation of the fair
market value within twenty (20) calendar days after being directed by the
Initial Appraisers, then such Third Appraiser or a substitute Third Appraiser,
as applicable, shall, at the request of Lender, be appointed by the President or
Chairman of the American Arbitration Association in the area in which the Excess
Land is located. The costs and expenses of the Third Appraiser (and substitute
Third Appraiser and the American Arbitration Association, if applicable) shall
be paid by Borrower.
All appraisers selected or appointed pursuant to this Section 11.17 shall
be independent qualified appraisers. Such appraisers shall have no right, power
or authority to alter or modify the provisions of this Agreement, and such
appraisers shall determine the fair market value of the Excess Land.
-82-
Witness the due execution hereof by the undersigned as of the date first
written above.
BORROWER:
LEX-GEN WOODLANDS, L.P.,
a Delaware limited partnership
By: Lex-Gen Woodlands GP, LLC,
a Delaware limited liability
company, its sole general partner
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LENDER:
iSTAR FINANCIAL INC.,
a Maryland corporation
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
Exhibit A
Legal Description
1
Exhibit B
List of Equipment and Personalty
- ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ modular lab casework and lab furniture
- Teknion Altos modular wall system
- Environmental cold and warm rooms
- Getinge Castle tunnel cage washers
- Getinge Castle cage rack washers
- Getinge Castle bedding disposal and dispensing/filling systems
- Getinge Castle bulk steam sterilizers/autoclaves
- AVAYA Definity phone switch
- Voice and data patch bays
- Dumpster containers, to the extent owned by Borrower
- CO(2) distribution piping and regulators at the source
- Reverse osmosis / de-ionized water systems
- All fixed mechanical, electrical and plumbing systems, active or redundant,
including emergency generators, server room AC and UPS units and air
compressors. - Kitchen and food service equipment, to the extent owned by
Borrower and affixed to the Improvements, whose removal would require
material repairs to be made
- CCTV monitors, multiplexers, recorders, security badge station with
printer, camera, etc., to the extent required to operate the security
software system
- A workstation or server with all peripherals, if and to the extent
necessary to operate the software systems listed in Exhibit C.
- All red-line, and/or as-built system and facility drawings
- All facility and equipment installation and operation and maintenance
books, drawings, special tools and materials
- Biological materials digester and Bio-hazard dumpster disposal unit
2
Exhibit C
List of General Intangibles
- ▇▇▇▇▇▇▇ vivarium environmental monitoring software and installed database
- Teletrol HVAC controls software and installed database
- CCure 800 security software, including ID, NETVUE, etc (if installed) and
installed database
- Micromain work order software and installed database
3
Exhibit D
Permitted Encumbrances
a. Restrictions as set out under File Nos. 8624668, 8647645, 2000-084612,
9353446, 9886434, 2000-090175, 9357930, 2000-090176 and 2000-090177 in
the Official Public Records of Real Property of ▇▇▇▇▇▇▇▇▇▇ County,
Texas, and Cabinet O, Sheet 180, Cabinet E, Sheet 193A and Cabinet G,
Sheet 68B of the Map Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas
b. Restrictions as set out under File Nos 8610313, 8620448, 9429755,
9445768 and 2000-104003 of the Real Property of ▇▇▇▇▇▇▇▇▇▇ County,
Texas, and in Cabinet E, Sheet 163B and 164A of the Map Records of
▇▇▇▇▇▇▇▇▇▇ County, Texas.
c. Restrictions as set out under File Nos 8807519, 9429754, 9445769 and
9445792 of the real Property of ▇▇▇▇▇▇▇▇▇▇ County, Texas, and in
Cabinet F, Sheet 24 of the Map Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
Deleting from each of a, b and c above any covenant or restriction based on
race, color, religion, sex, handicap, familial status, or national origin.
d. Easements and Building lines as shown on maps filed of record in
Cabinet E, Sheet 193, Cabinet O, Sheet 180 and Cabinet G, Sheet 68B
all of the Map Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
e. Easement 10 feet wide along the front and rear property line and 5
feet wide along the side property lines of the property as reserved by
instrument recorded under County Clerk's File No. 8624668 of the Real
Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas. Partial Release as to
strip 10 feet wide along the northeast boundary line of subject
property recorded under Clerk's File No. 2000-086442 of the Real
Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas. (Applies to 6.1797 acres
of Tract I)
f. Forest preserves and Pathway easements as imposed by instrument
recorded under Clerk's File Nos. 2000-090175 and 2000-09177 of the
Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
g. Easement 10 feet wide along the front and rear property lines and 5
feet wide along the side property lines of the subject property as
reserved for public utilities by instrument recorded under Clerk's
File No. 9357930, annexed by File No. 2000-090176 of the Real Property
Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas. Partial Release as to strip of
land 10 feet wide running along and adjacent to the southwest boundary
line of subject property as recorded under Clerk's File No.
2000-090190 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
(As to 5.5921 acres of Tract I)
h. Easement 5 feet wide along the southeast property line of the
property, as reserved for public utilities by instrument recorded
under County Clerk's File No. 9353446 and annexed by County Clerk's
File No. 9886434 of the Real Property Records of
4
▇▇▇▇▇▇▇▇▇▇ County, Texas. Partial release as to 10 foot wide strip
along the southwest and northeast boundary lines of subject property
and 5 foot wide strip along the northwest boundary line of subject
property as recorded under Clerk's File No. 2000-086441 of the Real
Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas. (As to a 0.588 acre
portion of Tract I)
i. Utility easement Ten (10) feet in width along the Southeasterly
property line granted to Entergy Gulf States, Inc. recorded under
▇▇▇▇▇▇▇▇▇▇ County Clerk's File No. 2001-081155.
j. An undivided 8.74098% interest of the oil, gas and other minerals, as
conveyed to ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ by Mineral Deed recorded
under Clerk's File No. 8011718 of the Real Property Records of
▇▇▇▇▇▇▇▇▇▇ County, Texas. Title to said interest has not been
investigated subsequent to the date of the aforesaid instrument. (As
to that portion of the property lying in the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Survey,
A-51)
k. All of the oil, gas and other minerals, the royalties, bonuses,
rentals and all other rights in connection with same, and all
subterranean waters including without limitation all percolating
waters and underground reservoirs are expressly excepted here from as
the same are reserved by The Woodlands Commercial Properties Company,
L.P., by instrument recorded under File Nos. 2000-090175 and
2000-090177 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
Surface rights waived therein. Title to said interests have not been
investigated subsequent to the execution date of cited instrument.
l. Annual Maintenance Charge payable to The Woodlands Community
Association, Inc., secured by a Vendor's Lien retained in
instrument(s) filed for record under ▇▇▇▇▇▇▇▇▇▇ County Clerk's File
No(s) 8624668 and 9353446, annexed under Clerk's File No. 9886434.
Said maintenance assessments are subordinated to first liens and
improvement liens.
m. Terms, conditions and stipulations in that certain Non-Exclusive
Reciprocal Access Easement., as described by instrument filed for
record under ▇▇▇▇▇▇▇▇▇▇ County Clerk's File No(s). 8647647, amended
under Clerk's File No. 8713940.
n. Easement for utility purposes 10 feet wide adjacent to, parallel with,
and extending the full length of the northwest, southeast, northeast
and southwest boundary lines of the property as imposed by instrument
recorded under Clerk's File No. 2000-090177 of the Real Property
Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas. (As to 5.5921 acres of Tract I)
o. Terms, conditions and stipulations in that certain Non-Exclusive
Reciprocal Access Easement., as described by instrument filed for
record under ▇▇▇▇▇▇▇▇▇▇ County Clerk's File No(s). 8647647, amended
under Clerk's File No. 8713940.
p. Terms, conditions and stipulations in that certain Reciprocal Easement
Agreement dated December 8, 2000, recorded under Clerk's File No.
2000-104008 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas,
by and between Woodlands Office Equities-'95
5
Limited and First Security Bank, National Association, not
individually, but solely as Owner Trustee under the Lexi Trust 2000-1.
q. All of the oil, gas and other minerals, the royalties, bonuses,
rentals and all other rights in connection with same, and all
subterranean waters including without limitation all percolating
waters and underground reservoirs are expressly excepted here from as
the same are reserved by instrument recorded under File Nos. 9445792
and 2000-104003 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County,
Texas. Surface rights waived therein. Title to said interests have not
been investigated subsequent to the execution date of cited
instruments.
r. Building lines and easements as shown on map recorded in Cabinet E,
Sheet 164-A of the Map Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
s. Forest preserves and Pathway easement as reserved by instrument
recorded under County Clerk's File No. 9445792 and 2000-104003 of the
Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
t. Easement 10 feet wide along the front and rear property lines and 5
feet wide along the side property lines as reserved for public
utilities by instruments recorded under County Clerk's File Nos.
8610313 and 8620448 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County,
Texas.
u. Utility Easement 10 feet wide adjacent to, parallel with, and
extending the full length of each boundary line as reserved by
instrument recorded under County Clerk's File Nos. 9445792 and
2000-104003 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
v. Annual Maintenance Charge payable to The Woodlands Community
Association, Inc., secured by a Vendor's Lien retained in
instrument(s) filed for record under ▇▇▇▇▇▇▇▇▇▇ County Clerk's File
No. 8610313. Said maintenance assessments are subordinated to first
liens and improvement liens.
w. Terms, conditions and stipulations in that certain Reciprocal Easement
Agreement dated December 8, 2000, recorded under Clerk's File No.
2000-104008 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas,
by and between Woodlands Office Equities-'95 Limited and First
Security Bank, National Association, not individually, but solely as
Owner Trustee under the Lexi Trust 2000-1.
x. Building set-back lines as reflected by Cabinet F, Sheet 24A of the
Map Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
y. Forest preserve and Pathway easement as reserved by instrument
recorded under County Clerk's File No. 9445792 of the Real Property
Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
z. Easement 10 feet wide along the southwesterly property line and 5 feet
wide along the side property lines as reserved for public utilities by
instruments recorded under County
6
Clerk's File No. 8807519 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇
County, Texas.
aa. Utility Easement 10 feet wide adjacent to, parallel with, and
extending the full length of each boundary line as reserved by
instrument recorded under County Clerk's File No. 9445792 of the Real
Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
bb. All oil, gas and other minerals, the royalties, bonuses, rentals and
all other rights in connection with same and all subterranean waters
including without limitation all percolating waters and underground
reservoirs and all other rights in connection with same are reserved
by The Woodlands Corporation by instrument filed for record under
▇▇▇▇▇▇▇▇▇▇ County Clerk's File No.9445792. Surface rights waived
therein.
cc. Maintenance assessment payable to the Woodlands Community Association,
Inc. as set forth in instrument recorded under County Clerk's File No.
8807519 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
7
Exhibit E
Required Capital Improvement
Required Capital Improvement Required Completion Date
-------------------------------- ------------------------
Replace Roof at Building 1 April 21, 2009
Replace HVAC units at Building 3 April 21, 2009
8
PROMISSORY NOTE
$34,000,000 April 21, 2004
FOR VALUE RECEIVED, LEX-GEN WOODLANDS, L.P., a Delaware limited partnership
("Borrower"), promises to pay to iSTAR FINANCIAL, INC., a Maryland corporation
("Holder"), or order, at 1114 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or at such other place as Holder may from time to time in writing
designate, in lawful money of the United States of America, the principal sum of
THIRTY FOUR MILLION AND NO/100 DOLLARS ($34,000,000.00) or such other sum as may
be the total amount outstanding pursuant to this Note (the "Loan"), payable at
such rates and at such times as are provided in the "Loan Agreement" (as
hereinafter defined).
Payments of both principal and interest are to be made in lawful money of
the United States of America.
This Promissory Note (this "Note") evidences Indebtedness incurred under,
and is subject to the terms and provisions of, that certain Loan and Security
Agreement of even date herewith, by and among the Borrower and the Holder
(herein, as the same may be further amended, modified or supplemented from time
to time, called the "Loan Agreement"). The Loan Agreement, to which reference is
hereby made, sets forth said terms and provisions, including those under which
this Note may or must be paid prior to its due date or may have its due date
accelerated or extended. The Loan Agreement also contains provisions for the
payment of late charges and interest at the Default Rate, all as more
specifically set forth therein. Repayment of the Indebtedness evidenced by this
Note is secured by the Mortgage and the other Loan Documents referred to in the
Loan Agreement, and reference is made thereto for a statement of terms and
provisions.
Terms used but not otherwise defined herein are used herein as defined in
the Loan Agreement.
This Note may only be prepaid in whole or in part in accordance with the
terms of Section 2.4 of the Loan Agreement (or as otherwise expressly provided
elsewhere in the Loan Agreement or the other Loan Documents). Any payments of
the outstanding principal balance of the Loan evidenced by this Note, whether
voluntary or involuntary, shall be accompanied by interest accrued to the date
of prepayment and the Prepayment Premium, to the extent, if any, provided in
Section 2.4 of the Loan Agreement (except to the extent any other provision of
the Loan Agreement expressly provides otherwise, including, without limitation,
Section 2.2(C) of the Loan Agreement).
EXCEPT AS OTHERWISE EXPRESSLY PERMITTED IN THIS NOTE OR THE OTHER LOAN
DOCUMENTS, BORROWER HEREBY EXPRESSLY (i) WAIVES ANY RIGHTS IT MAY HAVE UNDER LAW
TO PREPAY THIS NOTE, IN WHOLE OR IN PART, WITHOUT PENALTY, UPON ACCELERATION OF
THE MATURITY DATE, AND (ii) AGREES THAT IF, FOR ANY REASON, A PREPAYMENT OF ALL
OR ANY PORTION OF THE PRINCIPAL AMOUNT OF THIS NOTE IS MADE, INCLUDING, WITHOUT
LIMITATION, UPON OR FOLLOWING ANY ACCELERATION OF THE
MATURITY DATE BY HOLDER ON ACCOUNT OF THE OCCURRENCE OF ANY EVENT OF DEFAULT,
INCLUDING, WITHOUT LIMITATION, ANY TRANSFER, DISPOSITION, OR FURTHER ENCUMBRANCE
PROHIBITED OR RESTRICTED BY THE LOAN AGREEMENT, THEN BORROWER SHALL BE OBLIGATED
TO PAY CONCURRENTLY WITH SUCH PREPAYMENT THE PREPAYMENT PREMIUM TO THE EXTENT
REQUIRED UNDER SECTION 2.4 OF THE LOAN AGREEMENT. BY INITIALING THIS PROVISION
IN THE SPACE PROVIDED BELOW, BORROWER HEREBY DECLARES THAT (1) EACH OF THE
MATTERS SET FORTH IN THIS PARAGRAPH IS TRUE AND CORRECT, (2) HOLDER'S AGREEMENT
TO MAKE THE LOAN EVIDENCED BY THIS NOTE AT THE INTEREST RATES SET FORTH IN THE
LOAN AGREEMENT AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE
CONSIDERATION FOR THIS WAIVER AND AGREEMENT, AND HAS BEEN GIVEN INDIVIDUAL
WEIGHT BY BORROWER AND HOLDER, (3) BORROWER IS A SOPHISTICATED AND KNOWLEDGEABLE
REAL ESTATE INVESTOR WITH COMPETENT AND INDEPENDENT LEGAL COUNSEL, AND (4)
BORROWER FULLY UNDERSTANDS THE EFFECT OF THIS WAIVER AND AGREEMENT.
-------------------------
On behalf of the Borrower
The remedies of Holder, as provided in this Note, the Loan Agreement and
the other Loan Documents, shall be cumulative and concurrent and may be pursued
singularly, successively or together, at the sole discretion of Holder, and may
be exercised as often as occasion therefor shall occur; and the failure to
exercise any such right or remedy shall in no event be construed as a waiver or
release thereof. In any action, sale of collateral, or other proceedings to
enforce this Note, the Loan Agreement or any other Loan Document, Holder need
not file or produce the original of this Note, but only need file or produce a
photocopy of this Note certified by Holder to be a true and correct copy of this
Note.
In the event of any dispute, action or lawsuit regarding the terms hereof,
subject to the provisions of the Loan Agreement, the prevailing party will have
the right to recover from the other party all court costs and reasonable
attorneys' fees and disbursements incurred with respect thereto, in addition to
all other applicable damages and costs.
BORROWER WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, DILIGENCE,
PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF DEMAND, NOTICE OF PROTEST, NOTICE OF
NONPAYMENT OR DISHONOR, NOTICE OF INTENTION TO ACCELERATE, NOTICE OF
ACCELERATION, PROTEST AND NOTICE OF PROTEST OF THIS NOTE, AND ALL OTHER NOTICES
(OTHER THAN AS EXPRESSLY PROVIDED IN THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS)
IN CONNECTION WITH THE DELIVERY, ACCEPTANCE, PERFORMANCE, DEFAULT OR ENFORCEMENT
OF THE PAYMENT OF THIS NOTE. BORROWER FURTHER WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL VALUATION AND APPRAISEMENT PRIVILEGES, CLAIMS OF LACK OF
DILIGENCE OR DELAYS IN COLLECTION OR ENFORCEMENT OF THIS NOTE, THE RELEASE OF
ANY PARTY LIABLE, THE RELEASE OF ANY SECURITY FOR THE DEBT, THE TAKING OF ANY
ADDITIONAL SECURITY AND ANY OTHER INDULGENCE OF FORBEARANCE.
2
Holder shall not be deemed, by any act of omission or commission, to have
waived any of its rights or remedies hereunder unless such waiver is in writing
and signed by Holder, and then only to the extent specifically set forth in the
writing. The acceptance by Holder of any payment hereunder which is less than
payment in full of all amounts due and payable at the time of such payment shall
not constitute a waiver of the right to exercise any of the foregoing options at
that time or at any subsequent time or nullify any prior exercise of any such
option without the express consent of Holder, except as and to the extent
otherwise provided by law. A waiver with reference to one event shall not be
construed as continuing or as a bar to or waiver of any right or remedy as to a
subsequent event.
PURSUANT TO SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BORROWER AND ANY GUARANTOR OF THIS NOTE AGREE THAT THIS NOTE AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF AMERICA AND THE LAWS OF THE
STATE OF NEW YORK.
Whenever used, the singular number shall include the plural, the plural
shall include the singular, and the words "Holder" and "Borrower" shall be
deemed to include their respective heirs, executors, successors and assigns.
All notices which Holder or Borrower may be required or permitted to give
hereunder shall be made in the same manner as set forth in Section 11.5 of the
Loan Agreement.
In the event any one or more of the provisions hereof shall be invalid,
illegal or unenforceable in any respect, the validity of the remaining
provisions hereof shall be in no way affected, prejudiced or disturbed thereby.
Borrower acknowledges that Holder may, in its sole discretion, sell all or
any part of its interest in the Loan evidenced by this Note, including, without
limitation, for purposes of effecting a Securitization.
Notwithstanding anything to the contrary contained in this Note or any
other Loan Documents, to the fullest extent permitted by applicable law, the
Holder's rights hereunder shall be reinstated and revived, and the
enforceability of this Note and the other Loan Documents shall continue, with
respect to any amount at any time paid on account of the Loan which thereafter
shall be required to be restored by Holder pursuant to a court order or judgment
(whether or not final or non-appealable), as though such amount had not been
paid. The rights of Holder created or granted herein and the enforceability of
the Loan Documents at all times shall, to the fullest extent permitted by
applicable law, remain effective to cover the full amount of the Loan even
though the Loan, including any part thereof or any other security or guaranty
therefor, may be or hereafter may become invalid or otherwise unenforceable as
against any other party and whether or not any other party shall have any
personal liability with respect thereto.
Borrower and Holder, by acceptance of this Note, hereby agree that the Loan
Documents supersede any prior oral or written agreements of the parties; without
limiting the generality of
3
the foregoing, in the event of conflict between the terms of this Note and the
terms of the Loan Agreement, the terms of the Loan Agreement shall prevail.
Time is of the essence for the performance of each and every covenant of
the parties hereunder or under the other Loan Documents. No excuse, delay, act
of God, or other reason, whether or not within the control of Borrower or Holder
(as the case may be), shall operate to defer, reduce or waive Borrower's or
Holder's (as the case may be) performance of any such covenant or obligation.
(END OF PAGE)
4
IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has
duly executed this Note the day and year first above written.
BORROWER:
LEX-GEN WOODLANDS, L.P., a
Delaware limited partnership
By: Lex-Gen Woodlands GP, LLC, a
Delaware limited liability company
and its sole general partner
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
GUARANTY
THIS GUARANTY (this "GUARANTY"), dated as of April 21, 2004, is made and
entered into by LEXICON GENETICS INCORPORATED, a Delaware corporation
("GUARANTOR"), in favor of iSTAR FINANCIAL INC., a Maryland corporation
("LENDER"), with an address for notice hereunder of 1114 Avenue of the ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Lex-Gen Woodlands, L.P., a Delaware limited partnership
("BORROWER"), and Lender have entered into a certain Loan and Security Agreement
of even date herewith (as the same may be amended, modified, supplemented or
restated from time to time, the "LOAN AGREEMENT").
WHEREAS, Lender has required, as a condition to making the Loan and
entering into and executing the Loan Agreement and the other Loan Documents,
that Guarantor enter into this Guaranty.
WHEREAS, Guarantor directly or indirectly owns all of the ownership
interests in the Borrower and will benefit from the making of the Loan and the
financial accommodations extended to Borrower pursuant to the Loan Agreement and
the other Loan Documents.
NOW, THEREFORE, in consideration for the extension of credit and other good
and valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, and to induce Lender to extend credit to Borrower,
Guarantor does hereby unconditionally, absolutely and irrevocably guarantee to
Lender, its successors and assigns, the due payment, fulfillment and performance
of the "GUARANTEED OBLIGATIONS" (as hereinafter defined). Guarantor, hereby
irrevocably and unconditionally covenants and agrees that it is liable for and
shall pay, the Guaranteed Obligations as primary obligor, this Guaranty being
upon the following terms and conditions:
1. Definitions. All capitalized terms used but not otherwise defined
herein shall have the meanings ascribed thereto in the Loan Agreement. As used
herein, the term "GUARANTEED OBLIGATIONS" means the full, complete and punctual
observance, performance, payment and satisfaction of all of the Borrower's
Obligations. The failure by Guarantor to pay or perform any Guaranteed
Obligations, after expiration of any applicable notice and cure periods provided
to Borrower, without duplication thereof, or any other covenant, agreement or
obligation of Guarantor under this Guaranty or the inaccuracy when made, or
deemed made, of any representations, certifications and warranties of Guarantor
in this Guaranty or in any certificate, agreement or document provided by, or on
behalf of Guarantor, pursuant to this Guaranty or any of the other Loan
Documents shall constitute an "Event of Default" for purposes of this Guaranty
and the Loan Agreement.
2. Continuing Guaranty. This is an irrevocable, absolute, continuing
guaranty of payment and performance. This Guaranty may not be revoked by
Guarantor and shall continue to be effective with respect to the Guaranteed
Obligations arising or created after any attempted revocation by Guarantor and
after Guarantor's dissolution (in which event this Guaranty shall be binding
upon Guarantor's successors and assigns). It is the intent of Guarantor that the
obligations and liabilities of Guarantor hereunder are absolute and
unconditional under any and all circumstances and that until the Guaranteed
Obligations are fully, finally and indefeasibly satisfied, such obligations and
liabilities shall not be discharged or released in whole or in part, by any act
or occurrence which might, but for the provisions of this Guaranty, be deemed a
legal or equitable discharge or release of Guarantor. Each and every default in
payment of any amounts due or performance of any obligation required under this
Guaranty shall give rise to a separate cause of action hereunder, and separate
suits may be brought hereunder as each cause of action arises, or, in the
discretion of Lender, may be brought as a consolidated suit or suits.
3. Waivers.
(a) Guarantor hereby assents to all terms and agreements heretofore or
hereafter made by Borrower with Lender, and, to the fullest extent permitted by
applicable law, waives notice of:
(i) Any loans or advances made by Lender to Borrower under the
Loan Documents;
(ii) The present existence or future incurring of any of the
indebtedness pursuant to the Note or any future modifications thereof or any
terms or amounts thereof or any Guaranteed Obligations or any terms or amounts
thereof;
(iii) The obtaining or release of any guaranty or surety
agreement (in addition to this Guaranty), pledge, assignment, or other security
for any of the indebtedness evidenced by the Note, or any Guaranteed
Obligations; and
(iv) Notice of protest, default, notice of intent to accelerate
and notice of acceleration in relation to any instrument relating to the
indebtedness evidenced by the Note or any Guaranteed Obligations.
(b) Guarantor hereby waives, to the fullest extent permitted by
applicable law, any rights and defenses which such Guarantor might have as a
result of any representation, warranty or statement made by Lender or its agents
to such Guarantor in order to induce Guarantor to execute this Guaranty.
(c) Regardless of whether Guarantor may have made any payments to
Lender, until the Loan is indefeasibly paid in full and except as set forth in
Section 10 hereof, Guarantor hereby waives, to the fullest extent permitted by
applicable law: (i) all rights of subrogation, indemnification, contribution and
any other rights to collect reimbursement from Borrower or any other party for
any sums paid to Lender, whether contractual or arising by operation of law
(including the United States Bankruptcy Code or any successor or similar
statute) or otherwise, (ii) all rights to enforce any remedy that Lender may
have against Borrower, and (iii) all rights to participate in any security now
or later to be held by Lender for the Loan.
-2-
(d) Guarantor further waives, to the fullest extent permitted by
applicable law, any defense to the recovery by Lender against Guarantor of any
deficiency or otherwise to the enforcement of this Guaranty or any security for
this Guaranty based upon Lender's election of any remedy against Guarantor or
Borrower, including the defense to enforcement of this Guaranty by virtue of any
"anti-deficiency" statutes and their application following a non-judicial
foreclosure sale.
4. Events and Circumstances Not Reducing or Discharging Guarantor's
Obligations. Guarantor hereby consents and agrees to each of the following, and
agrees that Guarantor's obligations under this Guaranty shall not be released,
diminished, impaired, reduced or adversely affected by any of the following, and
waives, to the fullest extent permitted by applicable law, any rights and
defenses (excluding the rights to notice, if any, as herein provided or as
required by law) which Guarantor might have otherwise as a result of or in
connection with any of the following:
(a) any and all extensions, modifications, adjustments, indulgences,
forbearances or compromises that might be granted or given by Lender to
Borrower, including, without limitation, any and all amendments, modifications,
supplements, extensions or restatements of any of the Loan Documents;
(b) the insolvency, bankruptcy, rearrangement, adjustment,
composition, liquidation, disability, dissolution or lack of power of Borrower
or any other party at any time liable for the payment of all or part of the
indebtedness evidenced by the Note or any Guaranteed Obligations; or any
dissolution, consolidation or merger of Borrower or Guarantor, or any sale,
lease or transfer of any or all of the assets of Borrower or Guarantor, or any
changes in the ownership, partners or members of Borrower or Guarantor;
(c) the invalidity, illegality or unenforceability of all or any part
of the indebtedness evidenced by the Note or any Guaranteed Obligations, or any
document or agreement executed in connection with the indebtedness evidenced by
the Note or any Guaranteed Obligations, for any reason whatsoever, including,
without limitation, the fact that the indebtedness evidenced by the Note, or any
part thereof exceeds the amount permitted by law, the act of creating the
indebtedness evidenced by the Note or any Guaranteed Obligations or any part
thereof is ultra ▇▇▇▇▇, the representatives executing the Note or the other Loan
Documents or otherwise creating the indebtedness evidenced by the Note or any
Guaranteed Obligations acted in excess of their authority, the indebtedness
evidenced by the Note violates applicable usury laws, Borrower has valid
defenses, claims or offsets (whether at law, in equity or by agreement) which
render the indebtedness evidenced by the Note or any Guaranteed Obligations
wholly or partially uncollectible from Borrower, the creation, performance or
repayment of the indebtedness evidenced by the Note or any Guaranteed
Obligations is illegal, uncollectible, legally impossible or unenforceable, or
any of the other Loan Documents pertaining to the indebtedness evidenced by the
Note or any Guaranteed Obligations are irregular or not genuine or authentic;
provided, however, the foregoing shall not prohibit Guarantor from (i) asserting
a defense of performance, (ii) asserting a compulsory counterclaim on an action
-3-
brought under this Guaranty, or (iii) subject to the remaining terms of the Loan
Documents, bringing a separate action against Lender for breaches of Lender's
obligations under the Loan Documents;
(d) the taking or accepting of any other security, collateral or
guaranty, or other assurance of the payment, for all or any of the indebtedness
evidenced by the Note or any Guaranteed Obligations;
(e) any release, surrender or exchange of any collateral, property or
security, at any time existing in connection with, or assuring or securing
payment of, all or any part of the indebtedness evidenced by the Note or the
Guaranteed Obligations;
(f) the failure of Lender or any other party to exercise diligence or
reasonable care in the preservation, protection, enforcement, sale or other
handling or treatment of all or any part of such collateral, property or
security;
(g) the fact that any collateral, security, security interest or lien
contemplated or intended to be given, created or granted as security for the
repayment of the indebtedness evidenced by the Note or Guaranteed Obligations
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other security interest or lien, it being recognized and
agreed by Guarantor that Guarantor is not entering into this Guaranty in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
indebtedness evidenced by the Note or the Guaranteed Obligations; or
(h) any payment by Borrower to Lender is held to constitute a
preference under the Bankruptcy Code, or for any reason Lender is required to
refund such payment or pay such amounts to such Borrower, or any other Person.
It is the unambiguous and unequivocal intention of Guarantor that Guarantor
shall be obligated to pay and perform the Guaranteed Obligations when due,
notwithstanding any occurrence, circumstance, event, action or omission
whatsoever, whether contemplated or uncontemplated, and whether or not otherwise
or particularly described herein, except for the full and final payment and
satisfaction of all Guaranteed Obligations.
5. Payment by Guarantor. If the Guaranteed Obligations, or any part
thereof, are not punctually paid or performed (following the expiration of any
applicable notice and cure periods), as the case may be, Guarantor shall,
immediately on demand and without protest or notice of protest, pay the amount
due thereon to Lender, at its address set forth above or as otherwise designated
by Lender. Such demand(s) may be made at any time coincident with or after the
time for payment or performance of all or part of the Guaranteed Obligations.
Such demand shall be deemed made if given in accordance with Section 18 hereof.
It shall not be necessary for Lender, in order to enforce such payment or
performance by Guarantor, first to institute suit or exhaust its remedies
against Borrower, or others liable to pay or perform such Guaranteed
Obligations, or to enforce its rights against any security which shall ever have
been
-4-
given to secure the Guaranteed Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
indebtedness evidenced by the Note or Guaranteed Obligations.
6. Indebtedness or Other Obligations of Guarantor. If Guarantor is or
becomes liable for any indebtedness owed by Borrower to Lender by endorsement or
otherwise than under this Guaranty, such liability shall not be in any manner
impaired or affected by this Guaranty, and the rights of Lender hereunder shall
be cumulative of any and all other rights that Lender may ever have against
Guarantor. The exercise by Lender of any right or remedy hereunder or under any
other instrument or at law or in equity shall not preclude the concurrent or
subsequent exercise of any other instrument or remedy at law or in equity and
shall not preclude the concurrent or subsequent exercise of any other right or
remedy. Further, without in any way diminishing or limiting the generality of
the foregoing, it is specifically understood and agreed that this Guaranty is
given by Guarantor as an additional guaranty to any and all guarantees hereafter
executed and delivered to Lender by Guarantor in favor of Lender relating to the
indebtedness and obligations of Borrower to Lender, and nothing herein shall
ever be deemed to replace or be in lieu of any other of such previous or
subsequent guarantees.
7. Application of Payments. If, at any time, there is any indebtedness or
obligations (or any portion thereof) of Borrower to Lender which is not
guaranteed by Guarantor, Lender, without in any manner impairing its rights
hereunder, may, at its option, apply all amounts realized by Lender from
collateral or security held by Lender first to the payment of such unguaranteed
indebtedness or obligations, with the remaining amounts, if any, to then be
applied to the payment of the indebtedness or obligations guaranteed by
Guarantor.
8. Suits, Releases of Settlements with Others. Guarantor agrees that
Lender, in its sole discretion, may bring suit against any other guarantor
without impairing the rights of Lender or its successors and assigns against
Guarantor or any other guarantor of the Guaranteed Obligations; and Lender may
settle or compromise with such other guarantor for such sum or sums as Lender
may see fit and release such other guarantor from all further liability to
Lender, all without impairing its rights against Guarantor.
9. Warranties, Representations and Covenants.
(a) Guarantor warrants and represents, as follows:
(i) Guarantor has received, or will receive, direct or indirect
benefit from the making of this Guaranty, the making of the Loan and the
entering into and execution of the Loan Agreement and the Loan Documents in
connection therewith;
(ii) Guarantor is familiar with, and has independently reviewed
the financial condition of the Borrower and is familiar with the value of any
and all collateral intended to be created as security for the payment and
performance of the indebtedness evidenced by the Note and the Guaranteed
Obligations, and Guarantor assumes full responsibility for keeping fully
informed as to such matters in the future; however, Guarantor is
-5-
not relying on such financial condition or the collateral as an inducement to
enter into this Guaranty; and
(iii) All financial statements concerning Guarantor which have
been or will hereafter be furnished by Guarantor or Borrower to Lender pursuant
to the Loan Documents, have been or will be prepared in accordance with GAAP
consistently applied (except as disclosed therein, to the extent Lender approves
such disclosure; provided that Lender's approval shall not be required so long
as (a) Guarantor is a reporting company under the Exchange Act, and (b)
Guarantor's financial statements are audited by a so-called "Big-4" accounting
firm) and, in all material respects, present fairly the financial condition of
the Persons covered thereby as at the dates thereof and the results of their
operations for the periods then ended.
(iv) No ERISA Affiliate of Guarantor maintains or contributes to,
or has any obligation under, any Employee Benefit Plans. Guarantor is not an
"employee benefit plan" (within the meaning of section 3(3) of ERISA) to which
ERISA applies and Guarantor's assets do not constitute plan assets. No actions,
suits or claims under any laws and regulations promulgated pursuant to ERISA are
pending or, to Guarantor's knowledge, threatened against Guarantor. Guarantor
has no knowledge of any material liability incurred by Guarantor which remains
unsatisfied for any taxes or penalties with respect to any employee benefit plan
or any Multiemployer Plan, or of any lien which has been imposed on Guarantor's
assets pursuant to section 412 of the Code or sections 302 or 4068 of ERISA. The
Loan, the execution, delivery and performance of the Loan Documents and the
transactions contemplated by this Guaranty do not constitute a non-exempt
prohibited transaction under ERISA or the Code. Guarantor is an "operating
company" as defined in ERISA.
(v) As of the date hereof, and after giving effect to this
Guaranty and the contingent obligations evidenced hereby, Guarantor is and
expects to be solvent at all times, and has and expects to have assets at all
times which, fairly valued, exceed his or its obligations, liabilities and
debts, and has and expects to have property and assets at all times sufficient
to satisfy and repay its obligations and liabilities.
(b) Guarantor covenants and agrees that, for so long as this Guaranty
remains in effect, Guarantor shall not liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution).
10. Subordination. If, for any reason Borrower is now or hereafter becomes
indebted to Guarantor (such indebtedness and all interest thereon being referred
to as the "AFFILIATED DEBT"), such Affiliated Debt shall, at all times, be
subordinate in all respects to the full payment and performance of the
obligations evidenced by the Note, and Guarantor shall not be entitled to
enforce or receive payment thereof until all of the obligations evidenced by the
Note have been fully paid. Guarantor agrees that any liens, mortgages, deeds of
trust, security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Affiliated Debt shall be and remain
subordinate and inferior to any liens, security interests, judgment liens,
charge or other encumbrances upon Borrower's assets securing the payment of
-6-
the obligations evidenced by the Note and Guaranteed Obligations, and without
the prior written consent of Lender, Guarantor shall not exercise or enforce any
creditor's rights of any nature against Borrower to collect the Affiliated Debt
(other than demand payment therefor). In the event of the receivership,
bankruptcy, reorganization, arrangement, debtor's relief or other insolvency
proceedings involving Borrower as a debtor, to the fullest extent permitted by
law, Lender shall have the right and authority, either in its own name or as
attorney-in-fact for Guarantor, to file such proof of debt claim, petition or
other documents and to take such other steps as are necessary to prove its
rights hereunder.
11. Waiver of Subrogation. Notwithstanding any other provision of this
Guaranty to the contrary, until the Loan is indefeasibly paid in full, Guarantor
hereby waives any claim or other rights which Guarantor may now have or
hereafter acquire against Borrower or any other guarantor of all or any of the
obligations that arise from the existence or performance of Guarantor's
obligations under this Guaranty (all such claims and rights are referred to as
"GUARANTOR'S CONDITIONAL RIGHTS"), including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, or indemnification, any
right to participate in any claim or remedy of Lender against Borrower or any
security or collateral which Lender now has or hereafter acquires, whether or
not such claim, remedy or right arises in equity or under contract, statute
(including the Bankruptcy Code or any successor or similar statute) or common
law, by any payment made hereunder or otherwise, including without limitation,
the right to take or receive from Borrower, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or security on
account of such claim or other rights. If, notwithstanding the foregoing
provisions, any amount shall be paid to Guarantor on account of Guarantor's
Conditional Rights and either (i) such amount is paid to Guarantor at any time
when the Guaranteed Obligations shall not have been paid or performed in full,
or (ii) regardless of when such amount is paid to Guarantor, any payment made by
Borrower to Lender is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid by Lender or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (such payment, a "PREFERENTIAL PAYMENT"), then such amount paid to
Guarantor shall be held in trust for the benefit of Lender and shall forthwith
be paid to Lender to be credited and applied upon the Guaranteed Obligations,
whether matured or unmatured, in such order as Lender, in its sole and absolute
discretion, shall determine. The foregoing waivers shall be effective until the
Guaranteed Obligations have been paid and performed in full.
12. Impairment of Subrogation Rights; Waivers of Rights Under the
Anti-Deficiency Rules.
(a) Guarantor agrees that upon the occurrence and during the
continuance of an Event of Default under the Loan Documents, Lender in its sole
discretion, without prior notice to or consent of Guarantor, may elect to (i)
foreclose either nonjudicially or judicially against any real or personal
property security (including, without limitation, the Mortgaged Property) it
holds for the obligations evidenced by the Note or any Guaranteed Obligations,
or any part thereof, (ii) accept any transfer or assignment of any such security
in lieu of foreclosure, (iii) compromise or adjust any part of such obligations,
or (iv) make any other accommodation
-7-
with Borrower or Guarantor, or exercise any other remedy against Borrower or any
collateral or security. No such action by Lender will release or limit the
liability of Guarantor to Lender, who shall remain liable under this Guaranty
after the action, even if the effect of that action is to deprive Guarantor of
the right to collect reimbursement from Borrower or any other person for any
sums paid to Lender or Guarantor's rights of subrogation, contribution, or
indemnity against Borrower or any other person. Without limiting the foregoing,
it is understood and agreed that on any foreclosure or assignment in lieu of
foreclosure of any collateral or security held by Lender, such security will no
longer exist and that any right that Guarantor might otherwise have, on full
payment of the Guaranteed Obligations by Guarantor to Lender, to participate in
any such security or to be subrogated to any rights of Lender with respect to
any such security will be nonexistent; nor shall Guarantor be deemed to have any
right, title, interest or claim under any circumstances in or to any real or
personal property held by Lender or any third party following any foreclosure or
assignment in lieu of foreclosure of any such security.
(b) Guarantor understands and acknowledges that if Lender forecloses
judicially or nonjudicially against any real property security for Borrower's
obligations, such foreclosure could impair or destroy any right or ability that
Guarantor may have to seek reimbursement, contribution, or indemnification for
any amounts paid by Guarantor under this Guaranty.
(c) Without limiting the foregoing, Guarantor waives, to the fullest
extent permitted by applicable law, all rights and defenses arising out of an
election of remedies by Lender, even though that election of remedies, such as
nonjudicial foreclosure with respect to security for a guaranteed obligation,
may adversely affect Guarantor's rights of subrogation and reimbursement against
Borrower.
(d) Guarantor intentionally, freely, irrevocably and unconditionally
waives and relinquishes, to the fullest extent permitted by applicable law, all
rights which may be available to it under any provision of applicable law to
limit the amount of any deficiency judgment or other judgment which may be
obtained against Guarantor under this Guaranty to not more than the amount by
which the unpaid Guaranteed Obligations plus all other indebtedness due from
Borrower under the Loan Documents exceeds the fair market value or fair value of
any real or personal property securing said obligations and any other
indebtedness due from Borrower under the Loan Documents, including, without
limitation, all rights to an appraisement of, judicial or other hearing on, or
other determination of the value of said property. Guarantor acknowledges and
agrees that, as a result of the foregoing waiver, Lender may be entitled to
recover from Guarantor an amount which, when combined with the value of any real
or personal property foreclosed upon by Lender (or the proceeds of the sale of
which have been received by Lender) and any sums collected by Lender from
Borrower or other Persons, might exceed the amount of the Guaranteed Obligations
plus all other indebtedness due from Borrower under the Loan Documents.
(e) Guarantor understands and agrees that Lender may have the ability
to pursue Guarantor for a judgment on the Guaranteed Obligations without having
first foreclosed
-8-
on the real property security for such Guaranteed Obligations, that Lender may
have the ability to ▇▇▇ Guarantor for a deficiency judgment on the Guaranteed
Obligations after a non-judicial foreclosure sale or, regardless of any election
of remedies by Lender, if the Guaranteed Obligations or any of the other
indebtedness of Borrower to Lender under the Loan Documents is considered to
have been provided by a vendor to a buyer and to evidence part of the purchase
price for the real property security, and that Lender may be able to recover
from Borrower an amount which, when combined with the fair market value of the
property acquired by Lender in a foreclosure sale or the proceeds of the
foreclosure sale received by Lender, might exceed the amount of the Guaranteed
Obligations due and owing by Guarantor and the amounts payable under the Loan
Documents.
(f) Without limiting any of the other waivers and provisions set forth
in this Guaranty, Guarantor waives all rights and defenses that Guarantor may
have because Borrower's debt is secured by real property; this means, among
other things: (a) Lender may collect from Guarantor without first foreclosing on
any real or personal property collateral pledged by Borrower; (b) the amount of
the Guaranteed Obligations may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price; (c) Lender may collect from Guarantor even if Lender, by
foreclosing on the real property collateral, has destroyed any right Guarantor
may have to collect from Borrower. This is an unconditional and irrevocable
waiver of any rights and defenses Guarantor may have because the indebtedness
evidenced by the Note is secured by real property.
Notwithstanding the foregoing or any provisions of Section 12(a) hereof,
nothing contained in this Guaranty shall in any way be deemed to imply that any
other state's law other than the law of the State of New York shall govern this
Guaranty or any of the Loan Documents in any respect, except as expressly set
forth therein, including with respect to the exercise of Lender's remedies under
the Loan Documents.
Notwithstanding any other provision herein to the contrary, upon the
indefeasible payment in full of the Note, Guarantor shall have all rights of
subrogation available at law or in equity.
13. Benefit. This Guaranty is for the benefit of Lender, its successors
and assigns, and in the event of an assignment by Lender, its successors and
assigns, of the obligations evidenced by the Note, or any part or parts thereof,
the rights and benefits hereunder, to the extent applicable to the obligations
so assigned, shall be transferred with such obligations.
14. No Release if Preference, Refund, Etc. In the event any payment by
Borrower to Lender is determined to be a preferential payment under any
applicable bankruptcy or insolvency laws, or if for any reason Lender is
required to refund part or all of any payment or pay the amount thereof to any
other party, such repayment by Lender to Borrower shall not constitute a release
of Guarantor from any liability hereunder, and Guarantor agrees to pay such
amount to Lender upon demand to the extent such amount constitutes a Guaranteed
Obligation.
-9-
15. Right of Set-Off. In addition to any other rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon Guarantor's failure to pay the Guaranteed Obligations, after demand by
Lender, Lender is hereby authorized at any time and from time to time, without
notice to Guarantor or to any other person, to set off and to appropriate and to
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by Lender to or for the credit or the account of
Guarantor against or on account of the obligations evidenced by the Note.
16. Consent to Use of Logo. Guarantor hereby consents to the use by Lender
of Guarantor's logo, solely for the purpose specified, and in accordance with
the terms and conditions set forth, in Section 11.12 of the Loan Agreement.
17. GOVERNING LAW. PURSUANT TO SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, GUARANTOR AGREES THAT THIS GUARANTY AND ALL
RIGHTS, OBLIGATIONS AND LIABILITIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Notices. Unless otherwise specifically provided herein, any notice or
other communication required or permitted to be given shall be in writing
addressed to the respective party as set forth below and may be personally
served, telecopied (with request for confirmation) or sent by overnight courier
service or United States registered mail return receipt requested, postage
prepaid. Any notice so given shall be deemed effective upon delivery or on
refusal or failure of delivery during normal business hours. Notices shall be
addressed to the parties at the following addresses or to such other address as
the party addressed shall have previously designated by written notice to the
serving party, given in accordance with this Section 18.
If to Guarantor: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Lender: iStar Financial Inc.
1114 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-10-
Attn: Chief Operating Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: iStar Financial Inc.
1114 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq./General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: iStar Asset Services Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇, Esq.
208972-002289
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
19. Consent of Jurisdiction/Service of Process. IN ACCORDANCE WITH SECTION
5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, GUARANTOR HEREBY
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO
LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES
ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY, THE NOTE, SUCH OTHER
LOAN DOCUMENTS OR SUCH OBLIGATION. GUARANTOR ACKNOWLEDGES AND AGREES THAT
SERVICE OF PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING WILL BE DEEMED
EFFECTIVE. SERVICE OF PROCESS ON GUARANTOR IF PERSONALLY SERVED OR SERVED IN
ACCORDANCE WITH SECTION 17 ABOVE OR AT SUCH OTHER ADDRESS AS SUCH GUARANTOR
-11-
MAY HAVE FURNISHED AS TO ITSELF TO THE SERVING PARTY BY LIKE NOTICE, OR TO THE
LAST KNOWN ADDRESS OF SUCH GUARANTOR PROVIDED THEREUNDER.
20. WAIVER OF JURY TRIAL. GUARANTOR AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP
THAT IS BEING ESTABLISHED. GUARANTOR AND LENDER ALSO WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
GUARANTOR OR LENDER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. GUARANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS GUARANTY AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. GUARANTOR AND LENDER
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS GUARANTY, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOAN. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS
A WRITTEN CONSENT TO A TRIAL BY THE COURT.
21. Expenses. Guarantor agrees to fully and punctually pay all costs and
expenses, including, without limitation, reasonable attorneys' fees, court costs
and costs of appeal, which Lender may incur in enforcing and collecting the
Guaranteed Obligations.
[Remainder of Page Intentionally Left Blank;
Signature Page Follows]
-12-
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the
day and year first above written.
GUARANTOR:
LEXICON GENETICS INCORPORATED, a
Delaware corporation
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial
Officer and Executive Vice President
