Loan ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇
EXHIBIT 10.38
AMENDED AND RESTATED LOAN AGREEMENT
Dated as of November 21, 2003
Among
▇▇▇▇▇▇▇ PROPERTIES - 555 W. FIFTH, LLC
and
▇▇▇▇▇▇▇ PROPERTIES - 808 S. OLIVE, LLC,
collectively, as Borrower
and
BANK OF AMERICA, N.A.,
as Lender
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION..................... 1
SECTION 1.1. DEFINITIONS.......................................... 1
SECTION 1.2. PRINCIPLES OF CONSTRUCTION........................... 19
ARTICLE 2 GENERAL TERMS............................................... 19
SECTION 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER............ 19
SECTION 2.2. INTEREST RATE PROTECTION AGREEMENT................... 20
SECTION 2.3. LOAN PAYMENTS........................................ 22
SECTION 2.4. LATE PAYMENT CHARGE.................................. 23
SECTION 2.5. PREPAYMENT........................................... 23
SECTION 2.6. PAYMENTS AFTER DEFAULT............................... 24
SECTION 2.7. INTENTIONALLY DELETED................................ 25
SECTION 2.8. USURY SAVINGS........................................ 25
SECTION 2.9. UNAVAILABILITY OF RATE............................... 25
SECTION 2.10. EXTENSION OF THE MATURITY DATE....................... 28
SECTION 2.11. ADDITIONAL PAYMENT PROVISIONS........................ 29
ARTICLE 3 CONDITIONS PRECEDENT........................................ 30
SECTION 3.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS........................................... 30
SECTION 3.2. DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
LEASES............................................... 31
SECTION 3.3. RELATED DOCUMENTS.................................... 32
SECTION 3.4. ORGANIZATIONAL DOCUMENTS............................. 32
SECTION 3.5. OPINIONS OF BORROWER'S COUNSEL....................... 32
SECTION 3.6. ANNUAL BUDGET........................................ 32
SECTION 3.7. TAXES AND OTHER CHARGES.............................. 33
SECTION 3.8. COMPLETION OF PROCEEDINGS............................ 33
SECTION 3.9. PAYMENTS............................................. 33
SECTION 3.10. TRANSACTION COSTS.................................... 33
SECTION 3.11. NO MATERIAL ADVERSE CHANGE........................... 33
SECTION 3.12. LEASES AND RENT ROLL................................. 33
SECTION 3.13. TENANT ESTOPPELS..................................... 33
SECTION 3.14. INTENTIONALLY OMITTED................................ 34
SECTION 3.15. SUBORDINATION AND ATTORNMENT......................... 34
SECTION 3.16. TAX LOT.............................................. 34
SECTION 3.17. PHYSICAL CONDITIONS REPORT........................... 34
SECTION 3.18. MANAGEMENT AGREEMENTS................................ 34
SECTION 3.19. APPRAISAL............................................ 34
SECTION 3.20. FINANCIAL STATEMENTS................................. 34
SECTION 3.21. INTENTIONALLY OMITTED................................ 35
SECTION 3.22. FURTHER DOCUMENTS.................................... 35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.............................. 35
SECTION 4.1. ORGANIZATION......................................... 35
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TABLE OF CONTENTS
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SECTION 4.2. STATUS OF BORROWER................................... 35
SECTION 4.3. VALIDITY OF DOCUMENTS................................ 36
SECTION 4.4. NO CONFLICTS......................................... 36
SECTION 4.5. LITIGATION........................................... 36
SECTION 4.6. AGREEMENTS........................................... 36
SECTION 4.7. SOLVENCY............................................. 37
SECTION 4.8. FULL AND ACCURATE DISCLOSURE......................... 37
SECTION 4.9. NO PLAN ASSETS....................................... 37
SECTION 4.10. NOT A FOREIGN PERSON................................. 38
SECTION 4.11. ENFORCEABILITY....................................... 38
SECTION 4.12. BUSINESS PURPOSES.................................... 38
SECTION 4.13. COMPLIANCE........................................... 38
SECTION 4.14. FINANCIAL INFORMATION................................ 38
SECTION 4.15. CONDEMNATION......................................... 39
SECTION 4.16. UTILITIES AND PUBLIC ACCESS; PARKING................. 39
SECTION 4.17. SEPARATE LOTS........................................ 39
SECTION 4.18. ASSESSMENTS.......................................... 39
SECTION 4.19. INSURANCE............................................ 39
SECTION 4.20. USE OF PROPERTY...................................... 39
SECTION 4.21. CERTIFICATE OF OCCUPANCY; LICENSES................... 40
SECTION 4.22. FLOOD ZONE........................................... 40
SECTION 4.23. PHYSICAL CONDITION................................... 40
SECTION 4.24. BOUNDARIES........................................... 40
SECTION 4.25. LEASES AND RENT ROLL................................. 40
SECTION 4.26. FILING AND RECORDING TAXES........................... 41
SECTION 4.27. MANAGEMENT AGREEMENTS................................ 41
SECTION 4.28. ILLEGAL ACTIVITY..................................... 41
SECTION 4.29. CONSTRUCTION EXPENSES................................ 42
SECTION 4.30. PERSONAL PROPERTY.................................... 42
SECTION 4.31. TAXES................................................ 42
SECTION 4.32. PERMITTED ENCUMBRANCES............................... 42
SECTION 4.33. FEDERAL RESERVE REGULATIONS.......................... 42
SECTION 4.34. INVESTMENT COMPANY ACT............................... 42
SECTION 4.35. RECIPROCAL EASEMENT AGREEMENTS....................... 43
SECTION 4.36. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE...... 43
SECTION 4.37. INTELLECTUAL PROPERTY................................ 44
SECTION 4.38. SURVEY............................................... 44
SECTION 4.39. EMBARGOED PERSON..................................... 44
SECTION 4.40. PATRIOT ACT.......................................... 44
SECTION 4.41. SURVIVAL............................................. 45
ARTICLE 5 BORROWER COVENANTS.......................................... 45
SECTION 5.1. EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS........ 46
SECTION 5.2. MAINTENANCE AND USE OF PROPERTY...................... 46
SECTION 5.3. WASTE................................................ 46
SECTION 5.4. TAXES AND OTHER CHARGES.............................. 47
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SECTION 5.5. LITIGATION........................................... 47
SECTION 5.6. ACCESS TO PROPERTY................................... 47
SECTION 5.7. NOTICE OF DEFAULT.................................... 48
SECTION 5.8. COOPERATE IN LEGAL PROCEEDINGS....................... 48
SECTION 5.9. PERFORMANCE BY BORROWER.............................. 48
SECTION 5.10. AWARDS; INSURANCE PROCEEDS........................... 48
SECTION 5.11. FINANCIAL REPORTING.................................. 48
SECTION 5.12. ESTOPPEL STATEMENT................................... 53
SECTION 5.13. LEASING MATTERS...................................... 53
SECTION 5.14. PROPERTY MANAGEMENT.................................. 55
SECTION 5.15. LIENS................................................ 56
SECTION 5.16. DEBT CANCELLATION.................................... 56
SECTION 5.17. ZONING............................................... 56
SECTION 5.18. ERISA................................................ 56
SECTION 5.19. NO JOINT ASSESSMENT.................................. 57
SECTION 5.20. RECIPROCAL EASEMENT AGREEMENTS....................... 57
SECTION 5.21. ALTERATIONS.......................................... 57
ARTICLE 6 ENTITY COVENANTS............................................ 58
SECTION 6.1. SINGLE PURPOSE ENTITY/SEPARATENESS................... 58
SECTION 6.2. CHANGE OF NAME, IDENTITY OR STRUCTURE................ 61
SECTION 6.3. BUSINESS AND OPERATIONS.............................. 62
SECTION 6.4. INDEPENDENT MANAGER.................................. 62
ARTICLE 7 NO SALE OR ENCUMBRANCE...................................... 62
SECTION 7.1. TRANSFER DEFINITIONS................................. 62
SECTION 7.2. NO SALE/ENCUMBRANCE.................................. 63
SECTION 7.3. PERMITTED TRANSFERS.................................. 63
SECTION 7.4. LENDER'S RIGHTS...................................... 65
SECTION 7.5. ASSUMPTION........................................... 65
ARTICLE 8 INSURANCE; CASUALTY; CONDEMNATION; RESTORATION.............. 67
SECTION 8.1. INSURANCE............................................ 67
SECTION 8.2. CASUALTY............................................. 71
SECTION 8.3. CONDEMNATION......................................... 71
SECTION 8.4. RESTORATION.......................................... 72
ARTICLE 9 RESERVE FUNDS............................................... 76
SECTION 9.1. MIZUHO TERMINATION RESERVE........................... 76
SECTION 9.2. REPLACEMENTS......................................... 76
SECTION 9.3. TENANT IMPROVEMENTS/LEASING COMMISSIONS.............. 77
SECTION 9.4. REQUIRED WORK........................................ 78
SECTION 9.5. RELEASE OF RESERVE FUNDS............................. 80
SECTION 9.6. TAX AND INSURANCE RESERVE FUNDS...................... 83
SECTION 9.7. MEZZANINE LITIGATION RESERVE ACCOUNT................. 84
SECTION 9.8. OPERATING EXPENSES; EXTRAORDINARY EXPENSES........... 84
SECTION 9.9. RESERVE FUNDS GENERALLY.............................. 84
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ARTICLE 10 CASH MANAGEMENT............................................. 87
SECTION 10.1. LOCKBOX ACCOUNT AND CASH MANAGEMENT ACCOUNT.......... 87
SECTION 10.2. DEPOSITS AND WITHDRAWALS............................. 88
SECTION 10.3. SECURITY INTEREST.................................... 91
SECTION 10.4. DEFINITIONS.......................................... 92
ARTICLE 11 EVENTS OF DEFAULT; REMEDIES................................. 92
SECTION 11.1. EVENT OF DEFAULT..................................... 92
SECTION 11.2. REMEDIES............................................. 94
ARTICLE 12 ENVIRONMENTAL PROVISIONS.................................... 95
SECTION 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES......... 95
SECTION 12.2. ENVIRONMENTAL COVENANTS.............................. 95
SECTION 12.3. LENDER'S RIGHTS...................................... 96
SECTION 12.4. OPERATIONS AND MAINTENANCE PROGRAMS.................. 97
SECTION 12.5. ENVIRONMENTAL DEFINITIONS............................ 97
SECTION 12.6. INTENTIONALLY OMITTED................................ 97
ARTICLE 13 SECONDARY MARKET............................................ 98
SECTION 13.1. TRANSFER OF LOAN..................................... 98
SECTION 13.2. DELEGATION OF SERVICING.............................. 98
SECTION 13.3. DISSEMINATION OF INFORMATION......................... 98
SECTION 13.4. COOPERATION.......................................... 98
SECTION 13.5. SECURITIZATION INDEMNIFICATION....................... 100
ARTICLE 14 INDEMNIFICATIONS............................................ 103
SECTION 14.1. GENERAL INDEMNIFICATION.............................. 103
SECTION 14.2. MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION.......... 103
SECTION 14.3. ERISA INDEMNIFICATION................................ 103
SECTION 14.4. SURVIVAL............................................. 104
ARTICLE 15 EXCULPATION................................................. 104
SECTION 15.1. EXCULPATION.......................................... 104
ARTICLE 16 NOTICES..................................................... 106
SECTION 16.1. NOTICES.............................................. 106
ARTICLE 17 FURTHER ASSURANCES.......................................... 108
SECTION 17.1. REPLACEMENT DOCUMENTS................................ 108
SECTION 17.2. RECORDING OF MORTGAGE, ETC........................... 108
SECTION 17.3. FURTHER ACTS, ETC.................................... 108
SECTION 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP
LAWS................................................. 109
SECTION 17.5. EXPENSES............................................. 109
ARTICLE 18 WAIVERS..................................................... 110
SECTION 18.1. REMEDIES CUMULATIVE; WAIVERS......................... 110
SECTION 18.2. MODIFICATION, WAIVER IN WRITING...................... 110
SECTION 18.3. DELAY NOT A WAIVER................................... 111
SECTION 18.4. TRIAL BY JURY........................................ 111
SECTION 18.5. WAIVER OF NOTICE..................................... 111
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SECTION 18.6. REMEDIES OF BORROWER................................. 112
SECTION 18.7. WAIVER OF MARSHALLING OF ASSETS...................... 112
SECTION 18.8. WAIVER OF STATUTE OF LIMITATIONS..................... 112
SECTION 18.9. WAIVER OF COUNTERCLAIM............................... 112
SECTION 18.10. GRADSKY WAIVERS...................................... 112
ARTICLE 19 GOVERNING LAW............................................... 113
SECTION 19.1. CHOICE OF LAW........................................ 113
SECTION 19.2. SEVERABILITY......................................... 114
SECTION 19.3. PREFERENCES.......................................... 114
ARTICLE 20 MISCELLANEOUS............................................... 114
SECTION 20.1. SURVIVAL............................................. 114
SECTION 20.2. LENDER'S DISCRETION.................................. 114
SECTION 20.3. HEADINGS............................................. 114
SECTION 20.4. COST OF ENFORCEMENT.................................. 115
SECTION 20.5. SCHEDULES INCORPORATED............................... 115
SECTION 20.6. OFFSETS, COUNTERCLAIMS AND DEFENSES.................. 115
SECTION 20.7. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES........................................ 115
SECTION 20.8. PUBLICITY............................................ 116
SECTION 20.9. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE........ 116
SECTION 20.10. ENTIRE AGREEMENT..................................... 117
SECTION 20.11. LIABILITY............................................ 117
SECTION 20.12. CONTRIBUTIONS AND WAIVERS............................ 117
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of November 21, 2003
(as amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between BANK OF AMERICA, N.A., a national banking
association, having an address at Bank of America Corporate Center, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together with its successors
and/or assigns, "LENDER") and ▇▇▇▇▇▇▇ PROPERTIES - 555 W. FIFTH, LLC, a Delaware
limited liability company, having an address at c/▇ ▇▇▇▇▇▇▇ Properties, Inc.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("WEST FIFTH") and ▇▇▇▇▇▇▇
PROPERTIES - 808 S. OLIVE, LLC, a Delaware limited liability company, having an
address at c/▇ ▇▇▇▇▇▇▇ Properties, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("SOUTH OLIVE", and collectively with West Fifth, together with
their respective successors and/or assigns, "BORROWER").
RECITALS:
Lender has made a Loan to Borrower in the original principal amount
of $250,000,000 (the "LOAN")
Borrower and Lender desire that this Agreement shall amend and restate in
its entirety that certain Loan Agreement dated as of June 27, 2003 between
Borrower and Lender in connection with the Loan.
Lender and Borrower have agreed that Borrower shall prepay the principal
amount of the Loan in the amount of $20,000,000, thereby reducing the original
principal balance of the Loan to $230,000,000.
In consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the
parties hereto hereby covenant, agree, represent and warrant as follows:
ARTICLE 1
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1. DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:
"ACCEPTABLE ACCOUNTANT" shall mean a "Big Four" accounting firm or other
independent certified public accountant acceptable to Lender.
"ACCEPTABLE COUNTERPARTY" shall mean any counterparty to the Interest Rate
Protection Agreement that has, as of June 27, 2003 and shall maintain until the
expiration of the applicable Interest Rate Protection Agreement, a credit rating
of not less than AA- from S&P and not less than Aa3 from ▇▇▇▇▇'▇.
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"ACT" shall have the meaning set forth in Section 6.1(c) hereof.
"ADDITIONAL REPLACEMENT" shall have the meaning set forth in Section
9.5(g) hereof.
"AFFILIATE" shall mean, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person or of an Affiliate
of such Person.
"AFFILIATED LOANS" shall mean a loan made by Lender to a parent,
subsidiary or such other entity affiliated with Borrower or Borrower Principal.
"AFFILIATED MANAGER" shall have the meaning set forth in Section 7.1
hereof.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ALTERATION THRESHOLD" means $1,000,000.00.
"ANNUAL BUDGET" shall mean the operating budget, including all planned
capital expenditures, for the Property approved by Lender in accordance with
Section 5.11(a)(iv) hereof for the applicable calendar year or other period.
"ASSIGNMENTS OF MANAGEMENT AGREEMENT" shall mean, collectively, that
certain Assignment and Subordination of Management Agreement dated as of June
27, 2003, among Lender, West Fifth and Manager, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time, with
respect to the Tower Parcel and that certain Assignment and Subordination of
Management Agreement dated as of June 27, 2003, among Lender, South Olive and
Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, with respect to the Garage Parcel.
"AWARD" shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of the Property.
"BASE MANAGEMENT FEE" shall mean a monthly amount equal to $83,333.
"BORROWER PRINCIPAL" shall mean ▇▇▇▇▇▇▇ Properties, L.P., a Maryland
limited partnership.
"BORROWER PRINCIPAL OBLIGATIONS" shall have the meaning set forth in
Section 18.10(c) hereof.
"BUSINESS DAY" shall mean a day on which Lender is open for the conduct of
substantially all of its banking business at its office in the city in which the
Note is payable (excluding Saturdays and Sundays), except that when used with
respect to the determination of LIBOR, "Business Day" shall mean a day on which
commercial banks are open for international business (including dealings in U.S.
Dollar deposits) in London, England.
"CASH MANAGEMENT ACCOUNT" shall have the meaning set forth in Section
10.1(a) hereof.
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"CASUALTY" shall have the meaning set forth in Section 8.2 hereof.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"COLLATERAL ASSIGNMENT OF INTEREST RATE PROTECTION AGREEMENT" shall mean
that certain Collateral Assignment of Interest Rate Protection Agreement dated
as of June 27, 2003, executed by Borrower in connection with the Loan for the
benefit of Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.
"CONTROL" shall have the meaning set forth in Section 7.1 hereof.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result, in lieu or in anticipation, of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to its debts or debtors.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgage or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of time,
scheduled principal and/or interest payments under the Note.
"DEFAULT" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
four percent (4%) above the Note Rate.
"DETERMINATION DATE" shall mean (a) with respect to any Interest Period
prior to the Interest Period that commences in the month during which the
Securitization Closing Date occurs, two (2) Business Days prior to the start of
the applicable Interest Period; (b) with respect to the Interest Period that
commences in the month during which the Securitization Closing Date occurs, the
date that is two (2) Business Days prior to the Securitization Closing Date and
(c) with respect to each Interest Period thereafter, the date that is two (2)
Business Days prior to the beginning of such Interest Period.
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"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section 13.5
hereof.
"ELIGIBILITY REQUIREMENTS" means, with respect to any Person, that such
Person (i) has total assets (in name or under management) in excess of
$600,000,000 and (except with respect to a pension advisory firm or similar
fiduciary) capital/statutory surplus or shareholder's equity of $250,000,000 and
(ii) is regularly engaged in the business of making or owning commercial real
estate loans or operating commercial mortgage properties.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. Section
9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean Bank of America, N.A. or a depository
institution or trust company insured by the Federal Deposit Insurance
Corporation, the short term unsecured debt obligations or commercial paper of
which are rated at least "A-1+" by S&P, "P-1" by ▇▇▇▇▇'▇ and "F-1+" by Fitch in
the case of accounts in which funds are held for thirty (30) days or less (or,
in the case of accounts in which funds are held for more than thirty (30) days,
the long term unsecured debt obligations of which are rated at least "AA-" by
Fitch and S&P and "Aa2" by ▇▇▇▇▇'▇).
"EMBARGOED PERSON" shall have the meaning set forth in Section 4.39.
"ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental Indemnity
Agreement, dated as of June 27, 2003, executed by Borrower and Borrower
Principal in connection with the Loan for the benefit of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL LIENS" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL REPORT" shall have the meaning set forth in Section 12.5
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statutes thereto and applicable
regulations issued pursuant thereto in temporary or final form.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 11.1
hereof.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
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"EXCHANGE ACT FILING" shall have the meaning set forth in Section 5.11(c)
hereof.
"EXTENSION FEE" shall mean an amount equal to 0.125% of the outstanding
principal balance of the Loan (unless the Loan is bifurcated into an A component
and a B component pursuant to Section 13.4 hereof, in which case the Extension
Fee shall mean an amount equal to 0.125% of the A component of the Loan).
"EXTENSION OPTION" shall have the meaning set forth in Section 2.10
hereof.
"EXTENSION TERM" shall have the meaning set forth in Section 2.10 hereof.
"EXTRAORDINARY EXPENSE" shall mean an operating expense or capital
expenditure with respect to the Property that (i) is not set forth on the Annual
Budget and (ii) is not subject to payment by withdrawals from the Replacement
Reserve. Borrower shall deliver promptly to Lender a reasonably detailed
explanation of such proposed Extraordinary Expense for the approval of Lender.
"EXTRAORDINARY EXPENSE RESERVE ACCOUNT" shall have the meaning set forth
in Section 9.8 hereof.
"EXTRAORDINARY EXPENSE RESERVE FUNDS" shall have the meaning set forth in
Section 9.8 hereof.
"FACTORY MUTUAL" shall have the meaning set forth in Section 8.1(b)
hereof.
"FITCH" shall mean Fitch, Inc.
"FOREIGN TAXES" shall have the meaning set forth in Section 2.9(b).
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"GARAGE PARCEL" shall mean the parking garage and other improvements
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, as more particularly
described in the Mortgage.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, department,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, state, county, municipal, city, town, special
district or otherwise) in the United States whether now or hereafter in
existence.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 12.5
hereof.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause of
the Mortgage.
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in Section 14.1
hereof.
"INDEMNIFIED PARTIES" shall mean (a) Lender, (b) any prior owner or holder
of the Loan, (c) any servicer or prior servicer of the Loan, (d) any Investor or
any prior Investor in any Securities, (e) any trustees, custodians or other
fiduciaries who hold or who have held a full or
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partial interest in the Loan for the benefit of any Investor or other third
party, (f) any receiver or other fiduciary appointed in a foreclosure or other
Creditors Rights Laws proceeding, (g) any officers, directors, shareholders,
partners, members, employees, agents, representatives, affiliates or
subsidiaries of any and all of the foregoing, and (h) the heirs, legal
representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties' assets
and business).
"INDEMNITY AND AGREEMENT" shall mean that certain Indemnity and Agreement
dated as of the date hereof among Borrower Principal, Borrower and Lender.
"INDEPENDENT MANAGER" shall have the meaning set forth in Section 6.4(a)
hereof.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section 8.1(b)
hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
"INTEREST PERIOD" shall mean (a) with respect to the initial period for
the accrual of interest due under this Agreement, the period from and including
the Closing Date through but excluding the Selected Day first occurring after
the Closing Date, and (b) with respect to the Payment Date occurring in August,
2003 and each Payment Date thereafter, the period from and including the
Selected Day immediately preceding the applicable Payment Date through but
excluding the Selected Day next occurring after the applicable Payment Date.
Notwithstanding the foregoing clause (b), if the Lender so elects at any time,
the "Interest Period" shall be the calendar month preceding each Payment Date.
"INTEREST RATE PROTECTION AGREEMENT" shall mean the Rate Cap.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"INVESTOR" shall have the meaning set forth in Section 13.3 hereof.
"ISSUER GROUP" shall have the meaning set forth in Section 13.5(b) hereof.
"ISSUER PERSON" shall have the meaning set forth in Section 13.5(b)
hereof.
"JUNIOR MEZZANINE BORROWER" shall mean, collectively, ▇▇▇▇▇▇▇ Properties -
555 W. Fifth Junior Mezzanine, LLC, a Delaware limited liability company, and
▇▇▇▇▇▇▇ Properties - 808 S. Olive Junior Mezzanine, LLC, a Delaware limited
liability company.
"JUNIOR MEZZANINE EVENT OF DEFAULT" shall mean an event of default, after
the expiration of any applicable grace or cure periods, as defined in the Junior
Mezzanine Loan Agreement.
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"JUNIOR MEZZANINE LENDER" shall mean Bank of America, N.A., and its
successors and assigns.
"JUNIOR MEZZANINE LOAN" shall mean that certain loan in the original
principal amount of $20,000,000.00 made by Junior Mezzanine Lender to Junior
Mezzanine Borrower pursuant to the Junior Mezzanine Loan Agreement.
"JUNIOR MEZZANINE LOAN AGREEMENT" shall mean that certain Junior Mezzanine
Loan Agreement, dated the date hereof, between Junior Mezzanine Borrower, as
borrower, and Junior Mezzanine Lender, as lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"JUNIOR MEZZANINE LOAN DOCUMENTS" shall mean the Junior Mezzanine Loan
Agreement and all other documents now or hereafter evidencing or securing the
Junior Mezzanine Loan.
"JUNIOR SUBORDINATED MANAGEMENT FEE" shall mean a monthly amount equal to
(a) 3.0% of all Project Income (as defined in the Management Agreement) for such
month, minus (b) the Base Management Fee.
"LATHAM LEASE" shall mean that certain Lease between Borrower and ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP dated May 28, 2003 for approximately 72,682 square feet at the Tower
Parcel.
"LEASE" shall have the meaning set forth in the Mortgage.
"LEASING COMMISSIONS" shall have the meaning set forth in Section 9.3(a)
hereof.
"LEASING RESERVE ACCOUNT" shall have the meaning set forth in Section
9.3(b) hereof.
"LEASING RESERVE FUNDS" shall have the meaning set forth in Section 9.3(b)
hereof.
"LEGAL REQUIREMENTS" shall mean all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Property or any part thereof, or the construction,
use, alteration or operation thereof, whether now or hereafter enacted and in
force, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Borrower, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use and enjoyment
thereof.
"LETTER OF CREDIT" shall mean a clean, irrevocable and unconditional
letter of credit in form and substance acceptable to Lender (a) that is issued
by a commercial bank, the long term unsecured obligations of which are rated no
less than AA- (or the equivalent) by the Rating Agencies, (b) that is payable
upon presentation of sight draft only in New York, New York or Los Angeles,
California to the order of Lender, (c) that has an initial expiration date of
not less than one (1) year from the date of issuance and is automatically
renewable, at least thirty (30) days prior to expiration, for successive one (1)
year periods, (d) that is transferable by Lender
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without the consent of the issuing bank and (e) for which Borrower has no
reimbursement or payment obligations.
"LIBOR" shall mean, with respect to each Interest Period. a rate of
interest per annum obtained by dividing
(a) shall mean, with respect to each Interest Period, the rate for
deposits in U.S. Dollars, for a period equal to one month, which appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on the related Determination
Date; provided, however, if more than one rate is specified on Reuters Screen
LIBOR Page, the LIBOR Rate shall be the arithmetic mean of all rates. Lender
shall determine the LIBOR Rate for each Interest Period and the determination of
the LIBOR Rate by Lender shall be binding upon Borrower absent manifest error,
by
(b) a percentage equal to 100% minus the applicable Reserve Percentage
then in effect.
LIBOR may or may not be the lowest rate based upon the market for U.S.
Dollar deposits in the London Interbank Eurodollar Market at which Lender prices
loans on the date which LIBOR is determined by Lender as set forth above.
"LIBOR LOAN" shall mean the Loan at such time as interest thereon accrues
at the LIBOR Rate.
"LIBOR RATE" shall mean, for any applicable Interest Period, a rate per
annum equal to the sum of (i) LIBOR, and (ii) the LIBOR Spread.
"LIBOR SPREAD" shall mean 0.824%.
"LIEN" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or encumbering Borrower, the Property, any portion thereof or
any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances.
"LLC AGREEMENT" shall have the meaning set forth in Section 6.1(c) hereof.
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Mortgage, the Environmental Indemnity, the Assignment of Management Agreement,
and any and all other documents, agreements and certificates executed and/or
delivered in connection with the Loan, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"LOCKBOX ACCOUNT" shall mean an Eligible Account established pursuant to
Article 10 hereof for deposit of all Rents and other receipts from the Property.
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"LOCKBOX AGREEMENT" shall mean that certain Clearing Bank Instruction
Letter Agreement between Borrower and Lockbox Bank.
"LOCKBOX BANK" shall mean Bank of the West.
"LOCKOUT PERIOD" shall mean the period commencing on the date hereof and
ending on the date immediately preceding the Payment Date in August 2006.
"LOCKOUT YIELD MAINTENANCE PREMIUM" shall mean an amount equal to five
percent (5%) of the then outstanding principal amount of the Loan.
"LOSSES" shall mean any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, fines, penalties, charges, fees,
judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to legal fees and other costs of defense).
"MAJOR DECISIONS" shall mean (i) the sale of all or a substantial portion
of the Property, (ii) the approval of the Annual Budget, (iii) the execution of
any Lease which does not substantially comply with leasing guidelines then in
effect with respect to the Property; (iv) any material modification of the
leasing guidelines then in effect; (v) any material modification of any Loan
Documents requested by Borrower; (vi) any material modification or refinancing
of the Senior Mezzanine Loan or the Junior Mezzanine Loan; (vii) any merger or
consolidation of Borrower with any other entity, or the liquidation or
dissolution of Borrower other than in accordance with the terms of the
Borrower's operating agreement; (viii) any proposed settlement or compromise of
any claim, litigation or other legal proceeding by or against Borrower for more
than $1,000,000 (net of insurance coverage); (ix) any petition in bankruptcy or
reorganization or instituting any other type of bankruptcy, reorganization or
insolvency proceeding with respect to Borrower, the admission in writing by
Borrower of its inability to pay its debts generally as they become due or the
making by Borrower of a general assignment for the benefit of its creditors; (x)
except for the Management Agreement, any material agreement between Borrower and
any Affiliate of Borrower and (xi) such other items similar in scope to the
foregoing which (A) are consistent with veto rights typically held by
institutional investors holding majority but non-managing, non-controlling
interests in an entity, but (B) would not reasonably be deemed to constitute a
change in Control with respect to such entity.
"MAJOR LEASE" shall mean as to the Property (i) any Lease which,
individually or when aggregated with all other leases at the Property with the
same Tenant or its Affiliate, either (A) demises in the aggregate more than one
(1) full occupied floor of the Property, or (B) covers seventy-five (75) or more
parking spaces, (ii) any Lease which contains any option, offer, right of first
refusal or other similar entitlement to acquire all or any portion of the
Property, or (iii) any instrument guaranteeing or providing credit support for
any Lease meeting the requirements of (i) or (ii) above.
"MANAGEMENT AGREEMENT" shall mean the management agreement entered into by
and between West Fifth and Manager with respect to the Tower Parcel, and the
management agreement entered into between South Olive and Manager with respect
to the Garage Parcel, pursuant to which Manager is to provide management and
other services with respect to the
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Property, together with the sub-contract entered into between Manager and
▇▇▇▇▇▇▇ Properties Services, Inc., as the foregoing documents may be amended,
restated, replaced, supplemented or otherwise modified in accordance with the
terms of this Agreement.
"MANAGER" shall mean ▇▇▇▇▇▇▇ Properties L.P., a Maryland limited
partnership or such other entity selected as the manager of the Property in
accordance with the terms of this Agreement.
"MATERIAL ADVERSE CHANGE" shall mean any event that is reasonably likely
to cause a material and adverse impact on a party's financial condition, or the
business of the Property, or could be anticipated to prevent any person from
complying with its material obligations under the Loan Documents to which it is
a party.
"MATURITY DATE" shall mean the Payment Date occurring in July, 2007 or, if
the Extension Option is exercised in accordance with the terms of Section 2.10
hereof, the Payment Date occurring in July, 2008.
"MAXIMUM LEGAL RATE" shall mean the maximum non-usurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MEMBER" shall have the meaning set forth in Section 6.1(c) hereof.
"MEZZANINE LITIGATION EVENT" shall have the meaning set forth in the
Indemnity and Agreement.
"MEZZANINE LITIGATION RESERVE ACCOUNT" shall mean an Eligible Account
established upon the occurrence of a Mezzanine Litigation Event.
"MIZUHO TERMINATION RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.1 hereof.
"MIZUHO TERMINATION RESERVE FUNDS" shall have the meaning set forth in
Section 9.1 hereof.
"MOFO LEASE" shall mean that certain Lease between Borrower and ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ LLP dated November 10, 1988, as amended from time to time,
including, without limitation, an amendment dated April 21, 2003, with respect
to approximately 192,775 square feet at the Tower Parcel
"MONTHLY PAYMENT AMOUNT" shall mean the monthly payment of interest due on
each Payment Date as set forth in Section 2.3(b) hereof.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investor Services, Inc.
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"MORTGAGE" shall mean that certain first priority Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing as of June
27, 2003, executed and delivered by Borrower as security for the Loan and
encumbering the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"NET PROCEEDS" shall have the meaning set forth in Section 8.4(b) hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
8.4(b)(vi) hereof.
"NOTE" shall mean that certain promissory note as of June 27, 2003 in the
original principal amount of $250,000,000.00, made by Borrower in favor of
Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"NOTE RATE" shall have the meaning set forth in Section 2.3(a) hereof.
"OFFERING DOCUMENT DATE" shall have the meaning set forth in Section
5.11(c)(i)(D) hereof.
"OPERATING EXPENSES" shall mean, with respect to any period of time, the
total of all expenses actually paid or payable in accordance with each Annual
Budget approved by Lender, including, without limitation, the Base Management
Fee, but excluding the Junior Subordinated Management Fee, and any leasing
commissions payable under the Management Agreement.
"OPERATING EXPENSE RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.8 hereof.
"OPERATING EXPENSE RESERVE FUNDS" shall have the meaning set forth in
Section 9.8 hereof.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"PARTICIPATIONS" shall have the meaning set forth in Section 13.1 hereof.
"PAYMENT DATE" shall mean the day that is six (6) Business Days prior to
the Selected Day.
"PERMITTED ENCUMBRANCES" shall mean collectively, (a) the Lien and
security interests created by the Loan Documents, (b) the Lien and security
interests created by the Senior Mezzanine Loan Documents or the Junior Mezzanine
Loan Documents, (c) all Liens, encumbrances and other matters disclosed in the
Title Insurance Policy, (d) Liens, if any, for Taxes imposed by any Governmental
Authority not yet delinquent, (e) such other title and survey exceptions as
Lender has approved or may approve in writing in Lender's sole discretion, (f)
Liens for the personal property identified on Schedule I attached hereto; and
(g) easements granted by Borrower so long as (i) such easements do not,
individually or in the aggregate, have a material adverse effect on the use or
operation of the Property and (ii) a breach or violation of
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the terms of any such easements could not result in the divestiture or
subordination of the lien of this Mortgage.
"PERMITTED INVESTMENTS" shall mean to the extent available from Lender or
Lender's servicer for deposits in the Reserve Accounts and the Lockbox Account,
any one or more of the following obligations or securities acquired at a
purchase price of not greater than par, including those issued by a servicer of
the Loan, the trustee under any securitization or any of their respective
Affiliates, payable on demand or having a maturity date not later than the
Business Day immediately prior to the date on which the funds used to acquire
such investment are required to be used under this Agreement and meeting one of
the appropriate standards set forth below:
(a) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America and are one or more of the following: obligations of
the U.S. Treasury (all direct or fully guaranteed obligations, the General
Services Administration (participation certificates), the Small Business
Administration (guaranteed participation certificates and guaranteed pool
certificates) and the U.S. Department of Housing and Urban Development (local
authority bonds); provided, however, that the investments described in this
clause must (i) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (ii) be rated "AAA" or the equivalent by each of the
Rating Agencies, (iii) if rated by S&P, must not have an "r" highlighter affixed
to their rating, (iv) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (v) such investments
must not be subject to liquidation prior to their maturity;
(b) Federal Housing Administration debentures;
(c) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations) and the Federal National Mortgage Association
(debt obligations); provided, however, that the investments described in this
clause must (i) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (ii) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(d) federal funds, unsecured certificates of deposit, time deposits,
bankers' acceptances and repurchase agreements with maturities of not more than
365 days of any bank, the short term obligations of which at all times are rated
in the highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest
short term rating category and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (i) have
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a predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(e) fully Federal Deposit Insurance Corporation-insured demand and time
deposits in, or certificates of deposit of, or bankers' acceptances issued by,
any bank or trust company, savings and loan association or savings bank, the
short term obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency in the highest short term rating category
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities); provided, however, that the investments described
in this clause must (i) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (ii) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(f) debt obligations with maturities of not more than 365 days and at all
times rated by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities) in its highest
long-term unsecured rating category; provided, however, that the investments
described in this clause must (i) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (ii) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (iii) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(g) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) with maturities
of not more than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
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(h) units of taxable money market funds, which funds are regulated
investment companies, seek to maintain a constant net asset value per share and
invest solely in obligations backed by the full faith and credit of the United
States, which funds have the highest rating available from each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) for money market funds; and
(i) any other security, obligation or investment which has been approved
as a Permitted Investment in writing by (i) Lender and (ii) each Rating Agency,
as evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments, (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of one hundred twenty percent (120%) of
the yield to maturity at par of such underlying investment or (C) such
obligation or security has a remaining term to maturity in excess of one (1)
year; and provided, further that at any time that Borrower is not permitted
under the Loan Documents to select Permitted Investments, the term "Permitted
Investments" shall mean any one or more of the obligations or securities
included in subsections (a) through (c) above.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage.
"PHYSICAL CONDITIONS REPORT" shall mean a report regarding the physical
condition of the Property prepared by Certified Environments, Inc. or a company
otherwise satisfactory to Lender, in form and substance satisfactory to Lender
in its sole discretion.
"POLICIES" shall have the meaning set forth in Section 8.1(b) hereof.
"PRINCIPALS GUARANTY" shall mean the document(s) described on Schedule III
attached hereto.
"PROHIBITED TRANSFER" shall have the meaning set forth in Section 7.2
hereof.
"PROPERTY" shall mean the parcels of real property, the Improvements
thereon and all Personal Property owned by Borrower and encumbered by the
Mortgage, together with all rights pertaining to such property and Improvements,
as more particularly described in the granting clause of the Mortgage and
referred to therein as the "Property".
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"PROVIDED INFORMATION" shall have the meaning set forth in Section 13.4(a)
hereof.
"QUALIFIED INVESTOR" shall mean one or more of the following:
(A) a real estate investment trust, bank, saving and loan
association, investment bank, insurance company, trust company, commercial
credit corporation, pension plan, pension fund or pension advisory firm,
mutual fund, government entity or plan, provided that any such Person
referred to in this clause (A) satisfies the Eligibility Requirements;
(B) an investment company, money management firm or "qualified
institutional buyer" within the meaning of Rule 144A under the Securities
Act of 1933, as amended, or an institutional "accredited investor" within
the meaning of Regulation D under the Securities Act of 1933, as amended,
provided that any such Person referred to in this clause (B) satisfies the
Eligibility Requirements;
(C) an institution substantially similar to any of the foregoing
entities described in clauses (ii)(A) or (ii)(B) that satisfies the
Eligibility Requirements;
(D) any entity Controlled by any of the entities described in clause
(i) or clauses (ii)(A) or (ii)(C) above.
For purposes of this definition of Qualified Investor, "Control" means the
ownership, directly or indirectly, in the aggregate of more than fifty percent
(50%) of the beneficial ownership interests of an entity and the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of an entity, whether through the ability to exercise
voting power, by contract or otherwise. "Controlled by," "controlling" and
"under common control with" shall have the respective correlative meaning
thereto.
"QUALIFIED MANAGER" shall mean Manager or a reputable and experienced
professional management organization (a) which manages, together with its
affiliates, at least five (5) first class office buildings totaling at least
2,500,000 square feet of gross leasable area, exclusive of the Property and (b)
approved by Lender, which approval shall not have been unreasonably withheld and
for which Lender shall have received (i) written confirmation from the Rating
Agencies that the employment of such manager will not result in a downgrade,
withdrawal or qualification of the initial, or if higher, then current ratings
issued in connection with a Securitization, or if a Securitization has not
occurred, any ratings to be assigned in connection with a Securitization, and
(ii) with respect to any Affiliated Manager, a revised substantive
non-consolidation opinion if one was delivered in connection with the closing of
the Loan.
"RATE CAP" shall mean, as applicable (A) an interest rate cap with a
maturity date of the initial Maturity Date entered into with an Acceptable
Counterparty with a notional amount equal to the Loan for the term of the Loan
and a LIBOR strike price not greater than seven and ninety two hundredths
percent (7.92%); provided, however, that in the event the rating of the
counterparty to any Rate Cap is downgraded, such Rate Cap will be replaced by a
Rate Cap in the same form and substance as the Rate Cap purchased by the
Borrower in connection with the closing of the Loan or otherwise in a form
approved by Lender in its reasonable discretion and shall be obtained from a
counterparty with a credit rating meeting the requirements set forth
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hereinabove with respect to an Acceptable Counterparty; and provided, that, each
Rate Cap shall provide for (i) the calculation of interest, (ii) the
determination of the interest rate, (iii) the modification of the Interest
Period and (iv) the distribution of payments thereunder to be identical to the
definition of Interest Period set forth herein, and (B) a Replacement Rate Cap.
"RATING AGENCIES" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any other
nationally-recognized statistical rating agency which has been approved by
Lender.
"REA" shall mean that certain Reciprocal Easement Agreement dated as of
June 1, 1989, recorded April 5, 1990 as Instrument No. 90-655583 Official
Records executed by Pacific ▇▇▇▇, American Telephone and Telegraph and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Partners-Fifth & Grand, Ltd. (predecessor to Borrower) and that certain
Parking Easement Agreement dated December 13, 2000, a memorandum of which was
recorded December 27, 2000 as Instrument No. 00-2009212 Official Records
executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners-▇▇▇▇▇▇▇ Development Company and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Partners-Fifth & Grand, Ltd.
"RELEASE" shall have the meaning set forth in Section 12.5 hereof.
"RENT ROLL" shall have the meaning set forth in Section 4.25 hereof.
"RENTS" shall have the meaning set forth in the Mortgage.
"REP & WARRANTY BREACH" shall have the meaning set forth in Section
11.1(e) hereof.
"REPLACEMENT RATE CAP" shall mean an interest rate cap from an Acceptable
Counterparty with terms identical to the Rate Cap.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in Section
9.2(b) hereof.
"REPLACEMENT RESERVE FUNDS" shall have the meaning set forth in Section
9.2(b) hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth in
Section 9.2(b) hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 9.2(a) hereof.
"REQUIRED WORK" shall have the meaning set forth in Section 9.4 hereof.
"RESERVE ACCOUNTS" shall mean the Tax and Insurance Reserve Account, the
Replacement Reserve Account, the Leasing Reserve Account, the Operating Expense
Reserve Account, the Extraordinary Expense Reserve Account, the Debt Service
Reserve Account or any other escrow account established by the Loan Documents.
"RESERVE FUNDS" shall mean the Tax and Insurance Reserve Funds, the
Replacement Reserve Funds, the Leasing Reserve Funds, the Operating Expense
Reserve Funds, the Extraordinary Expense Reserve Funds, the Debt Service Reserve
Funds or any other escrow funds established by the Loan Documents.
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"RESERVE LETTER OF CREDIT" shall have the meaning set forth in Section 9.2
hereof.
"RESERVE PERCENTAGE" shall mean, with respect to any day of any Interest
Period, that percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor), for determining the maximum reserve requirement (including basic,
supplemental, emergency, special and marginal reserves) generally applicable to
financial institutions regulated by the Federal Reserve Board comparable in size
and type to Lender in respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits by reference to which
the interest rate on the Loan is determined), whether or not Lender has any
Eurocurrency liabilities or such requirement otherwise in fact applies to
Lender. The LIBOR Rate shall be adjusted automatically as of the effective date
of each change in the Reserve Percentage. As of the Closing Date, the Reserve
Percentage is zero, however, there can be no assurance as to what such amount
may be in the future.
"RESTORATION" shall mean, following the occurrence of a Casualty or a
Condemnation which is of a type necessitating the repair of the Property, the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"RESTORATION CONSULTANT" shall have the meaning set forth in Section
8.4(b)(iii) hereof.
"RESTORATION RETAINAGE" shall have the meaning set forth in Section
8.4(b)(iv) hereof.
"RESTRICTED PARTY" shall have the meaning set forth in Section 7.1 hereof.
"SALE OR PLEDGE" shall have the meaning set forth in Section 7.1 hereof.
"SECURITIES" shall have the meaning set forth in Section 13.1 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES LIABILITIES" shall have the meaning set forth in Section 13.5
hereof.
"SECURITIZATION" shall have the meaning set forth in Section 13.1 hereof.
"SECURITIZATION CLOSING DATE" shall mean a date selected by Lender in its
sole discretion by providing not less than twenty-four (24) hours prior notice
to Borrower.
"SELECTED DAY" means the fifteenth (15th) day of each calendar month, or
such other date as determined by Lender pursuant to Section 13.4 hereof.
"SENIOR MEZZANINE BORROWER" shall mean, collectively, ▇▇▇▇▇▇▇ PROPERTIES -
555 W. FIFTH SENIOR MEZZANINE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AND
▇▇▇▇▇▇▇ PROPERTIES - 808 S. ▇▇▇▇▇ ▇▇▇▇▇▇ MEZZANINE, LLC, A DELAWARE LIMITED
LIABILITY COMPANY].
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"SENIOR MEZZANINE EVENT OF DEFAULT" shall mean an event of default, after
the expiration of any applicable grace or cure periods, as defined in the Senior
Mezzanine Loan Agreement.
"SENIOR MEZZANINE LENDER" shall mean Bank of America, N.A., and its
successors and assigns.
"SENIOR MEZZANINE LOAN" shall mean tat certain loan in the original
principal amount of $30,000,000.00 made by Senior Mezzanine Lender to Junior
Mezzanine Borrower, formerly known as ▇▇▇▇▇▇▇ Properties - 555 W. Fifth
Mezzanine, LLC and ▇▇▇▇▇▇▇ Properties - 808 S. Olive Mezzanine, LLC pursuant to
the Senior Mezzanine Loan Agreement.
"SENIOR MEZZANINE LOAN AGREEMENT" shall mean that certain Senior Mezzanine
Loan Agreement, dated as of June 27, 2003, between Senior Mezzanine Borrower, as
borrower, and Senior Mezzanine Lender, as lender, as the same has been and may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"SENIOR MEZZANINE LOAN DOCUMENTS" shall mean the Senior Mezzanine Loan
Agreement and all other documents now or hereafter evidencing or securing the
Senior Mezzanine Loan.
"SPECIAL MEMBER" shall have the meaning set forth in Section 6.1(c)
hereof.
"SPONSOR" shall mean ▇▇▇▇▇▇▇ Properties, Inc.
"STANDARD STATEMENTS" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"STATIC LIBOR RATE" shall have the meaning set forth in Section 2.9
hereof.
"STATIC LIBOR RATE LOAN" shall have the meaning set forth in Section
2.9(c) hereof.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"STATE" shall mean the state in which the Property or any part thereof is
located.
"TAX AND INSURANCE RESERVE FUNDS" shall have the meaning set forth in
Section 9.6 hereof.
"TAX AND INSURANCE RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.6 hereof.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof.
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"TENANT" shall mean any Person leasing, subleasing or otherwise occupying
any portion of the Property under a Lease or other occupancy agreement with
Borrower, including, without limitation, any Major Lease.
"TENANT IMPROVEMENTS" shall have the meaning set forth in Section 9.3(a)
hereof.
"TERMINATION FEE DEPOSIT" shall have the meaning set forth in Section
9.3(b) hereof.
"TI/LC MONTHLY DEPOSIT" shall mean (i) with respect each Payment Date
through and including the Payment Date in July 2005, the sum of $115,646.67,
(ii) with respect to each Payment Date after July 2005 through and including the
Payment Date in July 2006, the sum of $166,729.83 and (iii) with respect to each
Payment Date after July 2006 through and including the Payment Date in July
2007, the sum of $115,646.67.
"TITLE INSURANCE POLICY" shall mean that certain ALTA mortgagee title
insurance policy issued with respect to the Property and insuring the lien of
the Mortgage.
"TOWER PARCEL" shall mean Gas Company Tower, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, as more particularly described in the Mortgage.
"TRANSFEREE" shall have the meaning set forth in Section 7.5 hereof.
"TRIBUNAL" shall mean any state, commonwealth, federal, foreign,
territorial or other court or governmental department, commission, board,
bureau, district, authority, agency, central bank, or instrumentality, or any
arbitration authority.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code
as in effect in the State where the applicable Property is located.
"UNDERWRITER GROUP" shall have the meaning set forth in Section 13.5(b)
hereof.
SECTION 1.2. PRINCIPLES OF CONSTRUCTION
All references to sections and schedules are to sections and schedules in
or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
ARTICLE 2
GENERAL TERMS
SECTION 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER
(a) Subject to and upon the terms and conditions set forth herein, Lender
has made and Borrower has accepted the Loan on the Closing Date.
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(b) Borrower may request and receive only one borrowing in respect of the
Loan and any amount borrowed and repaid in respect of the Loan may not be
reborrowed.
(c) The Loan shall be evidenced by the Note and secured by the Mortgage
and the other Loan Documents.
(d) Borrower used the proceeds of the Loan to (i) retire the debt existing
on the Property existing prior to the Closing Date, (ii) pay certain costs in
connection with the financing of the Property, (iii) make deposits into the
Reserve Funds on the Closing Date in the amounts provided herein, (iv) pay costs
and expenses incurred in connection with the closing of the Loan, as approved by
Lender, such approval not to be unreasonably withheld, conditioned or delayed,
(v) fund any working capital requirements of the Property, and (vi) distribute
the balance, if any, to its constituent owners.
(e) Borrower shall prepay the Loan in the amount of $20,000,000 and Lender
shall accept such prepayment without any penalty or premium notwithstanding
Section 2.5 hereof. As a result of such prepayment, the original principal
amount of the Loan shall be $230,000,000.
SECTION 2.2. INTEREST RATE PROTECTION AGREEMENT
(a) Prior to or contemporaneously with the Closing Date, Borrower shall
have obtained the Interest Rate Protection Agreement, which shall be coterminous
with, or extend beyond, the initial term of the Loan and have a notional amount
which shall not at any time be less than the outstanding principal balance of
the Loan. The Interest Rate Protection Agreement shall be maintained throughout
the term of the Loan with an Acceptable Counterparty. If the provider of the
Interest Rate Protection Agreement ceases to be an Acceptable Counterparty,
Borrower shall obtain a replacement Interest Rate Protection Agreement from an
Acceptable Counterparty within ten (10) Business Days of receipt of notice from
Lender or Borrower's obtaining knowledge that the then-current counterparty
under the Interest Rate Protection Agreement is no longer an Acceptable
Counterparty; provided, however, in the event that the Interest Rate Protection
Agreement counterparty is Bank of America, N.A., the provisions of this sentence
shall not apply.
(b) Borrower shall collaterally assign to Lender pursuant to the
Collateral Assignment of Interest Rate Protection Agreement all of its right,
title and interest to receive any and all payments under the Interest Rate
Protection Agreement (and any related guarantee, if any) and shall deliver to
Lender counterparts of such Collateral Assignment of Interest Rate Protection
Agreement executed by the Borrower and by the Acceptable Counterparty and notify
the Acceptable Counterparty of such collateral assignment (either in such
Interest Rate Protection Agreement or by separate instrument). At such time as
the Loan is repaid in full, all of Lender's right, title and interest in the
Interest Rate Protection Agreement shall terminate and Lender shall execute and
deliver at Borrower's sole cost and expense, such documents as may be required
to evidence Lender's release of the Interest Rate Protection Agreement and to
notify the Acceptable Counterparty of such release.
(c) Borrower shall comply with all of its obligations under the terms and
provisions of the Interest Rate Protection Agreement. All amounts paid by the
Acceptable Counterparty
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under the Interest Rate Protection Agreement to Borrower or Lender shall be
deposited immediately into the Lockbox Account. Borrower shall take all actions
reasonably requested by Lender to enforce Lender's rights under the Interest
Rate Protection Agreement in the event of a default by the Acceptable
Counterparty and shall not waive, amend or otherwise modify any of its rights
thereunder.
(d) In the event that Borrower fails to purchase, maintain and/or
deliver to Lender the Interest Rate Protection Agreement in accordance with the
terms and provisions of this Agreement, Lender may purchase the Interest Rate
Protection Agreement and the cost incurred by Lender in purchasing the Interest
Rate Protection Agreement shall be paid by Borrower to Lender with interest
thereon at the Default Rate from the date such cost was incurred by Lender until
such cost is reimbursed by Borrower to Lender.
(e) In connection with the Interest Rate Protection Agreement and any
replacement Interest Rate Protection Agreement, Borrower shall obtain and
deliver to Lender an opinion from counsel (which counsel may be in-house counsel
for the Acceptable Counterparty) for the Acceptable Counterparty (upon which
Lender and its successors and assigns may rely) which shall provide, in relevant
part, that:
(i) the Acceptable Counterparty is duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation
and has the organizational power and authority to execute and deliver, and
to perform its obligations under, the Interest Rate Protection Agreement;
(ii) the execution and delivery of the Interest Rate Protection
Agreement by the Acceptable Counterparty, and any other agreement which
the Acceptable Counterparty has executed and delivered pursuant thereto,
and the performance of its obligations thereunder have been and remain
duly authorized by all necessary action and do not contravene any
provision of its certificate of incorporation or by-laws (or equivalent
organizational documents) or any law, regulation or contractual
restriction binding on or affecting it or its property;
(iii) all consents, authorizations and approvals required for the
execution and delivery by the Acceptable Counterparty of the Interest Rate
Protection Agreement, and any other agreement which the Acceptable
Counterparty has executed and delivered pursuant thereto, and the
performance of its obligations thereunder have been obtained and remain in
full force and effect, all conditions thereof have been duly complied
with, and no other action by, and no notice to or filing with any
governmental authority or regulatory body is required for such execution,
delivery or performance; and
(iv) the Interest Rate Protection Agreement, and any other agreement
which the Acceptable Counterparty has executed and delivered pursuant
thereto, has been duly executed and delivered by the Acceptable
Counterparty and constitutes the legal, valid and binding obligation of
the Acceptable Counterparty, enforceable against the Acceptable
Counterparty in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to
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enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
SECTION 2.3. LOAN PAYMENTS
(a) The Loan shall bear interest at a rate per annum equal to the LIBOR
Rate or the Static LIBOR Rate, as applicable (the "NOTE RATE"). Interest shall
be computed based on the daily rate produced assuming a three hundred sixty
(360) day year, multiplied by the actual number of days elapsed. Except as
otherwise set forth in this Agreement, interest shall be paid in arrears.
(b) Borrower hereby agrees to pay sums due under the Note as follows: An
initial payment of $293,472.22 is due on July 9, 2003 for interest from the date
the Loan is funded by Lender into escrow with the title company through and
including July 14, 2003. Thereafter, except as may be adjusted in accordance
with the last sentence of Section 2.3(c), consecutive monthly installments of
interest calculated at the applicable Note Rate for the applicable Interest
Period shall be payable pursuant to the terms of Section 2.3(d) (the "MONTHLY
PAYMENT AMOUNT") on each Payment Date. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance, all accrued and unpaid interest
and all other amounts due hereunder and under the Note, the Mortgage and other
Loan Documents. The accrued and unpaid interest due on the Maturity Date shall
be calculated for the full final Interest Period, notwithstanding that such
Interest Period may extend beyond the Maturity Date.
(c) All interest shall be computed on the basis of a three hundred sixty
(360) day year and paid for the actual number of days elapsed in an Interest
Period. Lender shall determine the Note Rate applicable to the Debt in
accordance with this Agreement and its determination thereof shall be conclusive
in the absence of manifest error. The books and records of Lender shall be prima
facie evidence of all sums owing to Lender from time to time under this
Agreement, but the failure to record any such information shall not limit or
affect the obligations of Borrower under the Loan Documents.
(d) Each payment by Borrower hereunder or under the Note shall be payable
at ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Commercial
Mortgage Loan Servicing #1777, or at such other place as the Lender may
designate from time to time in writing, on the date such payment is due, to
Lender by deposit to such account as Lender may designate by written notice to
Borrower. Each payment by Borrower hereunder or under the Note shall be made in
funds settled through the New York Clearing House Interbank Payments System or
other funds immediately available to Lender by 2:00 p.m., New York City time, on
the date such payment is due, to Lender by deposit to such account as Lender may
designate by written notice to Borrower. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the first Business Day preceding such scheduled due
date. Notwithstanding the foregoing, amounts due under the Loan Documents shall
be deemed paid so long as there is sufficient money in the Cash Management
Account for payment of such amounts and Lender's access to such money has not
been constrained or constricted in any manner.
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(e) Prior to the occurrence of an Event of Default, all monthly payments
made as scheduled under this Agreement and the Note shall be applied to the
payment of interest computed at the Note Rate. All voluntary and involuntary
prepayments on the Note shall be applied, to the extent thereof, to accrued but
unpaid interest on the amount prepaid, to the remaining principal amount, and
any other sums due and unpaid to Lender in connection with the Loan, in such
manner and order as Lender may elect in its sole and absolute discretion.
Following the occurrence of an Event of Default, any payment made on the Note
shall be applied to accrued but unpaid interest, late charges, accrued fees, the
unpaid principal amount of the Note, and any other sums due and unpaid to Lender
in connection with the Loan, in such manner and order as Lender may elect in its
sole and absolute discretion.
(f) All payments made by Borrower hereunder or under the Note or the other
Loan Documents shall be made irrespective of, and without any deduction for, any
setoff, defense or counterclaims.
SECTION 2.4. LATE PAYMENT CHARGE
Except for the payment due on the Maturity Date, if any principal or
interest payment is not paid by Borrower on or before the date on which same is
due (unless sufficient funds for payment thereof are on deposit in the Cash
Management Account and Lender's access thereto has not been restricted or
constrained), Borrower shall pay to Lender upon demand an amount equal to the
lesser of four percent (4%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray the expense incurred by Lender in handling
and processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment. Any such amount shall be secured by the
Mortgage and the other Loan Documents to the extent permitted by applicable law.
SECTION 2.5. PREPAYMENT
Except as otherwise expressly permitted by Section 2.1(e) and this Section
2.5 no voluntary prepayments, whether in whole or in part, of the Loan or any
other amount at any time due and owing under the Note can be made by Borrower or
any other Person without the express written consent of Lender.
(a) Lockout Period. Borrower has no right to make, and Lender shall have
no obligation to accept, any voluntary prepayment, whether in whole or in part,
of the Loan during the Lockout Period. Notwithstanding the foregoing, if either
(i) Lender, in its sole and absolute discretion, accepts a full or partial
voluntary prepayment during the Lockout Period or (ii) there is an involuntary
prepayment during the Lockout Period, then, in either case, Borrower shall, in
addition to any portion of the Loan prepaid (together with all interest accrued
and unpaid thereon), pay to Lender a prepayment premium in an amount calculated
in accordance with Section 2.5(c) hereof.
(b) Intentionally omitted.
(c) Involuntary Prepayment During the Lockout Period. If, during the
Lockout Period, payment of all or any part of the Debt is tendered by Borrower
or otherwise recovered by Lender in the exercise of its remedies under the Loan
Documents, such tender or recovery shall
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be (i) made on the next occurring Payment Date together with the Monthly Payment
Amount and (ii) deemed a voluntary prepayment by Borrower in violation of the
prohibition against prepayment set forth in this Section 2.5 and Borrower shall
pay, in addition to the Debt, (x) an amount equal to the Lockout Yield
Maintenance Premium and (y) the accrued and unpaid interest calculated for the
full Interest Period in which such voluntary prepayment occurs.
(d) Insurance and Condemnation Proceeds; Excess Interest. Notwithstanding
any other provision herein to the contrary, and provided no Event of Default
exists, Borrower shall not be required to pay any prepayment premium in
connection with any prepayment occurring solely as a result of (i) the
application of Insurance Proceeds or Condemnation Proceeds pursuant to the terms
of the Loan Documents, or (ii) the application of any interest in excess of the
maximum rate permitted by applicable law to the reduction of the Loan.
(e) After the Lockout Period. Commencing on the day after the expiration
of the Lockout Period, and upon giving Lender at least sixty (60) days (but not
more than ninety (90) days) prior written notice, Borrower may voluntarily
prepay (without premium) the Note in whole (but not in part) on a Payment Date.
Lender shall accept a prepayment pursuant to this Section 2.5(e) on a day other
than a Payment Date provided that, in addition to payment of the full
outstanding principal balance of the Note, Borrower pays to Lender a sum equal
to the amount of interest which would have accrued on the Note if such
prepayment occurred on the next Payment Date.
(f) Limitation on Partial Prepayments. In no event shall Lender have any
obligation to accept a partial prepayment.
SECTION 2.6.PAYMENTS AFTER DEFAULT
Upon the occurrence and during the continuance of an Event of Default,
interest on the outstanding principal balance of the Loan and, to the extent
permitted by law, overdue interest and other amounts due in respect of the Loan,
(a) shall accrue at the Default Rate, and (b) Lender shall be entitled to
receive and Borrower shall pay to Lender all cash flow from the Property in
accordance with the terms of Article 10 hereof, such amount to be applied by
Lender to the payment of the Debt in such order as Lender shall determine in its
sole discretion, including, without limitation, alternating applications thereof
between interest and principal. Interest at the Default Rate shall be computed
from the occurrence of the Event of Default until the earlier of (i) the actual
receipt and collection of the Debt (or that portion thereof that is then due)
and (ii) the cure of such Event of Default. To the extent permitted by
applicable law, interest at the Default Rate shall be added to the Debt, shall
itself accrue interest at the same rate as the Loan and shall be secured by the
Mortgage. This paragraph shall not be construed as an agreement or privilege to
extend the date of the payment of the Debt, nor as a waiver of any other right
or remedy accruing to Lender by reason of the occurrence of any Event of
Default; the acceptance of any payment from Borrower shall not be deemed to cure
or constitute a waiver of any Event of Default; and Lender retains its rights
under this Agreement to accelerate and to continue to demand payment of the Debt
upon the happening of and during the continuance any Event of Default, despite
any payment by Borrower to Lender.
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SECTION 2.7. INTENTIONALLY DELETED
SECTION 2.8. USURY SAVINGS
This Agreement and the Note are subject to the express condition that at
no time shall Borrower be obligated or required to pay interest on the principal
balance of the Loan at a rate which could subject Lender to either civil or
criminal liability as a result of being in excess of the Maximum Legal Rate. If,
by the terms of this Agreement or the other Loan Documents, Borrower is at any
time required or obligated to pay interest on the principal balance due
hereunder at a rate in excess of the Maximum Legal Rate, the Note Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to
the Maximum Legal Rate and all previous payments in excess of the Maximum Legal
Rate shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid to
Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.
SECTION 2.9. UNAVAILABILITY OF RATE. In the event that Lender shall have
determined in its reasonable discretion that none of the methods set forth in
the definition of "LIBOR" herein are available, then Lender shall forthwith give
notice by telephone of such determination, confirmed in writing, to Borrower at
least one (1) day prior to the last day of the related Interest Period. If such
notice is given, the Note Rate, commencing with such related Interest Period
shall be the LIBOR Rate in effect for the most recent Interest Period (the
"STATIC LIBOR RATE").
(a) If, pursuant to the terms of this Agreement, the Loan has been
converted to the Static LIBOR Rate and Lender shall determine (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that the event(s) or circumstance(s) which resulted in such conversion
shall no longer be applicable, Lender shall give notice thereof to Borrower, and
the Loan will be converted from the Static LIBOR Rate to the LIBOR Rate
effective on the first day of the next succeeding Interest Period.
Notwithstanding any provision of this Agreement to the contrary, in no event
shall Borrower have the right to elect to convert from the LIBOR Rate to the
Static LIBOR Rate.
(b) (i) All payments made by Borrower hereunder shall be made free and
clear of, and without reduction for or on account of, income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions, reserves or
withholdings imposed, levied, collected, withheld or assessed by any
Governmental Authorities, which are imposed, enacted or become effective on or
after the Closing Date (such non-excluded taxes being referred to collectively
as "FOREIGN TAXES"), excluding income and franchise taxes of the United States
of America or any political subdivision or taxing authority thereof or therein.
If any Foreign Taxes are required to be withheld from any amounts payable to
Lender hereunder and such Foreign Taxes are not a result of activities of Lender
unrelated to the Loan or Borrower, the amounts so payable to Lender shall be
increased to the extent necessary to yield to Lender (after payment of all
Foreign Taxes) interest or any such other amounts payable hereunder at the rate
or in the amounts specified
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hereunder. Whenever any Foreign Taxes are payable pursuant to applicable law by
Borrower, as promptly as possible thereafter, Borrower shall send to Lender an
original official receipt, if available, or certified copy thereof showing
payment of such Foreign Taxes. Borrower hereby indemnifies Lender for any
incremental taxes, interest or penalties that may become payable by Lender which
may result from any failure by Borrower to pay any such Foreign Taxes when due
to the appropriate taxing authority of which Lender shall have provided Borrower
with prior written notice, if possible, or any failure by Borrower to remit to
Lender the required receipts or other required documentary evidence. Lender's
inability to notify Borrower of any such Foreign Taxes in accordance with the
immediately preceding sentence shall in no way relieve Borrower of its
obligations under this Section 2.9(b). (ii) A Lender that is entitled to an
exemption from or reduction of any Foreign Taxes, with respect to payments under
this Agreement shall deliver to the Borrower, at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate. In addition, at
Borrower's request, Lender shall provide to Borrower its understanding as to
whether any Foreign Taxes will be applicable to any forthcoming payments due
under the Loan Documents. Lender shall not be entitled to claim compensation
pursuant to this Section 2.9(b) for any Foreign Taxes to the extent that such
Foreign Taxes result from a failure to comply with the requirements of this
paragraph. (iii) If Lender determines in good faith that a reasonable basis
exists for contesting any Foreign Taxes for which indemnification has been
demanded hereunder, Lender shall cooperate with Borrower in challenging such
Taxes at Borrower's expense if so requested by Borrower. If Lender receives a
refund of Foreign Tax for which a payment has been made by Borrower pursuant to
this Agreement, which refund in the good faith judgment of Lender is
attributable to such payment made by Borrower, then Lender shall reimburse
Borrower for such amount (together with any interest received thereon) as Lender
determines to be the proportion of the refund as will leave it, after such
reimbursement, in no better or worse position than it would have been in if the
payment had not been required. (iv) If the Borrower is required to pay
additional amounts to or for the account of any Lender pursuant to this Section
2.9(b) as a result of a change in law or treaty occurring after such Lender
first became a party to this Agreement, then such Lender will, at the request of
the Borrower, change the jurisdiction of its applicable lending office if such
change (i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) is, in such Lender's sole, reasonable discretion,
determined not to be materially disadvantageous or cause unreasonable hardship
to such Lender, provided that fees, charges, costs or expenses that are related
to such change shall be borne by the Borrower on behalf of a Lender, and the
mere existence of such expenses, fees or costs shall not be deemed to be
materially disadvantageous or cause undue hardship to the Lender. Lender agrees
that it will (A) take all reasonable actions reasonably requested by the
Borrower in writing that are without material risk and cost to Lender and
consistent with the internal policies of such Lender and applicable legal and
regulatory restrictions (as the case may be) to maintain all exemptions, if any,
available to it from withholding taxes (whether available by treaty or existing
administrative waiver) and (B) to the extent reasonable and without material
risk and cost to it, otherwise cooperate with the Borrower to minimize any
amounts payable by the Borrower under this Section 2.9(b); provided, however,
that in each case, any cost relating to such action or cooperation requested by
the Borrower shall be borne by the Borrower.
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(c) If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender to make or maintain a Loan with the Note Rate being based on LIBOR as
contemplated hereunder, (i) the obligation of Lender hereunder to make or
continue the Loan based on LIBOR or to convert the Loan from the Static LIBOR
Rate to the LIBOR Rate shall be canceled forthwith and (ii) any outstanding
LIBOR Loan shall be converted automatically to a loan bearing interest at the
Static LIBOR Rate (the "STATIC LIBOR RATE LOAN") on the next succeeding Payment
Date or within such earlier period as required by law. Borrower hereby agrees
promptly to pay Lender, upon demand, any additional amounts necessary to
compensate Lender for any costs incurred by Lender in making any conversion in
accordance with this Agreement, including, without limitation, any interest or
fees payable by Lender to lenders of funds obtained by it in order to make or
maintain the LIBOR Loan hereunder. If Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.9(c), Lender shall provide
Borrower with not less than ninety (90) days written notice specifying in
reasonable detail the event by reason of which it has become so entitled and the
additional amount required to fully compensate Lender for such additional costs.
Lender's notice of such costs, as certified to Borrower, shall be conclusive
absent manifest error.
(d) In the event that any change in any requirement of law or in the
interpretation or application thereof, or compliance by Lender with any request
or directive (whether or not having the force of law) hereafter issued from any
central bank or other Governmental Authority:
(i) shall hereafter impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of Lender which is not otherwise
included in the determination of the LIBOR Rate hereunder;
(ii) shall hereafter have the effect of reducing the rate of return
on Lender's capital as a consequence of its obligations hereunder to a
level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender's policies with
respect to capital adequacy) by any amount deemed by Lender to be
material; or
(iii) shall hereafter impose on Lender any other condition and the
result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining loans or extensions of credit or to reduce
any amount receivable hereunder other than with respect to taxes;
then, in any such case, Borrower shall promptly pay Lender, upon demand,
any additional amounts necessary to compensate Lender for such additional
cost or reduced amount receivable which Lender deems to be material as
determined by Lender. If Lender becomes entitled to claim any additional
amounts pursuant to this Section 2.9(d), Lender shall provide Borrower
with not less than ninety (90) days written notice specifying in
reasonable detail the event by reason of which it has become so entitled
and the additional amount required to fully compensate Lender for such
additional cost or reduced amount. A certificate (together with such
supporting documentation as Lender shall provide) as to any additional
costs or amounts payable pursuant to the foregoing
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sentence submitted by Lender to Borrower shall be conclusive in the
absence of error. This provision shall survive payment of the Note and the
satisfaction of all other obligations of Borrower under this Agreement and
the Loan Documents.
(e) Borrower agrees to indemnify Lender and to hold Lender harmless from
any loss or expense which Lender sustains or incurs as a consequence of (i) any
default by Borrower in payment of the principal of or interest on a LIBOR Loan,
including, without limitation, any such loss or expense arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to maintain a
LIBOR Loan hereunder, (ii) any prepayment (whether voluntary or mandatory) of
the LIBOR Loan that did not include all interest which had accrued (or would
have accrued) at the Note Rate through the end of the related Interest Period,
including, without limitation, such loss or expense arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to maintain
the LIBOR Loan hereunder, and (iii) the conversion (for any reason whatsoever,
whether voluntary or involuntary) of the Note Rate from the LIBOR Rate to the
Static LIBOR Rate with respect to any portion of the outstanding principal
amount of the Loan then bearing interest at the LIBOR Rate on a date other than
the Payment Date immediately following the last day of an Interest Period,
including, without limitation, such loss or expenses arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to maintain a
LIBOR Loan hereunder (the amounts referred to in clauses (i), (ii) and (iii) are
herein referred to collectively as the "BREAKAGE COSTS"); provided, however,
Borrower shall not indemnify Lender from any loss or expense arising from
Lender's gross negligence or willful misconduct. This provision shall survive
payment of the Note in full and the satisfaction of all other obligations of
Borrower under this Agreement and the other Loan Documents.
Lender shall not be entitled to claim compensation pursuant to this
Section 2.9(e) for any Foreign Taxes, increased cost or reduction in amounts
received or receivable hereunder, or any reduced rate of return, which was
incurred or which accrued more than ninety (90) days before the date Lender
notified Borrower of the change in law or other circumstance on which such claim
of compensation is based and delivered to Borrower a written statement setting
forth in reasonable detail the basis for calculating the additional amounts owed
to Lender under this Section 2.9(e), which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
SECTION 2.10. EXTENSION OF THE MATURITY DATE. (I) Borrower shall have the
option to extend the term of the Loan (the "EXTENSION OPTION") beyond the
initial Maturity Date for one (1) term (the "EXTENSION TERM") of one (1) year to
the Payment Date occurring in July, 2008, upon satisfaction of the following
terms and conditions:
(a) no Event of Default shall have occurred and be continuing at the time
Borrower delivers notice to Lender of its intention to exercise the Extension
Option and on the date that the extension term is commenced;
(b) Borrower shall notify Lender in writing of its election to extend the
Maturity Date as aforesaid not earlier than three (3) months, and no later than
one (1) month, prior to the then applicable Maturity Date, which election shall
be irrevocable commencing on the fifteenth (15th ) day prior to the date on
which the Extension Term will commence.
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(c) Borrower shall obtain and deliver to Lender as security for the Loan
prior to the commencement of the Extension Term, one or more Interest Rate
Protection Agreements, which Interest Rate Protection Agreements shall be
effective commencing on the first day of such Extension Term and shall have a
maturity date not earlier than the Maturity Date, as extended pursuant to the
terms of this Section 2.10;
(d) in connection with the Extension Option, Borrower shall have delivered
to Lender together with its notice pursuant to subsection (b) of this Section
2.10 and as of the commencement of the Extension Term, a certificate from an
officer of Borrower in form acceptable to the Lender certifying that each of the
representations and warranties of Borrower contained in the Loan Documents is
true, complete and correct in all material respects as of the date of such
certificate to the extent such representations and warranties are not matters
which by their nature can no longer be true and correct as a result of the
passage of time; and
(e) in connection with the exercise of the Extension Option, Borrower
shall have paid to Lender the Extension Fee.
All references in this Agreement and in the other Loan Documents to the
Maturity Date shall mean the Maturity Date, as the same may be extended pursuant
and subject to this Section 2.10.
(II) In the event that Borrower for any reason does not extend the
Maturity Date of the Loan pursuant to this Section 2.10, Borrower shall cause
Senior Mezzanine Borrower to prepay the Senior Mezzanine Loan on the initial
Maturity Date in accordance with the terms of the Senior Mezzanine Loan
Documents.
SECTION 2.11. ADDITIONAL PAYMENT PROVISIONS
(i) Within fifteen (15) days after request by Lender (or at the time
of any prepayment), Borrower shall pay to Lender such amount or amounts as
will compensate Lender for any loss, cost, expense, penalty, claim or
liability, including any loss incurred in obtaining, prepaying,
liquidating or employing deposits or other funds from third parties and
any loss of yield, as determined by Lender in its judgment reasonably
exercised incurred by it with respect to the Loan as a result of the
payment or prepayment of any amount on a date other than the date such
amount is required or permitted to be paid or prepaid; provided that
Lender delivers to Borrower a certificate as to the amounts of such costs
described herein, which certificate shall be conclusive in the absence of
manifest error. Lender shall have no obligation to purchase, sell and/or
match funds in connection with the funding or maintaining of the Loan or
any portion thereof. The obligations of Borrower under this Section shall
survive any termination of the Loan Documents and payment of the Note and
shall not be waived by any delay by Lender in seeking such compensation.
(ii) All payments made by Borrower hereunder or under the other Loan
Documents shall be made irrespective of, and without any deduction for,
any setoff, defense or counterclaims.
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(iii) Remittances in payment of any part of the Loan in less than
the required amount in immediately available U.S. funds shall not,
regardless of any receipt or credit issued therefor, constitute payment
until the required amount is actually received by the holder hereof in
immediately available U.S. funds and shall be made and accepted subject to
the condition that any check or draft may be handled for collection in
accordance with the practices of the collecting bank or banks.
(iv) If at any time after the Closing Date, Lender (which shall
include, for purposes of this Section, any corporation controlling Lender)
reasonably determines that due to the adoption or modification of any
Legal Requirement regarding taxation, Lender's required levels of
reserves, deposits, Federal Deposit Insurance Corporation insurance or
capital (including any allocation of capital requirements or conditions),
or similar requirements, or any interpretation or administration thereof
by any Tribunal or compliance of Lender with any of such requirements, has
or would have the effect of (a) increasing Lender's costs relating to the
Loan, or (b) reducing the yield or rate of return of Lender on the Loan,
to a level below that which Lender could have achieved but for the
adoption or modification of any such Legal Requirements, Borrower shall,
within fifteen (15) days of any request by Lender, pay to Lender such
additional amounts as (in Lender's sole judgment, after good faith and
reasonable computation) will compensate Lender for such increase in costs
or reduction in yield or rate of return of Lender (a "Consequential
Loss"). No failure by Lender to immediately demand payment of any
additional amounts payable hereunder shall constitute a waiver of Lender's
right to demand payment of such amounts at any subsequent time. Nothing
herein contained shall be construed or so operate as to require Borrower
to pay any interest, fees, costs or charges greater than is permitted by
applicable Law. If a change in the applicable lending office of Lender
would eliminate any Consequential Loss, Lender shall use its best efforts
to change such office, so long as such change would not be materially
disadvantageous or cause unreasonable hardship to Lender.
(v) Any demand for payment pursuant to this Section 2.11 shall be
accompanied by an acknowledgement from Lender that it is applying these
provisions generally with respect to similar loan transactions and
borrowers.
ARTICLE 3
CONDITIONS PRECEDENT
The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by Borrower or waiver by Lender of the following conditions
precedent no later than the Closing Date.
SECTION 3.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH CONDITIONS
The representations and warranties of Borrower contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the Closing Date with the same effect as if made on and as of such
date, and Lender shall have determined that no Default or an Event of Default
shall have occurred and be continuing nor will any Default or Event of Default
occur immediately following the Closing Date; and Borrower shall be in
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compliance in all material respects with all terms and conditions set forth in
this Agreement and in each other Loan Document on its part to be observed or
performed.
SECTION 3.2. DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES
(a) Mortgage, Loan Agreement and Note. Lender shall have received from
Borrower a fully executed and acknowledged counterpart of the Mortgage and
evidence that counterparts of the Mortgage has been delivered to the title
company for recording, in the reasonable judgment of Lender, so as to
effectively create upon such recording valid and enforceable Liens upon the
Property, of the requisite priority, in favor of Lender (or such other trustee
as may be required or desired under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents. Lender shall have also received from Borrower fully executed
counterparts of the Environmental Indemnity, this Agreement, the Note and
Assignments of Management Agreement and all other Loan Documents.
(b) Title Insurance. Lender shall have received a Title Insurance Policy
issued by a title company acceptable to Lender and dated as of the Closing Date,
with reinsurance and direct access agreements acceptable to Lender. Such Title
Insurance Policy shall (i) provide coverage in the amount of the Loan, (ii)
insure Lender that the Mortgage creates a valid lien on the Property of the
requisite priority, free and clear of all exceptions from coverage other than
Permitted Encumbrances and standard exceptions and exclusions from coverage (as
modified by the terms of any endorsements), (iii) contain such endorsements and
affirmative coverages as Lender may reasonably request, and (iv) name Lender as
the insured. The Title Insurance Policy shall be assignable. Lender also shall
have received evidence that all premiums in respect of such Title Insurance
Policy have been paid.
(c) Survey. Lender shall have received a current title survey for the
Property, certified to the title company and Lender and their successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys. The survey shall meet the classification of an "Urban Survey" and
the following additional items from the list of "Optional Survey
Responsibilities and Specifications" (Table A) should be added to each survey:
2, 3, 4, 6, 8, 9, 10, 11 and 13. Such survey shall reflect the same legal
description contained in the Title Insurance Policy referred to in subsection
(b) above and shall include, among other things, a metes and bounds description
of the real property comprising part of the Property reasonably satisfactory to
Lender. The surveyor's seal shall be affixed to the survey and the surveyor
shall provide a certification for each survey in form and substance acceptable
to Lender.
(d) Insurance. Lender shall have received copies of the Policies required
hereunder, satisfactory to Lender in its sole discretion, and evidence of the
payment of all Insurance Premiums payable for the existing policy period.
(e) Environmental Reports. Lender shall have received an Environmental
Report in respect of the Property satisfactory to Lender.
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(f) Zoning/Building Code. Lender shall have received evidence of
compliance with zoning and building ordinances and codes with respect to the
Property, including, without limitation, required certificates of occupancy,
reasonably acceptable to Lender.
(g) Encumbrances. Borrower shall have taken or caused to be taken such
actions in such a manner so that Lender has a valid and perfected first Lien as
of the Closing Date on the Property, subject only to applicable Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents, and Lender shall have received satisfactory evidence thereof.
(h) Lien Searches. Borrower shall have delivered to Lender certified
search results pertaining to Borrower, Borrower Principal and such other Persons
as reasonably required by Lender for state and federal tax liens, bankruptcy,
judgment, litigation and state and local UCC filings
SECTION 3.3. RELATED DOCUMENTS
Each additional document not specifically referenced herein, but relating
to the transactions contemplated herein, shall have been duly authorized,
executed and delivered by all parties thereto and at Lender's written request,
Lender shall have received and approved certified copies thereof.
SECTION 3.4. ORGANIZATIONAL DOCUMENTS
On or before the Closing Date, Borrower shall deliver or cause to be
delivered to Lender (a) copies certified by Borrower of all organizational
documentation related to Borrower and Borrower Principal which must be
acceptable to Lender in its sole discretion, and (b) such other evidence of the
formation, structure, existence, good standing and/or qualification to do
business of the Borrower and Borrower Principal, as Lender may request in its
sole discretion, including, without limitation, good standing or existence
certificates, qualifications to do business in the appropriate jurisdictions,
resolutions authorizing the entering into of the Loan and incumbency
certificates as may be requested by Lender.
SECTION 3.5. OPINIONS OF BORROWER'S COUNSEL
Lender shall have received opinions of Borrower's counsel (a) with respect
to non-consolidation issues and (b) with respect to due execution, authority and
enforceability of the Loan Documents and such other matters as Lender may
require, all such opinions in form, scope and substance satisfactory to Lender
and Lender's counsel in their sole discretion.
SECTION 3.6. ANNUAL BUDGET
Borrower shall have delivered, and Lender shall have approved, the Annual
Budget for the current fiscal year, a copy of which is attached as Exhibit A
hereto.
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SECTION 3.7. TAXES AND OTHER CHARGES
Borrower shall have paid all Taxes and Other Charges (including any in
arrears) relating to the Property, which amounts may be funded with proceeds of
the Loan.
SECTION 3.8. COMPLETION OF PROCEEDINGS
All corporate and other proceedings taken or to be taken in connection
with the transactions contemplated by this Agreement and other Loan Documents
and all documents incidental thereto shall be satisfactory in form and substance
to Lender, and Lender shall have received all such counterpart originals or
certified copies of such documents as Lender may reasonably request.
SECTION 3.9. PAYMENTS
All payments, deposits or escrows required to be made or established by
Borrower under this Agreement, the Note and the other Loan Documents on or
before the Closing Date shall have been paid.
SECTION 3.10. TRANSACTION COSTS
Except as otherwise expressly provided herein, Borrower shall have paid or
reimbursed Lender for all out of pocket expenses in connection with the
underwriting, negotiation and closing of the Loan, including title insurance
premiums and other title company charges; recording, registration, filing and
similar fees, taxes and charges; transfer, mortgage, deed, stamp or documentary
taxes or similar fees or charges; costs of third-party reports, including
without limitation, environmental studies, credit reports, seismic reports,
engineer's reports, appraisals and surveys; underwriting and origination
expenses; and all actual, reasonable legal fees and expenses charged by counsel
to Lender.
SECTION 3.11. NO MATERIAL ADVERSE CHANGE
There shall have been no Material Adverse Change in the financial
condition or business condition of the Property, Borrower, Borrower Principal,
Manager or any other person or party contributing to the operating income and
operations of the Property since the date of the most recent financial
statements and/or other information delivered to Lender. The income and expenses
of the Property, the occupancy and leases thereof, and all other features of the
transaction shall be as represented to Lender without material adverse change.
Neither Borrower nor Borrower Principal or Affiliated Manager shall be the
subject of any bankruptcy, reorganization, or insolvency proceeding.
SECTION 3.12. LEASES AND RENT ROLL
Lender shall have received copies of all Leases affecting the Property,
which shall be satisfactory in form and substance to Lender. Lender shall have
received a current certified rent roll of the Property, reasonably satisfactory
in form and substance to Lender.
SECTION 3.13. TENANT ESTOPPELS
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Borrower shall have delivered to Lender an executed tenant estoppel
letter, which shall be in form and substance satisfactory to Lender, from (a)
each Tenant under a Major Lease and (b) disregarding the area leased by those
Tenants described in clause (a) herein, Tenants leasing, in the aggregate, not
less than seventy-five percent (75%) of the remaining gross leasable area of the
Property.
SECTION 3.14. INTENTIONALLY OMITTED
SECTION 3.15. SUBORDINATION AND ATTORNMENT
Borrower shall have delivered to Lender executed instruments acceptable to
Lender subordinating to the Mortgage all of the Leases with those tenants
indicated on the estoppel/snda chart circulated with the closing checklist.
SECTION 3.16. TAX LOT
Lender shall have received evidence that the Property constitutes one (1)
or more separate tax lots, which evidence shall be reasonably satisfactory in
form and substance to Lender.
SECTION 3.17. PHYSICAL CONDITIONS REPORT
Lender shall have received a Physical Conditions Report with respect to
the Property, which report shall be reasonably satisfactory in form and
substance to Lender.
SECTION 3.18. MANAGEMENT AGREEMENTS
Lender shall have received a certified copy of the Management Agreement
which shall be satisfactory in form and substance to Lender.
SECTION 3.19. APPRAISAL
Lender shall have received an appraisal of the Property, which shall be
satisfactory in form and substance to Lender.
SECTION 3.20. FINANCIAL STATEMENTS
Lender shall have received financial statements and related information in
form and substance satisfactory to Lender and in compliance with any Legal
Requirements promulgated by the Securities and Exchange Commission, including,
without limitation, a balance sheet, income and expense statement and statement
of cash flows with respect to Borrower and an operating statement with respect
to the Property for the year-to-date 2003, 2002, 2001 and 2000, audited (except
with respect to the year-to-date 2003) by an Acceptable Accountant and together
with (x) an unqualified opinion of such Acceptable Accountant that such
statements have been prepared in accordance with GAAP applied on a consistent
basis and (y) a letter from such Acceptable Accountant consenting to the
utilization and/or incorporation by reference of such financial statements and
opinion in a Securitization involving the Loan.
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SECTION 3.21. INTENTIONALLY OMITTED
SECTION 3.22. FURTHER DOCUMENTS
Lender or its counsel shall have received such other and further
approvals, opinions, documents and information as Lender or its counsel may have
reasonably requested including the Loan Documents in form and substance
satisfactory to Lender and its counsel.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Borrower and, where specifically indicated, Borrower Principal represents
and warrants to Lender as of the Closing Date that:
SECTION 4.1. ORGANIZATION
Borrower and Borrower Principal (when not an individual) (a) has been duly
organized and is validly existing and in good standing with requisite power and
authority to own its properties and to transact the businesses in which it is
now engaged, (b) is duly qualified to do business and is in good standing in
each jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations, (c) possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management and operation of
the Property, and (d) in the case of Borrower, has full power, authority and
legal right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer
and convey the Property pursuant to the terms of the Loan Documents, and in the
case of Borrower and Borrower Principal, has full power, authority and legal
right to keep and observe all of the terms of the Loan Documents to which it is
a party. Borrower and Borrower Principal represent and warrant that the chart
attached hereto as Exhibit B sets forth an accurate listing of the direct and
indirect owners of the equity interests in Borrower and Borrower Principal (when
not an individual) to the extent any such entity is not publicly traded.
SECTION 4.2. STATUS OF BORROWER
Borrower's exact legal name is correctly set forth on the first page of
this Agreement, on the Mortgage and on any UCC-1 Financing Statements filed in
connection with the Loan. Borrower is an organization of the type specified on
the first page of this Agreement. Borrower is incorporated in or organized under
the laws of the state of Delaware. Borrower's principal place of business and
chief executive office, and the place where Borrower keeps its books and
records, including recorded data of any kind or nature, regardless of the medium
of recording, including software, writings, plans, specifications and
schematics, has been for the preceding four months (or, if less, the entire
period of the existence of Borrower) the address of Borrower set forth on the
first page of this Agreement. The organizational identification numbers assigned
by the state of incorporation or organization are, with respect to West Fifth,
3658031, and with respect to South Olive, 3658033.
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SECTION 4.3. VALIDITY OF DOCUMENTS
Borrower and Borrower Principal have taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents to which they are parties. This Agreement and such other
Loan Documents have been duly executed and delivered by or on behalf of Borrower
and Borrower Principal and constitute the legal, valid and binding obligations
of Borrower and Borrower Principal enforceable against Borrower and Borrower
Principal in accordance with their respective terms, subject only to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
SECTION 4.4. NO CONFLICTS
The execution, delivery and performance of this Agreement and the other
Loan Documents by Borrower and Borrower Principal will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower or Borrower Principal pursuant to the terms of any
agreement or instrument to which Borrower or Borrower Principal is a party or by
which any of Borrower's or Borrower Principal's property or assets is subject,
nor will such action result in any violation of the provisions of any statute or
any order, rule or regulation of any Governmental Authority having jurisdiction
over Borrower or Borrower Principal or any of Borrower's or Borrower Principal's
properties or assets, and any consent, approval, authorization, order,
registration or qualification of or with any Governmental Authority required for
the execution, delivery and performance by Borrower or Borrower Principal of
this Agreement or any of the other Loan Documents has been obtained and is in
full force and effect.
SECTION 4.5. LITIGATION
Except as disclosed on Schedule 4.5 attached hereto, there are no actions,
suits or proceedings at law or in equity by or before any Governmental Authority
or other agency now pending for which Borrower or an Affiliate of Borrower has
been served or, to Borrower's or Borrower Principal's knowledge, threatened in
writing against or affecting Borrower, Borrower Principal, Manager or the
Property, which actions, suits or proceedings, if determined against Borrower,
Borrower Principal, Manager or the Property, would materially adversely affect
the condition (financial or otherwise) or business of Borrower or Borrower
Principal or the condition or ownership of the Property.
SECTION 4.6. AGREEMENTS
Borrower is not a party to any agreement or instrument or subject to any
restriction which would materially and adversely affect Borrower or the
Property, or Borrower's business, properties or assets, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or the Property is bound. Borrower has no material financial
obligation under
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any agreement or instrument to which Borrower is a party or by which Borrower or
the Property is otherwise bound, other than (a) obligations incurred in the
ordinary course of the operation of the Property and (b) obligations under the
Loan Documents.
SECTION 4.7. SOLVENCY
Except as disclosed on Schedule 4.7 attached hereto, Borrower and Borrower
Principal have (a) not entered into the transaction or executed the Note, this
Agreement or any other Loan Documents with the actual intent to hinder, delay or
defraud any creditor and (b) received reasonably equivalent value in exchange
for their obligations under such Loan Documents. Giving effect to the Loan, the
fair saleable value of the assets of Borrower and Borrower Principal exceeds and
will, immediately following the making of the Loan, exceed the total liabilities
of Borrower and Borrower Principal, including, without limitation, subordinated,
unliquidated, disputed and contingent liabilities. No petition in bankruptcy has
been filed against Borrower, Borrower Principal or Affiliated Manager (if any)
in the last ten (10) years, and neither Borrower nor Borrower Principal or
Affiliated Manager in the last ten (10) years has made an assignment for the
benefit of creditors or taken advantage of any Creditors Rights Laws. Neither
Borrower nor Borrower Principal or Affiliated Manager is contemplating either
the filing of a petition by it under any Creditors Rights Laws or the
liquidation of all or a major portion of Borrower's assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against Borrower or Borrower Principal or Affiliated Manager.
SECTION 4.8. FULL AND ACCURATE DISCLOSURE
No statement of fact made by or on behalf of Borrower or Borrower
Principal in this Agreement or in any of the other Loan Documents or in any
other document or certificate delivered by Borrower, Borrower Principal or any
Affiliate thereof or, to Borrower's knowledge, in any third-party reports
delivered on behalf of Borrower or Borrower Principal contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no material
fact presently known to Borrower or Borrower Principal which has not been
disclosed to Lender which adversely affects, nor as far as Borrower or Borrower
Principal can reasonably foresee, might adversely affect, the Property or the
business, operations or condition (financial or otherwise) of Borrower or
Borrower Principal.
SECTION 4.9. NO PLAN ASSETS
Borrower is not an "employee benefit plan," as defined in Section 3(3) of
ERISA, subject to Title I of ERISA, and none of the assets of Borrower
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is not a
"governmental plan" within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans
similar to the provisions of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code currently in effect, which prohibit or otherwise restrict
the transactions contemplated by this Agreement.
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SECTION 4.10. NOT A FOREIGN PERSON
Neither Borrower nor Borrower Principal is a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code.
SECTION 4.11. ENFORCEABILITY
The Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable as a whole, and
neither Borrower nor Borrower Principal has asserted any right of rescission,
set-off, counterclaim or defense with respect thereto. No Default or Event of
Default exists under or with respect to any Loan Document.
SECTION 4.12. BUSINESS PURPOSES
The Loan is solely for the business purpose of Borrower (including
distributions to Borrower's constituent entity and all subsequent upstream
distributions), and is not for personal, family, household, or agricultural
purposes.
SECTION 4.13. COMPLIANCE
Borrower and the Property, and the use and operation thereof, comply in
all material respects with all Legal Requirements, including, without
limitation, building and zoning ordinances and codes and the Americans with
Disabilities Act. To Borrower's knowledge, Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority and Borrower has received no written notice of any such default or
violation. There has not been committed by Borrower or, to Borrower's knowledge,
any other Person in occupancy of or involved with the operation or use of the
Property any act or omission affording any Governmental Authority the right of
forfeiture as against the Property or any part thereof or any monies paid in
performance of Borrower's obligations under any of the Loan Documents.
SECTION 4.14. FINANCIAL INFORMATION
All financial data, including, without limitation, the balance sheets,
statements of cash flow, statements of income and operating expense and rent
rolls, that have been delivered to Lender in respect of Borrower, Borrower
Principal and/or the Property (a) are true, complete and correct in all material
respects, (b) accurately represent in all material respects the financial
condition of Borrower, Borrower Principal or the Property, as applicable, as of
the date of such reports, and (c) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein. Borrower
does not have any contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments that are known to Borrower and reasonably likely to have
a material adverse effect on the Property or the current and/or intended
operation thereof, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no
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materially adverse change in the financial condition, operations or business of
Borrower or Borrower Principal from that set forth in said financial statements.
SECTION 4.15. CONDEMNATION
No Condemnation or other proceeding has been commenced or, to Borrower's
best knowledge, is threatened or contemplated with respect to all or any portion
of the Property or for the relocation of roadways providing access to the
Property.
SECTION 4.16. UTILITIES AND PUBLIC ACCESS; PARKING
The Property has adequate rights of access to public ways and is served by
water, sewer, sanitary sewer and storm drain facilities adequate to service the
Property for full utilization of the Property for its intended uses. All public
utilities necessary to the full use and enjoyment of the Property as currently
used and enjoyed are located either in the public right-of-way abutting the
Property (which are connected so as to serve the Property without passing over
other property) or in recorded easements serving the Property and such easements
are set forth in and insured by the Title Insurance Policy. All roads necessary
for the use of the Property for its current purposes have been completed and
dedicated to public use and accepted by all Governmental Authorities. The
Property has, or is served by, parking to the extent required to comply with all
Legal Requirements.
SECTION 4.17. SEPARATE LOTS
The Property is assessed for real estate tax purposes as one or more
wholly independent tax lot or lots, separate from any adjoining land or
improvements not constituting a part of such lot or lots, and no other land or
improvements is assessed and taxed together with the Property or any portion
thereof.
SECTION 4.18. ASSESSMENTS
To Borrower's knowledge after due inquiry, there are no pending or
proposed special or other assessments for public improvements or otherwise
affecting the Property, nor are there any contemplated improvements to the
Property that may result in such special or other assessments.
SECTION 4.19. INSURANCE
Borrower has obtained and has delivered to Lender certified copies of all
Policies reflecting the insurance coverages, amounts and other requirements set
forth in this Agreement. No claims have been made under any of the Policies, and
to Borrower's knowledge, no Person, including Borrower, has done, by act or
omission, anything which would impair the coverage of any of the Policies.
SECTION 4.20. USE OF PROPERTY
The Property is used exclusively for office purposes and other appurtenant
and related uses.
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SECTION 4.21. CERTIFICATE OF OCCUPANCY; LICENSES
All certifications, permits, licenses and approvals, including, without
limitation, certificates of completion or occupancy and any applicable liquor
license required for the legal use, occupancy and operation of the Property for
the purpose intended herein, have been obtained and are valid and in full force
and effect. Borrower shall keep and maintain all licenses necessary for the
operation of the Property for the purpose intended herein. The use being made of
the Property is in conformity with the certificate of occupancy and any permits
or licenses issued for the Property.
SECTION 4.22. FLOOD ZONE
None of the Improvements on the Property are located in an area identified
by the Federal Emergency Management Agency as an area having special flood
hazards, or, if any portion of the Improvements is located within such area,
Borrower has obtained the insurance prescribed in Section 8.1(a)(i).
SECTION 4.23. PHYSICAL CONDITION
To Borrower's knowledge after due inquiry and except as expressly
disclosed in the Physical Conditions Report to Lender, the Property, including,
without limitation, all buildings, improvements, parking facilities, sidewalks,
storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects. To the best of Borrower's
knowledge, there exists no structural or other material defects or damages in
the Property, as a result of a Casualty or otherwise, and whether latent or
otherwise. Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
SECTION 4.24. BOUNDARIES
(a) None of the Improvements which were included in determining the
appraised value of the Property lie outside the boundaries and building
restriction lines of the Property to any material extent, and (b) no
improvements on adjoining properties encroach upon the Property and no easements
or other encumbrances upon the Property encroach upon any of the Improvements so
as to materially affect the value or marketability of the Property.
SECTION 4.25. LEASES AND RENT ROLL
Borrower has delivered to Lender a true, correct and complete rent roll
for the Property (a "RENT ROLL") which includes all Leases affecting the
Property (including schedules for all executed Leases for Tenants not yet in
occupancy or under which the rent commencement date has not occurred). Except as
set forth in the Rent Roll (as same has been updated by written notice thereof
to Lender) and estoppel certificates delivered to Lender on or prior to the
Closing Date: (a) each Lease is in full force and effect; (b) the premises
demised under the Leases have
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been completed and the Tenants under the Leases have accepted possession of and
are in occupancy of all of their respective demised premises; (c) the Tenants
under the Leases have commenced the payment of rent under the Leases, and to the
best of Borrower's knowledge, there are no offsets, claims or defenses to the
enforcement thereof, and Borrower has no monetary obligations to any Tenant
under any Lease; (d) all Rents due and payable under the Leases have been paid
and no portion thereof has been paid for any period more than thirty (30) days
in advance; (e) the rent payable under each Lease is the amount of fixed rent
set forth in the Rent Roll, and, to the best of Borrower's knowledge, there is
no claim or basis for a claim by the Tenant thereunder for an offset or
adjustment to the rent; (f) no Tenant has made any written claim of a material
default against the landlord under any Lease which remains outstanding nor has
Borrower or Manager received, by in-person, or e-mail (with respect to Major
Leases only) communication to an authorized representative of Borrower or
Manager, any notice of a material default under any Lease; (g) to Borrower's
knowledge there is no present material default by the Tenant under any Lease;
(h) all security deposits under the Leases have been collected by Borrower; (i)
Borrower is the sole owner of the entire landlord's interest in each Lease; (j)
each Lease is the valid, binding and enforceable obligation of Borrower and, to
the best of Borrower's knowledge, the applicable Tenant thereunder and there are
no agreements with the Tenants under the Leases other than as expressly set
forth in the Leases; (k) no Person has any possessory interest in, or right to
occupy, the Property or any portion thereof except under the terms of a Lease;
(l) none of the Leases contains any option or offer to purchase or right of
first refusal to purchase the Property or any part thereof; (m) neither the
Leases nor the Rents have been assigned, pledged or hypothecated except to
Lender, and no other Person has any interest therein except the Tenants
thereunder; and (n) no conditions exist which now give any Tenant or party the
right to "go dark" pursuant to the provision of its Lease and/or the REA.
SECTION 4.26. FILING AND RECORDING TAXES
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgage, have been paid or will be paid, and, under
current Legal Requirements, the Mortgage is enforceable in accordance with its
terms by Lender (or any subsequent holder thereof).
SECTION 4.27. MANAGEMENT AGREEMENTS
The Management Agreement is in full force and effect and there is no
default thereunder by any party thereto and, to Borrower's knowledge, no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder. No management fees under the Management
Agreement are accrued and unpaid.
SECTION 4.28. ILLEGAL ACTIVITY
No portion of the Property has been or will be purchased with proceeds of
any illegal activity, and no part of the proceeds of the Loan will be used in
connection with any illegal activity.
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SECTION 4.29. CONSTRUCTION EXPENSES
All costs and expenses of any and all labor, materials, supplies and
equipment used in the construction maintenance or repair of the Improvements
have been paid in full. To Borrower's knowledge after due inquiry, there are no
claims for payment for work, labor or materials affecting the Property which are
or may become a lien prior to, or of equal priority with, the Liens created by
the Loan Documents.
SECTION 4.30. PERSONAL PROPERTY
Borrower has paid in full for, and is the owner of, all Personal Property
(other than tenants' property) used in connection with the operation of the
Property, free and clear of any and all security interests, liens or
encumbrances, except for Permitted Encumbrances and the Lien and security
interest created by the Loan Documents.
SECTION 4.31. TAXES
Borrower and Borrower Principal have filed all federal, state, county,
municipal, and city income, personal property and other tax returns required to
have been filed by them and have paid all taxes and related liabilities which
have become due pursuant to such returns or pursuant to any assessments received
by them. Neither Borrower nor Borrower Principal knows of any basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.
SECTION 4.32. PERMITTED ENCUMBRANCES
None of the Permitted Encumbrances, individually or in the aggregate,
materially interferes with the benefits of the security intended to be provided
by the Loan Documents, materially and adversely affects the value of the
Property, impairs the use or the operation of the Property or impairs Borrower's
ability to pay its obligations in a timely manner.
SECTION 4.33. FEDERAL RESERVE REGULATIONS
Borrower will use the proceeds of the Loan for the purposes set forth in
Section 2.1(d) hereof and not for any illegal activity. No part of the proceeds
of the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by Legal Requirements or prohibited by the terms and
conditions of this Agreement or the other Loan Documents.
SECTION 4.34. INVESTMENT COMPANY ACT
Borrower is not (a) an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended; (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the
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Public Utility Holding Company Act of 1935, as amended; or (c) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
SECTION 4.35. RECIPROCAL EASEMENT AGREEMENTS
(a) Neither Borrower, nor any other party is currently in default (nor has
any notice been given or received with respect to an alleged or current default)
under any of the terms and conditions of the REA, and the REA remains unmodified
and in full force and effect;
(b) All easements granted pursuant to the REA which were to have survived
the site preparation and completion of construction (to the extent that the same
has been completed), remain in full force and effect and have not been released,
terminated, extinguished or discharged by agreement or otherwise;
(c) All sums due and owing by Borrower to the other parties to the REA (or
by the other parties to the REA to the Borrower) pursuant to the terms of the
REA, including without limitation, all sums, charges, fees, assessments, costs,
and expenses in connection with any taxes, site preparation and construction,
non-shareholder contributions, and common area and other property management
activities have been paid, are current, and no lien has attached on the Property
(or threat thereof been made) for failure to pay any of the foregoing;
(d) The terms, conditions, covenants, uses and restrictions contained in
the REA do not conflict in any manner with any terms, conditions, covenants,
uses and restrictions contained in any Lease or in any agreement between
Borrower and occupant of any peripheral parcel, including without limitation,
conditions and restrictions with respect to kiosk placement, tenant restrictions
(type, location or exclusivity), sale of certain goods or services, and/or other
use restrictions; and
(e) The terms, conditions, covenants, uses and restrictions contained in
each Lease do not conflict in any manner with any terms, conditions, covenants,
uses and restrictions contained in the REA, any other Lease or in any agreement
between Borrower and occupant of any peripheral parcel, including without
limitation, conditions and restrictions with respect to kiosk placement, tenant
restrictions (type, location or exclusivity), sale of certain goods or services,
and/or other use restrictions.
SECTION 4.36. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE
All information submitted by Borrower or its agents to Lender and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower in this Agreement or in any other
Loan Document, as may be updated by Borrower prior to the closing of the Loan,
are accurate and correct in all material respects and sufficiently complete as
to not to be misleading in any material respect. To the best of Borrower's
knowledge, there has been no material adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material respect or that otherwise
materially and adversely affects or might materially and adversely affect the
Property or the business operations or the financial condition of Borrower.
Borrower has disclosed to Lender all material facts and has not failed to
disclose any material fact that could cause any
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representation or warranty made herein or in any other documents delivered to
Lender by Borrower or any of its Affiliates or agents to be materially
misleading.
SECTION 4.37. INTELLECTUAL PROPERTY
All trademarks, trade names and service marks necessary to the business of
Borrower as presently conducted or as Borrower contemplates conducting its
business are in good standing and, to the extent of Borrower's actual knowledge,
uncontested. Borrower has not infringed, is not infringing, and has not received
notice of infringement with respect to asserted trademarks, trade names and
service marks of others. To Borrower's knowledge, there is no infringement by
others of trademarks, trade names and service marks of Borrower.
SECTION 4.38. SURVEY
The Survey for the Property delivered to Lender in connection with this
Agreement has been prepared in accordance with the provisions of Section 3.2(c)
hereof, and to the knowledge of Borrower does not fail to reflect any material
matter affecting the Property or the title thereto.
SECTION 4.39. EMBARGOED PERSON
To the best of Borrower's knowledge, as of the date hereof and at all
times throughout the term of the Loan, including after giving effect to any
transfers of interests permitted pursuant to the Loan Documents, (a) none of the
funds or other assets of Borrower and Borrower Principal constitute property of,
or are beneficially owned, directly or indirectly, by any person, entity or
government subject to trade restrictions under U.S. law, including but not
limited to, the International Emergency Economic Powers Act, 50 U.S.C.
Sections 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et
seq., and any Executive Orders or regulations promulgated thereunder with the
result that the investment in Borrower or Borrower Principal, as applicable
(whether directly or indirectly), is prohibited by law or the Loan made by
Lender is in violation of law ("EMBARGOED PERSON"); (b) no Embargoed Person has
any interest of any nature whatsoever in Borrower or Borrower Principal, as
applicable, with the result that the investment in Borrower or Borrower
Principal, as applicable (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law; and (c) none of the funds of Borrower or
Borrower Principal, as applicable, have been derived from any unlawful activity
with the result that the investment in Borrower or Borrower Principal, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law.
SECTION 4.40. PATRIOT ACT
All capitalized words and phrases and all defined terms used in the USA
Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes
and all orders, rules and regulations of the United States government and its
various executive departments, agencies and offices related to the subject
matter of the Patriot Act, including Executive Order 13224 effective September
24, 2001 (collectively referred to in this Section only as the "PATRIOT ACT")
and are incorporated into this Section. Each of Borrower and Borrower Principal
hereby represents and warrants that Borrower and Borrower Principal and each and
every Person affiliated with Borrower or Borrower Principal or that to
Borrower's knowledge has an economic interest in Borrower, or, to Borrower's
knowledge, that has or will have an interest in the transaction
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contemplated by this Agreement or in the Property or will participate, in any
manner whatsoever, in the Loan, is: (i) not a "blocked" person listed in the
Annex to Executive Order Nos. 12947, 13099 and 13224 and all modifications
thereto or thereof (as used in this Section only, the "ANNEX"); (ii) in full
compliance with the requirements of the Patriot Act and all other requirements
contained in the rules and regulations of the Office of Foreign Assets Control,
Department of the Treasury (as used in this Section only, "OFAC"); (iii)
operated under policies, procedures and practices, if any, that are in
compliance with the Patriot Act and available to Lender for Lender's review and
inspection during normal business hours and upon reasonable prior notice; (iv)
not in receipt of any notice from the Secretary of State or the Attorney General
of the United States or any other department, agency or office of the United
States claiming a violation or possible violation of the Patriot Act; (v) not
listed as a Specially Designated Terrorist or as a "blocked" person on any lists
maintained by the OFAC pursuant to the Patriot Act or any other list of
terrorists or terrorist organizations maintained pursuant to any of the rules
and regulations of the OFAC issued pursuant to the Patriot Act or on any other
list of terrorists or terrorist organizations maintained pursuant to the Patriot
Act; (vi) not a person who has been determined by competent authority to be
subject to any of the prohibitions contained in the Patriot Act; and (vii) not
owned or controlled by or now acting and or will in the future act for or on
behalf of any person named in the Annex or any other list promulgated under the
Patriot Act or any other person who has been determined to be subject to the
prohibitions contained in the Patriot Act. Borrower covenants and agrees that in
the event Borrower receives any notice that Borrower Principal or Borrower (or
any of its beneficial owners or affiliates or participants) become listed on the
Annex or any other list promulgated under the Patriot Act or is indicted,
arraigned, or custodially detained on charges involving money laundering or
predicate crimes to money laundering, Borrower shall immediately notify Lender.
It shall be an Event of Default hereunder if Borrower, Borrower Principal or any
other party to any Loan Document becomes listed on any list promulgated under
the Patriot Act or is indicted, arraigned or custodially detained on charges
involving money laundering or predicate crimes to money laundering.
SECTION 4.41. SURVIVAL
Borrower agrees that, unless expressly provided otherwise, all of the
representations and warranties of Borrower set forth in this Agreement and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any portion of the Debt remains owing to Lender. All representations,
warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.
ARTICLE 5
BORROWER COVENANTS
From the date hereof and until repayment of the Debt in full and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Mortgage (and all related obligations) in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
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SECTION 5.1. EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS
(a) Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with all
Legal Requirements applicable to it and the Property. Borrower hereby covenants
and agrees not to commit, permit or suffer to exist any act or omission
affording any Governmental Authority the right of forfeiture as against the
Property or any part thereof or any monies paid in performance of Borrower's
obligations under any of the Loan Documents. Borrower shall at all times
maintain, preserve and protect all franchises and trade names used in connection
with the operation of the Property.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the Legal Requirements affecting the
Property, provided that (i) no Default or Event of Default has occurred and is
continuing; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower or the
Property is subject and shall not constitute a default thereunder; (iii) neither
the Property, any part thereof or interest therein, any of the tenants or
occupants thereof, nor Borrower shall be affected in any material adverse way as
a result of such proceeding; (iv) non-compliance with the Legal Requirements
shall not impose civil or criminal liability on Borrower or Lender; (v) Borrower
shall have furnished the security as may be required in the proceeding or by
Lender to ensure compliance by Borrower with the Legal Requirements; and (vi)
Borrower shall have furnished to Lender all other items reasonably requested by
Lender.
SECTION 5.2. MAINTENANCE AND USE OF PROPERTY
Borrower shall cause the Property to be maintained in a good and safe
condition and repair. The Improvements and the Personal Property shall not be
removed, demolished or other than in accordance with the provisions of Section
5.21, materially altered (except for normal replacement or disposal of the
Personal Property in the ordinary course of Borrower's business) without the
prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. If under applicable zoning provisions the use
of all or any portion of the Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or
the nonconforming Improvement to be abandoned without the express written
consent of Lender.
SECTION 5.3. WASTE
Borrower shall not commit or suffer any physical or actual waste of the
Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security
for the Loan. Borrower will not, without the prior written consent of Lender,
permit any drilling or exploration for or extraction, removal, or production of
any minerals from the surface or the subsurface of the Property, regardless of
the depth thereof or the method of mining or extraction thereof.
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SECTION 5.4. TAXES AND OTHER CHARGES
(a) Borrower shall pay all Taxes and Other Charges now or hereafter levied
or assessed or imposed against the Property or any part thereof prior to
delinquency; provided, however, Borrower's obligation to directly pay Taxes
shall be suspended for so long as Borrower complies with the terms and
provisions of Section 9.6 hereof. Borrower shall furnish to Lender receipts for
the payment of the Taxes and the Other Charges prior to the date the same shall
become delinquent (provided, however, that Borrower is not required to furnish
such receipts for payment of Taxes in the event that such Taxes have been paid
by Lender pursuant to Section 9.6 hereof). Subject to Section 5.4(b), Borrower
shall not suffer and shall promptly cause to be paid and discharged any Lien or
charge whatsoever which may be or become a Lien or charge against the Property,
and shall promptly pay for all utility services provided to the Property.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i) no Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable Legal Requirements; (iii) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of such contested Taxes or Other Charges
from the Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or deliver to Lender such reserve deposits as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon (unless Borrower has paid all
of the Taxes or Other Charges under protest). Lender may pay over any such cash
deposit or part thereof held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established or the Property (or part thereof or interest therein) shall be in
danger of being sold, forfeited, terminated, canceled or lost or there shall be
any danger of the Lien of the Mortgage being primed by any related Lien.
SECTION 5.5. LITIGATION
Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened in writing against Borrower which
might materially adversely affect Borrower's condition (financial or otherwise)
or business or the Property.
SECTION 5.6. ACCESS TO PROPERTY
Borrower shall permit agents, representatives and employees of Lender to
inspect the Property or any part thereof at reasonable hours upon reasonable
advance notice, provided Lender shall use reasonable efforts to minimize
interference with the business of any tenants.
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SECTION 5.7. NOTICE OF DEFAULT
Borrower shall promptly advise Lender of any Material Adverse Change in
the condition (financial or otherwise) of Borrower, Borrower Principal or the
Property or of the occurrence of event or circumstance which would constitute a
Default or Event of Default of which Borrower has knowledge.
SECTION 5.8. COOPERATE IN LEGAL PROCEEDINGS
Borrower shall at Borrower's expense cooperate fully with Lender with
respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Lender hereunder or any
rights obtained by Lender under any of the other Loan Documents and, in
connection therewith, permit Lender, at its election, to participate in any such
proceedings.
SECTION 5.9. PERFORMANCE BY BORROWER
Borrower shall in a timely manner observe, perform and fulfill each and
every covenant, term and provision to be observed and performed by Borrower
under this Agreement and the other Loan Documents and any other material
agreement or instrument affecting or pertaining to the Property and any
amendments, modifications or changes thereto.
SECTION 5.10. AWARDS; INSURANCE PROCEEDS
Borrower shall cooperate with Lender in obtaining for Lender the benefits
of any Awards or Insurance Proceeds lawfully or equitably payable in connection
with the Property, and Lender shall be reimbursed for any expenses incurred in
connection therewith (including reasonable, actual attorneys' fees and
disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of a Casualty or Condemnation affecting the Property or
any part thereof) out of such Awards or Insurance Proceeds.
SECTION 5.11. FINANCIAL REPORTING
(a) Borrower and Borrower Principal shall keep adequate books and records
of account in accordance with GAAP, consistently applied and shall furnish to
Lender:
(i) prior to a Securitization, at the request of Lender, monthly,
and following a Securitization, quarterly and annual certified rent rolls
signed and dated by Borrower, detailing the names of all Tenants of the
Improvements, the portion of Improvements (in terms of square footage)
occupied by each Tenant, the base rent, additional rent and any other
charges payable under each Lease (including annual store sales required to
be reported by Tenant under any Lease), and the term of each Lease,
including the commencement and expiration dates and any tenant extension,
expansion or renewal options, the extent to which any Tenant is in default
under any Lease, and any other information as is reasonably required by
Lender, within thirty (30) days after the end of each calendar month,
forty-five (45) days after the end of each fiscal quarter or ninety (90)
days after the close of each fiscal year of Borrower, as applicable;
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(ii) prior to a Securitization, at the request of Lender, monthly,
and following a Securitization, quarterly and annual operating statements
of the Property, prepared and certified by the chief financial officer of
Borrower in form acceptable to Lender in its reasonable discretion (with
the annual operating statement prepared and audited by an Acceptable
Accountant), detailing the revenues received, the expenses incurred and
the net operating income before and after debt service (principal and
interest) and major capital improvements for the period of calculation and
containing appropriate year-to-date information, within thirty (30) days
after the end of each calendar month, forty-five (45) days after the end
of each fiscal quarter or ninety (90) days after the close of each fiscal
year of Borrower, as applicable;
(iii) quarterly and annual balance sheets, profit and loss
statements, statements of cash flows, and statements of change in
financial position of Borrower and Borrower Principal in form reasonably
acceptable to Lender (with the annual financial statements prepared and
audited by an Acceptable Accountant), within forty-five (45) days after
the end of each fiscal quarter or ninety (90) days after the close of each
fiscal year of Borrower and Borrower Principal, as applicable, as the case
may be; and
(iv) an Annual Budget not later than thirty (30) days prior to the
commencement of each fiscal year of Borrower in form reasonably
satisfactory to Lender. In the event that Lender objects to a proposed
Annual Budget submitted by Borrower, Lender shall advise Borrower of such
objections within fifteen (15) days after receipt thereof (and deliver to
Borrower a reasonably detailed description of such objections) and
Borrower shall promptly revise such Annual Budget and resubmit the same to
Lender. Lender shall advise Borrower in writing of any objections to such
revised Annual Budget within ten (10) days after receipt thereof (and
deliver to Borrower a reasonably detailed description of such objections)
and Borrower shall promptly revise the same in accordance with the process
described in this subsection until Lender approves the Annual Budget.
Lender shall have a period of thirty (30) days from receipt of such Annual
Budget, together with any other related documentation reasonably requested
by Lender, in which to approve or reject such Annual Budget, provided that
such Annual Budget is accompanied by a written request from Borrower
marked in bold lettering with the following language: "LENDER'S RESPONSE
IS REQUIRED WITHIN THIRTY (30) DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO
THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and the
envelope containing the request must be marked "PRIORITY - LENDER'S
RESPONSE REQUIRED IN THIRTY (30) DAYS". In the event that Lender fails to
approve or reject such Annual Budget in such period of time, Lender's
consent to such Annual Budget shall be deemed given. Until such time that
Lender approves a proposed Annual Budget, which approval shall not be
unreasonably withheld, conditioned or delayed, the most recent Annual
Budget shall apply; provided that, such approved Annual Budget shall be
adjusted to reflect actual increases in Taxes, Insurance Premiums,
utilities expenses and expenses under the Management Agreement.
(b) Upon request from Lender, Borrower shall promptly furnish to Lender:
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(i) a property management report for the Property, containing a list
of prospective tenants and any other information requested by Lender, in
reasonable detail and certified by Borrower under penalty of perjury to be
true and complete, but no more frequently than quarterly;
(ii) an accounting of all security deposits held in connection with
any Lease of any part of the Property, including the name and
identification number of the accounts in which such security deposits are
held, the name and address of the financial institutions in which such
security deposits are held and the name of the Person to contact at such
financial institution, along with any authority or release necessary for
Lender to obtain information regarding such accounts directly from such
financial institutions; and
(iii) a report of all letters of credit provided by any Tenant in
connection with any Lease of any part of the Property, including the
account numbers of such letters of credit, the names and addresses of the
financial institutions that issued such letters of credit and the names of
the Persons to contact at such financial institutions, along with any
authority or release necessary for Lender to obtain information regarding
such letters of credit directly from such financial institutions.
(c) Borrower shall comply with the following:
(i) If requested by Lender, Borrower shall provide Lender, promptly
upon request, with the following financial statements if, at the time a
Disclosure Document is being prepared for a Securitization, it is expected
that the principal amount of the Loan when combined with the principal
amount of any Affiliated Loans at the time of Securitization may, or if
the principal amount of the Loan when combined with the principal amount
of any Affiliated Loans at any time during which the Loan and any
Affiliated Loans are included in a Securitization does, equal or exceed
20% of the aggregate principal amount of all mortgage loans included or
expected to be included, as applicable, in the Securitization:
(A) A balance sheet with respect to the Property for the two
most recent fiscal years, meeting the requirements of Section
210.3-01 of Regulation S-X of the Securities Act and statements of
income and statements of cash flows with respect to the Property for
the three most recent fiscal years, meeting the requirements of
Section 210.3-02 of Regulation S-X, and, to the extent that such
balance sheet is more than 135 days old as of the date of the
document in which such financial statements are included, interim
financial statements of the Property meeting the requirements of
Section 210.3-01 and 210.3-02 of Regulation S-X (all of such
financial statements, collectively, the "STANDARD STATEMENTS").
(B) Not later than 30 days after the end of each fiscal
quarter following the date hereof, a balance sheet of the Property
as of the end of such fiscal quarter, meeting the requirements of
Section 210.3-01 of Regulation S-X, and statements of income and
statements of cash flows of the Property for the period commencing
following the last day of the most recent fiscal year and ending on
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the date of such balance sheet and for the corresponding period of
the most recent fiscal year, meeting the requirements of Section
210.3-02 of Regulation S-X (provided, that if for such corresponding
period of the most recent fiscal year Acquired Property Statements
were permitted to be provided hereunder pursuant to subsection (i)
above, Borrower shall instead provide Acquired Property Statements
for such corresponding period).
(C) Not later than 75 days after the end of each fiscal year
following the date hereof, a balance sheet of the Property as of the
end of such fiscal year, meeting the requirements of Section
210.3-01 of Regulation S-X, and statements of income and statements
of cash flows of the Property for such fiscal year, meeting the
requirements of Section 210.3-02 of Regulation S-X.
(D) Within ten Business Days after notice from Lender in
connection with the Securitization of this Loan, such additional
financial statements, such that, as of the date (each an "OFFERING
DOCUMENT DATE") of each Disclosure Document, Borrower shall have
provided Lender with all financial statements as described in
subsection (f)(i) above; provided that the fiscal year and interim
periods for which such financial statements shall be provided shall
be determined as of such Offering Document Date.
(ii) If requested by Lender, Borrower shall provide Lender, promptly
upon request, with summaries of the financial statements referred to in
Section 5.11(c) hereof if, at the time a Disclosure Document is being
prepared for a Securitization, it is expected that the principal amount of
the Loan and any Affiliated Loans at the time of Securitization may, or if
the principal amount of the Loan and any Affiliated Loans at any time
during which the Loan and any Affiliated Loans are included in a
Securitization does, equal or exceed 10% (but is less than 20%) of the
aggregate principal amount of all mortgage loans included or expected to
be included, as applicable, in a Securitization. Such summaries shall meet
the requirements for "summarized financial information," as defined in
Section 210.1-02(bb) of Regulation S-X, or such other requirements as may
be determined to be necessary or appropriate by Lender.
(iii) All financial statements provided by Borrower hereunder
pursuant to Section 5.11(c)(i) and (ii) hereof shall be prepared in
accordance with GAAP, and shall meet the requirements of Regulation S-X
and other applicable legal requirements. All financial statements referred
to in Section 5.11(c)(i)(A)and (C) above shall be audited by Acceptable
Accountants in accordance with Regulation S-X and all other applicable
legal requirements, shall be accompanied by the manually executed report
of the independent accountants thereon, which report shall meet the
requirements of Regulation S-X and all other applicable legal
requirements, and shall be further accompanied by a manually executed
written consent of the Acceptable Accountants, in form and substance
acceptable to Lender, to the inclusion of such financial statements in any
Disclosure Document and any Exchange Act Filing and to the use of the name
of such Acceptable Accountants and the reference to such Acceptable
Accountants as "experts" in any Disclosure Document and Exchange Act
Filing (as defined below), all of which shall be provided at the same time
as the related financial statements are required to be provided.
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All financial statements (audited or unaudited) provided by Borrower under
this Section 5.11 shall be certified by the chief financial officer or
administrative member of Borrower, which certification shall state that
such financial statements meet the requirements set forth in the first
sentence of this Section 5.11(c)(iii).
(iv) If requested by Lender, Borrower shall provide Lender, promptly
upon request, with any other or additional financial statements, or
financial, statistical or operating information, as Lender shall determine
to be required pursuant to Regulation S-X or any amendment, modification
or replacement thereto or other legal requirements in connection with any
Disclosure Document or any filing under or pursuant to the Exchange Act in
connection with or relating to a Securitization (hereinafter an "EXCHANGE
ACT FILING") or as shall otherwise be reasonably requested by Lender.
(v) In the event Lender determines, in connection with a
Securitization, that the financial statements required in order to comply
with Regulation S-X or other legal requirements are other than as provided
herein, then notwithstanding the provisions of Section 5.11(c) hereof,
Lender may request, and Borrower shall promptly provide, such combination
of Acquired Property Statement and/or Standard Statements or such other
financial statements as Lender determines to be necessary or appropriate
for such compliance.
(vi) Any reports, statements or other information required to be
delivered under this Agreement shall be delivered in paper form and in the
event that Lender requires financial statements in connection with
subsection (c) above because the Loan when combined with the principal
amount of any Affiliated Loans equal or exceed 20% of the aggregate
principal amount of all mortgage loans included in a Securitization
(defined below), Borrower shall deliver such reports, statements and other
information (A) on a diskette, and (B) if requested by Lender and within
the capabilities of Borrower's data systems without change or modification
thereto, in electronic form and prepared using Microsoft Word for Windows
or WordPerfect for Windows files (which files may be prepared using a
spreadsheet program and saved as word processing files).
(d) Borrower and Borrower Principal shall furnish Lender with such other
additional financial or management information (including state and federal tax
returns) as may, from time to time, be reasonably required by Lender in form and
substance satisfactory to Lender (including, without limitation, any financial
reports required to be delivered by any Tenant or any guarantor of any Lease
pursuant to the terms of such Lease), and shall furnish to Lender and its agents
convenient facilities for the examination and audit of any such books and
records.
(e) All items requiring the certification of Borrower shall, except where
Borrower is an individual, require a certificate executed by the general
partner, managing member or chief executive officer of Borrower, as applicable
(and the same rules shall apply to any sole shareholder, general partner or
managing member which is not an individual).
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SECTION 5.12. ESTOPPEL STATEMENT
(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the rate of
interest on the Note, (iii) the unpaid principal amount of the Note, (iv) the
date installments of interest and/or principal were last paid, (v) any offsets
or defenses to the payment of the Debt, if any, and (vi) that the Note, this
Agreement, the Mortgage and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) After request by Borrower, Lender shall promptly deliver to Borrower a
beneficiary's statement on Lender's (or its servicer's) then current form of
such document, which shall include the balance of the Loan, the then applicable
interest rate and the balances in the Reserve Accounts. In a separate writing,
Lender shall provide to Borrower, to the extent true, a statement that Lender
has not delivered any notices of default to Borrower.
(c) Borrower shall use its best efforts to deliver to Lender, promptly
upon request, duly executed estoppel certificates from any one or more Tenants
as required by Lender attesting to such facts regarding the related Lease as
Lender may require, including, but not limited to attestations that each Lease
covered thereby is in full force and effect with no defaults thereunder on the
part of any party, that none of the Rents have been paid more than one month in
advance, except as security, and that the Tenant claims no defense or offset
against the full and timely performance of its obligations under the Lease.
Other than in connection with a Securitization, Borrower shall not be required
to use its best efforts to deliver such estoppel certificates more than once per
year so long as no Event of Default exists.
SECTION 5.13. LEASING MATTERS
(a) Borrower may enter into a proposed Lease (including the renewal or
extension of an existing Lease (a "RENEWAL LEASE")) without the prior written
consent of Lender, provided such proposed Lease or Renewal Lease (i) provides
for rental rates and terms comparable to existing local market rates and terms
(taking into account the type and quality of the tenant) as of the date such
Lease is executed by Borrower (unless, in the case of a Renewal Lease, the rent
payable during such renewal, or a formula or other method to compute such rent,
is provided for in the original Lease), (ii) is an arm's-length transaction with
a bona fide, independent third party tenant, (iii) does not have a materially
adverse effect on the value of the Property taken as a whole, (iv) is subject
and subordinate to the Mortgage and the Tenant thereunder agrees to attorn to
Lender, either by the terms of such Renewal Lease or pursuant to a
subordination, non-disturbance and attornment agreement on Lender's then current
form (v) does not contain any option, offer, right of first refusal, or other
similar right to acquire all or any portion of the Property, (vi) has a base
term of less than fifteen (15) years including options to renew, (vii) has no
rent credits, free rents or concessions granted thereunder, other than as
consistent with then market standards for prudent institutional owners of Class
A office buildings in the sub-market where the Property is located, and (viii)
is written on the standard form of lease approved by Lender and attached hereto
as Exhibit C, subject to tenant specific negotiated changes which do not,
individually or in the aggregate, cause a Material Adverse Change with respect
to the Property or the financial condition of Borrower. All proposed Leases
which do not satisfy the
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requirements set forth in this subsection shall be at Borrower's expense and
subject to the prior approval of Lender and its counsel, such consent not to be
unreasonably withheld or delayed. Borrower shall promptly deliver to Lender
copies of all Leases which are entered into pursuant to this subsection together
with Borrower's certification that it has satisfied all of the conditions of
this Section.
(b) Borrower (i) shall observe and perform all the obligations imposed
upon the landlord under the Leases (or refrain from such observance or
performance to the extent the same is in accordance with prudent institutional
ownership practices for properties similar to and in the same sub-market as
Property) and shall not do or permit to be done anything to impair the value of
any of the Leases as security for the Debt; (ii) shall promptly send copies to
Lender of all notices of default which Borrower shall send or receive
thereunder; (iii) shall enforce all of the material terms, covenants and
conditions contained in the Leases upon the part of the tenant thereunder to be
observed or performed unless Borrower, in accordance with prudent institutional
ownership practices for properties similar and in the same sub-market as the
Property, elects not to enforce any such term, covenant or condition; (iv) shall
not collect any of the Rents more than one (1) month in advance (except security
deposits shall not be deemed Rents collected in advance); (v) shall not execute
any other assignment of the landlord's interest in any of the Leases or the
Rents; and (vi) shall not consent to any assignment of or subletting under any
Leases not in accordance with their terms, without the prior written consent of
Lender, such consent not to be unreasonably withheld, conditioned or delayed.
(c) Borrower may, without the prior written consent of Lender, amend,
modify or waive the provisions of any Lease or terminate, reduce Rents under,
accept a surrender of space under, or shorten the term of, any Lease (including
any guaranty, letter of credit or other credit support with respect thereto)
provided that such action (taking into account, in the case of a termination,
reduction in rent, surrender of space or shortening of term, the planned
alternative use of the affected space) does not have a materially adverse effect
on the value of the Property taken as a whole, and provided that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements of
this Agreement and any subordination agreement binding upon Lender with respect
to such Lease. A termination of a Lease with a tenant who is in default beyond
applicable notice and grace periods shall not be considered an action which has
a materially adverse effect on the value of the Property taken as a whole. Any
amendment, modification, waiver, termination, rent reduction, space surrender or
term shortening which does not satisfy the requirements set forth in this
subsection shall be subject to the prior approval of Lender and its counsel, at
Borrower's expense. Borrower shall promptly deliver to Lender copies of
amendments, modifications and waivers which are entered into pursuant to this
subsection together with Borrower's certification that it has satisfied all of
the conditions of this subsection.
(d) Notwithstanding anything contained herein to the contrary, Borrower
shall not, without the prior written consent of Lender, enter into, renew,
extend, amend, modify, waive any material provisions of, terminate, reduce Rents
under, accept a surrender of space under, or shorten the term of any Major
Lease.
(e) Notwithstanding anything to the contrary contained herein, to the
extent Lender's prior approval is required for any leasing matters set forth in
this Section 5.13, Lender shall have
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ten (10) Business Days from receipt of written request and all required
information and documentation relating thereto in which to approve or disapprove
such matter, provided that such request to Lender is marked in capitalized bold
lettering with the following language: "LENDER'S RESPONSE IS REQUIRED WITHIN TEN
(10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN
AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and the envelope containing the
request must be marked "PRIORITY- LENDER'S RESPONSE REQUIRED IN TEN (10)
BUSINESS DAYS". In the event that Lender fails to respond to the leasing matter
in question within such time, Lender's approval shall be deemed given for all
purposes. Borrower shall provide Lender with such information and documentation
as may be reasonably required by Lender, including, without limitation, lease
comparables and other market information as required by Lender.
SECTION 5.14. PROPERTY MANAGEMENT
(a) Borrower shall (i) promptly perform and observe all of the covenants
required to be performed and observed by it under the Management Agreement and
do all things necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any default under the Management
Agreement of which it is aware; (iii) promptly deliver to Lender a copy of any
notice of default or other material notice received by Borrower under the
Management Agreement; (iv) promptly give notice to Lender of any notice or
information that Borrower receives which indicates that Manager is terminating
the Management Agreement or that Manager is otherwise discontinuing its
management of the Property; and (v) promptly enforce the performance and
observance of all of the covenants required to be performed and observed by
Manager under the Management Agreement.
(b) If at any time, (i) Manager shall become insolvent or a debtor in a
bankruptcy proceeding; (ii) an Event of Default has occurred and is continuing;
or (iii) a default has occurred and is continuing beyond applicable cure periods
under the Management Agreement, Borrower shall, at the request of Lender,
terminate the Management Agreement upon sixty (60) days prior notice to Manager
and replace Manager with a Qualified Manager reasonably approved by Lender on
terms and conditions satisfactory to Lender, it being understood and agreed that
the management fee for such replacement manager shall not exceed then prevailing
market rates.
(c) In addition to the foregoing, in the event that Lender, in Lender's
reasonable discretion, at any time prior to the termination of the Assignment of
Management Agreement, determines that the Property is not being managed in
accordance with generally accepted management practices for projects similarly
situated, Lender may deliver written notice thereof to Borrower and Manager,
which notice shall specify with particularity the grounds for Lender's
determination. If Lender reasonably determines that the conditions specified in
Lender's notice are not remedied to Lender's reasonable satisfaction by Borrower
or Manager within sixty (60) days from the date of such notice or that Borrower
or Manager have failed to diligently undertake correcting such conditions within
such sixty (60) day period, Lender may direct Borrower to terminate the
Management Agreement, provided Borrower has the right to do so pursuant to the
terms of the Management Agreement, and to replace Manager with a Qualified
Manager approved by Lender on terms and conditions satisfactory to Lender, it
being understood and agreed that the management fee for such replacement manager
shall not exceed then prevailing market rates.
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(d) Borrower shall not, without the prior written consent of Lender (which
consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement or otherwise replace
Manager or enter into any other management agreement with respect to the
Property; (ii) reduce or consent to the reduction of the term of the Management
Agreement; (iii) increase or consent to the increase of the amount of any
charges under the Management Agreement; or (iv) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under, the Management Agreement in any material respect. In the event that
Borrower replaces Manager at any time during the term of Loan pursuant to this
subsection, such Manager shall be a Qualified Manager.
(e) No resignation of Manager shall be effective unless (i) Manager
provides ninety (90) days prior written notice of its intent to resign and (ii)
a Qualified Manager has assumed responsibility for the management of the
Property pursuant to a written management agreement in form and substance
acceptable to Lender.
SECTION 5.15. LIENS
Borrower shall not, without the prior written consent of Lender, create,
incur, assume or suffer to exist any Lien on any portion of the Property or
permit any such action to be taken, except Permitted Encumbrances and liens
being contested in accordance with Sections 5.1(b) and 5.4(b) of this Agreement.
SECTION 5.16. DEBT CANCELLATION
Borrower shall not cancel or otherwise forgive or release any claim or
debt (other than termination of Leases in accordance herewith) owed to Borrower
by any Person, except for adequate consideration and in the ordinary course of
Borrower's business.
SECTION 5.17. ZONING
Borrower shall not initiate or consent to any zoning reclassification of
any portion of the Property or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of the Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior written consent of Lender.
SECTION 5.18. ERISA
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (i) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes
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regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(B) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2);
or
(C) 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).
SECTION 5.19. NO JOINT ASSESSMENT
Borrower shall not suffer, permit or initiate the joint assessment of the
Property with (a) any other real property constituting a tax lot separate from
the Property, or (b) any portion of the Property which may be deemed to
constitute personal property, or any other procedure whereby the Lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Property.
SECTION 5.20. RECIPROCAL EASEMENT AGREEMENTS
Borrower shall not enter into, terminate or modify any REA without
Lender's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. Borrower shall enforce, comply with, and cause
each of the parties to the REA to comply with all of the material economic terms
and conditions contained in the REA.
SECTION 5.21. ALTERATIONS
Lender's prior approval (not to be unreasonably withheld) shall be
required in connection with any alterations to any Improvements, exclusive of
alterations to tenant spaces required under any Lease, (a) that may have a
material adverse effect on the Property, (b) that affect the structure of the
applicable building or (c) that, together with any other alterations undertaken
at the same time (including any related alterations, improvements or
replacements), are reasonably anticipated to have a cost in excess of the
Alteration Threshold. If the total unpaid amounts incurred and to be incurred
with respect to such alterations to the Improvements shall at any time exceed
the Alteration Threshold, Borrower shall promptly deliver to Lender as security
for the payment of such amounts and as additional security for Borrower's
obligations under the Loan Documents any of the following: (i) cash, (ii) direct
non-callable obligations of the United States of America or other obligations
which are "government securities" within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940, to the extent acceptable to the applicable
Rating Agencies, (iii) other securities acceptable to Lender and the Rating
Agencies, or (iv) a completion bond, provided that such completion bond is
acceptable to the Lender and the Rating Agencies. Such security shall be in an
amount equal to the excess of the total unpaid amounts incurred and to be
incurred with respect to such alterations to the Improvements over the
Alteration Threshold.
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ARTICLE 6
ENTITY COVENANTS
SECTION 6.1. SINGLE PURPOSE ENTITY/SEPARATENESS
Until the Debt has been paid in full, Borrower represents, warrants and
covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership,
operation and maintenance of the Property, and activities incidental
thereto;
(ii) acquire or own any assets other than (A) the Property, and (B)
such incidental Personal Property as may be necessary for the operation of
the Property;
(iii) merge into or consolidate with any Person, or dissolve,
terminate, liquidate in whole or in part, transfer or otherwise dispose of
all or substantially all of its assets or change its legal structure;
(iv) fail to observe all organizational formalities, or fail to
preserve its existence as an entity duly organized, validly existing and
in good standing (if applicable) under the applicable Legal Requirements
of the jurisdiction of its organization or formation, or amend, modify,
terminate or fail to comply with the provisions of its organizational
documents;
(v) own any subsidiary, or make any investment in, any Person;
(vi) commingle its assets with the assets of any other Person;
(vii) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (A) the Debt, (B)
trade and operational indebtedness incurred in the ordinary course of
business with trade creditors, provided such indebtedness is (1)
unsecured, (2) not evidenced by a note, (3) on commercially reasonable
terms and conditions, and (4) due not more than sixty (60) days past the
date incurred and paid on or prior to such date, and/or (C) financing
leases and purchase money indebtedness incurred in the ordinary course of
business relating to Personal Property on commercially reasonable terms
and conditions; provided however, the aggregate amount of the indebtedness
described in (B) and (C) shall not exceed at any time three percent (3%)
of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank
accounts, financial statements, accounting records and other entity
documents separate and apart from those of any other Person; except that
Borrower's financial position, assets, liabilities, net worth and
operating results may be included in the consolidated financial statements
of an Affiliate, provided that such consolidated financial statements
contain a footnote indicating that Borrower is a separate legal entity and
that it maintains separate books and records;
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(ix) enter into any contract or agreement with any general partner,
member, shareholder, principal, guarantor of the obligations of Borrower,
or any Affiliate of the foregoing, except upon terms and conditions that
are intrinsically fair, commercially reasonable and substantially similar
to those that would be available on an arm's-length basis with
unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or
difficult to segregate, ascertain or identify its individual assets from
those of any other Person;
(xi) (A) assume or guaranty the debts of any other Person, hold
itself out to be responsible for the debts of any other Person, or
otherwise pledge its assets for the benefit of any other Person or hold
out its credit as being available to satisfy the obligations of any other
Person or (B) other than with respect to (I) the obligations of Borrower
guaranteed by Borrower Principal pursuant to the terms of the Loan
Documents, (II) reimbursement obligations, if any, of Borrower Principal
or its Affiliates (other than Borrower) to the Issuing Bank with respect
to the Reserve Letters of Credit or (III) the Principals Guaranty, permit
any of its partners, members, shareholders or other Affiliates to
guarantee, become obligated for or hold its credit out to be responsible
for any of the debts or obligations of Borrower;
(xii) make any loans or advances to any Person;
(xiii) fail to file its own tax returns or files a consolidated
federal income tax return with any Person (unless prohibited or required,
as the case may be, by applicable Legal Requirements);
(xiv) identify itself as a division or part of any Affiliate or fail
either to hold itself out to the public as a legal entity separate and
distinct from any other Person or to conduct its business solely in its
own name or fail to correct any known misunderstanding regarding its
separate identity;
(xv) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations;
(xvi) without the unanimous written consent of all of its members
and the written consent of 100% of the managers of Borrower, including,
without limitation, each Independent Manager, (a) file or consent to the
filing of any petition, either voluntary or involuntary, to take advantage
of any Creditors Rights Laws, (b) seek or consent to the appointment of a
receiver, liquidator or any similar official, (c) take any action that
might cause such entity to become insolvent, or (d) make an assignment for
the benefit of creditors;
(xvii) fail to allocate, fairly and reasonably, shared expenses
(including, without limitation, shared office space and services performed
by an employee of an Affiliate) among the Persons sharing such expenses
and to use separate stationery, invoices and checks with the result that
Borrower bears its fair share of such expenses, such allocation to be
reasonable, in good faith and consistent with sound accounting practices;
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(xviii) fail to remain solvent or pay its own liabilities
(including, without limitation, salaries of its own employees) only from
its own funds;
(xix) acquire obligations or securities of its partners, members,
shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with
respect to Borrower and its principals in any opinion letter pertaining to
substantive consolidation delivered to Lender in connection with the Loan;
(xxi) fail to maintain a sufficient number of employees in light of
its contemplated business operations;
(xxii) permit any Affiliate independent access to its bank accounts
other than with respect to the Manager in its capacity as manager of the
Property pursuant to the Management Agreement;
(xxiii) fail to maintain the resolutions, agreements and other
instruments regarding the transactions contemplated by the Loan as
official records; or
(xxiv) fail to make all oral and written communication, including,
without limitation, letters, invoices, purchase orders, contracts,
statements, and applications solely in the name of Borrower.
(b) Borrower shall have as its sole member the Senior Mezzanine Borrower.
Borrower shall maintain its status as a single member Delaware limited liability
company.
(c) The limited liability company agreement of Borrower (the "LLC
AGREEMENT") shall provide that (i) upon the occurrence of any event that causes
the sole member of Borrower ("MEMBER") to cease to be the member of Borrower
(other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee in accordance
with the Loan Documents and the LLC Agreement, or (B) the resignation of Member
and the admission of an additional member of Borrower in accordance with the
terms of the Loan Documents and the LLC Agreement), any person acting as
Independent Manager of Borrower shall, without any action of any other Person
and simultaneously with the Member ceasing to be the member of Borrower,
automatically be admitted to Borrower ("SPECIAL MEMBER") and shall continue
Borrower without dissolution and (ii) Special Member may not resign from
Borrower or transfer its rights as Special Member unless (A) a successor Special
Member has been admitted to Borrower as Special Member in accordance with
requirements of Delaware law and (B) such successor Special Member has also
accepted its appointment as an Independent Manager. The LLC Agreement shall
further provide that (i) Special Member shall automatically cease to be a member
of Borrower upon the admission to Borrower of a substitute Member, (ii) Special
Member shall be a member of Borrower that has no interest in the profits, losses
and capital of Borrower and has no right to receive any distributions of
Borrower assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the "ACT"), Special Member shall not be required to make
any capital contributions to Borrower and shall not receive a limited liability
company interest in Borrower, (iv) Special Member, in its capacity as Special
Member, may not bind Borrower and
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(v) except as required by any mandatory provision of the Act, Special Member, in
its capacity as Special Member, shall have no right to vote on, approve or
otherwise consent to any action by, or matter relating to, Borrower, including,
without limitation, the merger, consolidation or conversion of Borrower;
provided, however, such prohibition shall not limit the obligations of Special
Member, its capacity as Independent Manager, to vote on such matters required by
the Loan Documents or the LLC Agreement. In order to implement the admission to
Borrower of Special Member, Special Member shall execute a counterpart to the
LLC Agreement. Prior to its admission to Borrower as Special Member, Special
Member shall not be a member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be a
member of Borrower, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in Borrower, agree
in writing (i) to continue Borrower and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of Borrower, effective as of the occurrence of the event that terminated
the continued membership of Member of Borrower in Borrower. Any action initiated
by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower and
upon the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.
SECTION 6.2. CHANGE OF NAME, IDENTITY OR STRUCTURE
Borrower shall not change or permit to be changed (a) Borrower's name, (b)
Borrower's identity (including its trade name or names), (c) Borrower's
principal place of business set forth on the first page of this Agreement, (d)
the corporate, partnership or other organizational structure of Borrower, (e)
Borrower's state of organization, or (f) Borrower's organizational
identification number, without in each case notifying Lender of such change in
writing at least thirty (30) days prior to the effective date of such change
and, in the case of a change in Borrower's structure, without first obtaining
the prior written consent of Lender. In addition, Borrower shall not change or
permit to be changed any organizational documents of Borrower or if such change
would adversely impact the covenants set forth in Section 6.1 and Section 6.4
hereof. Borrower authorizes Lender to file any financing statement or financing
statement amendment required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate the Property,
and representing and warranting that Borrower does business under no other trade
name with respect to the Property. If Borrower does not now have an
organizational identification number and later obtains one, or if the
organizational identification number assigned to Borrower subsequently changes,
Borrower shall promptly notify Lender of such organizational identification
number or change.
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SECTION 6.3. BUSINESS AND OPERATIONS
Borrower will qualify to do business and will remain in good standing
under the laws of the State as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property.
SECTION 6.4. INDEPENDENT MANAGER
(a) The organizational documents of Borrower shall provide that at all
times there shall be, and Borrower shall cause there to be, at least two duly
appointed members of the board of managers (each an "INDEPENDENT MANAGER") of
Borrower reasonably satisfactory to Lender each of whom are not at the time of
such individual's initial appointment, and shall not have been at any time
during the preceding five (5) years, and shall not be at any time while serving
as a manager of Borrower, either (i) a shareholder (or other equity owner) of,
or an officer, director, partner, manager, member (other than as a Special
Member in the case of single member Delaware limited liability companies),
employee, attorney or counsel of, Borrower or any of its shareholders, partners,
members, subsidiaries or affiliates; (ii) a customer or creditor of, or supplier
to, Borrower or any of its respective shareholders, partners, members,
subsidiaries or affiliates who derives any of its purchases or revenue from its
activities with Borrower or any Affiliate of any of them; (iii) a Person who
Controls or is under common Control with any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer; or
(iv) a member of the immediate family of any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer.
(b) The organizational documents of Borrower shall provide that the
board of managers of Borrower shall not take any action which, under the terms
of any certificate of organization, operating agreement or any voting trust
agreement with respect to any membership interests, requires a unanimous vote of
the board of managers of Borrower unless at the time of such action there shall
be at least two members of the board of managers who are Independent Managers.
Borrower shall not will not, without the unanimous written consent of its board
of managers including each Independent Manager, on behalf Borrower, (i) file or
consent to the filing of any petition, either voluntary or involuntary, to take
advantage of any applicable Creditors Rights Laws; (ii) seek or consent to the
appointment of a receiver, liquidator or any similar official; (iii) take any
action that might cause such entity to become insolvent; or (iv) make an
assignment for the benefit of creditors.
ARTICLE 7
NO SALE OR ENCUMBRANCE
SECTION 7.1. TRANSFER DEFINITIONS
For purposes of this Article 7 an "AFFILIATED MANAGER" shall mean any
managing agent of the Property, other than Borrower Principal, in which
Borrower, Senior Mezzanine Borrower, Junior Mezzanine Borrower, Borrower
Principal or any affiliate of such entities has, directly or indirectly, any
Controlling legal, beneficial or economic interest; "CONTROL" shall mean the
power to direct the management and policies of a Restricted Party, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise;
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"RESTRICTED PARTY" shall mean Borrower, Senior Mezzanine Borrower, Junior
Mezzanine Borrower, Borrower Principal, any Affiliated Manager, or any
shareholder, partner, member or non-member manager, or any direct or indirect
legal or beneficial owner of Borrower, Senior Mezzanine Borrower, Junior
Mezzanine Borrower, Borrower Principal, any Affiliated Manager or any non-member
manager, provided, however, that no direct or indirect owners of Borrower
Principal, other than Sponsor, shall be included within the definition of
Restricted Party; and a "SALE OR PLEDGE" shall mean a voluntary or involuntary
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment,
grant of any options with respect to, or any other transfer or disposition of
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) a legal or
beneficial interest, except for Permitted Encumbrances.
SECTION 7.2. NO SALE/ENCUMBRANCE
(a) Except as provided in Section 7.3 below, Borrower shall not cause
or permit a Sale or Pledge of the Property or any part thereof or any legal or
beneficial interest therein nor permit a Sale or Pledge of an interest in any
Restricted Party (in each case, a "PROHIBITED TRANSFER"), other than pursuant to
Leases of space in the Improvements to Tenants in accordance with the provisions
of Section 5.13, without the prior written consent of Lender.
(b) A Prohibited Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder 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; (iii) if a Restricted Party is a corporation,
any merger, consolidation or Sale or Pledge of such corporation's stock or the
creation or issuance of new stock in one or a series of transactions; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
or limited partner or any profits or proceeds relating to such partnership
interests or the creation or issuance of new partnership interests; (v) if a
Restricted Party is a limited liability company, any merger or consolidation or
the change, removal, resignation or addition of a managing member or non-member
manager (or if no managing member, any member) or the Sale or Pledge of the
membership interest of any member or any profits or proceeds relating to such
membership interest; (vi) if a Restricted Party is a trust or nominee trust, any
merger, consolidation or the Sale or Pledge of the legal or beneficial interest
in a Restricted Party or the creation or issuance of new legal or beneficial
interests; or (vii) the removal or the resignation of Manager (including,
without limitation, an Affiliated Manager) other than in accordance with Section
5.14.
SECTION 7.3. PERMITTED TRANSFERS
Notwithstanding the provisions of Section 7.2, the following transfers
shall not be deemed to be a Prohibited Transfer: (a) a transfer by devise or
descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party; (b) the Sale or Pledge, in one or a series of
transactions, of not more than forty-nine percent (49%) of the stock,
partnership interests or membership interests (as the case may be) in a
Restricted Party;
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provided, however, no such transfers shall result in a change in Control in
Borrower, Senior Mezzanine Borrower, Junior Mezzanine Borrower or Borrower
Principal or a change in the Manager, and as a condition to each transfer of
direct interests in Borrower (to the extent otherwise permitted hereunder),
Lender shall receive not less than thirty (30) days prior written notice of such
proposed transfer, (c) the transfer of interests held by Sponsor and its
Affiliates in any Restricted Party other than Borrower, Senior Mezzanine
Borrower or Junior Mezzanine Borrower in connection with the purchase, sale
and/or financing of the ownership interests in other properties owned by
Sponsor, provided, that (i) no such transfers shall result in a change in
Control in Borrower or a change in Control of the Manager (ii) Sponsor remains
at all times the general partner of Borrower Principal, and (iii) Sponsor
continues to own no less than twenty-five percent (25%) of the direct or
indirect interests in Borrower, (d) transfers of direct or indirect interests in
Borrower Principal, provided, that (i) no such transfers shall result in a
change in Control in Borrower or a change in Control of the Manager (ii) Sponsor
remains at all times the general partner of Borrower Principal, and (iii)
Sponsor continues to own no less than twenty-five percent (25%) of the direct or
indirect interests in Borrower, (e) so long as Sponsor is a publicly traded
company, the pledge of Sponsor's interests in any Restricted Party other than
Borrower, Senior Mezzanine Borrower or Junior Mezzanine Borrower to secure an
operating debt facility of Sponsor, provided that (i) such operating debt
facility is secured by a pledge of interests in entities having a direct or
indirect interest in substantially all of the properties directly or indirectly
owned by Sponsor and (ii) the beneficiary of such pledge shall be a major
financial institution with significant real estate experience involving
properties similar to the Property, (f) Sponsor and its Affiliates may sell (but
not pledge) to a Qualified Investor up to 75% of the direct or indirect,
non-managing membership interests in Borrower, Senior Mezzanine Borrower or
Junior Mezzanine Borrower, provided that (i) Sponsor at all times maintains
Control of the Borrower (subject to the veto rights, if any, of such Qualified
Investor with respect to Major Decisions, provided that no such veto right shall
be construed to affect any rights or remedies of Lender under the Loan
Documents), Senior Mezzanine Borrower and Junior Mezzanine Borrower (ii) Sponsor
shall at all times own, directly or indirectly, at least 25% of the ownership
interests in Borrower, and (iii) the Property shall at all times be managed by a
Qualified Manager, (g) transfers of ownership interests in Sponsor so long as
Sponsor is a publicly traded entity, (h) the merger of Sponsor with or into
another entity, provided that (x) the surviving entity is publicly traded and
(y) such merger does not result in a change of Control in Borrower or Borrower
Principal, (i) encumbrances of the Tower Parcel portion of the Property with 365
parking covenants for the benefit of the property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ substantially in the form attached hereto as
Exhibit E, to which Lender will subordinate the lien of the Mortgage pursuant to
an agreement that would be satisfactory to a prudent institutional lender or (j)
the encumbrance of the Garage Parcel with parking covenants covering up to 814
spaces, provided that such covenants and any related agreements are in form and
substance reasonably acceptable to Lender and further provided that no such
covenants or agreements shall result in (x) a breach of the terms of any Lease
at the Tower Parcel or (y) a Material Adverse Change. Notwithstanding anything
to the contrary contained in this Section 7.3, if any Sale or Pledge permitted
under this Section 7.3 results in any Person and its Affiliates owning in excess
of forty-nine percent (49%) of the ownership interests in Borrower, Senior
Mezzanine Borrower, Junior Mezzanine Borrower or Borrower Principal, Borrower
shall, prior to such transfer, and in addition to any other requirement for
Lender consent contained herein, deliver a revised substantive non-consolidation
opinion to Lender reflecting such transfer, which
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opinion shall be in form, scope and substance acceptable in all respects to
Lender and the Rating Agencies.
SECTION 7.4. LENDER'S RIGHTS
Lender reserves the right to condition the consent to a Prohibited
Transfer requested hereunder upon (a) a modification of the terms hereof, in
Lender's reasonable discretion provided that such modifications shall not alter
the basic economic terms of the Loan, and an assumption of the Note and the
other Loan Documents as so modified by the proposed Prohibited Transfer, (b)
receipt of payment of a transfer fee equal to one-half of one percent (0.5%) of
the outstanding principal balance of the Loan and all of Lender's expenses
incurred in connection with such Prohibited Transfer, (c) receipt of written
confirmation from the Rating Agencies that the Prohibited Transfer will not
result in a downgrade, withdrawal or qualification of the initial, or if higher,
then current ratings issued in connection with a Securitization, or if a
Securitization has not occurred, any ratings to be assigned in connection with a
Securitization, (d) the proposed transferee's continued compliance with the
covenants set forth in this Agreement (including, without limitation, the
covenants in Article 6) and the other Loan Documents, (e) to the extent that a
Prohibited Transfer would result in a change of Control of Borrower, a new
manager for the Property and a new management agreement satisfactory to Lender,
and (f) the satisfaction of such other conditions and/or legal opinions as
Lender shall determine in its reasonable discretion to be in the interest of
Lender. All out-of-pocket expenses incurred by Lender shall be payable by
Borrower whether or not Lender consents to the Prohibited Transfer. Lender shall
not be required to demonstrate any actual impairment of its security or any
increased risk of default hereunder in order to declare the Debt immediately due
and payable upon a Prohibited Transfer made without Lender's consent. This
provision shall apply to each and every Prohibited Transfer, whether or not
Lender has consented to any previous Prohibited Transfer. Notwithstanding
anything to the contrary contained in this Section 7.4, in the event a
substantive non-consolidation opinion was delivered to Lender and the Rating
Agencies in connection with the closing of the Loan, and if any Sale or Pledge
permitted under this Article 7 results in any Person and its Affiliates owning
in excess of forty-nine percent (49%) of the ownership interests in Borrower,
Senior Mezzanine Borrower, Junior Mezzanine Borrower or Borrower Principal,
Borrower shall, prior to such transfer, and in addition to any other requirement
for Lender consent contained herein, deliver a revised substantive
non-consolidation opinion to Lender reflecting such Prohibited Transfer, which
opinion shall be in form, scope and substance acceptable in all respects to
Lender and the Rating Agencies.
SECTION 7.5. ASSUMPTION
Notwithstanding the foregoing provisions of this Article 7, following
the date which is six (6) months from the Closing Date, Lender shall not
unreasonably withhold consent to a transfer of the Property in its entirety to,
and the related assumption of the Loan by, any Person (a "TRANSFEREE") provided
that each of the following terms and conditions are satisfied:
(a) no Default or Event of Default has occurred and is continuing;
(b) Borrower shall have (i) delivered written notice to Lender of the
terms of such prospective transfer not less than thirty (30) days before the
date on which such transfer is
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scheduled to close and, concurrently therewith, all such information concerning
the proposed Transferee as Lender shall reasonably require and (ii) paid to
Lender a non-refundable processing fee in the amount of $25,000. Lender shall
have the right to approve or disapprove the proposed transfer based on its then
current underwriting and credit requirements for similar loans secured by
similar properties which loans are sold in the secondary market, such approval
not to be unreasonably withheld. In determining whether to give or withhold its
approval of the proposed transfer, Lender shall consider the experience and
track record of Transferee and its principals in owning and operating facilities
similar to the Property, the financial strength of Transferee and its
principals, the general business standing of Transferee and its principals and
Transferee's and its principals' relationships and experience with contractors,
vendors, tenants, lenders and other business entities; provided, however, that,
notwithstanding Lender's agreement to consider the foregoing factors in
determining whether to give or withhold such approval, such approval shall be
given or withheld based on what Lender determines to be commercially reasonable
and, if given, may be given subject to such conditions as Lender may deem
reasonably appropriate;
(c) Borrower shall have paid to Lender, concurrently with the closing
of such transfer, (i) a non-refundable assumption fee in an amount equal to
one-half of one percent (0.5%) of the then outstanding principal balance of the
Note, and (ii) all out-of-pocket costs and expenses, including reasonable
attorneys' fees, incurred by Lender in connection with the transfer;
(d) Transferee assumes and agrees to pay the Debt as and when due
subject to the provisions of Article 15 hereof and, prior to or concurrently
with the closing of such transfer, Transferee and its constituent partners,
members or shareholders as Lender may require, shall execute, without any cost
or expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate said assumption;
(e) Borrower and Transferee, without any cost to Lender, shall furnish
any information requested by Lender for the preparation of, and shall authorize
Lender to file, new financing statements and financing statement amendments and
other documents to the fullest extent permitted by applicable law, and shall
execute any additional documents reasonably requested by Lender;
(f) Borrower shall have delivered to Lender, without any cost or
expense to Lender, such endorsements to Lender's Title Insurance Policy insuring
that fee simple or leasehold title to the Property, as applicable, is vested in
Transferee (subject to Permitted Encumbrances), hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;
(g) Transferee shall have furnished to Lender, if Transferee is a
corporation, partnership, limited liability company or other entity, all
appropriate papers evidencing Transferee's organization and good standing, and
the qualification of the signers to execute the assumption of the Debt, which
papers shall include certified copies of all documents relating to the
organization and formation of Transferee and of the entities, if any, which are
partners or members of Transferee. Transferee and such constituent partners,
members or shareholders of
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Transferee (as the case may be), as Lender shall require, shall comply with the
covenants set forth in Article 6 hereof;
(h) Transferee shall assume the obligations of Borrower under any
Management Agreement or provide a new management agreement with a new manager
which meets with the requirements of Section 5.14 hereof and assign to Lender as
additional security such new management agreement;
(i) Transferee shall furnish an opinion of counsel satisfactory to
Lender and its counsel (A) that Transferee's formation documents provide for the
matters described in subparagraph (g) above, (B) that the assumption of the Debt
has been duly authorized, executed and delivered, and that the Note, the
Mortgage, this Agreement, the assumption agreement and the other Loan Documents
are valid, binding and enforceable against Transferee in accordance with their
terms, subject to customary qualifications acceptable to Lender in connection
with the closing of the Loan, (C) that Transferee and any entity which is a
controlling stockholder, member or general partner of Transferee, have been duly
organized, and are in existence and good standing, and (E) with respect to such
other matters as Lender may reasonably request;
(j) if required by Lender, Lender shall have received confirmation in
writing from the Rating Agencies that rate the Securities to the effect that the
transfer will not result in a qualification, downgrade or withdrawal of any
rating initially assigned or to be assigned to the Securities;
(k) Borrower's obligations under the contract of sale pursuant to which
the transfer is proposed to occur shall expressly be subject to the satisfaction
of the terms and conditions of this Section 7.5; and
(l) Transferee shall, prior to such transfer, deliver a substantive
non-consolidation opinion to Lender, which opinion shall be in form, scope and
substance acceptable in all respects to Lender and the Rating Agencies.
A consent by Lender with respect to a transfer of the Property in its entirety
to, and the related assumption of the Loan by, a Transferee pursuant to this
Section 7.5 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent transfer of the Property.
ARTICLE 8
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
SECTION 8.1. INSURANCE
(a) Borrower shall obtain and maintain, or cause to be maintained, at
all times insurance for Borrower and the Property providing at least the
following coverages:
(i) comprehensive "all risk" insurance on the Improvements and
the Personal Property, in each case (A) in an amount equal to one
hundred percent (100%) of the "Full Replacement Cost," which for
purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities
and footings) with a waiver of depreciation; (B) containing an agreed
amount endorsement with respect
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to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $100,000 for
all such insurance coverage; and (D) if any of the Improvements or the
use of the Property shall at any time constitute legal non-conforming
structures or uses, providing coverage for contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements and containing an "Ordinance or Law Coverage"
or "Enforcement" endorsement. In addition, Borrower shall obtain: (y)
if any portion of the Improvements is currently or at any time in the
future located in a "special flood hazard area" designated by the
Federal Emergency Management Agency, flood hazard insurance in an
amount equal to the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each
may be amended; and (z) earthquake insurance in amounts and in form and
substance reasonably satisfactory to Lender in the event the Property
is located in an area with a high degree of seismic risk, provided that
the insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required
under this subsection (i), provided, further, that the insurance
pursuant to clause (z) hereof shall provide for no deductible in excess
of 5% of the total insurable value (which includes annual rental value)
of the properties insured under the applicable policy;
(ii) Commercial General Liability insurance against claims for
personal injury, bodily injury, death or property damage occurring
upon, in or about the Property, with such insurance (A) to be on the
so-called "occurrence" form with a general aggregate limit of not less
than $2,000,000 and a per occurrence limit of not less than $1,000,000;
(B) to continue at not less than the aforesaid limit until required to
be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least
the following hazards: (1) premises and operations; (2) products and
completed operations; (3) independent contractors; (4) blanket
contractual liability; and (5) contractual liability covering the
indemnities contained in Article 12 and Article 14 hereof to the extent
the same is available;
(iii) loss of rents insurance or business income insurance, as
applicable, (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i)
above; and (C) which provides that after the physical loss to the
Improvements and Personal Property occurs, the loss of rents or income,
as applicable, will be insured until such rents or income, as
applicable, either return to the same level that existed prior to the
loss, or the expiration of twenty-four (24) months, whichever first
occurs, and notwithstanding that the policy may expire prior to the end
of such period; and (D) which contains an extended period of indemnity
endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the
same level it was at prior to the loss, or the expiration of twelve
(12) months from the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period. The amount
of such loss of rents or business income insurance, as applicable,
shall be determined prior to the date hereof and at least once each
year thereafter based on Borrower's reasonable estimate of the gross
income from the Property
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for the succeeding period of coverage required above. All proceeds
payable to Lender pursuant to this subsection shall be held by Lender
and shall be applied to the obligations secured by the Loan Documents
from time to time due and payable hereunder and under the Note;
provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to pay the obligations secured by
the Loan Documents on the respective dates of payment provided for in
the Note, this Agreement and the other Loan Documents except to the
extent such amounts are actually paid out of the proceeds of such loss
of rents or business income insurance, as applicable;
(iv) at all times during which material structural
construction, repairs or alterations are being made with respect to the
Improvements, and only if the Property coverage form does not otherwise
apply, (A) owner's contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the
above mentioned commercial general liability insurance policy; and (B)
the insurance provided for in subsection (i) above written in a
so-called Builder's Risk Completed Value form (1) on a non-reporting
basis, (2) against "all risks" insured against pursuant to subsection
(i) above, (3) including permission to occupy the Property, and (4)
with an agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of
the State, and employer's liability insurance in respect of any work or
operations on or about the Property, or in connection with the Property
or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on
terms consistent with the commercial property insurance policy required
under subsection (i) above;
(vii) excess liability insurance in an amount not less than
$50,000,000 per occurrence on terms consistent with the commercial
general liability insurance required under subsection (ii) above; and
(viii) upon sixty (60) days' written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time
to time may reasonably request against such other insurable hazards
which at the time are commonly insured against for property similar to
the Property located in or around the region in which the Property is
located.
The Policies required to be maintained pursuant to clauses (i) through
(viii) above shall contain no exclusion for Losses resulting from acts of
terrorism as certified under the Terrorism Risk Insurance Act of 2002, as the
same may be amended from time to time.
(b) All insurance provided for in Section 8.1(a) shall be obtained
under valid and enforceable policies (collectively, the "POLICIES" or in the
singular, the "POLICY"), and shall be subject to the approval of Lender as to
insurance companies, amounts, deductibles, loss payees and insureds. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the State and having a claims paying
ability rating of "AA-" or better by at least two Rating Agencies, one of which
must be S&P or such other Rating Agencies approved by Lender, provided, however,
that if Borrower elects to have its insurance
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coverage provided by a syndicate of insurers, then (i) if such syndicate
consists of 5 or more members, (A) at least 60% of the insurance coverage (and
100% of the first layer of such coverage) shall be provided by insurance
companies having a claims paying ability rating of "AA-" or better by at least
two Rating Agencies, one of which must be S&P, and (B) of the remaining 40% of
the coverage, (I) 30% (of the total syndicate) shall be provided by insurance
companies having a claims paying ability rating of "BBB-" or better by at least
two Rating Agencies, one of which must be S&P, and (II) the remaining 10% (of
the total syndicate) shall be provided by insurance carriers having a general
policy rating of "A" or better and a financial class of "XII" or better by A.M.
Best Company, Inc., or (ii) if such syndicate consists of four or fewer members,
(A) at least 75% of the insurance coverage (and 100% of the first layer of such
coverage) shall be provided by insurance companies having a claims paying
ability rating of "AA" or better by at least two Rating Agencies, one of which
must be S&P, and (B) of the remaining 25% of the coverage, (I) 15% (of the total
syndicate) shall be provided by insurance companies having a claims paying
ability rating of "BBB-" or better by at least two Rating Agencies, one of which
must be S&P, and (II) the remaining 10% (of the total syndicate) shall be
provided by insurance carriers having a general policy rating of "A" or better
and a financial class of "XII" or better by A.M. Best Company, Inc.
Notwithstanding anything to the contrary contained herein, Lender shall accept
an "all-risk" Policy issued by Factory Mutual Insurance Company ("Factory
Mutual"), provided that (I) Factory Mutual maintains a general policy rating of
"A" or better and a financial class of "XII" or better by A.M. Best Company,
Inc. and a claims paying ability rating of "A+" or better by Fitch, and (II) in
connection with a Securitization, Lender confirms that, in Lender's reasonable
determination based on information from the Rating Agencies, the ratings
assigned to the portion or the Securitization represented by the Loan will not
be adversely affected as a result of the "all-risk" Policy being issued by
Factory Mutual The Policies described in Section 8.1(a) shall designate Lender
and its successors and assigns as additional insureds, mortgagees and/or loss
payee as deemed appropriate by Lender. Not less than ten (10) days prior to the
expiration dates of the Policies theretofore furnished to Lender, renewal
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums due thereunder (the "INSURANCE PREMIUMS") shall be delivered by
Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 8.1(a).
(d) All Policies provided for or contemplated by Section 8.1(a), except
for the Policy referenced in Section 8.1(a)(v), shall name Borrower as the
insured and Lender as the additional insured, as its interests may appear, and
in the case of property damage, boiler and machinery, flood and earthquake
insurance, shall contain a so-called New York standard non-contributing
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.
(e) All Policies provided for in Section 8.1(a) shall contain clauses
or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any Tenant or other occupant, or failure to comply with
the provisions of any Policy,
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which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of
the insurance insofar as Lender is concerned;
(ii) the Policies shall not be materially changed (other than
to increase the coverage provided thereby) or canceled without at least
thirty (30) days' prior written notice to Lender;
(iii) the issuers thereof shall give written notice to Lender
if the Policies have not been renewed thirty (30) days prior to its
expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right, without notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Property, including, without
limitation, obtaining such insurance coverage as Lender in its sole discretion
deems appropriate. All premiums incurred by Lender in connection with such
action or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and, until paid, shall be secured by the Mortgage
and shall bear interest at the Default Rate.
SECTION 8.2. CASUALTY
If the Property shall be damaged or destroyed, in whole or in part, by
fire or other casualty (a "CASUALTY"), Borrower shall give prompt notice of such
damage to Lender and shall promptly commence and diligently prosecute the
Restoration of the Property in accordance with Section 8.4, whether or not
Lender makes any Net Proceeds available pursuant to Section 8.4 (unless Borrower
has satisfied all conditions set forth in Section 8.4 and Lender does not
disburse the Net Proceeds, in which case Borrower shall have no obligation under
this Agreement to restore the Property). Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance. Lender may, but
shall not be obligated to make proof of loss if not made promptly by Borrower.
Borrower shall adjust all claims for Insurance Proceeds in consultation with,
and approval of, Lender; provided, however, if an Event of Default has occurred
and is continuing, Lender shall have the exclusive right to participate in the
adjustment of all claims for Insurance Proceeds.
SECTION 8.3. CONDEMNATION
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of the Property of which
Borrower has knowledge and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or
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otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to pay the
Debt at the time and in the manner provided for its payment in the Note and in
this Agreement and the Debt shall not be reduced until any Award shall have been
actually received and applied by Lender, after the deduction of expenses of
collection, to the reduction or discharge of the Debt. Lender shall not be
limited to the interest paid on the Award by the condemning authority but shall
be entitled to receive out of the Award interest at the rate or rates provided
herein or in the Note. If the Property or any portion thereof is taken by a
condemning authority, Borrower shall promptly commence and diligently prosecute
the Restoration of the Property and otherwise comply with the provisions of
Section 8.4, whether or not Lender makes any Net Proceeds available pursuant to
Section 8.4. If the Property is sold, through foreclosure or otherwise, prior to
the receipt by Lender of the Award, Lender shall have the right, whether or not
a deficiency judgment on the Note shall have been sought, recovered or denied,
to receive the Award, or a portion thereof sufficient to pay the Debt.
SECTION 8.4. RESTORATION
The following provisions shall apply in connection with the Restoration
of the Property:
(a) If the Net Proceeds shall be less than $2,500,000.00 and the costs
of completing the Restoration shall be less than $2,500,000.00, the Net Proceeds
will be disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 8.4(b)(i) are met and Borrower delivers to
Lender a written undertaking to expeditiously commence and to satisfactorily
complete with due diligence the Restoration in accordance with the terms of this
Agreement.
(b) If the Net Proceeds are equal to or greater than $2,500,000.00 or
the costs of completing the Restoration are equal to or greater than
$2,500,000.00, Lender shall make the Net Proceeds available for the Restoration
in accordance with the provisions of this Section 8.4. The term "NET PROCEEDS"
for purposes of this Section 8.4 shall mean: (i) the net amount of all insurance
proceeds received by Lender pursuant to Section 8.1(a)(i), (iv), (vi) and (viii)
as a result of a Casualty, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("INSURANCE PROCEEDS"), or (ii) the net amount of the Award as a result
of a Condemnation, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("CONDEMNATION PROCEEDS"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are Insurance
Proceeds, less than thirty percent (30%) of the total floor
area of the Improvements on the Property has been damaged,
destroyed or rendered unusable as a result of a Casualty or
(2) in the event the Net Proceeds are Condemnation Proceeds,
less than fifteen percent (15%) of the land constituting the
Property is taken, such land is located
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along the perimeter or periphery of the Property, and no
portion of the Improvements is located on such land;
(C) Leases covering in the aggregate at least
seventy-five percent (75%) of the total rentable space in the
Property which has been demised under executed and delivered
Leases in effect as of the date of the occurrence of such
Casualty or Condemnation, whichever the case may be, and each
Major Lease in effect as of such date shall remain in full
force and effect during and after the completion of the
Restoration without abatement of rent beyond the time required
for Restoration;
(D) Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than ninety
(90) days after such Casualty or Condemnation, whichever the
case may be, occurs) and shall diligently pursue the same to
satisfactory completion, with commencement defined for
purposes hereof to mean the filing of the requisite
applications and ancillary paperwork necessary to receive
building permits;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note, which will be incurred with respect
to the Property as a result of the occurrence of any such
Casualty or Condemnation, whichever the case may be, will be
covered out of the insurance coverage referred to in Section
8.1(a)(iii) above;
(F) Lender shall be satisfied that the Restoration
will be completed on or before the earliest to occur of (1)
six (6) months prior to the Maturity Date, (2) the earliest
date required for such completion under the terms of any
Leases or material agreements affecting the Property, (3) such
time as may be required under applicable zoning law,
ordinance, rule or regulation, or (4) the expiration of the
insurance coverage referred to in Section 8.1(a)(iii);
(G) the Property and the use thereof after the
Restoration will be in compliance with and permitted under all
Legal Requirements;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
compliance with all applicable Legal Requirements;
(I) such Casualty or Condemnation, as applicable,
does not result in the loss of access to the Property or the
Improvements, which access is otherwise not replaced via new
improvements to the Property or an access easement
(respectively);
(J) Borrower shall deliver, or cause to be delivered,
to Lender a signed detailed budget approved in writing by
Borrower's architect or engineer stating the estimated entire
cost of completing the Restoration, which budget shall be
reasonably acceptable to Lender; and
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(K) the Net Proceeds together with any cash or cash
equivalent deposited by Borrower with Lender are sufficient in
Lender's reasonable judgment to cover the cost of the
Restoration.
(ii) The Net Proceeds shall be held by Lender until
disbursements commence, and, until disbursed in accordance with the
provisions of this Section 8.4, shall constitute additional security
for the Debt and other obligations under the Loan Documents. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all the conditions precedent
to such advance, including those set forth in Section 8.4(b)(i), have
been satisfied, (B) all materials installed and work and labor
performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the related Restoration item
have been paid for in full, and (C) there exist no notices of pendency,
stop orders, mechanic's or materialman's liens or notices of intention
to file same, or any other liens or encumbrances of any nature
whatsoever on the Property which have not either been fully bonded to
the satisfaction of Lender (and in accordance with applicable Legal
Requirements) and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company issuing the
Title Insurance Policy. Notwithstanding the foregoing, Insurance
Proceeds from the Policies required to be maintained by Borrower
pursuant to Section 8.1(a)(iii) shall be controlled by Lender at all
times, shall not be subject to the provisions of this Section 8.4 and
shall be used solely for the payment of the obligations under the Loan
Documents and Operating Expenses.
(iii) All plans and specifications required in connection with
the Restoration shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected
by Lender (the "RESTORATION CONSULTANT"). Lender shall have the use of
the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The identity
of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts in excess of $250,000 under which
they have been engaged, shall be subject to prior review and acceptance
by Lender and the Restoration Consultant. All costs and expenses
incurred by Lender in connection with making the Net Proceeds available
for the Restoration, including, without limitation, reasonable counsel
fees and disbursements and the Restoration Consultant's fees, shall be
paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Restoration Consultant, minus the
Restoration Retainage. The term "Restoration Retainage" shall mean an
amount equal to ten percent (10%) of the costs actually incurred for
work in place as part of the Restoration, as certified by the
Restoration Consultant, until the Restoration has been completed. The
Restoration Retainage shall be reduced to five percent (5%) of the
costs incurred upon receipt by Lender of satisfactory evidence that
fifty percent (50%) of the Restoration has been completed. The
Restoration Retainage shall in no event, and notwithstanding anything
to the contrary set forth above in this Section 8.4(b), be less than
the amount actually held back by Borrower from contractors,
subcontractors and
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materialmen engaged in the Restoration. The Restoration Retainage shall
not be released until the Restoration Consultant certifies to Lender
that the Restoration has been completed in accordance with the
provisions of this Section 8.4(b) and that all approvals necessary for
the re-occupancy and use of the Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid
in full or will be paid in full out of the Restoration Retainage;
provided, however, that Lender will release the portion of the
Restoration Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date
upon which the Restoration Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily completed
all work and has supplied all materials in accordance with the
provisions of the contractor's, subcontractor's or materialman's
contract, the contractor, subcontractor or materialman delivers the
lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested
by Lender or by the title company issuing the Title Insurance Policy,
and Lender receives an endorsement to the Title Insurance Policy
insuring the continued priority of the lien of the Mortgage and
evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Restoration
Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the reasonable opinion of Lender in
consultation with the Restoration Consultant, be sufficient to pay in
full the balance of the costs which are estimated by the Restoration
Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the "NET PROCEEDS
DEFICIENCY") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender and shall be disbursed for costs
actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds, and
until so disbursed pursuant to this Section 8.4(b) shall constitute
additional security for the Debt and other obligations under the Loan
Documents.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after the Restoration Consultant certifies to Lender that
the Restoration has been completed in accordance with the provisions of
this Section 8.4(b), and the receipt by Lender of evidence satisfactory
to Lender that all costs incurred in connection with the Restoration
have been paid in full, shall be remitted by Lender to Borrower (or as
directed by Borrower), provided no Event of Default shall have occurred
and shall be continuing under the Note, this Agreement or any of the
other Loan Documents.
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(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 8.4(b)(vii) may (x) be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its sole discretion shall deem proper, or, (y) at
the sole discretion of Lender, the same may be paid, either in whole or in part,
to Borrower for such purposes and upon such conditions as Lender shall
designate.
(d) In the event of foreclosure of the Mortgage, or other transfer of
title to the Property in extinguishment in whole or in part of the Debt, all
right, title and interest of Borrower in and to the Policies then in force
concerning the Property and all proceeds payable thereunder shall thereupon vest
in the purchaser at such foreclosure, Lender or other transferee in the event of
such other transfer of title.
ARTICLE 9
RESERVE FUNDS
SECTION 9.1. MIZUHO TERMINATION RESERVE
(a) Borrower has established an Eligible Account with Lender or
Lender's agent (the "MIZUHO TERMINATION RESERVE ACCOUNT") into which Borrower
has deposited $2,300,000.00. Amounts on deposit in the Debt Service Reserve
Account shall hereinafter be referred to as "MIZUHO TERMINATION RESERVE FUNDS."
(b) So long as no Event of Default exists, Lender shall disburse to
Borrower on each Payment Date commencing with the Payment Date in August, 2003
the sum of $38,333.33 from the Mizuho Termination Reserve Funds.
SECTION 9.2. REPLACEMENTS
(a) On an ongoing basis throughout the term of the Loan, Borrower shall
make capital repairs, replacements and improvements necessary to keep the
Property in good order and repair and in a good marketable condition or prevent
deterioration of the Property, including, but not limited to, those repairs,
replacements and improvements more particularly described in (i) the Physical
Conditions Report prepared in connection with the closing of the Loan and (ii)
Schedule II attached hereto and made a part hereof (collectively, the
"REPLACEMENTS"). Borrower shall complete all Replacements in a good and
workmanlike manner as soon as commercially reasonable after commencing to make
each such Replacement.
(b) Borrower has established an Eligible Account with Lender or
Lender's agent to fund the Replacements (the "REPLACEMENT RESERVE ACCOUNT") into
which Borrower shall deposit on the date hereof $-0-. In addition, Borrower
shall deposit (i) $26,935.79 into the Replacement Reserve Account on each
Payment Date commencing with the Payment Date in August, 2003 and continuing
through and including the Payment Date occurring in August, 2005 and (ii)
$9,158.17 into the Replacement Reserve Account on each Payment Date thereafter,
including, without limitation, during the Extension Term, if applicable (the
"REPLACEMENT RESERVE MONTHLY DEPOSIT"). Amounts so deposited shall hereinafter
be referred to as "REPLACEMENT RESERVE FUNDS." Lender may, in its reasonable
discretion, based on its good faith belief that additional funds are necessary,
adjust the Replacement Reserve Monthly Deposit
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from time to time to an amount sufficient to maintain the proper maintenance and
operation of the Property. In the event Lender shall at any time increase the
Replacement Reserve Monthly Deposit, Borrower may, at its election, request that
Lender obtain, at the sole cost and expense of Borrower, a Physical Conditions
Report prepared by an engineer selected by Lender in its reasonable discretion,
in which case the Replacement Reserve Monthly Deposit shall be adjusted by
Lender based on the results of such report, provided that in no event shall such
amounts be reduced below the initial amount of the Replacement Reserve Monthly
Deposit set forth in herein.
(c) (i) In lieu of making deposits into the Replacement Reserve
Account, Borrower may deliver to Lender a letter of credit that satisfies each
of the criteria set forth in the definition of Letter of Credit in this
Agreement and is in an amount equal to the product of twelve (12) times the
amount of the then applicable Replacement Reserve Monthly Deposit (the "RESERVE
LETTER OF CREDIT"). If, at any time, Borrower fails to maintain the Reserve
Letter of Credit in such amount, Borrower shall deposit the Replacement Reserve
Monthly Deposit into the Replacement Reserve Account in accordance with the
terms of Section 9.2(b) hereof.
(ii) Borrower shall have no draw or reduction rights with
respect to the Reserve Letter of Credit and no rights to disbursement
from any of the proceeds of the Reserve Letter of Credit. Lender have
the same rights, and upon the same terms and conditions, to draw down
the Reserve Letter of Credit and apply the proceeds thereof as Lender
would have to apply (rather than disburse to Borrower) the Replacement
Reserve Funds under the terms of this Agreement.
(iii) At its election, Borrower may obtain a release of the
Reserve Letter of Credit provided that (A) Borrower provides no less
than ten (10) Business Days' prior written notice to Lender of the
proposed release, (B) on or prior to the release of the Reserve Letter
of Credit, Borrower deposits into the Replacement Reserve Account the
cash amount equal to fifty percent (50%) of the face amount of the
Reserve Letter of Credit and (C) following such release of the Reserve
Letter of Credit, the provisions of this Section 9.2(c) shall no longer
be of any force or effect and Borrower shall comply with the terms of
Section 9.2(b) hereof.
(iv) Lender shall release and return the Reserve Letter of
Credit to Borrower upon satisfaction of the same conditions for release
of the balance of the Replacement Reserve Funds as set forth in Section
9.5(k) hereof.
(v) In the event that there are any sums on deposit in the
Replacement Reserve Account as of the date that Lender receives the
Reserve Letter of Credit, Lender shall promptly disburse such sums to
Borrower.
SECTION 9.3. TENANT IMPROVEMENTS/LEASING COMMISSIONS
(a) Borrower hereby agrees to (a) perform, or cause to be performed,
tenant improvements required under the ▇▇▇▇▇▇ Lease and the MoFo Lease
(collectively, the "TENANT IMPROVEMENTS"), and (b) pay the costs of leasing
commissions incurred by Borrower in
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connection with the leasing of the Property or a portion thereof (collectively,
"LEASING COMMISSIONS").
(b) Borrower has established an Eligible Account with Lender or
Lender's agent to fund Tenant Improvements and Leasing Commissions (the "LEASING
RESERVE ACCOUNT") into which Borrower has deposited $7,395,002.00. In addition,
Borrower shall deposit with Lender into the Leasing Reserve Account (i) on each
Payment Date, the applicable TI/LC Monthly Deposit and (ii) any sum or
termination fee payable to Borrower in connection with any Tenant's election to
exercise any early termination option contained in either the ▇▇▇▇▇▇ Lease or
the MoFo Lease (the "TERMINATION FEE DEPOSIT") on the date of Borrower's receipt
thereof. Amounts so deposited shall hereinafter be referred to as the "LEASING
RESERVE FUNDS."
SECTION 9.4. REQUIRED WORK
Borrower shall diligently pursue all Replacements and Tenant
Improvements (the "REQUIRED WORK") to completion in accordance with the
following requirements:
(a) Lender reserves the right, at its option, to approve all contracts
or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials in connection with the
Required Work to the extent such contracts or work orders exceed $250,000. Upon
Lender's request, Borrower shall assign any contract to Lender.
(b) In the event Lender determines in its reasonable discretion that
any Required Work is not being or has not been performed in a workmanlike or
timely manner, and upon Borrower's failure to cure such condition within fifteen
(15) days of notice thereof from Lender, Lender shall have the option to
withhold disbursement for such unsatisfactory Required Work and to proceed under
existing contracts or to contract with third parties to complete such Required
Work and to apply the Replacement Reserve Funds toward the labor and materials
necessary to complete such Required Work, without providing any further notice
to Borrower and to exercise any and all other remedies available to Lender upon
an Event of Default hereunder. Notwithstanding the foregoing, Lender shall not
be required to provide any advance notice to Borrower in the event that Lender
determines in good faith that the performance of such Required Work is of an
emergency nature.
(c) In order to facilitate Lender's completion of the Required Work,
Borrower grants Lender the right to enter onto the Property and perform any and
all work and labor necessary to complete the Required Work and/or employ
watchmen to protect the Property from damage. Notwithstanding the foregoing,
Lender shall provide Borrower written notice of who Lender intends shall perform
any Required Work or which watchmen shall protect the Property from Damage as
described in Section 9.4(b) or this Section 9.4(c). If within three Business
Days after receipt of such notice, Borrower provides written notice to Lender
that, in Sponsor's reasonable judgment, the use of such entities or individuals
to perform the work or protect the Property could adversely affect Sponsor's
ability to qualify as a real estate investment trust under the Code, Lender
shall not employ such entities or individuals, and in such case the Lender shall
repeat the process described above, and the Borrower shall have the same consent
rights as described above. Any reasonable costs or expenses incurred by Lender
as a result of this notice process shall be paid by Borrower. In addition,
Lender shall not be required to provide any
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notice to Borrower nor shall Borrower have any veto rights over the entities or
individuals selected by Lender if Lender determines, in its good faith
reasonable discretion, that an emergency situation exists at the Property. All
sums so expended by Lender, to the extent not from the Reserve Funds, shall be
deemed to have been advanced under the Loan to Borrower and secured by the
Mortgage. To the extent that Lender has the right to enter the Property and to
perform work under Section 9.4 (b) above, for this purpose Borrower constitutes
and appoints Lender its true and lawful attorney-in-fact with full power of
substitution to complete or undertake the Required Work in the name of Borrower
upon Borrower's failure to do so in a workmanlike and timely manner. Such power
of attorney shall be deemed to be a power coupled with an interest and cannot be
revoked. Borrower empowers said attorney-in-fact as follows: (i) to use any of
the Reserve Funds for the purpose of making or completing the Required Work;
(ii) to make such additions, changes and corrections to the Required Work as
shall be necessary or desirable to complete the Required Work; (iii) to employ
such contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iv) to pay, settle or compromise all existing bills
and claims which are or may become Liens against the Property, or as may be
necessary or desirable for the completion of the Required Work, or for clearance
of title; (v) to execute all applications and certificates in the name of
Borrower which may be required by any of the contract documents; (vi) to
prosecute and defend all actions or proceedings in connection with the Property
or the rehabilitation and repair of the Property; and (vii) to do any and every
act which Borrower might do on its own behalf to fulfill the terms of this
Agreement.
(d) Nothing in this Section 9.4 shall: (i) make Lender responsible for
making or completing the Required Work; (ii) require Lender to expend funds in
addition to the Reserve Funds to make or complete any Required Work; (iii)
obligate Lender to proceed with the Required Work; or (iv) obligate Lender to
demand from Borrower additional sums to make or complete any Required Work.
(e) Provided Lender gives Borrower notice at least 1 day in advance,
Borrower shall permit Lender and Lender's bonded and insured agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties performing Required Work pursuant to this Section
9.4 to enter onto the Property during normal business hours (subject to the
rights of tenants under their Leases and provided Landlord uses reasonable
efforts to minimize interference with such tenants) to inspect the progress of
any Required Work and all materials being used in connection therewith, to
examine all plans and shop drawings relating to such Required Work which are or
may be kept at the Property, and to complete any Required Work made pursuant to
this Section 9.4. Borrower shall cause all contractors and subcontractors to
cooperate with Lender and Lender's representatives or such other persons
described above in connection with inspections described in this Section 9.4 or
the completion of Required Work pursuant to this Section 9.4. Other than in
connection with what Lender determines to be an emergency situation, Lender
agrees not to conduct any invasive testing.
(f) Lender may, to the extent any Required Work would reasonably
require an inspection of the Property, inspect the Property at Borrower's
expense prior to making a disbursement of the Reserve Funds in order to verify
completion of the Required Work for which payment or reimbursement is sought.
With respect to any such disbursement request greater than or equal to $50,000,
Borrower shall pay Lender a reasonable inspection fee not exceeding $1,000
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for each such inspection. Lender may require that such inspection be conducted
by an appropriate independent qualified professional selected by Lender and/or
may require a copy of a certificate of completion by an independent qualified
professional acceptable to Lender prior to the disbursement of the Reserve
Funds. Borrower shall pay the expense of the inspection as required hereunder,
whether such inspection is conducted by Lender or by an independent qualified
professional.
(g) The Required Work and all materials, equipment, fixtures, or any
other item comprising a part of any Required Work shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other Liens (except for Permitted Encumbrances).
(h) Before each disbursement of the Replacement Reserve Funds in excess
of $35,000, Lender may require Borrower to provide Lender with a search of title
to the Property effective to the date of the disbursement, which search shows
that no mechanic's or materialmen's or other Liens of any nature have been
placed against the Property since the date of recordation of the Mortgage and
that title to the Property is free and clear of all Liens (except for Permitted
Encumbrances).
(i) All Required Work shall comply with all Legal Requirements and
applicable insurance requirements including, without limitation, applicable
building codes, special use permits, environmental regulations, and requirements
of insurance underwriters.
(j) Borrower hereby assigns to Lender all rights and claims Borrower
may have against all Persons supplying labor or materials in connection with the
Required Work; provided, however, that Lender may not pursue any such rights or
claims unless an Event of Default has occurred and remains uncured.
SECTION 9.5. RELEASE OF RESERVE FUNDS
(a) Upon written request from Borrower and satisfaction of the
requirements set forth in this Agreement, Lender shall disburse to Borrower
amounts from (i) the Replacement Reserve Account to pay for the actual costs of
any approved Replacements or (ii) the Leasing Reserve Account to the extent
necessary to reimburse Borrower for the actual costs of Tenant Improvements
and/or Leasing Commissions incurred, provided that (A) such Leasing Commissions
are reasonable and customary for properties similar to the Property and the
portion of the Property leased for which such Leasing Commissions are due, and
(B) the amount of such Leasing Commissions are determined pursuant to
arm's-length transactions between Borrower and any leasing agent to which a
Leasing Commission is due. Notwithstanding the preceding sentence, in no event
shall Lender be required to (x) disburse funds from any of the Reserve Accounts
if an Event of Default exists, or (y) disburse funds from the Replacement
Reserve Account to pay for the costs of routine repairs or maintenance to the
Property or for Tenant Improvements and Leasing Commissions.
(b) Each request for disbursement from any of the Reserve Accounts
shall be on a form provided or approved by Lender and shall (i) include copies
of invoices for all items or materials purchased and all labor or services
provided and (ii) specify (A) the Required Work for
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which the disbursement is requested, (B) the quantity and price of each item
purchased, if the Required Work includes the purchase or replacement of specific
items, (C) the price of all materials (grouped by type or category) used in any
Required Work other than the purchase or replacement of specific items, and (D)
the cost of all contracted labor or other services applicable to each Required
Work for which such request for disbursement is made and (iii) include, if such
request for disbursement is in connection with Tenant Improvements, a
certificate from the Tenant(s) for which the Tenant Improvements have been
performed stating that such Tenant Improvements have been completed in a manner
satisfactory and acceptable to such Tenant(s) and (unless disbursement is
requested pursuant to Section 9.5(d)), such Tenant(s) has accepted the premises
demised under the applicable Lease(s), and containing such other information as
Lender may require, in form and substance reasonably satisfactory to Lender,
and/or if such request for disbursement is in connection with Leasing
Commissions, a certificate from the leasing agent that no further sums are due
to it in connection with the applicable Lease. With each request Borrower shall
certify that all Required Work has been or will be performed in accordance with
all Legal Requirements. With each request Borrower shall certify that all
Required Work has been performed in accordance with all Legal Requirements.
Except as provided in Section 9.5(d), each request for disbursement shall be
made only after completion of the Replacement or Tenant Improvement (or the
portion thereof completed in accordance with Section 9.5(d)), as applicable, for
which disbursement is requested. Borrower shall provide Lender evidence
satisfactory to Lender in its reasonable judgment of such completion or
performance.
(c) Borrower shall use each disbursement to pay all invoices in
connection with the Required Work with respect to which such disbursement is
requested or, at the request of Borrower, Lender will issue joint checks,
payable to Borrower and the contractor, supplier, materialman, mechanic,
subcontractor or other party to whom payment is due in connection with the
Required Work. Lender may require in its sole discretion a conditional waiver of
lien (conditioned only on payment) from each Person receiving payment prior to
Lender's disbursement of the Reserve Funds. In addition, as a condition to any
disbursement, Lender may require Borrower to obtain lien waivers from each
contractor, supplier, materialman, mechanic or subcontractor who receives
payment in an amount equal to or greater than $10,000 for completion of its work
or delivery of its materials. Any lien waiver delivered hereunder shall conform
to all Legal Requirements and shall cover all work performed and materials
supplied (including equipment and fixtures) for the Property by that contractor,
supplier, subcontractor, mechanic or materialman through the date covered by the
current disbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint check,
the release of lien shall be effective through the date covered by the previous
release of funds request). In the case of Leasing Commissions, payment shall be
made to any leasing agent to which a Leasing Commission is due in the amount of
invoices submitted by such leasing agent, provided all of the other conditions
for disbursements for such Leasing Commissions are satisfied in the judgment of
Lender.
(d) If (i) the cost of any item of Required Work exceeds $50,000, (ii)
the contractor performing such Required Work requires periodic payments pursuant
to terms of a written contract, and (iii) Lender has approved in writing in
advance such periodic payments, a request for disbursement from the Reserve
Accounts may be made after completion of a portion of the work under such
contract, provided (A) such contract requires payment upon completion of such
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portion of work, (B) the materials for which the request is made are on site at
the Property and are properly secured or have been installed in the Property,
(C) all other conditions in this Agreement for disbursement have been satisfied,
and (D) in the case of a Replacement, funds remaining in the Replacement Reserve
Account are, in Lender's judgment, sufficient to complete such Replacement and
other Replacements when required.
(e) Borrower shall not make a request for, nor shall Lender have any
obligation to make, any disbursement from any Reserve Account more frequently
than once in any calendar month and (except in connection with the final
disbursement) in any amount less than the lesser of (i) $10,000 or (ii) the
total cost of the Required Work or Leasing Commission for which the disbursement
is requested.
(f) [Intentionally omitted].
(g) In the event Borrower requests a disbursement from the Replacement
Reserve Account to pay for the actual cost of labor or materials used in
connection with repairs or improvements other than the Replacements specified in
the Physical Conditions Report prepared in connection with the closing of the
Loan (an "ADDITIONAL REPLACEMENT"), Borrower shall disclose in writing to Lender
the reason why funds in the Replacement Reserve Account should be used to pay
for such Additional Replacement. If Lender determines in its reasonable
discretion that (i) such Additional Replacement is of the type intended to be
covered by the Replacement Reserve Account, (ii) [intentionally omitted], (iii)
costs for such Additional Replacement are reasonable, (iv) the funds in the
Replacement Reserve Account are sufficient to pay for such Additional
Replacement and all other Replacements for the Property specified in the
Physical Conditions Report, and (v) all other conditions for disbursement under
this Agreement have been met, Lender shall disburse funds from the Replacement
Reserve Account.
(h) Lender's disbursement of any Reserve Funds or other acknowledgment
of completion of any Required Work in a manner satisfactory to Lender shall not
be deemed a certification or warranty by Lender to any Person that the Required
Work has been completed in accordance with Legal Requirements.
(i) If the funds in any Reserve Account should exceed the amount of
payments actually applied by Lender for the purposes of the account, Lender in
its sole discretion shall either return any excess to Borrower or credit such
excess against future payments to be made to that Reserve Account. In allocating
any such excess, Lender may deal with the Person shown on Lender's records as
being the owner of the Property. If at any time Lender reasonably determines
that the Reserve Funds are not or will not be sufficient to make the required
payments, Lender shall notify Borrower of such determination and Borrower shall
pay to Lender any amount necessary to make up the deficiency within ten (10)
days after notice from Lender to Borrower requesting payment thereof.
(j) The insufficiency of any balance in any of the Reserve Accounts
shall not relieve Borrower from its obligation to fulfill all preservation and
maintenance covenants in the Loan Documents.
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(k) Upon payment in full of the Debt, all amounts remaining on deposit,
if any, in the Replacement Reserve Account shall be returned to Borrower or the
Person shown on Lender's records as being the owner of the Property and no other
party shall have any right or claim thereto.
(l) Upon the earlier to occur of (i) the completion of all Tenant
Improvements and the full performance by the leasing agent of its obligations
with respect to any Leasing Commissions, as verified by Lender in its reasonable
discretion, or (ii) the payment in full of the Debt, all amounts remaining on
deposit, if any, in the Leasing Reserve Account shall be returned to Borrower or
the Person shown on Lender's records as being the owner of the Property and no
other party shall have any right or claim thereto.
(m) Notwithstanding any other provision hereof to the contrary,
Borrower shall not be entitled to the disbursement of more than $6,007,242 with
respect to Tenant Improvements and Leasing Commission due with respect to the
▇▇▇▇▇▇ Lease, and more than $7,551,798.00 with respect to Tenant Improvements
and Leasing Commission due with respect to the MoFo Lease.
SECTION 9.6. TAX AND INSURANCE RESERVE FUNDS
Borrower has established an Eligible Account with Lender or Lender's
agent sufficient to discharge Borrower's obligations for the payment of Taxes
and Insurance Premiums pursuant to Section 5.4 and Section 8.1 hereof (the "TAX
AND INSURANCE RESERVE ACCOUNT") into which Borrower has deposited $1,469,518.91,
which amount, when added to the required monthly deposits set forth in the next
sentence, is sufficient to make the payments of Taxes and Insurance Premiums as
required herein. Borrower shall deposit into the Tax and Insurance Reserve
Account on each Payment Date (a) one-twelfth of the Taxes that Lender estimates
will be payable during the next ensuing twelve (12) months or such higher amount
necessary to accumulate with Lender sufficient funds to pay all such Taxes at
least thirty (30) days prior to the earlier of (i) the date that the same will
become delinquent and (ii) the date that additional charges or interest will
accrue due to the non-payment thereof, and (b) except to the extent Lender has
waived the insurance escrow because the insurance required hereunder is
maintained under a blanket insurance Policy acceptable to Lender in accordance
with Section 8.1(c), one-twelfth of the Insurance Premiums that Lender estimates
will be payable during the next ensuing twelve (12) months for the renewal of
the coverage afforded by the Policies upon the expiration thereof or such higher
amount necessary to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least thirty (30) days prior to the expiration of the
Policies (said amounts in (a) and (b) above hereinafter called the "TAX AND
INSURANCE RESERVE FUNDS"). Lender will apply the Tax and Insurance Reserve Funds
to payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to Section 5.4 and Section 8.1 hereof. In making any disbursement from
the Tax and Insurance Reserve Account, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the appropriate public office or tax lien
service (with respect to Taxes) or insurer or agent (with respect to Insurance
Premiums), without inquiry into the accuracy of such ▇▇▇▇, statement or estimate
or into the validity of any tax, assessment, sale, forfeiture, tax lien or title
or claim thereof. If the amount of the Tax and Insurance Reserve Funds shall
exceed the amounts due for Taxes and Insurance Premiums pursuant to Section 5.4
and Section 8.1 hereof, Lender shall, in its sole discretion, return any excess
to Borrower or credit such excess against future payments to be made to the Tax
and
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Insurance Reserve Account. In allocating any such excess, Lender may deal with
the person shown on Lender's records as being the owner of the Property. Any
amount remaining in the Tax and Insurance Reserve Account after the Debt has
been paid in full shall be returned to Borrower or the person shown on Lender's
records as being the owner of the Property and no other party shall have any
right or claim thereto. If at any time Lender reasonably determines that the Tax
and Insurance Reserve Funds are not or will not be sufficient to pay Taxes and
Insurance Premiums by the dates set forth in (a) and (b) above, Lender shall
notify Borrower of such determination and Borrower shall pay to Lender any
amount necessary to make up the deficiency within ten (10) days after notice
from Lender to Borrower requesting payment thereof.
SECTION 9.7. MEZZANINE LITIGATION RESERVE ACCOUNT
(a) Upon the occurrence of a Mezzanine Litigation Event, Borrower shall
promptly establish (or Lender shall establish on Borrower's behalf) an Eligible
Account with Lender or Lender's agent (the "MEZZANINE LITIGATION RESERVE
ACCOUNT") into which funds shall be deposited pursuant to Article 10 hereof.
Amounts on deposit in the Mezzanine Litigation Reserve Account shall hereinafter
be referred to as "MEZZANINE LITIGATION RESERVE FUNDS."
(b) Notwithstanding any other provision hereof, Lender shall disburse
Mezzanine Litigation Reserve Funds in accordance with the Indemnity and
Agreement.
SECTION 9.8. OPERATING EXPENSES; EXTRAORDINARY EXPENSES
(a) Borrower established as of June 27, 2003 an Eligible Account with
Lender or Lender's agent into which Borrower shall deposit, on each Payment Date
during the term of the Loan, funds sufficient to pay all Operating Expenses
required to be incurred during the following month in accordance with the Annual
Budget approved by Lender (the "OPERATING EXPENSE RESERVE ACCOUNT.") Amounts so
deposited shall hereinafter be referred to as the "OPERATING EXPENSE RESERVE
FUNDS." Provided no Event of Default has occurred and is continuing, sums from
the Operating Expense Reserve Account shall be disbursed by Lender to Borrower
following receipt and approval of Borrower's written request for the payment of
such Operating Expenses.
(b) Borrower established as of June 27, 2003 an Eligible Account with
Lender or Lender's agent into which Borrower shall deposit, on each Payment Date
during the term of the Loan, funds sufficient to pay any Extraordinary Expenses,
if any, for the following month which have been approved by Lender (the
"EXTRAORDINARY EXPENSE RESERVE ACCOUNT.") Amounts so deposited shall hereinafter
be referred to as the "EXTRAORDINARY EXPENSE RESERVE FUNDS." Provided no Event
of Default has occurred and is continuing, sums from the Extraordinary Expense
Reserve Account shall be disbursed by Lender to Borrower following receipt and
approval of Borrower's written request for the payment of such Extraordinary
Expenses.
SECTION 9.9. RESERVE FUNDS GENERALLY
(a) Borrower shall be entitled to interest on all Reserve Accounts.
Notwithstanding the foregoing, the funds in the Reserve Accounts shall not be
invested except in Permitted Investments in accordance with the terms of Section
10.1(b) hereof, and all interest earned or
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accrued thereon shall be for the account of the Borrower and shall be allocated
in a manner consistent with Section 10.2(c) hereof.
(b) Borrower grants to Lender a first-priority perfected security
interest in, and assigns and pledges to Lender, each of the Reserve Accounts and
any and all Reserve Funds now or hereafter deposited in the Reserve Accounts as
additional security for payment of the Debt. Until expended or applied in
accordance herewith, the Reserve Accounts and the Reserve Funds shall constitute
additional security for the Debt. The provisions of this Section 9.9 are
intended to give Lender or any subsequent holder of the Loan "control" of the
Reserve Accounts within the meaning of the UCC.
(c) The Reserve Accounts and any and all Reserve Funds now or hereafter
deposited in the Reserve Accounts shall be subject to the exclusive dominion and
control of Lender, which shall hold the Reserve Accounts and any or all Reserve
Funds now or hereafter deposited in the Reserve Accounts subject to the terms
and conditions of this Agreement. Borrower shall have no right of withdrawal
from the Reserve Accounts or any other right or power with respect to the
Reserve Accounts or any or all of the Reserve Funds now or hereafter deposited
in the Reserve Accounts, except as expressly provided in this Agreement.
(d) Lender shall furnish or cause to be furnished to Borrower, without
charge, an annual accounting of each Reserve Account in the normal format of
Lender or its loan servicer, showing credits and debits to such Reserve Account
and the purpose for which each debit to each Reserve Account was made.
(e) As long as no Event of Default has occurred, Lender shall make
disbursements from the Reserve Accounts in accordance with this Agreement. All
such disbursements shall be deemed to have been expressly pre-authorized by
Borrower, and shall not be deemed to constitute the exercise by Lender of any
remedies against Borrower unless an Event of Default has occurred and is
continuing and Lender has expressly stated in writing its intent to proceed to
exercise its remedies as a secured party, pledgee or lienholder with respect to
the Reserve Accounts.
(f) If any Event of Default occurs, Borrower shall immediately lose all
of its rights to receive disbursements from the Reserve Accounts until the
earlier to occur of (i) the date on which such Event of Default is cured to
Lender's satisfaction, or (ii) the payment in full of the Debt. Upon the
occurrence of any Event of Default, Lender may exercise any or all of its rights
and remedies as a secured party, pledgee and lienholder with respect to the
Reserve Accounts. Without limitation of the foregoing, upon any Event of
Default, Lender may use and disburse the Reserve Funds (or any portion thereof)
for any of the following purposes: (A) repayment of the Debt, including, but not
limited to, principal prepayments and the prepayment premium applicable to such
full or partial prepayment (as applicable); (B) reimbursement of Lender for all
losses, fees, costs and expenses (including, without limitation, reasonable
legal fees) suffered or incurred by Lender as a result of such Event of Default;
(C) payment of any amount expended in exercising any or all rights and remedies
available to Lender at law or in equity or under this Agreement or under any of
the other Loan Documents; (D) payment of any item from any of the Reserve
Accounts as required or permitted under this Agreement; or (E) any other purpose
permitted by applicable law; provided, however, that any such application of
funds shall not cure
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or be deemed to cure any Event of Default. Without limiting any other provisions
hereof, each of the remedial actions described in the immediately preceding
sentence shall be deemed to be a commercially reasonable exercise of Lender's
rights and remedies as a secured party with respect to the Reserve Funds and
shall not in any event be deemed to constitute a setoff or a foreclosure of a
statutory banker's lien. Nothing in this Agreement shall obligate Lender to
apply all or any portion of the Reserve Funds to effect a cure of any Event of
Default, or to pay the Debt, or in any specific order of priority. The exercise
of any or all of Lender's rights and remedies under this Agreement or under any
of the other Loan Documents shall not in any way prejudice or affect Lender's
right to initiate and complete a foreclosure under the Mortgage.
(g) The Reserve Funds shall not constitute escrow or trust funds and
may be commingled with other monies held by Lender. Notwithstanding anything
else herein to the contrary, Lender may commingle in one or more Eligible
Accounts any and all funds controlled by Lender, including, without limitation,
funds pledged in favor of Lender by other borrowers, whether for the same
purposes as the Reserve Accounts or otherwise. Without limiting any other
provisions of this Agreement or any other Loan Document, the Reserve Accounts
may be established and held in such name or names as Lender or its loan
servicer, as agent for Lender, shall deem appropriate, including, without
limitation, in the name of Lender or such loan servicer as agent for Lender. In
the case of any Reserve Account which is held in a commingled account, Lender or
its loan servicer, as applicable, shall maintain records sufficient to enable it
to determine at all times which portion of such account is related to the Loan.
The Reserve Accounts are solely for the protection of Lender. With respect to
the Reserve Accounts, Lender shall have no responsibility beyond the allowance
of due credit for the sums actually received by Lender or beyond the
reimbursement or payment of the costs and expenses for which such accounts were
established in accordance with their terms. Upon assignment of the Loan by
Lender, any Reserve Funds shall be turned over to the assignee and any
responsibility of Lender as assignor shall terminate. The requirements of this
Agreement concerning Reserve Accounts in no way supersede, limit or waive any
other rights or obligations of the parties under any of the Loan Documents or
under applicable law.
(h) Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in the Reserve
Accounts or the Reserve Funds deposited therein or permit any Lien to attach
thereto, except for the security interest granted in this Section 9.9, or any
levy to be made thereon, or any UCC Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.
(i) Borrower will maintain the security interest created by this
Section 9.9 as a first priority perfected security interest and will defend the
right, title and interest of Lender in and to the Reserve Accounts and the
Reserve Funds against the claims and demands of all Persons whomsoever. At any
time and from time to time, upon the written request of Lender, and at the sole
expense of Borrower, Borrower will promptly and duly execute and deliver such
further instruments and documents and will take such further actions as Lender
reasonably may request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.
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ARTICLE 10
CASH MANAGEMENT
SECTION 10.1. LOCKBOX ACCOUNT AND CASH MANAGEMENT ACCOUNT
(a) Borrower acknowledges and confirms that Borrower has established,
and Borrower covenants that it shall maintain, (i) pursuant to the Lockbox
Agreement, a non-interest bearing Eligible Account into which Borrower shall,
and shall cause Manager to, deposit or cause to be deposited, all Rents and
other revenue from the Property (such account, all funds at any time on deposit
therein and any proceeds, replacements or substitutions of such account or funds
therein, are referred to herein as the "LOCKBOX ACCOUNT"), and (ii) an interest
bearing Eligible Account into which funds in the Lockbox Account shall be
transferred pursuant to the terms of Section 10.2(b) hereof (such account, the
sub-accounts thereof, all funds at any time on deposit therein and any proceeds,
replacements or substitutions of such account or funds therein, are referred to
herein as the "CASH MANAGEMENT ACCOUNT").
(b) The Lockbox Account and Cash Management Account shall each be in
the name of Borrower for the benefit of Lender, provided that Borrower shall be
the owner of all funds on deposit in such accounts for federal and applicable
state and local tax purposes. Sums on deposit in the Cash Management Account (or
any Reserve Account) shall not be invested except in such Permitted Investments
as directed by Borrower and all income earned thereon shall be the income of
Borrower and be applied to and become part of the Cash Management Account, to be
disbursed in accordance with this Article 10. So long as no Event of Default
exists, Borrower shall be entitled to direct such investment not more frequently
than once per calendar month, and shall provide Lender with five (5) Business
Days prior notice with respect to any direction. Neither Lockbox Bank nor Lender
shall have any liability for any loss resulting from the investment of funds in
Permitted Investments in accordance with the terms and conditions of this
Agreement.
(c) The Lockbox Account and Cash Management Account shall be subject to
the exclusive dominion and control of Lender and, except as otherwise expressly
provided herein, neither Borrower, Manager nor any other party claiming on
behalf of, or through, Borrower or Manager, shall have any right of withdrawal
therefrom or any other right or power with respect thereto.
(d) Borrower agrees to pay the customary fees and expenses of Lockbox
Bank (incurred in connection with maintaining the Lockbox Account) and Lender
(incurred in connection with maintaining the Lockbox Account) and any successors
thereto in connection therewith, as separately agreed by them from time to time.
(e) Lender shall be responsible for the performance only of such duties
with respect to the Cash Management Account as are specifically set forth
herein, and no duty shall be implied from any provision hereof. Lender shall not
be under any obligation or duty to perform any act which would involve it in
expense or liability or to institute or defend any suit in respect hereof, or to
advance any of its own monies. Borrower shall indemnify and hold Lender and its
directors, employees, officers and agents harmless from and against any loss,
cost or damage (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by such
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parties in connection with the Cash Management Account other than such as result
from the gross negligence or willful misconduct of Lender or intentional
nonperformance by Lender of its obligations under this Agreement.
SECTION 10.2. DEPOSITS AND WITHDRAWALS
(a) Borrower represents, warrants and covenants that:
(i) Borrower has notified and advised each Tenant under each
Lease (whether such Lease is presently effective or executed after June
27, 2003) to send directly to the Lockbox all payments of Rents or any
other item payable under such Leases pursuant to an instruction letter
in the form of Exhibit D attached hereto (a "TENANT DIRECTION LETTER").
If Borrower fails to provide any such notice (and without prejudice to
Lender's rights with respect to such default), Lender shall have the
right, and Borrower hereby grants to Lender a power of attorney (which
power of attorney shall be coupled with an interest and irrevocable so
long as any portion of the Debt remains outstanding), to sign and
deliver a Tenant Direction Letter;
(ii) Borrower shall, and shall cause Manager to, instruct all
Persons that maintain open accounts with Borrower or Manager with
respect to the Property or with whom Borrower or Manager does business
on an "accounts receivable" basis with respect to the Property to
deliver all payments due under such accounts to the Lockbox. Neither
Borrower nor Manager shall direct any such Person to make payments due
under such accounts in any other manner;
(iii) All Rents or other income from the Property shall (A) be
deemed additional security for payment of the Debt and shall be held in
trust for the benefit, and as the property, of Lender, (B) not be
commingled with any other funds or property of Borrower or Manager, and
(C) if received by Borrower or Manager notwithstanding the delivery of
a Tenant Direction Letter, be deposited in the Lockbox Account within
two (2) Business Day of receipt;
(iv) Without the prior written consent of Lender, so long as
any portion of the Debt remains outstanding, neither Borrower nor
Manager shall terminate, amend, revoke or modify any Tenant Direction
Letter in any manner whatsoever or direct or cause any Tenant to pay
any amount in any manner other than as provided in the related Tenant
Direction Letter; and
(v) So long as any portion of the Debt remains outstanding,
neither Borrower, Manager nor any other Person shall open or maintain
any accounts other than the Lockbox Account into which revenues from
the ownership and operation of the Property are deposited. The
foregoing shall not prohibit Borrower from utilizing one or more
separate accounts for the disbursement or retention of funds that have
been transferred to Borrower pursuant to the express terms of this
Agreement.
(b) Borrower hereby irrevocably authorizes Lender to transfer, or cause
to be transferred, and Lender shall transfer, on each Business Day by wire
transfer or other method of transfer mutually agreeable to Lockbox Bank and
Lender of immediately available funds, all
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collected and available balances in the Lockbox Account to the Cash Management
Account to be held until disbursed by Lender pursuant to Section 10.2(c).
(c) On each Payment Date (and if such day is not a Business Day, then
the immediately preceding day which is a Business Day) commencing the month
during which the first Payment Date occurs, Borrower hereby irrevocably
authorizes Lender to withdraw or allocate to the sub-accounts of the Cash
Management Account, as the case may be, amounts received in the Cash Management
Account, in each case to the extent that sufficient funds remain therefor:
(i) funds sufficient to pay the monthly deposits to the Tax
and Insurance Reserve Account shall be allocated to the Tax and
Insurance Reserve Account to be held and disbursed in accordance with
Section 9.6;
(ii) funds sufficient to pay the Monthly Payment Amount shall
be withdrawn and paid to Lender;
(iii) funds sufficient to pay the Replacement Reserve Monthly
Deposit shall be allocated to the Replacement Reserve Account to be
held and disbursed in accordance with Section 9.5;
(iv) funds sufficient to pay any interest accruing at the
Default Rate, late payment charges, if any, and any other sums due and
payable to Lender under any of the Loan Documents, shall be withdrawn
and paid to Lender and applied against such items;
(v) funds sufficient to pay Lockbox Bank for all costs and
expenses incurred by Lockbox Bank in connection with the maintenance
and administration of the Lockbox Account;
(vi) funds sufficient to pay Operating Expenses (to the extent
actually incurred) for the following month incurred in accordance with
the related Annual Budget shall be allocated to the Operating Expense
Reserve Account to be held and disbursed in accordance with Section
9.8;
(vii) funds sufficient to pay the applicable TI/LC Monthly
Deposit shall be allocated to the Leasing Reserve Account to be held
and disbursed in accordance with Section 9.5;
(viii) funds sufficient to pay any Extraordinary Expenses for
the following month which have been approved by Lender shall be
allocated to the Extraordinary Expense Account to be held and disbursed
in accordance with Section 9.8;
(ix) provided no Event of Default has occurred and is
continuing, funds to pay (A) the debt service on the Senior Mezzanine
Loan pursuant to the direction letter from Senior Mezzanine Lender and
(B) the debt service on the Junior Mezzanine Loan pursuant to the
direction letter from Junior Mezzanine Lender;
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(x) provided no Event of Default exist and Lender has not
received written notice from either Senior Mezzanine Lender that a
Senior Mezzanine Event of Default exists or Junior Mezzanine Lender
that a Junior Mezzanine Event of Default exists, funds in an amount
equal to the Junior Subordinated Management Fee shall be disbursed to
Manager, it being understood that if there are insufficient funds to
pay the Junior Subordinated Management Fee in any month, such unpaid
fee (or portion thereof) shall be waived by Manager and Manager shall
have no rights to pursue such unpaid fee (or portion thereof);
(xi) provided no Event of Default exists, if Lender has
received written notice from Senior Mezzanine Lender that a Senior
Mezzanine Event of Default exists, funds in an amount equal to the
balance (if any) remaining on deposit in the Cash Management Account
after the foregoing withdrawals and allocations shall be transferred to
Senior Mezzanine Lender;
(xii) provided no Event of Default exist and Lender has not
received written notice from Senior Mezzanine Lender that a Senior
Mezzanine Event of Default exists, if Lender has received written
notice from Junior Mezzanine Lender that a Junior Mezzanine Event of
Default exists, funds in an amount equal to the balance (if any)
remaining on deposit in the Cash Management Account after the foregoing
withdrawals and allocations shall be transferred to Junior Mezzanine
Lender;
(xiii) provided no Event of Default exist and Lender has not
received written notice from Senior Mezzanine Lender that a Senior
Mezzanine Event of Default exists, or from Junior Mezzanine Lender that
a Junior Mezzanine Event of Default exists, in the event that a
Mezzanine Litigation Event exists, funds in an amount sufficient to pay
the "Discharge Amount" (as defined in the Indemnity and Agreement)
shall be transferred to the Mezzanine Litigation Reserve Account to be
held and disbursed pursuant to the terms of the Indemnity and
Agreement; and
(xiv) provided no Event of Default exist and Lender has not
received written notice from Senior Mezzanine Lender that a Senior
Mezzanine Event of Default exists, or from Junior Mezzanine Lender that
a Junior Mezzanine Event of Default exists, the balance (if any)
remaining on deposit in the Cash Management Account after the foregoing
withdrawals and allocations shall be transferred to Borrower pursuant
to written instructions provided by Borrower to Lender from time to
time. Lender acknowledges that Borrower will make distributions from
such to its equity holders in such amounts as are necessary for Sponsor
to maintain its qualification as a real estate investment trust for
United States federal tax purposes and to avoid the imposition of
income or excise taxes.
(d) Notwithstanding anything to the contrary herein, Borrower
acknowledges that Borrower is responsible for monitoring the sufficiency of
funds deposited in the Cash Management Account and that Borrower is liable for
any deficiency in available funds, irrespective of whether Borrower has received
any account statement, notice or demand from Lender or Lender's servicer. If the
amount on deposit in the Cash Management Account is insufficient to make all of
the withdrawals and allocations described in Section 10.2(c)(i) through
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(viii) above, Borrower shall deposit such deficiency into the Cash Management
Account within five (5) days (provided that such five day period shall not
constitute a grace period for any default or Event of Default under this
Agreement or any other Loan Document based on a failure to satisfy any monetary
obligation provided in any Loan Document).
(e) If an Event of Default shall have occurred and be continuing,
Borrower hereby irrevocably authorizes Lender to make any and all withdrawals
from the Lockbox Account and Cash Management Account and transfers between any
of the Reserve Accounts as Lender shall determine in Lender's sole and absolute
discretion and Lender may use all funds contained in any such accounts for any
purpose, including but not limited to repayment of the Debt in such order,
proportion and priority as Lender may determine in its sole and absolute
discretion. Lender's right to withdraw and apply funds as stated herein shall be
in addition to all other rights and remedies provided to Lender under this
Agreement, the Note, the Mortgage and the other Loan Documents.
SECTION 10.3. SECURITY INTEREST
(a) To secure the full and punctual payment of the Debt and performance
of all obligations of Borrower now or hereafter existing under this Agreement
and the other Loan Documents, Borrower hereby grants to Lender a first-priority
perfected security interest in the Lockbox Account and Cash Management Account,
all interest, cash, checks, drafts, certificates and instruments, if any, from
time to time deposited or held therein, any and all amounts invested in
Permitted Investments, and all "proceeds" (as defined in the UCC as in effect in
the state in which the Lockbox Account and Cash Management Account are located
or maintained) of any or all of the foregoing. Furthermore, Borrower shall not,
without obtaining the prior written consent of Lender, further pledge, assign or
grant any security interest in any of the foregoing or permit any Lien to attach
thereto or any levy to be made thereon or any UCC Financing Statements to be
filed with respect thereto. Borrower will maintain the security interest created
by this Section 10.3(a) as a first priority perfected security interest and will
defend the right, title and interest of Lender in and to the Lockbox Account and
Cash Management Account against the claims and demands of all Persons
whomsoever.
(b) Borrower authorizes Lender to file any financing statement or
statements required by Lender to establish or maintain the validity, perfection
and priority of the security interest granted herein in connection with the
Lockbox Account and Cash Management Account. Borrower agrees that at any time
and from time to time, at the expense of Borrower, Borrower will promptly and
duly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that Lender may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby (including, without limitation, any
security interest in and to any Permitted Investments) or to enable Lender to
exercise and enforce its rights and remedies hereunder.
(c) Upon the occurrence of an Event of Default, Lender may exercise any
or all of its rights and remedies as a secured party, pledgee and lienholder
with respect to the Lockbox Account and Cash Management Account. Without
limitation of the foregoing, upon any Event of Default, Lender may use the
Lockbox Account and Cash Management Account for any of the following purposes:
(A) repayment of the Debt, including, but not limited to, principal
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prepayments and the prepayment premium applicable to such full or partial
prepayment (as applicable); (B) reimbursement of Lender for all losses, fees,
costs and expenses (including, without limitation, reasonable legal fees)
suffered or incurred by Lender as a result of such Event of Default; (C) payment
of any amount expended in exercising any or all rights and remedies available to
Lender at law or in equity or under this Agreement or under any of the other
Loan Documents; (D) payment of any item as required or permitted under this
Agreement; or (E) any other purpose permitted by applicable law; provided,
however, that any such application of funds shall not cure or be deemed to cure
any Event of Default. Without limiting any other provisions hereof, each of the
remedial actions described in the immediately preceding sentence shall be deemed
to be a commercially reasonable exercise of Lender's rights and remedies as a
secured party with respect to the Lockbox Account and Cash Management Account
and shall not in any event be deemed to constitute a setoff or a foreclosure of
a statutory banker's lien. Nothing in this Agreement shall obligate Lender to
apply all or any portion of the Lockbox Account or Cash Management Account to
effect a cure of any Event of Default, or to pay the Debt, or in any specific
order of priority. The exercise of any or all of Lender's rights and remedies
under this Agreement or under any of the other Loan Documents shall not in any
way prejudice or affect Lender's right to initiate and complete a foreclosure
under the Mortgage.
SECTION 10.4. DEFINITIONS. Notwithstanding anything to the contrary
contained herein, For purposes of this Article 10 only, Business Day shall mean
a day on which Lender and Lockbox Bank are both open for the conduct of
substantially all of their respective banking business at the office in the city
in which the Note is payable, with respect to Lender and at the office in the
city where the Lockbox Account is maintained, with respect to Lockbox Bank (in
both instances, excluding Saturdays and Sundays).
ARTICLE 11
EVENTS OF DEFAULT; REMEDIES
SECTION 11.1. EVENT OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT":
(a) if any portion of the Debt is not paid on or prior to the date the
same is due or if the entire Debt is not paid on or before the Maturity Date;
provided, however, (i) Borrower shall not be in default so long as there is
sufficient money in the Lockbox Account for payment of all amounts then due and
payable (including any deposits into Reserve Accounts) and Lender's access to
such money has not been constrained or constricted in any manner and (ii) with
respect to payments that are not regularly scheduled pursuant to the terms of
the Loan Documents, Borrower shall have a five (5) day grace period;
(b) except as otherwise expressly provided in the Loan Documents, if
any of the Taxes or Other Charges are not paid prior to the time that such Taxes
or Other Charges would be delinquent, unless there is sufficient money in the
Tax and Insurance Reserve Account for payment of amounts then due and payable
and Lender's access to such money has not been constrained or restricted in any
manner;
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(c) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender as provided in
Section 8.1;
(d) if Borrower breaches any covenant with respect to itself contained
in Article 6 or any covenant contained in Article 7 hereof;
(e) if any representation or warranty of, or with respect to, Borrower,
Borrower Principal or any member, general partner, principal or beneficial owner
of any of the foregoing, made herein, in any other Loan Document, or in any
certificate, report, financial statement or other instrument or document
furnished to Lender at the time of the closing of the Loan or during the term of
the Loan shall have been false or misleading in any material respect when made
(a "REP & WARRANTY BREACH"), unless (i) Borrower notifies Lender of such Rep &
Warranty Breach promptly upon becoming aware of it and (ii) such Rep & Warranty
Breach (A) was unintentional, (B) is immaterial and (iii) if capable of being
cured, is cured within thirty (30) days following notice from Lender;
(f) if (i) Borrower shall commence any case, proceeding or other action
(A) under any Creditors Rights Laws, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Borrower shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against Borrower
any case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a period
of sixty (60) days; or (iii) there shall be commenced against Borrower, any
managing member or general partner of Borrower any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of any order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or (iv) Borrower shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due;
(g) if Borrower shall be in default beyond applicable notice and grace
periods under any other mortgage, deed of trust, deed to secure debt or other
security agreement covering any part of the Property, whether it be superior or
junior in lien to the Mortgage;
(h) if the Property becomes subject to any mechanic's, materialman's or
other Lien other than a Lien for any Taxes or Other Charges not then due and
payable and the Lien shall remain undischarged of record (by payment, bonding or
otherwise) for a period of thirty (30) days, unless, within such thirty (30) day
period, Borrower delivers to Lender an endorsement to the Title Insurance Policy
insuring that any such Lien shall not affect the priority of the Mortgage;
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(i) if any federal tax lien is filed against Borrower, any member or
general partner of Borrower, Borrower Principal or the Property and same is not
discharged of record within thirty (30) days after same is filed;
(j) if a judgment is filed against the Borrower in excess of $50,000
which is not fully covered by insurance or which is not vacated or discharged
within 90 days;
(k) if any default occurs under any guaranty or indemnity executed in
connection herewith and such default continues after the expiration of
applicable grace periods, if any;
(l) if Borrower shall permit any event within its control to occur that
would cause any REA to terminate without notice or action by any party thereto
or would entitle any party to terminate any REA and the term thereof by giving
notice to Borrower; or any REA shall be surrendered, terminated or canceled for
any reason or under any circumstance whatsoever except as provided for in such
REA; or any term of any REA shall be modified or supplemented without Lender's
prior written consent; or Borrower shall fail, within ten (10) Business Days
after demand by Lender, to exercise its option to renew or extend the term of
any REA or shall fail or neglect to pursue diligently all actions necessary to
exercise such renewal rights pursuant to such REA except as provided for in such
REA; or
(m) if Borrower shall continue to be in default under any other term,
covenant or condition of this Agreement or any of the Loan Documents for more
than ten (10) days after notice from Lender in the case of any default which can
be cured by the payment of a sum of money or for thirty (30) days after notice
from Lender in the case of any other default, provided that if such default
cannot reasonably be cured within such thirty (30) day period and Borrower shall
have commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for so long as it shall require Borrower in
the exercise of due diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of sixty (60) days.
SECTION 11.2. REMEDIES
(a) Upon the occurrence of an Event of Default (other than an Event of
Default described in Section 11.1(f) above) and at any time thereafter Lender
may, in addition to any other rights or remedies available to it pursuant to
this Agreement and the other Loan Documents or at law or in equity, take such
action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrower and in the Property, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and the Property, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default
described in Section 11.1(f) above, the Debt and all other obligations of
Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained herein or
in any other Loan Document to the contrary notwithstanding.
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(b) Upon the occurrence of an Event of Default, all or any one or more
of the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Debt shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Property. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singularly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
ARTICLE 12
ENVIRONMENTAL PROVISIONS
SECTION 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, based upon the Environmental Report
of the Property and information that Borrower knows or should reasonably have
known, that: (a) there are no Hazardous Materials or underground storage tanks
in, on, or under the Property, except those that are both (i) in compliance with
Environmental Laws and with permits issued pursuant thereto (if such permits are
required), if any, and (ii) either (A) in the case of Hazardous Materials, in
amounts not in excess of that necessary to operate the Property for the purposes
set forth herein or (B) fully disclosed to and approved by Lender in writing
pursuant to the Environmental Report; (b) there are no past, present or
threatened Releases of Hazardous Materials in violation of any Environmental Law
or which would require remediation by a Governmental Authority in, on, under or
from the Property except as described in the Environmental Report; (c) there is
no threat of any Release of Hazardous Materials migrating to the Property except
as described in the Environmental Report; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with the Property except as described in the Environmental Report;
(e) Borrower does not know of, and has not received, any written or oral notice
or other communication from any Person relating to Hazardous Materials in, on,
under or from the Property; and (f) Borrower has truthfully and fully provided
to Lender, in writing, any and all information relating to environmental
conditions in, on, under or from the Property known to Borrower or contained in
Borrower's files and records, including but not limited to any reports relating
to Hazardous Materials in, on, under or migrating to or from the Property and/or
to the environmental condition of the Property.
SECTION 12.2. ENVIRONMENTAL COVENANTS
Borrower covenants and agrees that so long as Borrower owns, manages,
is in possession of, or otherwise controls the operation of the Property: (a)
all uses and operations on or of the Property, whether by Borrower or any other
Person, shall be in compliance with all Environmental Laws and permits issued
pursuant thereto; (b) there shall be no Releases of Hazardous Materials in, on,
under or from the Property; (c) there shall be no Hazardous
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Materials in, on, or under the Property, except those that are both (i) in
compliance with all Environmental Laws and with permits issued pursuant thereto,
if and to the extent required, and (ii) (A) in amounts not in excess of that
necessary to operate the Property for the purposes set forth herein or (B) fully
disclosed to and approved by Lender in writing; (d) Borrower shall keep the
Property free and clear of all Environmental Liens; (e) Borrower shall, at its
sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to Section 12.4 below, including but not limited to providing all
relevant information and making knowledgeable persons available for interviews;
(f) Borrower shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection with
the Property, pursuant to any reasonable written request of Lender, upon
Lender's reasonable belief that the Property is not in full compliance with all
Environmental Laws, and share with Lender the reports and other results thereof,
and Lender and other Indemnified Parties shall be entitled to rely on such
reports and other results thereof; (g) Borrower shall, at its sole cost and
expense, comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from the
Property that are found to be in violation of Environmental Law; and (ii) comply
with any Environmental Law; (h) Borrower shall not allow any tenant or other
user of the Property to violate any Environmental Law; and (i) Borrower shall
immediately notify Lender in writing after it has become aware of (A) any
presence or Release or threatened Release of Hazardous Materials in, on, under,
from or migrating towards the Property; (B) any non-compliance with any
Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien against the Property; (D) any required or proposed
remediation of environmental conditions relating to the Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a Governmental
Authority) relating in any way to Hazardous Materials. Any failure of Borrower
to perform its obligations pursuant to this Section 12.2 shall constitute bad
faith waste with respect to the Property.
SECTION 12.3. LENDER'S RIGHTS
Lender and any other Person designated by Lender, including but not
limited to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon the Property at all
reasonable times to assess any and all aspects of the environmental condition of
the Property and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in
Lender's sole discretion) and taking samples of soil, groundwater or other
water, air, or building materials, and conducting other invasive testing. To the
extent that any such Person is an agent of Lender, Lender shall require that
such Person is bonded and insured. Provided Lender gives Borrower at least 2
days advance notice and agrees to use reasonable efforts to minimize
interference with any tenants, Borrower shall cooperate with and provide access
to Lender and any such person or entity designated by Lender. Other than in
connection with what Lender determines to be an emergency situation, Lender
agrees not to conduct any invasive testing.
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SECTION 12.4. OPERATIONS AND MAINTENANCE PROGRAMS
If recommended by the Environmental Report or any other environmental
assessment or audit of the Property, Borrower shall establish and comply with an
operations and maintenance program with respect to the Property, in form and
substance reasonably acceptable to Lender, prepared by an environmental
consultant reasonably acceptable to Lender, which program shall address any
asbestos-containing material or lead based paint that may now or in the future
be detected at or on the Property. Without limiting the generality of the
preceding sentence, Lender may require (a) periodic notices or reports to Lender
with regard to Borrower's operations and maintenance programs in form, substance
and at such intervals as Lender may specify, (b) an amendment to such operations
and maintenance program to address changing circumstances, laws or other
matters, (c) at Borrower's sole expense, supplemental examination of the
Property by consultants specified by Lender, (d) provided Lender gives Borrower
at least 2 days advance notice and agrees to use reasonable efforts to minimize
interference with any tenants, access to the Property by Lender, its agents or
servicer, to review and assess the environmental condition of the Property and
Borrower's compliance with any operations and maintenance program, and (e)
variation of the operations and maintenance program in response to the reports
provided by any such consultants.
SECTION 12.5. ENVIRONMENTAL DEFINITIONS
"ENVIRONMENTAL LAW" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations, standards, policies and
other government directives or requirements, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act, that apply to Borrower or the Property
and relate to Hazardous Materials or protection of human health or the
environment. "ENVIRONMENTAL LIENS" means all Liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other Person. "ENVIRONMENTAL REPORT" means the written reports
resulting from the environmental site assessments of the Property delivered to
Lender in connection with the Loan. "HAZARDOUS MATERIALS" shall mean petroleum
and petroleum products and compounds containing them, including gasoline, diesel
fuel and oil; explosives, flammable materials; radioactive materials;
polychlorinated biphenyls and compounds containing them; lead and lead-based
paint; asbestos or asbestos-containing materials in any form that is or could
become friable; underground or above-ground storage tanks, whether empty or
containing any substance; any substance the presence of which on the Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material", "hazardous waste",
"toxic substance", "toxic pollutant", "contaminant", or "pollutant" within the
meaning of any Environmental Law. "RELEASE" of any Hazardous Materials includes
but is not limited to any release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Materials.
SECTION 12.6. INTENTIONALLY OMITTED
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ARTICLE 13
SECONDARY MARKET
SECTION 13.1. TRANSFER OF LOAN
Lender may, at any time, sell, transfer or assign the Loan Documents,
or grant participations therein ("PARTICIPATIONS") or syndicate the Loan
("SYNDICATION") or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement ("SECURITIES") (a Syndication or the issuance of
Participations and/or Securities, a "SECURITIZATION").
SECTION 13.2. DELEGATION OF SERVICING
At the option of Lender, the Loan may be serviced by a servicer/trustee
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to such
servicer/trustee pursuant to a servicing agreement between Lender and such
servicer/trustee.
SECTION 13.3. DISSEMINATION OF INFORMATION
Lender may forward to each purchaser, transferee, assignee, or servicer
of, and each participant, or investor in, the Loan, or any Participations and/or
Securities or any of their respective successors (collectively, the "INVESTOR")
or any Rating Agency rating the Loan, or any Participations and/or Securities,
each prospective Investor, and any organization maintaining databases on the
underwriting and performance of commercial mortgage loans, all documents and
information which Lender now has or may hereafter acquire relating to the Debt
and to Borrower, any managing member or general partner thereof, Borrower
Principal and the Property, including financial statements, whether furnished by
Borrower or otherwise, as Lender determines necessary or desirable. Borrower
irrevocably waives any and all rights it may have under applicable Legal
Requirements to prohibit such disclosure, including but not limited to any right
of privacy.
SECTION 13.4. COOPERATION
At the request of the holder of the Note and, to the extent not already
required to be provided by Borrower under this Agreement, Borrower and Borrower
Principal shall use reasonable efforts to provide information not in the
possession of the holder of the Note in order to satisfy the market standards to
which the holder of the Note customarily adheres or which may be reasonably
required in the marketplace or by the Rating Agencies in connection with such
sales or transfers, including, without limitation, to:
(a) provide updated financial, budget and other information with
respect to the Property, Borrower, Borrower Principal, Sponsor and Manager and
provide modifications and/or updates to the appraisals, market studies,
environmental reviews and reports (Phase I reports and, if appropriate, Phase II
reports) and engineering reports of the Property obtained in connection with the
making of the Loan (all of the foregoing being referred to as the "PROVIDED
INFORMATION"), together, if customary, with appropriate verification and/or
consents of the
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Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating Agencies;
(b) make changes to the organizational documents of Borrower;
(c) at Borrower's expense, cause counsel to render or update existing
opinion letters as to enforceability and non-consolidation which may be relied
upon by the holder of the Note, the Rating Agencies and their respective
counsel, which shall be dated as of the closing date of the Securitization;
(d) provided Lender gives at least 2 days advance notice and agrees to
use reasonable efforts to minimize interference with any tenants, permit site
inspections, appraisals, market studies and other due diligence investigations
of the Property, as may be reasonably requested by the holder of the Note or the
Rating Agencies or as may be necessary or appropriate in connection with the
Securitization;
(e) re-make the representations and warranties with respect to the
Property, Borrower, Borrower Principal and the Loan Documents as are made in the
Loan Documents and, subject to such knowledge or diligence qualifiers as may be
necessary, such other representations and warranties as may be reasonably
requested by the holder of the Note or the Rating Agencies;
(f) execute such amendments to the Loan Documents as may be requested
by the holder of the Note or the Rating Agencies or otherwise to effect the
Securitization including, without limitation, bifurcation of the Loan into two
or more components and/or separate notes and/or creating a senior/subordinate
note structure; provided, however, that Borrower shall not be required to modify
or amend any Loan Document if such modification or amendment would (i) change
the interest rate, the stated maturity or the amortization of principal set
forth in the Note, except in connection with a bifurcation of the Loan which may
result in varying fixed interest rates and amortization schedules, but which
shall have the same initial weighted average coupon of the original Note, or
(ii) in the reasonable judgment of Borrower, modify or amend any other material
economic term of the Loan, or (iii) in the reasonable judgment of Borrower,
materially increase Borrower's obligations and liabilities, or materially
decrease Borrower's rights, under the Loan Documents. Borrower acknowledges that
in connection with a Securitization, Lender may change the Selected Day in its
sole discretion, but in no event to earlier than the fifth (5th) of each month.
(g) deliver to Lender and/or any Rating Agency, (i) one or more
certificates executed by an officer of the Borrower certifying as to the
accuracy, as of the closing date of the Securitization, of all representations
made by Borrower in the Loan Documents as of the Closing Date in all relevant
jurisdictions or, if such representations are no longer accurate, certifying as
to what modifications to the representations would be required to make such
representations accurate as of the closing date of the Securitization, and (ii)
certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower as of
the date of the closing date of the Securitization;
(h) have reasonably appropriate personnel participate in a bank meeting
and/or presentation for the Rating Agencies or Investors; and
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(i) cooperate with and assist Lender in obtaining ratings of the
Securities from two (2) or more of the Rating Agencies.
Borrower shall pay all costs and expenses incurred by Borrower in
connection with the compliance of Borrower and, if applicable, Senior Mezzanine
Borrower, Junior Mezzanine Borrower and Borrower Principal, with requests made
under this Section 13.4, including, without limitation, any additional costs and
expenses payable in connection with the substitution for Factory Mutual of an
acceptable insurer pursuant to Section 8.1 hereof; provided, however, that
Borrower shall not be responsible for the payment of any costs or expenses
incurred by or on behalf of Lender, or any Rating Agency fees, in connection
with a Securitization.
In the event that Borrower requests any consent or approval hereunder
and the provisions of this Agreement or any Loan Documents require the receipt
of written confirmation from each Rating Agency with respect to the rating on
the Securities, or, in accordance with the terms of the transaction documents
relating to a Securitization, such a rating confirmation is required in order
for the consent of Lender to be given, Borrower shall pay all of the costs and
expenses of Lender, Lender's servicer and each Rating Agency in connection
therewith, and, if applicable, shall pay any fees imposed by any Rating Agency
as a condition to the delivery of such confirmation.
SECTION 13.5. SECURITIZATION INDEMNIFICATION
(a) Borrower and Borrower Principal understand that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization, including, without limitation, a prospectus, prospectus
supplement, offering memorandum or private placement memorandum (each, a
"DISCLOSURE DOCUMENT") and may also be included in filings with the Securities
and Exchange Commission pursuant to the Securities Act or the Exchange Act, or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower and Borrower Principal
will cooperate with the holder of the Note in updating the Disclosure Document
by providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects.
(b) Borrower and Borrower Principal agree to provide in connection with
each of (i) a preliminary and a final offering memorandum or private placement
memorandum or similar document (including any Investor or Rating Agency "term
sheets" or presentations relating to the Property and/or the Loan) or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable, which
are delivered to Borrower and Borrower Principal for review, an indemnification
certificate (A) certifying that (I) Borrower and Borrower Principal have
carefully examined such memorandum or prospectus or other document actually
delivered by or on behalf of Lender (including any Investor or Rating Agency
"term sheets" or presentations relating to the Property and/or the Loan), as
applicable, including without limitation, the sections entitled "Special
Considerations," and/or "Risk Factors," and "Certain Legal Aspects of the
Mortgage Loan," or similar sections, and all sections relating to Borrower,
Borrower Principal, Manager, their Affiliates, the Loan, the Loan Documents and
the Property, and any risks or special considerations relating thereto, and any
other sections reasonably requested by Lender
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(all such sections, collectively, the "DISCLOSED MATERIALS"), and (II) to the
best of Borrower's knowledge except as specifically identified by Borrower, the
Disclosed Materials do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not misleading, (B)
indemnifying Lender (and for purposes of this Section 13.5, Lender hereunder
shall include its officers and directors) and the Affiliate of Lender that (i)
has filed the registration statement, if any, relating to the Securitization
and/or (ii) which is acting as issuer, depositor, sponsor and/or a similar
capacity with respect to the Securitization (any Person described in (i) or
(ii), an "ISSUER PERSON"), and each director and officer of any Issuer Person,
and each Person or entity who controls any Issuer Person within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "ISSUER GROUP"), and each Person which is acting as an
underwriter, manager, placement agent, initial purchaser or similar capacity
with respect to the Securitization, each of its directors and officers and each
Person who controls any such Person within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act (collectively, the
"UNDERWRITER GROUP") for any Losses to which Lender, the Issuer Group or the
Underwriter Group may become subject insofar as the Losses arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Disclosed Materials or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated in the Disclosed Materials or necessary in order to make the statements
in the Disclosed Materials or in light of the circumstances under which they
were made, not misleading (collectively the "SECURITIES LIABILITIES") and (C)
agreeing to reimburse Lender, the Issuer Group and the Underwriter Group for any
legal or other expenses reasonably incurred by Lender and Issuer Group in
connection with investigating or defending the Securities Liabilities; provided,
however, that Borrower will be liable in any such case under clauses (B) or (C)
above only to the extent that any such Securities Liabilities arise out of or is
based upon any such untrue statement or omission made therein in reliance upon
the Disclosed Materials or any reports delivered by or on behalf of Borrower or
Borrower Principal in connection with the underwriting of the Loan, including,
without limitation, financial statements of Borrower or Borrower Principal,
operating statements, rent rolls, environmental site assessment reports and
Property condition reports with respect to the Property. This indemnity
agreement will be in addition to any liability which Borrower and Borrower
Principal may otherwise have. Moreover, the indemnification provided for in
Clauses (B) and (C) above shall be effective whether or not an indemnification
certificate described in (A) above is provided and, if Borrower or Borrower
Principal do not provide the indemnification certificate, shall be applicable
based on information previously provided by Borrower and Borrower Principal or
their Affiliates.
(c) In connection with filings under the Exchange Act or any
information provided to holders of Securities on an ongoing basis, Borrower and
Borrower Principal agree to indemnify (i) Lender, the Issuer Group and the
Underwriter Group for Losses to which Lender, the Issuer Group or the
Underwriter Group may become subject insofar as the Securities Liabilities arise
out of or are based upon the omission or alleged omission to state in the
Provided Information a material fact required to be stated in the Provided
Information in order to make the statements in the Provided Information, in
light of the circumstances under which they were made not misleading and (ii)
reimburse Lender, the Issuer Group or the Underwriter Group for any legal or
other expenses reasonably incurred by Lender, the Issuer Group or the
Underwriter Group in connection with defending or investigating the Securities
Liabilities.
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(d) Promptly after receipt by an indemnified party under this Section
13.5 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 13.5, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party under this Section 13.5 the indemnifying party shall be responsible for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one such separate counsel unless an indemnified party
shall have reasonably concluded that there may be legal defenses available to it
that are different from or additional to those available to another indemnified
party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 13.5(c)
or Section 13.5(d) is or are for any reason held to be unenforceable by an
indemnified party in respect of any losses, claims, damages or liabilities (or
action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 13.5(c) or Section 13.5(d), the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages or liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) the indemnified party's, Borrower's and Borrower Principal's relative
knowledge and access to information concerning the matter with respect to which
claim was asserted; (ii) the opportunity to correct and prevent any statement or
omission; and (iii) any other equitable considerations appropriate in the
circumstances. Lender, Borrower and Borrower Principal hereby agree that it
would not be equitable if the amount of such contribution were determined by pro
rata or per capita allocation.
(f) The liabilities and obligations of Borrower, Borrower Principal and
Lender under this Section 13.5 shall survive the satisfaction of this Agreement
and the satisfaction and discharge of the Debt.
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ARTICLE 14
INDEMNIFICATIONS
SECTION 14.1. GENERAL INDEMNIFICATION
Borrower shall indemnify, defend and hold harmless the Indemnified
Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (b) any use,
nonuse or condition in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof; (d)
any failure of the Property to be in compliance with any applicable Legal
Requirements; (e) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or undertakings on
its part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; (f) the holding or investing of the Reserve Accounts or
the performance of the Required Work, Additional Required Repairs or Additional
Replacements, or (g) the payment of any commission, charge or brokerage fee to
anyone which may be payable in connection with the funding of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
SECTION 14.2. MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses imposed upon or incurred by or asserted against any
Indemnified Parties and directly or indirectly arising out of or in any way
relating to any tax on the making and/or recording of the Mortgage, the Note or
any of the other Loan Documents, but excluding any income, franchise or other
similar taxes.
SECTION 14.3. ERISA INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses (including, without limitation, reasonable attorneys' fees
and costs incurred in the investigation, defense, and settlement of Losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA that may be required, in Lender's sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Section 4.8 or Section
5.18 of this Agreement.
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SECTION 14.4. SURVIVAL
The obligations and liabilities of Borrower under this Article 14 shall
fully survive indefinitely notwithstanding any termination, satisfaction,
assignment, entry of a judgment of foreclosure, exercise of any power of sale,
or delivery of a deed in lieu of foreclosure of the Mortgage. Notwithstanding
the foregoing, if the Loan is paid off in full on the Maturity Date, Borrower
shall have no further liability under this Article 14 with respect to any event
that occurs subsequent to the Maturity Date.
ARTICLE 15
EXCULPATION
SECTION 15.1. EXCULPATION
(a) Except as otherwise provided herein or in the other Loan Documents,
Lender shall not enforce the liability and obligation of Borrower or Borrower
Principal, as applicable, to perform and observe the obligations contained
herein or in the other Loan Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower or Borrower Principal, except
that Lender may bring a foreclosure action, action for specific performance or
other appropriate action or proceeding to enable Lender to enforce and realize
upon this Agreement, the Note, the Mortgage and the other Loan Documents, and
the interest in the Property, the Rents and any other collateral given to Lender
created by this Agreement, the Note, the Mortgage and the other Loan Documents;
provided, however, that any judgment in any such action or proceeding shall be
enforceable against Borrower or Borrower Principal, as applicable, only to the
extent of Borrower's or Borrower Principal's interest in the Property, in the
Rents and in any other collateral given to Lender. Lender, by accepting this
Agreement, the Note, the Mortgage and the other Loan Documents, agrees that it
shall not, except as otherwise provided in this Section 15.1, ▇▇▇ for, seek or
demand any deficiency judgment against Borrower or Borrower Principal in any
such action or proceeding, under or by reason of or under or in connection with
this Agreement, the Note, the Mortgage or the other Loan Documents. The
provisions of this Section 15.1 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Agreement,
the Note, the Mortgage or the other Loan Documents; (ii) impair the right of
Lender to name Borrower or Borrower Principal as a party defendant in any action
or suit for judicial foreclosure and sale under this Agreement and the Mortgage;
(iii) affect the validity or enforceability of any indemnity (including, without
limitation, the Environmental Indemnity, Section 13.5 and Article 14 of this
Agreement), guaranty, master lease or similar instrument made in connection with
this Agreement, the Note, the Mortgage and the other Loan Documents; (iv) impair
the right of Lender to obtain the appointment of a receiver; (v) impair the
enforcement of the assignment of leases provisions contained in the Mortgage; or
(vi) impair the right of Lender to obtain a deficiency judgment or other
judgment on the Note against Borrower or Borrower Principal if necessary to
obtain any Insurance Proceeds or Awards to which Lender would otherwise be
entitled under this Agreement; provided however, Lender shall only enforce such
judgment to the extent of the Insurance Proceeds and/or Awards.
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(b) Notwithstanding the provisions of this Section 15.1 to the
contrary, Borrower and Borrower Principal shall be personally liable to Lender
on a joint and several basis for Losses due to:
(i) fraud or intentional misrepresentation by Borrower,
Borrower Principal or any other Affiliate of Borrower or Borrower
Principal in connection with the execution and the delivery of this
Agreement, the Note, the Mortgage, any of the other Loan Documents, or
any certificate, report, financial statement or other instrument or
document furnished to Lender at the time of the closing of the Loan or
during the term of the Loan;
(ii) Borrower's misapplication or misappropriation of Rents
received by Borrower after the occurrence of an Event of Default;
(iii) Borrower's misapplication or misappropriation of tenant
security deposits or Rents collected in advance;
(iv) the misapplication or the misappropriation of Insurance
Proceeds or Awards;
(v) Borrower's failure to pay Taxes, Other Charges (except to
the extent that sums sufficient to pay such amounts have been deposited
in escrow with Lender pursuant to the terms hereof and there exists no
impediment to Lender's utilization thereof), charges for labor or
materials or other charges that can create liens on the Property beyond
any applicable notice and cure periods specified herein;
(vi) Borrower's failure to return or to reimburse Lender for
all Personal Property taken from the Property by or on behalf of
Borrower and not replaced with Personal Property of the same utility
and of the same or greater value;
(vii) any act of intentional waste or arson by Borrower, any
principal, Affiliate, member or general partner thereof or by Borrower
Principal, any principal, Affiliate, member or general partner thereof;
(viii) Borrower's failure following any Event of Default to
deliver to Lender upon demand all Rents and books and records relating
to the Property; or
(ix) Borrower's gross negligence or willful misconduct.
(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability against Borrower and Borrower Principal as set forth
in subsection (a) above SHALL BECOME NULL AND VOID and shall be of no further
force and effect and the Debt shall be fully recourse to Borrower and Borrower
Principal jointly and severally in the event of (i) a default by Borrower,
Borrower Principal of any of the covenants set forth in Article 6, provided,
however, that a breach by Borrower of the covenants set forth in Article 6 shall
not result in recourse liability hereunder unless such breach was material and,
within fifteen (15) days of notice from Lender, Borrower fails to cure such
breach and fails to deliver to Lender a new or revised substantive
non-consolidation opinion, in form and substance and from counsel reasonably
satisfactory to Lender in accordance with the Rating Agency standards for the
same,
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to the effect that such failure does not negate/impair the opinion previously
delivered to Lender, (ii) a default by Borrower, Borrower Principal or of any of
the covenants set forth in Article 7 hereof, or (iii) if (A) a voluntary
bankruptcy or insolvency proceeding is commenced by Borrower, or (B) an
involuntary bankruptcy or insolvency proceeding is commenced against Borrower
which is not dismissed within ninety (90) days of filing (provided, however,
that Borrower and Borrower Principal shall not have recourse liability hereunder
in connection with any involuntary bankruptcy or insolvency proceeding unless
such involuntary proceeding is solicited, procured, consented to or acquiesced
in by Borrower, any Affiliate of Borrower or Borrower Principal in bad faith
collusion with an intent to circumvent the prohibition on recourse liability
against the Borrower or Borrower Principal set forth herein).
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Mortgage or to require that all collateral shall continue to
secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Mortgage or the other Loan Documents.
(e) Notwithstanding any provisions of this Article 15 to the contrary,
in no event shall Borrower's failure to pay Operating Expenses in the event cash
flow is insufficient to pay such expenses be considered an act of waste.
(f) Notwithstanding any other provision hereof, in the event that of a
foreclosure under the pledge agreement(s) executed by Senior Mezzanine Borrower
and/or Junior Mezzanine Borrower in connection with the Senior Mezzanine Loan
and/or the Junior Mezzanine Loan, and the subsequent transfer of interests in
Borrower to Senior Mezzanine Lender or Junior Mezzanine Lender, Borrower
Principal shall be released from its liabilities under this Article 15 with
respect to any matters arising from events occurring subsequent to the date of
such transfer, as of the effective date of such transfer of interests in
Borrower.
ARTICLE 16
NOTICES
SECTION 16.1. NOTICES
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, (b)
expedited prepaid overnight delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or by (c) telecopier (with
answer back acknowledged provided an additional notice is given pursuant to
subsection (b) above), addressed as follows (or at such other address and Person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section):
If to Lender: Bank of America, N.A.
Capital Markets Servicing Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Servicing Manager
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Bank of America Legal Department
GCIB/CMBS
NC1-007-20-01
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: ▇▇▇▇▇▇▇ Properties - 555 W. Fifth, LLC/
▇▇▇▇▇▇▇ Properties - 808 S. Olive, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Lammas, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇, Castle & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: ▇▇▇▇▇▇▇ Properties, LP
Principal ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Lammas, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇, Castle & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
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ARTICLE 17
FURTHER ASSURANCES
SECTION 17.1. REPLACEMENT DOCUMENTS
Upon receipt of an affidavit of an officer of Lender as to the loss,
theft, destruction or mutilation of the Note or any other Loan Document which is
not of public record: (i) with respect to any Loan Document other than the Note,
Borrower will issue, in lieu thereof, a replacement of such other Loan Document,
dated the date of such lost, stolen, destroyed or mutilated Loan Document in the
same principal amount thereof and otherwise of like tenor and (ii) with respect
to the Note, (a) Borrower will execute a reaffirmation of the Debt as evidenced
by such Note acknowledging that Lender has informed Borrower that the Note was
lost, stolen destroyed or mutilated and that such Debt continues to be an
obligation and liability of the Borrower as set forth in the Note, a copy of
which shall be attached to such reaffirmation and (b) if requested by Lender,
Borrower will execute a replacement note and Lender or Lender's custodian (at
Lender's option) shall provide to Borrower Lender's (or Lender's custodian's)
then standard form of lost note affidavit and indemnity, which such form shall
be reasonably acceptable to Borrower.
SECTION 17.2. RECORDING OF MORTGAGE, ETC.
Borrower forthwith upon the execution and delivery of the Mortgage and
thereafter, from time to time, will cause the Mortgage and any of the other Loan
Documents creating a lien or security interest or evidencing the lien hereof
upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, the Mortgage, the other Loan Documents, any note,
deed of trust or mortgage supplemental hereto, any security instrument with
respect to the Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state,
county and municipal taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of the Mortgage, any deed of
trust or mortgage supplemental hereto, any security instrument with respect to
the Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to do.
SECTION 17.3. FURTHER ACTS, ETC.
Borrower will, at the cost of Borrower, and without expense to Lender,
do, execute, acknowledge and deliver all and every further acts, deeds,
conveyances, deeds of trust, mortgages, assignments, security agreements,
control agreements, notices of assignments, transfers and assurances as Lender
shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property and
rights hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which Borrower may be or
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may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Agreement or
for filing, registering or recording the Mortgage, or for complying with all
Legal Requirements. Borrower, on demand, will execute and deliver, and in the
event it shall fail to so execute and deliver, hereby authorizes Lender to
execute in the name of Borrower or without the signature of Borrower to the
extent Lender may lawfully do so, one or more financing statements and financing
statement amendments to evidence more effectively, perfect and maintain the
priority of the security interest of Lender in the Property. Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the purpose
of exercising and perfecting any and all rights and remedies available to Lender
at law and in equity, including without limitation, such rights and remedies
available to Lender pursuant to this Section 17.3.
SECTION 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS
(a) If any law is enacted or adopted or amended after the date of this
Agreement which imposes a tax, either directly or indirectly, on the Debt or
Lender's interest in the Property, Borrower will pay the tax, with interest and
penalties thereon, if any. If Lender is advised by counsel chosen by it that the
payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have
the option by written notice of not less than one hundred twenty (120) days to
declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of the Mortgage or the
Debt. If such claim, credit or deduction shall be required by law, Lender shall
have the option, by written notice of not less than one hundred twenty (120)
days, to declare the Debt immediately due and payable.
If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Mortgage, or any of the other Loan Documents or impose
any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
SECTION 17.5. EXPENSES
Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender upon receipt of written notice from Lender for all reasonable
costs and expenses (including reasonable, actual attorneys' fees and
disbursements and the allocated costs of internal legal services and all actual
disbursements of internal counsel) reasonably incurred by Lender in accordance
with this Agreement in connection with (a) the underwriting and closing of the
Loan, including, without limitation, expenses related to Lender's legal
representation, underwriting, third party reports, travel and site inspections,
interest rate hedging and other customary items (except with respect to a
Securitization, any costs and expenses related to which that are payable by
Borrower shall be as set forth in Article 13 hereof) and all the costs of
furnishing all opinions by counsel for Borrower (including without limitation
any opinions requested by Lender as to
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any legal matters arising under this Agreement or the other Loan Documents with
respect to the Property); (b) Borrower's ongoing performance of and compliance
with Borrower's respective agreements and covenants contained in this Agreement
and the other Loan Documents on its part to be performed or complied with after
the Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (c) following a request by Borrower,
Lender's ongoing performance and compliance with all agreements and conditions
contained in this Agreement and the other Loan Documents on its part to be
performed or complied with after the Closing Date; (d) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (e) securing Borrower's
compliance with any requests made pursuant to the provisions of this Agreement;
(f) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Lien in favor of Lender pursuant to this Agreement and the other Loan Documents;
(g) enforcing or preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Borrower, this Agreement, the other Loan
Documents, the Property, or any other security given for the Loan; and (h)
enforcing any obligations of or collecting any payments due from Borrower under
this Agreement, the other Loan Documents or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender.
ARTICLE 18
WAIVERS
SECTION 18.1. REMEDIES CUMULATIVE; WAIVERS
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or Borrower Principal pursuant to this Agreement or
the other Loan Documents, or existing at law or in equity or otherwise. Lender's
rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's
sole discretion. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy, right or power
may be exercised from time to time and as often as may be deemed expedient. A
waiver of one Default or Event of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or to impair any remedy, right or power consequent thereon.
SECTION 18.2. MODIFICATION, WAIVER IN WRITING
No modification, amendment, extension, discharge, termination or waiver
of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a
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writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on Borrower, shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.
SECTION 18.3. DELAY NOT A WAIVER
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
SECTION 18.4. TRIAL BY JURY
BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES NOT TO ELECT
A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER
PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN
ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER, BORROWER
PRINCIPAL AND LENDER.
SECTION 18.5. WAIVER OF NOTICE
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
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SECTION 18.6. REMEDIES OF BORROWER
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages (except to the extent that Borrower can prove Lender's bad
faith or willful misconduct), and Borrower's sole remedies shall be limited to
commencing an action seeking injunctive relief or declaratory judgment. The
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment. Lender agrees that, in such event, it shall cooperate in expediting
any action seeking injunctive relief or declaratory judgment.
SECTION 18.7. WAIVER OF MARSHALLING OF ASSETS
To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Property, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Property for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Property in preference to
every other claimant whatsoever.
SECTION 18.8. WAIVER OF STATUTE OF LIMITATIONS
Borrower hereby expressly waives and releases, to the fullest extent
permitted by law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its Other Obligations.
SECTION 18.9. WAIVER OF COUNTERCLAIM
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.
SECTION 18.10. GRADSKY WAIVERS
Borrower Principal hereby waives each of the following:
(a) Any rights of Borrower Principal of subrogation, reimbursement,
indemnification, and/or contribution against Borrower or any other person or
entity, and any other rights and defenses that are or may become available to
Borrower Principal or any other person or entity by reasons of Sections
2787-2855, inclusive of the California Civil Code, or arising from the payment
by Borrower Principal of any reimbursement obligations with respect to the
Reserve Letter of Credit;
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(b) Any rights or defenses that may be available by reason of any
election of remedies by Lender (including, without limitation, any such election
which in any manner impairs, effects, reduces, releases, destroys or
extinguishes Borrower Principal's subrogation rights, rights to proceed against
Borrower for reimbursement, or any other rights of Borrower Principal to proceed
against any other person, entity or security, including but not limited to any
defense based upon an election of remedies by Lender under the provisions of
Section 580d of the California Code of Civil Procedure or any similar law of
California or of any other State or of the United Sates); and
(c) Any rights or defenses Borrower Principal may have because its
obligations under this Agreement (the "BORROWER PRINCIPAL OBLIGATIONS") are
secured by real property or any estate for years. These rights or defenses
include, but are not limited to, any rights or defenses that are based upon,
directly or indirectly, the application of Section 580a, Section 580b, Section
580d or Section 726 of the California Code of Civil Procedure to the Borrower
Principal Obligations.
The provisions of this subsection (c) mean, among other things:
(y) Lender may collect from Borrower Principal without first
foreclosing on any real or personal property collateral pledged by
Borrower for the Debt; and
(z) If Lender forecloses on a real property pledged by
Borrower:
(A) The Borrower Principal Obligations shall not be
reduced by the price for which the collateral sold at the
foreclosure sale or the value of the collateral at the time of
the sale.
(B) Lender may collect from Borrower Principal even
if Lender, by foreclosing on the real property collateral, has
destroyed any right of Borrower Principal to collect from
Borrower. Further, the provisions of this Agreement constitute
an unconditional and irrevocable waiver of any rights and
defenses Borrower Principal may have because Borrower's
obligations are secured by real property. These rights and
defenses, include, but are not limited to, any rights or
defenses based upon Section 580a, Section 580b, Section 580d
or Section 726 of the California Code of Civil Procedure.
ARTICLE 19
GOVERNING LAW
SECTION 19.1. CHOICE OF LAW
This Agreement shall be deemed to be a contract entered into pursuant
to the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York, provided however, (a) that with respect to the creation, perfection,
priority and enforcement of any Lien created by the Loan Documents, and the
determination of deficiency judgments, the laws of the state where the Property
is located shall apply, and (b) with respect to the security interest in each of
the Reserve Accounts and the Lockbox Account, the laws of the state where each
such account is located shall apply.
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SECTION 19.2. SEVERABILITY
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 19.3. PREFERENCES
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
Creditors Rights Laws, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds received, the obligations
hereunder or part thereof intended to be satisfied shall be revived and continue
in full force and effect, as if such payment or proceeds had not been received
by Lender.
ARTICLE 20
MISCELLANEOUS
SECTION 20.1. SURVIVAL
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
SECTION 20.2. LENDER'S DISCRETION
Whenever pursuant to this Agreement, Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.
SECTION 20.3. HEADINGS
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
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SECTION 20.4. COST OF ENFORCEMENT
In the event (a) that the Mortgage is foreclosed in whole or in part,
(b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors, or
(c) Lender exercises any of its other remedies under this Agreement or any of
the other Loan Documents, Borrower shall be chargeable with and agrees to pay
all costs of collection and defense, including attorneys' fees and costs,
incurred by Lender or Borrower in connection therewith and in connection with
any appellate proceeding or post-judgment action involved therein, together with
all required service or use taxes.
SECTION 20.5. SCHEDULES INCORPORATED
The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.
SECTION 20.6. OFFSETS, COUNTERCLAIMS AND DEFENSES
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to the Loan which Borrower may
otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
SECTION 20.7. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES
(a) Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
(c) The general partners, members, principals and (if Borrower is a
trust) beneficial owners of Borrower are experienced in the ownership and
operation of properties similar to the
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Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Borrower is not relying on Lender's expertise, business acumen or advice in
connection with the Property.
(d) Notwithstanding anything to the contrary contained herein, Lender
is not undertaking the performance of (i) any obligations under the Leases; or
(ii) any obligations with respect to such agreements, contracts, certificates,
instruments, franchises, permits, trademarks, licenses and other documents.
(e) By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this Agreement, the
Mortgage, the Note or the other Loan Documents, including, without limitation,
any officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
(f) Borrower recognizes and acknowledges that in accepting this
Agreement, the Note, the Mortgage and the other Loan Documents, Lender is
expressly and primarily relying on the truth and accuracy of the representations
and warranties set forth in Article 4 of this Agreement without any obligation
to investigate the Property and notwithstanding any investigation of the
Property by Lender; that such reliance existed on the part of Lender prior to
the date hereof, that the warranties and representations are a material
inducement to Lender in making the Loan; and that Lender would not be willing to
make the Loan and accept this Agreement, the Note, the Mortgage and the other
Loan Documents in the absence of the warranties and representations as set forth
in Article 4 of this Agreement.
SECTION 20.8. PUBLICITY
All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan, Lender, Banc of America Securities LLC, or any of their Affiliates
shall be subject to the prior written approval of Lender, not to be unreasonably
withheld. After the closing of the Loan, Lender shall be permitted to make any
news, releases, publicity or advertising by Lender or its Affiliates through any
media intended to reach the general public which refers to the Loan, the
Property, Borrower, Borrower Principal and their respective Affiliates without
the approval of Borrower or any such Persons. Borrower also agrees that Lender
may share any information pertaining to the Loan with Bank of America
Corporation, including its bank subsidiaries, Banc of America Securities LLC and
any other Affiliates of the foregoing, in connection with the sale or transfer
of the Loan or any Participations and/or Securities created.
SECTION 20.9. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE
In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents and that such Loan Documents shall
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not be subject to the principle of construing their meaning against the party
which drafted same. Borrower acknowledges that, with respect to the Loan,
Borrower shall rely solely on its own judgment and advisors in entering into the
Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Lender's exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of Borrower or its Affiliates.
SECTION 20.10. ENTIRE AGREEMENT
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written between Borrower and Lender are superseded by
the terms of this Agreement and the other Loan Documents.
SECTION 20.11. LIABILITY
If Borrower consists of more than one Person, the obligations and
liabilities of each such Person hereunder shall be joint and several. This Loan
Agreement shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns forever.
SECTION 20.12. CONTRIBUTIONS AND WAIVERS
(a) As a result of the transactions contemplated by this Agreement,
each Borrower will benefit, directly and indirectly, from each Borrower's
obligation to pay the Debt and perform its Obligations (as defined in the
Mortgage) and in consideration therefore each Borrower desires to enter into an
allocation and contribution agreement among themselves as set forth in this
Section 20.12 to allocate such benefits among themselves and to provide a fair
and equitable agreement to make contributions among each of Borrowers in the
event any payment is made by any individual Borrower hereunder to Lender (such
payment being referred to herein as a "CONTRIBUTION," and for purposes of this
Section 20.12, includes any exercise of recourse by Lender against any
Collateral of a Borrower and application of proceeds of such Collateral in
satisfaction of such Borrower's obligations, to Lender under the Loan
Documents).
(b) Each Borrower shall be liable hereunder with respect to the
Obligations only for such total maximum amount (if any) that would not render
its Obligations hereunder or under any of the Loan Documents subject to
avoidance under Section 548 of the U.S. Bankruptcy Code or any comparable
provisions of any State law.
(c) In order to provide for a fair and equitable contribution among
Borrowers in the event that any Contribution is made by an individual Borrower
(a "FUNDING BORROWER"), such Funding Borrower shall be entitled to a
reimbursement Contribution ("REIMBURSEMENT
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CONTRIBUTION") from all other Borrowers for all payments, damages and expenses
incurred by that Funding Borrower in discharging any of the Obligations, in the
manner and to the extent set forth in this Section 20.12.
(d) For purposes hereof, the "BENEFIT AMOUNT" of any individual
Borrower as of any date of determination shall be the net value of the benefits
to such Borrower and its Affiliates from extensions of credit made by Lender to
(i) such Borrower and (ii) to the other Borrowers hereunder and the Loan
Documents to the extent such other Borrowers have guaranteed or mortgaged their
properties to secure the Obligations of such Borrower to Lender.
(e) Each Borrower shall be liable to a Funding Borrower in an amount
equal to the greater of (i) the (A) ratio of the Benefit Amount of such Borrower
to the total amount of Obligations, multiplied by (B) the amount of Obligations
paid by such Funding Borrower, or (ii) ninety-five percent (95%) of the excess
of the fair saleable value of the property of such Borrower over the total
liabilities of such Borrower (including the maximum amount reasonably expected
to become due in respect of contingent liabilities) determined as of the date on
which the payment made by a Funding Borrower is deemed made for purposes hereof
(giving effect to all payments made by other Funding Borrowers as of such date
in a manner to maximize the amount of such Contributions).
(f) In the event that at any time there exists more than one Funding
Borrower with respect to any Contribution (in any such case, the "APPLICABLE
CONTRIBUTION"), then Reimbursement Contributions from other Borrowers pursuant
hereto shall be allocated among such Funding Borrowers in proportion to the
total amount of the Contribution made for or on account of the other Borrowers
by each such Funding Borrower pursuant to the Applicable Contribution. In the
event that at any time any Borrower pays an amount hereunder in excess of the
amount calculated pursuant to this Section 20.12 above, that Borrower shall be
deemed to be a Funding Borrower to the extent of such excess and shall be
entitled to a Reimbursement Contribution from the other Borrowers in accordance
with the provisions of this Section.
(g) Each Borrower acknowledges that the right to Reimbursement
Contribution hereunder shall constitute an asset in favor of Borrower to which
such Reimbursement Contribution is owing.
(h) No Reimbursement Contribution payments payable by a Borrower
pursuant to the terms of this Section 20.12 shall be paid until all amounts then
due and payable by all of Borrowers to Lender, pursuant to the terms of the Loan
Documents, are paid in full in cash. Nothing contained in this Section 20.12
shall limit or affect in any way the Obligations of any Borrower to Lender under
this Note or any other Loan Documents.
(i) Each Borrower waives:
(A) any right to require Lender to proceed against any other
Borrower or any other person or to proceed against or exhaust any
security held by Lender at any time or to pursue any other remedy in
Lender's power before proceeding against Borrower;
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(B) any defense based upon any legal disability or other
defense of any other Borrower, any guarantor of any other person or by
reason of the cessation or limitation of the liability of any other
Borrower or any guarantor from any cause other than full payment of all
sums payable under the Note, this Agreement and any of the other Loan
Documents;
(C) any defense based upon any lack of authority of the
officers, directors, partners or agents acting or purporting to act on
behalf of any other Borrower or any principal of any other Borrower or
any defect in the formation of any other Borrower or any principal of
any other Borrower;
(D) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in any other respects more burdensome than that of a
principal;
(E) any defense based upon any failure by Lender to obtain
collateral for the indebtedness or failure by Lender to perfect a lien
on any collateral;
(F) presentment, demand, protest and notice of any kind;
(G) any defense based upon any failure of Lender to give
notice of sale or other disposition of any collateral to any other
Borrower or to any other person or entity or any defect in any notice
that may be given in connection with any sale or disposition of any
collateral;
(H) any defense based upon any failure of Lender to comply
with Applicable Laws in connection with the sale or other disposition
of any collateral, including, without limitation, any failure of Lender
to conduct a commercially reasonable sale or other disposition of any
collateral;
(I) any defense based upon any use of cash collateral under
Section 363 of the U.S. Bankruptcy Code;
(J) any defense based upon any agreement or stipulation
entered into by Lender with respect to the provision of adequate
protection in any bankruptcy proceeding;
(K) any defense based upon any borrowing or any grant of a
security interest under Section 364 of the U.S. Bankruptcy Code;
(L) any defense based upon the avoidance of any security
interest in favor of Lender for any reason;
(M) any defense based upon any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding, including any discharge of, or bar or stay
against collecting, all or any of the obligations evidenced by the Note
or owing under any of the Loan Documents; and
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(N) any defense or benefit based upon Borrower's, or any other
party's, resignation of the portion of any obligation secured by the
applicable Security Instruments to be satisfied by any payment from any
other Borrower or any such party.
(j) Each Borrower waives:
(A) all rights and defenses arising out of an election of
remedies by Lender even though the election of remedies, such as
non-judicial foreclosure with respect to security for the Loan or any
other amounts owing under the Loan Documents, has destroyed Borrower's
rights of subrogation and reimbursement against any other Borrower;
(B) all rights and defenses that Borrower may have because any
of Debt is secured by real property. This means, among other things:
(i) Lender may collect from Borrower without first foreclosing on any
real or personal property collateral pledged by any other Borrower,
(ii) if Lender forecloses on any real property collateral pledged by
any other Borrower, (a) the amount of the Debt 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, (b) Lender
may collect from Borrower even if any other Borrower, by foreclosing on
the real property collateral, has destroyed any right Borrower may have
to collect from any other Borrower. This is an unconditional and
irrevocable waiver of any rights and defenses Borrower may have because
any of the Debt is secured by real property; and
(C) except as may be expressly and specifically permitted
herein, any claim or other right which Borrower might now have or
hereafter acquire against any other Borrower or any other person that
arises from the existence or performance of any obligations under the
Note, this Agreement, the Security Instruments or the other Loan
Documents, including, without limitation, any of the following: (i) any
right of subrogation, reimbursement, exoneration, contribution, or
indemnification; or (ii) any right to participate in any claim or
remedy of Lender against any other Borrower or any collateral security
therefor, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
▇▇▇▇▇▇▇ PROPERTIES - 555 W. FIFTH, LLC, a
Delaware limited liability company
By: ▇▇▇▇▇▇▇ Properties - 555 W. Fifth
Mezzanine, LLC, a Delaware limited
liability company, its sole member
By: ▇▇▇▇▇▇▇ Properties, L.P. a
Maryland limited partnership,
its sole member
By: ▇▇▇▇▇▇▇ Properties, Inc.,
a Maryland corporation,
its general partner
By:
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ PROPERTIES - 808 S. OLIVE, LLC, a
Delaware limited liability company
By: ▇▇▇▇▇▇▇ Properties - 808 S. OLIVE
Mezzanine, LLC, a Delaware limited
liability company, its sole member
By: ▇▇▇▇▇▇▇ Properties, L.P. a Maryland
limited partnership, its sole member
By: ▇▇▇▇▇▇▇ Properties, Inc., a
Maryland corporation, its
general partner
By:
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
BORROWER PRINCIPAL:
Acknowledged and agreed to with respect to its
obligations set forth in Article 4, Section
10.2(c)(ix), Article 13, Article 15 and
Article 18 hereof:
▇▇▇▇▇▇▇ PROPERTIES, L.P., a Maryland limited
partnership
By: ▇▇▇▇▇▇▇ Properties, Inc., a Maryland
corporation, its general partner
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
LENDER:
BANK OF AMERICA, N.A., a national banking
association
By:
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Name:
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Title:
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