MODIFICATION AND EXTENSION AGREEMENT
THIS AGREEMENT is made as of September 19, 1996, between AETNA
LIFE INSURANCE COMPANY, a Connecticut corporation ("AETNA"), and
▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS-SOUTH TOWER, a California limited partnership
("MTP-SOUTH TOWER LP").
1. Aetna is the holder of that indebtedness of MTP-South
Tower LP (the "LOAN") evidenced and secured by, among other instruments and
agreements:
a. that $200,000,000 Promissory Note dated
November 26, 1984 (as at any time heretofore amended, extended, restated or
replaced, the "NOTE"), by MTP-South Tower LP (then known as ▇▇▇▇▇▇▇
Partners - ▇▇▇▇▇▇▇ Properties - South Tower) payable to the order of The
Aetna Casualty and Surety Company, a Connecticut corporation ("AETNA
CASUALTY AND SURETY");
b. that Deed of Trust, Assignment of Rents and Security
Agreement dated as of November 26, 1984 (as at any time heretofore amended,
extended, restated or replaced, the "DEED OF TRUST"), by MTP-South Tower LP
(then known as ▇▇▇▇▇▇▇ Partners - ▇▇▇▇▇▇▇ Properties - South Tower), as
Trustor, to Ticor Title Insurance Company of California, as Trustee, for
the benefit of Aetna Casualty and Surety, as Beneficiary, and recorded
November 28, 1984 as Instrument Number ▇▇-▇▇▇▇▇▇▇ in the Official Records
of Los Angeles County, California; and
c. that California Assignment of Rents and Leases dated as
of November 26, 1984 (as at any time heretofore amended, extended, restated
or replaced, the "ASSIGNMENT OF RENTS"), by MTP-South Tower LP (then known
as ▇▇▇▇▇▇▇ Partners - ▇▇▇▇▇▇▇ Properties - South Tower), as assignor, to
Aetna Casualty and Surety, as assignee, and recorded November 28, 1984 as
Instrument Number ▇▇-▇▇▇▇▇▇▇ in the Official Records of Los Angeles County,
California.
2. The Deed of Trust encumbers, with first lien priority, that
improved real property in Los Angeles, California more particularly
described in Exhibit A to the Deed of Trust (the "PROJECT"), which
improvements include, without limitation, the 45-story office building
project now known as the "IBM Tower" located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
together with associated subterranean parking and a garage penthouse
structure, and the "X-2 Garage" located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇.
3. Aetna Casualty and Surety assigned and transferred its
interest under the Note, the Deed of Trust and the Assignment of Rents to
Aetna pursuant to that Assignment dated October 29, 1986 and recorded on
December 4, 1986 as Instrument Number ▇▇-▇▇▇▇▇▇▇ in the Official Records of
Los Angeles County, California.
4. As of December 1, ▇▇▇▇, ▇▇▇-▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇ and CB
Commercial Real Estate Group, Inc., as Agent for Aetna, entered into that
Lockbox Agreement (as heretofore supplemented and amended, the "LOCKBOX
AGREEMENT") providing for the deposit of all Gross Receipts (as defined
therein) into Aetna's "DEPOSIT ACCOUNT" (as defined and provided for
therein) and certain other matters.
5. The Loan matured on December 1, 1994 and has not been repaid.
6. Prior to the execution and delivery of this Agreement,
International Business Machines Corporation ("IBM"), the only limited
partner in MTP-South Tower LP, transferred its limited partnership interest
in MTP-South Tower LP to ▇▇▇▇▇▇▇ Partners-Bunker Hill, Ltd., one of the
general partners of MTP-South Tower LP.
7. MTP-South Tower LP and Aetna now wish to provide for, subject
to the payment to Aetna of $2,000,000 from equity contributions (as
provided for herein) and the satisfaction of certain other conditions
precedent to the "Effective Date" provided for herein, an extension of the
scheduled maturity date of the Loan, until September 1, 2003, and for
certain other modifications to the terms and conditions of the instruments
and agreements evidencing and securing the Loan (collectively, the "Loan
Documents," including but not limited to the Note, the Deed of Trust, the
Assignment of Rents and the Lockbox Agreement).
8. In connection with such conditional modification of the Loan
Documents, simultaneously herewith, Aetna and MTP-South Tower LP have
caused certain recording instructions dated as of even date herewith (the
"RECORDING INSTRUCTIONS") to be issued to Chicago Title Company ("CHICAGO
TITLE") providing for the transmittal of this Agreement and the other
instruments and agreements described below to Chicago Title and the
subsequent closing of the transactions provided for herein upon receipt of
the $2,000,000 payment described above and the satisfaction of certain
other conditions precedent, prior to the expiration or sooner termination
of the Recording Instructions.
9. Accordingly, as of even date herewith, the parties are
executing the following instruments and agreements and are transmitting
same to Chicago Title pursuant to the Recording Instructions:
a. this Agreement between Aetna and MTP-South Tower LP,
with the appended Acknowledgment and Agreement executed by the direct and
indirect general partners of MTP-South Tower LP;
b. that Allonge to Promissory Note dated as of even date
herewith (the "ALLONGE"), between MTP-South Tower LP and Aetna, amending
the Note;
c. that Amendment to Deed of Trust, Assignment of Rents
and Security Agreement and to California Assignment of Rents and Leases and
Fixture Filing dated as of even date herewith (the "AMENDMENT TO SECURITY
DOCUMENTS"), between MTP-South Tower LP and Aetna, amending the Deed of
Trust and the Assignment of Rents;
d. that Environmental Indemnity dated as of even date
herewith (the "ENVIRONMENTAL INDEMNITY AGREEMENT"), by MTP-South Tower LP
to and for the benefit of Aetna, providing for certain additional covenants
of MTP-South Tower LP in connection with the Project;
e. that Acknowledgment Agreement (▇▇▇▇▇ Fargo Center
Project Agreements) dated as of even date herewith (the "CENTER
ACKNOWLEDGMENT AGREEMENT"), by MTP-South Tower LP and ▇▇▇▇▇▇▇ Partners -
▇▇▇▇▇▇▇ Properties Phase I, a California limited partnership (the "PHASE I
OWNER"), in favor of Aetna;
f. that Agreement of Property Manager dated as of even
date herewith (the "PROPERTY MANAGER'S AGREEMENT"), by ▇▇▇▇▇▇▇/▇▇▇▇▇▇
Partners-Development, Ltd., a California limited partnership
("MTP-DEVELOPMENT"), and MTP-South Tower LP in favor of Aetna; and
g. that Consent to Lease Amendment (▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇)
dated as of even date herewith (the "▇▇▇▇▇▇ ▇▇▇▇▇▇ CONSENT"), between Aetna
and MTP-South Tower LP, providing for the approval by Aetna of (i) that
Third Amendment to Lease dated as of March 1, 1996 between MTP-South
Tower LP, as Landlord, and ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, as Tenant, and (ii) that
Termination Agreement dated as of March 1, 1996 among MTP-South Tower LP,
the general partners of MTP-South Tower LP and ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇.
The instruments and agreements described in this Recital H executed by each
party are being (promptly upon full execution thereof) transmitted to
Chicago Title pursuant to the terms and conditions of the Recording
Instructions, and this Agreement and such other instruments and agreements
shall become effective only if and when same are delivered to the parties
in accordance with the terms and conditions of this Agreement prior to the
expiration or sooner termination of the Recording Instructions. The Loan
Documents, if and when amended as of the Effective Date by this Agreement,
the Allonge, the Amendment to Security Documents and the Environmental
Indemnity, are sometimes collectively referred to herein as the "AMENDED
LOAN DOCUMENTS."
IN CONSIDERATION of the recitals and agreements set forth herein,
and for other valuable consideration, the receipt and adequacy of which is
hereby acknowledged, MTP-South Tower LP and Aetna agree that the Loan
Documents shall be supplemented and modified as follows:
1. TRANSACTIONS ON EFFECTIVE DATE AND LLC CONVERSION.
1.1 CONDITIONS PRECEDENT TO EFFECTIVE DATE. Among the
conditions precedent to the Effective Date provided for herein, prior to
the expiration or sooner termination of the Recording Instructions:
1.1.1one or more of the Equity Owners (as defined in
Section 1.5 below) of MTP-South Tower (as defined below) must have made
capital contributions totalling $2,000,000 in accordance with Section 1.7
below, which sum must have been deposited with Chicago Title pursuant to
the Recording Instructions, for disbursement to Aetna on the Effective Date
provided for herein in accordance with this Agreement and the Recording
Instructions; and
1.1.2the Investment Committee of Aetna must have approved
the execution and delivery of this Agreement and the transactions provided
for herein, and Aetna must have provided Chicago Title with written
confirmation of such Investment Committee approval.
IF FOR ANY REASON SUCH TRANSACTIONS AND THE OTHER CONDITIONS PRECEDENT
PROVIDED FOR IN SECTION 10.2 BELOW HAVE NOT BEEN SATISFIED PRIOR TO THE
EXPIRATION OR SOONER TERMINATION OF THE RECORDING INSTRUCTIONS, THEN THIS
AGREEMENT AND THE OTHER INSTRUMENTS AND AGREEMENTS EXECUTED AS OF EVEN DATE
HEREWITH BY AETNA AND MTP-SOUTH TOWER LP SHALL BE NULL AND VOID, AND
NEITHER PARTY SHALL HAVE ANY LIABILITY OR OBLIGATION HEREUNDER OR
THEREUNDER. The Recording Instructions provide, among other things, that
any of the general partners of MTP-South Tower LP or Aetna may, each acting
unilaterally and with or without cause, terminate the Recording
Instructions at any time after September 26, 1996, time being of the
essence. Without limiting the generality of the foregoing, the parties
acknowledge that if the Recording Instructions are terminated prior to the
Effective Date provided for herein, the Loan Documents shall remain in full
force and effect, unmodified by the matters provided for in this Agreement,
and Aetna reserves the right, without limitation, to claim and enforce the
imposition of interest at the default rate provided for in the Note for the
period from December 1, 1994 until the Note and all other obligations of
MTP-South Tower LP to Aetna under the Loan Documents are paid in full. The
foregoing acknowledgments of MTP-South Tower LP and Aetna shall survive the
expiration or sooner termination of the Recording Instructions.
1.2 EFFECTIVE DATE. This Agreement shall become effective only
on the date of the Closing of certain transactions provided for in this
Agreement, which Closing is described in Section 10.1 below and is subject
to satisfaction of the conditions precedent provided for in Section 1.1
above and in Section 10.2 below. The date of such Closing (as publicly
evidenced by the recording by Chicago Title, in accordance with the
Recording Instructions, of the Amendment to Security Documents in the
Official Records of Los Angeles County) is herein referred to as the
"EFFECTIVE DATE," as provided for in Section 10.1.
1.3 CONSENT TO EQUITY TRANSACTION. Aetna hereby consents to
the transfer by IBM of its interest in MTP-South Tower described in
Recital F above.
1.4 CONVERSION TO LIMITED LIABILITY COMPANY. The general
partners of MTP-South Tower LP plan to cause a limited liability company to
be formed under California law, to be named ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners-South
Tower, LLC ("MTP-SOUTH TOWER LLC"), and to cause MTP-South Tower LLC to
succeed by operation of law to all of the assets and liabilities of
MTP-South Tower LP. If MTP-South Tower LLC is formed and succeeds to the
assets and liabilities of MTP-South Tower LP, whether before or after the
Effective Date, Aetna consents to such formation and succession, provided
that:
1.4.1all of the general partners of MTP-South Tower LP
must be the managing members of MTP-South Tower LLC;
1.4.2within five days following such formation and
succession, MTP-South Tower LLC:
1.4.2.1 must duly execute, acknowledge and
deliver to Aetna an Amendment to Deed of Trust and Acknowledgement
Agreement in the form of Exhibit D attached hereto (the "MTP-SOUTH
TOWER LLC ACKNOWLEDGMENT");
1.4.2.2 must duly execute and deliver to Aetna a
Uniform Commercial Code Fixture Filing in the form of Exhibit E attached
hereto (the "MTP-SOUTH TOWER LLC FIXTURE FILING");
1.4.2.3 must duly execute and deliver to Aetna
two Uniform Commercial Code Financing Statements in the forms set forth on
Exhibit F attached hereto (the "MTP-SOUTH TOWER LLC FINANCING STATEMENTS");
and
1.4.2.4 must cause Chicago Title to record the
MTP-South Tower LLC Acknowledgment and the MTP-South Tower LLC Fixture
Filing, and to issue a further endorsement to Aetna's title insurance
policy referred to in Section 9.3, confirming that record title to the
Project has vested in MTP-South Tower LLC and that the Aetna continues to
hold a first lien thereon, with no loss of priority -- all premiums, fees
and charges in connection therewith shall be paid by MTP-South Tower LLC,
as Approved Operating Costs hereunder; and
1.4.2.5 must execute such additional instruments
as Aetna may reasonably require to evidence the assumption by MTP-South
Tower LLC, subject to the provisions of Section 11.8 below, of all of the
obligations and liabilities of MTP-South Tower LP hereunder and to confirm
the liens and interests of Aetna on the assets of MTP-South Tower LLC in
accordance with the terms of the Amended Loan Documents.
If MTP-South Tower LLC is so organized and succeeds to the interest of MTP-
South Tower LP, the failure to comply with the provisions of Section 1.4.1
and Section 1.4.2 above shall constitute a breach of this Agreement with
respect to MTP-South Tower LP.
1.5 MTP-SOUTH TOWER; EQUITY OWNERS. As used herein, "MTP-SOUTH
TOWER" shall mean and refer to MTP-South Tower LP or MTP-South Tower LLC as
the successor in interest to MTP-South Tower LP, as applicable, and the
partners of MTP-South Tower LP or the members of MTP-South Tower LLC, as
the case may be, are herein collectively referred to as the "EQUITY OWNERS"
of MTP-South Tower and each is herein individually referred to as a "EQUITY
OWNER" of MTP-South Tower. Without limiting the generality of the
foregoing, after the date MTP-South Tower LLC succeeds to the interest of
MTP-South Tower LP, the provisions of Section 11.8 shall apply to the
liability of MTP-South Tower LLC, as "MTP-South Tower" thereunder, and to
the members of MTP-South Tower LLC, as "Equity Owners" thereunder.
1.6 APPLICATION OF PRE-CLOSING PAYMENTS. Subject to the
disclaimers set forth in the last paragraph of Section 1.1 above (in the
event the Effective Date does not occur for any reason):
1.6.1 Aetna and MTP-South Tower agree that all payments
received by Aetna on each "Disbursement Date" under the Lockbox Agreement
during the period from December 1, 1994 (the scheduled maturity date of the
Loan under the existing Loan Documents) through September 20, 1996 (the
most recent Disbursement Date for a disbursement by Agent under the Lockbox
Agreement) shall be credited and accounted for as of each such Disbursement
Date during such period as follows: (i) first, to the reimbursement of then
unpaid legal and other expenses of Aetna reimbursable by MTP-South Tower
pursuant to the terms of the Loan Documents (during such period, the total
amount of such reimbursements was $443,892.30); (ii) second, to then
accrued unpaid interest on the Loan at the rate of thirteen percent (13%)
per annum, the applicable interest rate during such period under the
existing Loan Documents, through such date; and (iii) third, any excess to
principal reduction on such date. As a result of the foregoing, Aetna and
MTP-South Tower acknowledge, affirm and agree that as of September 20,
1996: (i) interest on the Loan has been paid through that date, (ii) the
principal balance of the Loan is One Hundred Eighty-Nine Million Sixty
Thousand Three Hundred Seven and 69/100 Dollars ($189,060,307.69) on that
date, and (iii) the balance in the Deposit Account on that date is
approximately $3,000 (the minimum balance maintained therein) plus any
deposits posted thereto since September 18, 1996.
1.6.2 During the period following September 20, 1996
through the Effective Date, any payments received by Aetna in accordance
with the Lockbox Agreement on each Disbursement Date thereunder shall be
credited and accounted for in the same manner, as follows: (i) first, to
reimbursement of any then unpaid reimbursable expenses of Aetna under the
terms of the Lockbox Agreement and the other Loan Documents, (ii) second,
to then accrued unpaid interest on the Loan at the rate of thirteen
percent (13%) per annum through such date, and (iii) third, any remaining
balance to reduction of the principal balance of the Loan on such date.
1.7 ADDITIONAL PAYMENT AT CLOSING. On the Effective Date,
MTP-South Tower must also pay to Aetna the sum of Two Million
Dollars ($2,000,000), which sum shall be applied on the Effective Date in
accordance with Section 1.8 to certain obligations of MTP-South Tower. In
connection therewith, MTP-South Tower covenants, agrees, represents and
warrants to Aetna:
1.7.1 that said sum shall be contributed to the equity of
MTP-South Tower by one or more of its Equity Owners;
1.7.2 that no portion of said sum shall have been obtained
from Project rents or other Gross Receipts (as defined in the Lockbox
Agreement), from other pre-Closing assets of MTP-South Tower, or from
indebtedness of MTP-South Tower, whether owed to such Equity Owner or
Owners or to any other person; and
1.7.3 that no Equity Owner making such contribution to the
capital of MTP-South Tower shall have any right to receive any return on or
return of such sum at any time prior to the repayment in full of the Loan
and all other obligations of MTP-South Tower to Aetna.
As provided for in Section 10.1, the payment provided for in this
Section 1.7 shall be made through Chicago Title pursuant to the Recording
Instructions, which provide for the simultaneous (i) release of fully
executed counterparts of this Agreement and the other instruments and
agreements provided for herein to the parties, and (ii) the application of
such sum in accordance with the provisions of Section 1.8 below.
1.8 APPLICATION OF FUNDS AT CLOSING. On the Effective Date,
the $2,000,000 payment by MTP-South Tower pursuant to Section 1.7, shall be
released by Chicago Title pursuant to the Recording Instructions and
applied or disbursed by Aetna for obligations of MTP-South Tower as
follows:
1.8.1 $88,800 shall be applied by Chicago Title for the
title insurance premium for the policy or endorsement and recording fees
provided for in Section 9.3 below;
1.8.2 $388,934 shall be disbursed to MTP-Development as
payment in full of all previously held-back leasing commissions owed by
MTP-South Tower, which sum shall be paid by MTP-South Tower to
MTP-Development in satisfaction of all such obligations (and MTP-South
Tower hereby represents and warrants that such sum (of which $258,514 was
50% of the commission earned in connection with the February 6, 1995 lease
to The Los Angeles Unified School District, $51,176 was 50% of the
commission earned plus certain other fees earned in connection with the
March 8, 1995 lease to Finova Capital Corporation, and $79,244 was 100% of
the commission earned in connection with the July 10, 1995 lease to The
Boston Consulting Group) represents the full amount of all accrued leasing
commissions and other fees owed by MTP-South Tower to MTP-Development as of
the date of this Agreement); and
1.8.3 following the disbursements described above, the
balance of such $2,000,000 shall be disbursed to Aetna, and shall be
applied by Aetna:
1.8.3.1 first, for reimbursable costs of Aetna,
to the extent not disbursed to Aetna from the Deposit Account pursuant to
the terms of the Lockbox Agreement prior to the Effective Date, including,
without limitation, such sums as required to reimburse Aetna's legal fees
and expenses in connection with the Loan for the period following
March 31, 1996 (the last date for which such fees and expenses were
reimbursed by Aetna as provided in Section 1.6 above) through the Effective
Date (without limitation with respect to fees and expenses for subsequent
periods, such fees and expenses for the period from April 1, 1996 through
August 31, 1996 were approximately $51,200); and
1.8.3.2 the remaining amount shall credited by
Aetna on the Effective Date to reduction of the principal balance of the
Loan.
1.9 ESTABLISHMENT OF PROJECT RESERVE ACCOUNT.
1.9.1 In addition to the existing Deposit Account and the
existing "TAX AND INSURANCE ESCROW" (as defined and provided for in the
Lockbox Agreement), in connection with the transactions provided for
herein, Aetna has established a new deposit account, Account No.
12336-21673 (the "PROJECT RESERVE") with Bank of America N.T. & S.A., in
the name of Agent, as agent for Aetna. As used in this Agreement and in
the Lockbox Agreement, "AGENT" means CB Commercial Real Estate Group, Inc.
or such other entity as may be designated by Aetna from time-to-time, in
accordance with Section 13 of the Lockbox Agreement (and Aetna hereby
agrees to not so designate as its Agent an entity which, directly or
through affiliates, owns, manages or is developing a competing office
building project in downtown Los Angeles), to act as Aetna's agent with
respect to the Deposit Account, the Tax and Insurance Escrow and the
Project Reserve pursuant to this Agreement and the Lockbox Agreement, as
supplemented and modified by the provisions of this Agreement (unless the
context requires otherwise, references herein to the "LOCKBOX AGREEMENT"
shall mean and refer to the existing Lockbox Agreement as so supplemented
and modified). Until the Loan and all other obligations of MTP-South Tower
under this Agreement and the other Amended Loan Documents have been paid in
full, MTP-South Tower shall remain obligated to reimburse the reasonable
fees and costs of Aetna's Agent, which fees shall not be limited to the
current fees of Agent specified in the Lockbox Agreement (such fees and
costs shall be paid out of Operating Receipts as defined in Section 6.2.1)
in accordance with Section 7.2.1.3 below). The Project Reserve shall be
the property of Aetna and shall be exclusively controlled by Agent for
Aetna for the purposes provided for in this Agreement.
1.9.2 Absent Default (as defined in Section 8.14.1) under
the Amended Loan Documents, in which event Aetna shall have the rights and
remedies provided for in Section 6.4.2, the Project Reserve shall be used:
(i) to fund Approved Capital Costs (as defined in Section 5.2.2.1 below)
for the Project (including tenant improvement costs and leasing
commissions), in accordance with Section 7.3 below; and (ii) to provide
working capital for the Project (in addition to the provision for $250,000
of working capital in section 6(b) of the Lockbox Agreement) -- as provided
for in the first paragraph of Section 7.2.1 below, if the balance on
deposit in the Deposit Account is insufficient therefor, funds in the
Project Reserve may be transferred to the Deposit Account for disbursement
to pay or permit payment of Approved Operating Costs (as defined in
Section 7.2.1.4), Fixed Rate Interest (as defined in Section 2.2.1 below)
and certain other obligations which have been approved in advance by Aetna.
1.9.3 The amount of the maximum balance to be maintained
in the Project Reserve at any time in accordance with this Agreement (the
"PROJECT RESERVE MAXIMUM BALANCE") shall equal $3,000,000 or such lesser
sum as Aetna and MTP-South Tower may mutually agree upon in writing;
provided, however, that at any time following the designation of any such
lesser sum, MTP-South Tower shall have the right, by notice to Aetna and
Agent, to specify that the Project Reserve Maximum Balance again be the sum
of $3,000,000 (whereupon the Project Reserve shall be funded to such
increased Project Reserve Maximum Balance amount only to the extent of
subsequent disbursement of Operating Receipts pursuant to Section :\JMB-10K\,
i.e., no party shall be responsible for funding such increased amount).
2. EXTENSION AND INTEREST.
2.1 EXTENSION; EXTENSION FEE. The scheduled "Maturity Date"
provided for in Paragraph 1(h) of the Note, in paragraph a. on page 2 of
the Deed of Trust, and in any other provision of the Loan Documents, i.e.,
December 1, 1994, is hereby extended until September 1, 2003, at which time
the entire unpaid principal balance of the Loan, all accrued but unpaid
interest on the Loan (including both Fixed Rate Interest and Participation
Interest, as provided for below), and any other unpaid amounts owed to
Aetna in accordance with the terms of the Amended Loan Documents, shall be
immediately due and payable. In consideration of such extension, MTP-South
Tower shall pay to Aetna a fee (the "EXTENSION FEE") of Five Hundred
Thousand Dollars ($500,000), which sum shall be paid to Aetna out of
disbursements of Operating Receipts pursuant to Section 7.2.1.9 below.
2.2 INTEREST. In consideration of Aetna's agreement to extend
the scheduled maturity date of the Loan, as provided for in Section 2.1
above, and to reduce the fixed rate of interest payable on the Loan, as
provided for in Section 2.2.1 below, MTP-South Tower has agreed that Aetna
shall also be entitled to Participation Interest, as provided for in
Section 2.2.2.1 below.
2.2.1FIXED RATE INTEREST. Effective from and after the
Effective Date, until the Loan has been repaid in full, the rate of fixed
interest which shall accrue on the outstanding unpaid balance of the Loan
shall be decreased to ten percent (10%) per annum ("FIXED RATE INTEREST"),
payable monthly in arrears in accordance with the Note, as amended by the
Allonge (the "AMENDED NOTE"); provided, however, during the time that any
installment of principal or interest payable under the Amended Note is
delinquent, interest at the rate of twelve percent (12%) per annum shall
accrue and be due and payable on the total of all unpaid principal plus all
arrearages of interest past due under the Amended Note; provided further,
however, that if there is a maximum legal rate of interest applicable to
the Amended Note, the total interest payable on account of the Amended Note
shall not exceed interest at such maximum rate permitted by law. Such
changes in the fixed interest rate shall only be effective from and after
the Effective Date; any unpaid accrued interest on the Loan for the period
prior to the Effective Date, at the rate of thirteen percent (13%) per
annum, shall be payable at such rate on the next date interest is due
following the Effective Date in accordance with the terms of the Amended
Note.
2.2.2PARTICIPATION INTEREST.
2.2.2.1 As more particularly provided for in the
Allonge, at the maturity of the Loan (including acceleration and
prepayment) other than upon Early Repayment in accordance with Section 3.1
below, MTP-South Tower shall also be obligated to pay Aetna additional
interest (as more particularly defined in the Allonge, "PARTICIPATION
INTEREST") equal to fifty percent (50%) of the amount, if any, by which the
sum of:
2.2.2.1.1 the "Fair Market Value" of the
Project (as defined and provided for in the Allonge, and determined by
appraisal in accordance with the Allonge, except in connection with an
"Arms-Length Sale" of the Project in accordance with Section 4.4 below),
less an amount equal to one percent (1%) of such sum as an allowance for
assumed commissions and other closing costs (except in connection with an
Arms-Length Sale of the Project, in which case the amount of closing costs
shall be based on the actual closing costs, as provided for in Section 4.4
below), plus
2.2.2.1.2 all other assets of MTP-South Tower
(other than the Excluded Assets provided for in Section 8.12 below) plus
all amounts on deposit in the Deposit Account, in the Project Reserve and
in the Tax and Insurance Escrow, to the extent not required to pay or
provide for then-accrued obligations of MTP-South Tower for (i) Fixed Rate
Interest and all other sums then due Aetna under the Amended Loan Documents
(other than principal, Yield Maintenance Payment (as defined in Section 3.3
below) and Participation Interest), (ii) property taxes on the Project,
(iii) Approved Operating Costs, and (iv) Approved Capital Costs,
exceeds the sum of the then-outstanding principal balance of the
Loan plus the amount of any Yield Maintenance Payment then due and payable;
provided, however, that the amount of Participation Interest due and
payable to Aetna pursuant to this Agreement and the Amended Note shall not
exceed the "MAXIMUM PARTICIPATION INTEREST AMOUNT" as defined and provided
for in the Allonge.
2.2.2.2 The Participation Interest provided for
herein and in the Allonge equals a share (50%) of the entire unencumbered
value of the Project and such other amounts, and is not limited to a share
of any appreciation in such value; by way of example:
2.2.2.2.1 if Participation Interest was to
become due prior to any principal reduction of the Loan, and if the
aggregate value (determined as provided for in Section 2.2.2.1.1 above) of
the Project plus such other assets (not including the Excluded Assets) and
the amounts on deposit in the Deposit Account, in the Project Reserve and
in the Tax and Insurance Escrow (to the extent not required to pay or
provide for then-accrued obligations of MTP-South Tower, as provided for in
Section 2.2.2.1.2 above) then exceeded the principal balance of the Loan by
$1,000,000, and no Yield Maintenance Payment was then due, then the amount
of Participation Interest then due would equal $500,000; and
2.2.2.2.2 if instead Participation Interest
was to become due later, during which period (i) the principal balance of
the Loan had been reduced by $5,000,000 and (ii) the aggregate value of the
Project plus such other assets (not including the Excluded Assets) and the
amounts on deposit in the Deposit Account, in the Project Reserve and in
the Tax and Insurance Escrow (to the extent not required to pay or provide
for then-accrued obligations of MTP-South Tower, as provided for in
Section 2.2.2.1.2 above) had increased (from the amount described in the
preceding example) by $6,000,000, and no Yield Maintenance Payment was due,
then such aggregate value would exceed the then-current Loan balance by
$12,000,000 and the amount of Participation Interest then due would equal
$6,000,000.
3. PAYMENT OF THE LOAN.
3.1 EARLY REPAYMENT. At any time during the period (the
"PERMITTED PREPAYMENT PERIOD") from the Effective Date through and
including September 1, 1999, if not then in Default under the Amended Loan
Documents, MTP-South Tower shall have the right, without the consent of
Aetna, to prepay the Loan in full or in part, and in connection with such
voluntary cash repayment of the Loan on or before said date ("EARLY
REPAYMENT"), Aetna hereby agrees that no Participation Interest shall be
due or payable in connection with any Early Repayment.
3.2 AMOUNTS DUE AT MATURITY. At the scheduled maturity date of
the Loan or the earlier date of acceleration of the obligations evidenced
and secured by the Amended Loan Documents, or upon the repayment of the
Loan in full, upon such event ("MATURITY"), in addition to accrued Fixed
Rate Interest and any other unsatisfied obligations of MTP-South Tower to
Aetna under the Amended Loan Documents, the following amounts shall be due
and payable to Aetna by MTP-South Tower:
3.2.1 any Yield Maintenance Payment (to the extent
provided for in the Allonge or in Section 3.3 below); and
3.2.2 Participation Interest (except on Early Repayment,
and subject to the provisions set forth in Section 4.2 with respect to a
Deferred Obligation in connection with a refinancing of the Loan).
3.3 YIELD MAINTENANCE PAYMENT. MTP-South Tower shall also be
obligated to pay Aetna the "YIELD MAINTENANCE PAYMENT" (as defined in the
Allonge) in the amount provided for in the Allonge, (a) upon any
acceleration of the maturity of the Loan following March 1, 2000 by reason
of an Event of Default under the Amended Loan Documents, and (b) upon any
full or partial prepayment of the Loan after March 1, 2000, except with
respect to (i) principal payments made from monthly disbursements of
Operating Receipts, as provided for in Section 7.2.1.10 below,
(ii) Additional Loan Advance Repayments in accordance with Section 3.4.1,
or (iii) principal payments made from the proceeds of condemnation awards
or insurance recoveries, as provided for in Section 4.1.2.2, made after
said date. No Yield Maintenance Payment shall be due or payable upon any
full or partial prepayment of the Loan at any time on or before March
1, 2000, regardless of whether or not an Event of Default then exists under
the Amended Loan Documents.
3.4 REPAYMENT OF ADDITIONAL LOAN ADVANCES.
3.4.1ADDITIONAL LOAN ADVANCE REPAYMENTS. The provisions
of this Section 3.4 shall apply only if Aetna has made any Additional Loan
Advance pursuant to Section 7.4 below. In such event, on the September 1st
immediately following the date of the first Additional Loan Advance, and on
each subsequent September 1st until the Loan has been repaid in full (each
an "ADJUSTMENT DATE"), MTP-South Tower shall be required to make a partial
principal payment on the Loan (an "ADDITIONAL LOAN ADVANCE REPAYMENT"),
from the proceeds of equity contributions by one or more of the Equity
Owners of MTP-South Tower in accordance with Section 3.4.2 below, equal to
the lesser of:
3.4.1.1 the amount, if any, by which (i) the
outstanding principal balance of the Loan on such Adjustment Date exceeds
(ii) the amount of the applicable Maximum Principal Balance (defined below)
provided for in Exhibit A for such Adjustment Date (i.e., no Additional
Loan Advance Repayment shall be due on an Adjustment Date if the
outstanding principal balance of the Loan is then less than or equal to the
amount of the Maximum Principal Balance provided for on such date in
Exhibit A); or
3.4.1.2 the sum of (i) the aggregate amount of all
Additional Loan Advances made by Aetna pursuant to Section 7.4 below during
the twelve month period (herein referred to as a "LOAN YEAR") prior to such
Adjustment Date (e.g., on September 1, 1998, the aggregate amount of such
Additional Loan Advances made during the Loan Year between
September 1, 1997 through August 31, 1998), plus (ii) the aggregate amount
of all disbursements to MTP-South Tower in accordance with Section 7.2.1.8
during the (same) Loan Year prior to such Adjustment Date.
As more specifically provided for in Exhibit A attached hereto and
incorporated herein by reference, the "Maximum Principal Balance" for each
Loan Year specified therein shall be reduced by the amount of any principal
payments by MTP-South Tower following the Effective Date, other than:
(i) principal payments made from monthly disbursements of Operating
Receipts, as provided for in Section 7.2.1.10, (ii) Additional Loan Advance
Repayments in accordance with Section 3.4.1, or (iii) principal payments
made from the proceeds of condemnation awards or insurance recoveries, as
provided for in Section 4.1.2.2. Such reduction of the Maximum Principal
Balance for the current and each subsequent Loan Year shall become
effective immediately upon receipt of any such principal payment. All
references in this Agreement to any "MAXIMUM PRINCIPAL BALANCE" shall mean
the applicable amount shown on Exhibit A as same may be so reduced
following any such principal payment. Any such Additional Loan Advance
Repayment pursuant to this Section 3.4.1 shall be due and payable on the
first business day immediately following the applicable Adjustment Date.
Any such Additional Loan Advance Repayment received by Aetna from MTP-South
Tower shall be applied to reduction of the principal balance of the Loan.
No Yield Maintenance Payment shall be due or payable in connection with any
such Additional Loan Advance Repayment.
3.4.2EQUITY CONTRIBUTIONS. MTP-South Tower covenants and
agrees as follows with respect to each such Additional Loan Advance
Repayment:
3.4.2.1 that the amount of any such Additional Loan
Advance Repayment shall be contributed to the equity of MTP-South Tower on
or immediately before the applicable Adjustment Date by one or more of its
Equity Owners and said sum shall be used to make such Additional Loan
Advance Repayment to Aetna;
3.4.2.2 that no portion of the amount of such
Additional Loan Advance Repayment shall be obtained from Project rents or
other Gross Receipts (as defined in the Lockbox Agreement), from other
assets of MTP-South Tower (other than any Excluded Assets), or from
indebtedness of MTP-South Tower, whether owed to such Equity Owner or
Owners or to any other person; and
3.4.2.3 that no Equity Owner making such
contribution to the capital of MTP-South Tower shall have any right to
receive any return on or return of such sum at any time prior to the
repayment in full of the Loan and all other obligations of MTP-South Tower
to Aetna (except a right to participate in any disbursement made to
MTP-South Tower in accordance with Section 3.4.3 and Section 7.2.1.8).
3.4.3PERMITTED EQUITY DISTRIBUTIONS. If (a) MTP-South
Tower makes any Additional Loan Advance Repayments following the Effective
Date, (b) on any subsequent Disbursement Date (as defined in Section 7.2.1)
during the same or any subsequent Loan Year, the balance of the Loan
becomes less than the Maximum Principal Balance as provided for in
Section 3.4.1 and the schedule attached as Exhibit A for the September 1st
next following such Disbursement Date, and (c) no Default then exists, then
MTP-South Tower shall be entitled to disbursements, up to the amount of any
such Additional Loan Advance Repayments (without interest), of excess
Operating Receipts (as defined in Section 6.2.1) disbursed on such
Disbursement Date in accordance with the terms and conditions of (and at
the priority provided for in) Section 7.2.1.8 below, and any amount so
disbursed to MTP-South Tower may, notwithstanding any other provision of
this Agreement, be distributed or paid by MTP-South Tower to its Equity
Owners; provided, however, that the right to receive such disbursements
pursuant to Section 7.2.1.8 shall terminate on the earliest of (i) the
Maturity of the Loan, (ii) September 1, 2003, or (iii) the date any
Deferred Obligation is created pursuant to Section 4.2. An example of the
operation of Section 3.4.1 and the operation of Section 7.2.1.8 is attached
hereto as Exhibit C.
4. CAPITAL EVENTS.
4.1 PAYMENTS UPON RECEIPT OF CAPITAL PROCEEDS. In the event of
a refinancing of the Loan or the receipt of other Capital Receipts (as
defined in Section 6.2.2 below) by MTP-South Tower (except in connection
with a sale of the Project, which shall be governed by Section 4.4 below,
but including, without limitation, receipt of any insurance proceeds or
condemnation proceeds, to the extent not required to repair or restore the
Project), then:
4.1.1 MTP-South Tower shall be obligated to pay Aetna an
amount (not to exceed the aggregate amount owed to Aetna, including but not
limited to accrued unpaid Fixed Rate Interest, the unpaid balance of the
Loan, any Yield Maintenance Payment and any Participation Interest) equal
to 100% of the amount of net proceeds therefrom ("NET CAPITAL PROCEEDS"),
after payment of or provision for the customary and reasonable costs
associated with such refinancing or other capital event, as reasonably
approved by Aetna ("CAPITAL TRANSACTION COSTS"), including, without
limitation, (i) reasonable legal fees, appraisal costs, points and other
closing costs reasonably associated therewith, or (ii) any costs payable
out of any insurance proceeds or condemnation proceeds as reasonably
required to repair or restore the Project.
4.1.2 As provided for in Section 6.2 below, all such
proceeds received by MTP-South Tower (before deduction or provision for
Capital Transaction Costs) shall constitute "Capital Receipts" and must be
immediately deposited in Aetna's Deposit Account upon receipt by MTP-South
Tower. Agent shall disburse such Capital Receipts from the Deposit Account
as follows:
4.1.2.1 Following Aetna's reasonable approval of
such Capital Transaction Costs and in accordance with a disbursement
schedule proposed by MTP-South Tower and reasonably approved by Aetna at
the time of such capital event, from such Capital Receipts funds shall be
disbursed to MTP-South Tower, in installments, to the extent required to
permit MTP-South Tower to pay Capital Transaction Costs. In the event of
condemnation or casualty, absent the existence of an Event of Default,
Aetna shall permit insurance proceeds or condemnation payments to be
applied to the reasonable costs of any necessary repair and restoration of
the Project, and Aetna's approval of such repair or restoration costs shall
not be unreasonably withheld, delayed or conditioned. Any or all Capital
Transaction Costs may be paid or disbursed by an escrow holder or other
third party (other than MTP-South Tower or its affiliates) in connection
with a sale, refinancing or other event giving rise to Capital Receipts, in
which event (i) disbursements for such Capital Transaction Costs shall be
made by such escrow holder or other third party, and not by Agent, and
(ii) the approval by Aetna of a settlement statement or similar instrument
describing such costs shall constitute Aetna's approval of such Capital
Transaction Costs for purposes of this Agreement.
4.1.2.2 The entire amount of Net Capital Proceeds
(i.e., all Capital Receipts after payment of or provision for Capital
Transaction Costs to be disbursed to MTP-South Tower pursuant to
Section 4.1.2.1), shall be disbursed to Aetna, to be applied by Aetna to
reduction of the principal amount of the Loan plus any Yield Maintenance
Payment with respect to such principal payment (as provided for in
Section 3.3, no Yield Maintenance Payment shall be due in connection with
such principal payments made from the proceeds of condemnation awards or
insurance recoveries).
4.1.2.3 If the amount of Net Capital Proceeds
paid to Aetna in accordance with Section 4.1.2.2 is sufficient to repay the
entire principal balance of the Loan and any Yield Maintenance Payment
associated therewith, then the Loan shall mature and all other amounts due
at Maturity, as provided for in Section 3.2 above, shall be due and
payable, and:
4.1.2.3.1 Aetna shall apply such excess amount
of Net Capital Proceeds, after repayment pursuant to Section 4.1.2.2 of the
entire principal balance of the Loan and any Yield Maintenance Payment
associated therewith:
(1) first, to Fixed Rate Interest and
any other accrued unpaid obligations of MTP-South Tower under the Amended
Loan Documents other than Participation Interest, and
(2) second, (except in connection with
Early Repayment) to Participation Interest.
4.1.2.3.2 To the extent such excess amount of
Net Capital Proceeds is insufficient to pay all of such obligations owed to
Aetna under the Amended Loan Documents, including (except in connection
with Early Repayment) all Participation Interest, then MTP-South Tower
shall be obligated to immediately pay Aetna all such amounts, subject,
however, to the provisions of Section 4.2 regarding deferral of the
obligation to pay unpaid Participation Interest upon certain refinancings.
4.2 SUBORDINATION OF PARTICIPATION INTEREST ON REFINANCING. In
the event that MTP-South Tower refinances the Loan, to the extent that the
net proceeds of such refinancing (after payment of or provision for the
Capital Transaction Costs and funding any Qualified Reserves and/or
Qualified Set-Asides (as defined in Section 4.2.8.5 and Section 4.2.8.6
below, respectively) required by the first lien lender) plus all amounts in
the Project Reserve are sufficient (and are applied) to repay the entire
outstanding principal balance of the Loan, plus any Yield Maintenance
Payment associated therewith, and to pay all accrued unpaid Fixed Rate
Interest and all other obligations to Aetna under the Amended Loan
Documents, but are not sufficient to repay in full all Participation
Interest then due Aetna (i.e., in the event of Early Repayment, for which
no Participation Interest is due, the provisions of this Section 4.2 shall
not apply), then Aetna shall permit MTP-South Tower to repay the unpaid
balance of such Participation Interest (which balance shall be determined
and fixed as of the date (the "REFINANCING DATE") of such refinancing and
repayment of the principal balance of the Loan), plus Fixed Rate Interest
on such unpaid balance from the Refinancing Date until repaid (the
"DEFERRED OBLIGATION"), over a three year period subject to the terms and
conditions of this Section 4.2.
4.2.1 The Deferred Obligation shall remain a secured debt
obligation of MTP-South Tower, as part of the Loan and evidenced and
secured by the Amended Loan Documents (and subject, without limitation, to
the limitation on the liability of MTP-South Tower and its Equity Owners in
accordance with Section 11.8), as the Amended Loan Documents are further
amended as provided for in this Section 4.2.
4.2.2 The lien of the Amended Loan Documents securing the
Deferred Obligation shall be subordinated by Aetna to the lien of the
instruments and agreements evidencing and securing the new financing
obtained by MTP-South Tower to refinance the Loan, pursuant to a
subordination agreement reasonably acceptable to Aetna.
4.2.3 The Deferred Obligation, including all accrued
unpaid interest thereon, shall be due and payable on the earlier of
(i) September 1, 2006 or (ii) the third anniversary of the Refinancing
Date, regardless of the availability of funds for such repayment.
4.2.4 During the three year period following the
Refinancing Date, however, the Deferred Obligation shall be repaid out of,
and only to the extent of (i) 100% of Operating Receipts (as defined in
Section 6.2.1) remaining after payment or provision for (a) operating
costs, including taxes and insurance and a working capital reserve not to
exceed $250,000, (b) capital expenditures, including funding a Qualified
Reserve therefor not to exceed $3 million, and (c) debt service on the
first lien loan, and (ii) 100% of any Net Capital Proceeds (as defined in
Section 4.1.1) remaining after any required repayment of such first lien
loan.
4.2.5 The Deposit Account and lockbox requirements of the
Lockbox Agreement, as supplemented and modified by this Agreement, shall
continue to apply to provide for such application of funds to operating
expenses, including taxes and insurance and a working capital reserve not
to exceed $250,000, and capital expenditures, including funding a reserve
therefor not to exceed $3 million, and other approved obligations of
MTP-South Tower, including debt service on the first lien loan, and payment
of the Deferred Obligation; provided, however, that if the first lien
lender requires that MTP-South Tower provide such lender with a similar
lockbox or deposit account arrangement, then Aetna agrees to consent to
same provided that such documents, in form and substance reasonably
acceptable to Aetna, provide for direct payments to Aetna for the Deferred
Obligation from all excess funds as provided for herein.
4.2.6 Following the date that the balance of the Loan
(other than the Deferred Obligation) is repaid, Aetna shall have no
obligation to make any Additional Loan Advances and there shall be no
further disbursements to MTP-South Tower in connection therewith pursuant
to Section 7.2.1.8.
4.2.7 Aetna also agrees to reasonably cooperate to
accommodate the reasonable requests of the first lien lender in connection
with amendments to the Amended Loan Documents and agreements subordinating
the liens thereof to the liens of the instruments and agreements evidencing
and securing the first lien loan.
4.2.8 The economic terms of the new first lien loan to
which any Deferred Obligation is to be subordinated (the "NEW LOAN") shall
be subject to the prior approval of Aetna, in its reasonable discretion (as
such standard is provided for in Section 5.4), unless the following
conditions are satisfied, in which event Aetna will be deemed to have
approved such economic terms (and any amendment of such economic terms
shall similarly remain subject to the prior approval of Aetna, in its
reasonable discretion):
4.2.8.1 the maturity date of the New Loan must be
not less than five years;
4.2.8.2 the interest rate of the New Loan must be a
market rate of interest, taking into account points and fees;
4.2.8.3 the New Loan must be non-amortizing or have
an amortization schedule of not less than 25 years (level payment), with no
additional principal payments required before maturity;
4.2.8.4 no kicker, participating or other contingent
interest must be due or payable under the New Loan prior to the repayment
in full of the Deferred Obligation;
4.2.8.5 if the lender with respect to the New Loan
requires reserves for capital expenditures to be funded or maintained out
of disbursements from Operating Receipts, then (i) the maximum amount of
such capital reserve must not exceed $3,000,000 (in addition to a working
capital reserve of not more than $250,000 and any reserve for Project
property taxes and/or insurance premiums), and after the Refinancing Date
the Project Reserve Maximum Balance shall be reduced by the amount of the
required balance in such capital reserve (so that the aggregate amount of
both (in addition to a working capital reserve not to exceed $250,000 and a
reserve for Project property taxes and insurance) does not exceed the sum
of $3,000,000), and (ii) Aetna must have a lien on such reserve subordinate
only to any lien thereon securing the New Loan (such reserve meeting the
foregoing conditions is herein referred to as a "QUALIFIED RESERVE");
4.2.8.6 if in addition to any Qualified Reserve, the
lender with respect to the New Loan requires any amounts be set-aside from
the proceeds of the New Loan, then (i) such set-asides must be used to fund
a Qualified Reserve or be held to fund Project costs (including capital
costs, operating expenses and debt service) over a period not to exceed
three years (and Aetna will not unreasonably withhold its approval of a
longer period), (ii) any amounts released from such set-asides not used for
such purposes must be included in Operating Receipts for disbursement in
accordance with this Agreement, and (iii) Aetna must have a lien on any
such set-aside funds subordinate only to any liens thereon securing the New
Loan (such set-asides meeting the foregoing conditions are herein referred
to as "QUALIFIED SET-ASIDES"); and
4.2.8.7 if the proceeds of the New Loan are to be
disbursed in installments, then the net proceeds of any such future
advances, to the extent not applied to Project operating or capital costs
or held in a Qualified Set-Aside for such Project costs, must be applied to
the Deferred Obligation when received by MTP-South Tower.
4.2.9 The obligation of Aetna to commit to such
subordination and deferral of unpaid Participation Interest shall be
subject to the following conditions:
4.2.9.1 the Loan and all other obligations of
MTP-South Tower to Aetna (other than Participation Interest) must have been
repaid in full;
4.2.9.2 to the extent that the net proceeds of the
New Loan (after payment of reasonable and customary closing costs
(including, without limitation, reasonable attorneys fees, points, swap
costs, and title insurance premiums) and funding any Qualified Reserves and
Qualified Set-Asides required by the first lien lender) plus all amounts in
the Project Reserve (but excluding amounts in the Tax and Insurance Escrow,
the Deposit Account or the Operating Account) exceed the amount required to
satisfy such other Loan obligations to Aetna, the excess amount must have
been applied to pay Participation Interest;
4.2.9.3 amendments to the Amended Loan Documents,
and agreements subordinating the liens thereof to the instruments and
agreements securing the New Loan, must be acceptable to Aetna, in its
reasonable discretion;
4.2.9.4 the economic terms of the New Loan must have
been approved, or deemed approved, by Aetna as provided for in
Section 4.2.8;
4.2.9.5 the first lien lender must have consented to
all documents and the transactions provided for therein;
4.2.9.6 the closing of such transactions must occur
on or before September 1, 2003, the scheduled maturity date of the Loan
(subject to any extension of that date by written express amendment of the
Amended Loan Documents);
4.2.9.7 all instruments and agreements must be duly
executed and delivered by all parties;
4.2.9.8 Aetna must receive opinions of counsel to
MTP-South Tower as Aetna may reasonably request;
4.2.9.9 Aetna must have received an endorsement to
its title insurance policy, confirming the second lien priority of the
instruments and agreements evidencing and securing the Deferred Obligation;
and
4.2.9.10 MTP-South Tower must reimburse all of
Aetna's reasonable costs and expenses in connection with negotiating,
documenting and closing the transactions provided for in this Section 4.2
(including, without limitation, reasonable attorneys' fees and costs).
4.3 RIGHT OF FIRST OFFER. In connection with any sale or other
disposition of the Project by MTP-South Tower, MTP-South Tower must comply
with the terms of this Section 4.3. If MTP-South Tower desires to sell or
otherwise dispose of the Project, then MTP-South Tower must offer to sell
the Project to Aetna, which offer shall be in writing (the "OFFER") and
shall specify the purchase price and any other material economic terms upon
which MTP-South Tower would be willing to sell the Project; without
limiting the foregoing: (i) unless otherwise specified in the Offer, the
Project shall include the Excluded Assets provided for herein, and (ii) the
Offer must specify the terms of any post-closing property management
contract with MTP-Development or any other affiliate of MTP-South Tower (as
used herein, an "AFFILIATE" of MTP-South Tower means any person or entity
which is controlled by, controls or is under common control with MTP-South
Tower or any of the Equity Owners of MTP-South Tower) -- absent such
specification, there shall be no such affiliate contract.
4.3.1 If Aetna accepts such Offer in writing within
thirty (30) days following its receipt, or accepts any Revised Offer (as
defined below) within seven (7) business days following its receipt,
MTP-South Tower and Aetna shall proceed in good faith to document and close
such sale as soon as possible, in accordance with such Offer or Revised
Offer, as applicable, and at such closing, the Project shall be sold to
Aetna or its nominee subject to the matured Loan, i.e., all accrued unpaid
Fixed Rate Interest, the entire principal balance, any Yield Maintenance
Payment associated therewith, Participation Interest (except on Early
Repayment), and all other amounts payable under the Amended Loan Documents
shall be deducted in the determination of the portion of the purchase
payable to MTP-South Tower at the closing of such sale of the Project to
Aetna or its nominee. The amount of Participation Interest, if any, shall
be calculated in the same manner as provided for in Section 4.6 below
(i.e., based on (i) the purchase price, plus (ii) amounts in the Deposit
Account, in the Project Reserve and in the Tax and Insurance Escrow, plus
(iii) all cash and other assets of MTP-South Tower other than the Excluded
Assets), except that no closing costs shall be payable at such closing or
deductible in such calculation of Participation Interest then due. At such
closing, property taxes, operating expenses and current rents shall be
prorated. Aetna and MTP-South Tower shall be obligated to close such sale
within thirty (30) days following the date Aetna accepts the applicable
Offer or Revised Offer, and in such event, solely for the purpose of
determining whether or not any Yield Maintenance Payment or Participation
Interest is then due, provided MTP-South Tower diligently proceeds to close
such sale to Aetna, such sale shall be deemed to have occurred on the date
Aetna accepts the Offer or Revised Offer, as applicable.
4.3.2 If Aetna declines or fails to accept an Offer within
such thirty (30) day period, or if Aetna declines or fails to accept a
Revised Offer within the seven business day period provided for below, then
MTP-South Tower shall have the right at any time during the following nine
months to close the sale of the Project in an Arms-Length Sale (as provided
for in Section 4.4 below) provided that the purchase price and other
material economic terms of such sale are no more favorable to the buyer
than the purchase price and other material economic terms declined or so
deemed declined by Aetna, and in such event Aetna shall have no approval
rights with respect to such Arms-Length Sale (provided that the other
"arms-length" requirements of Section 4.4 are satisfied); provided,
however:
4.3.2.1 that at any time during such nine month
period following Aetna's rejection or deemed rejection of an Offer,
MTP-South Tower shall have the right to submit a revised offer to Aetna (a
"REVISED OFFER"), which Aetna must accept, if at all, within seven (7)
business days following its receipt;
4.3.2.2 that Aetna's failure to accept any such
Offer or Revised Offer from MTP-South Tower shall not affect the right of
Aetna to approve or reject any sale or other disposition of the Project
which is not an Arms-Length Sale in accordance with Section 4.5 (including,
without limitation, Aetna's rights in connection with certain transactions
in accordance with Paragraph 17 of the Note); and
4.3.2.3 that the references herein to MTP-South
Tower's rights within the nine month period described shall not be
construed to extend the date of Maturity of the Loan.
4.4 ARMS-LENGTH SALE OF PROJECT. In the event of an
Arms-Length Sale (as defined below) the Loan shall be due and payable and,
except in the case of Early Repayment (when no Participation Interest is
due hereunder), the amount of Participation Interest related to the value
of the Project shall be determined with reference to the amount of the net
proceeds of such sale, as provided for in Section 4.5 (in all other cases,
the amount of Participation Interest attributable to the value of the
Project shall be determined by appraisal, as more particularly provided for
in Section 2.2.2.1 and in the Allonge). As used herein, a sale of the
Project shall constitute an "ARMS-LENGTH SALE" only if:
4.4.1 the purchase price and the other material economic
terms of such sale are no more favorable to the buyer than those contained
in an Offer or any Revised Offer made by MTP-South Tower to Aetna in
accordance with Section 4.3, which Offer and any Revised Offer have been
declined by Aetna (or been deemed to have been declined by Aetna in
accordance with Section 4.3.2) within nine months preceding the date of
closing of such sale;
4.4.2 following such sale, if MTP-Development or any other
affiliate of MTP-South Tower is to continue to manage the Project, the
management fee payable to such affiliated entity is not more than the
management fee now payable by MTP-South Tower to MTP-Development, i.e.,
2-1/2% of Project revenues;
4.4.3 if following such sale MTP-Development or any other
affiliate of MTP-South Tower is to continue to provide leasing agent
services at the Project, the leasing commissions payable to such entity are
not more than the leasing commissions payable to MTP-Development under its
contract with MTP-South Tower as of the date of this Agreement; and
4.4.4 all other aspects of such sale are with unaffiliated
entities, including but not limited to any sales commissions payable in
connection with such sale, and none of MTP-South Tower or any of the Equity
Owners of MTP-South Tower or any affiliate of any of them retains or
receives any direct or indirect interest in the buyer or in the Project
following such sale.
Notwithstanding any other provision of this Agreement, MTP-South Tower
shall not be required to obtain the consent of Aetna to an Arms-Length Sale
of the Project.
4.5 PROCEEDS OF SALE OF PROJECT. In the event of any sale or
other disposition of the Project, whether or not same qualifies as an
Arms-Length Sale hereunder (this Section, however, shall not be deemed to
be a consent to any transfer other than in accordance with Section 5.1
hereof), upon such sale or other disposition ("SALE"):
4.5.1 The Loan and all other obligations of MTP-South
Tower to Aetna under the Amended Loan Documents shall be immediately due
and payable, and all of such obligations must be paid to Aetna regardless
of the amount of the net proceeds of such sale (except in the case of
Participation Interest payable in connection with an Arms-Length Sale, as
provided for in Section 4.6 below).
4.5.2 As provided for in Section 6.2 below, all such
proceeds received by MTP-South Tower from any sale shall constitute
"Capital Receipts" and must be immediately deposited in Aetna's Deposit
Account upon receipt by MTP-South Tower. In addition, upon a sale of the
Project, Agent shall consolidate into the Deposit Account all remaining
Funds (as defined in Section 6.3.1 below) in the Project Reserve and (to
the extent not required to pay or provide for then-accrued property taxes
on the Project) in the Tax and Insurance Escrow. From such Funds:
4.5.2.1 Agent shall make the payments required under
this Agreement to Aetna for all accrued unpaid Fixed Rate Interest, the
entire outstanding principal balance of the Loan plus any Yield Maintenance
Payment payable in connection with such prepayment, and any other amounts
due Aetna under the Amended Loan Documents (other than Participation
Interest, which shall be disbursed in accordance with Section 4.5.2.3
below);
4.5.2.2 following Aetna's reasonable approval of
such costs and in accordance with a disbursement schedule proposed by
MTP-South Tower and reasonably approved by Aetna in connection with such
sale, Agent shall disburse such Funds from the Deposit Account to MTP-South
Tower in installments as required, after taking into account the amounts
available in MTP-South Tower's Operating Account (as defined in the Lockbox
Agreement) and all other assets (not including the Excluded Assets) of
MTP-South Tower, to permit MTP-South Tower (i) to create reasonable
reserves for any post-closing obligations of MTP-South Tower in connection
with such sale, and (ii) to pay approved commissions, fees and other
Capital Transaction Costs in connection with such sale, any outstanding
Approved Operating Costs, and other approved costs as necessary in
connection with the liquidation of MTP-South Tower (to the extent that
closing costs are paid by an escrow agent or other third party from funds
not delivered to MTP-South Tower, the provisions of this Section 4.5.2.2
applicable to disbursement to MTP-South Tower of amounts to pay such costs
do not apply, and Aetna shall permit such payments or disbursements by an
escrow agent or other third party, as provided for in Section 4.1.2.1); and
4.5.2.3 from the remaining Funds, after payment or
provision for the disbursements and payments described above,
simultaneously:
4.5.2.3.1 if such sale closes after the
Permitted Prepayment Period (as defined in Section 3.1 above), i.e., such
sale does not result in Early Repayment, Agent shall cause Aetna to be paid
Participation Interest either (i) in accordance with Section 4.6 below, if
such sale constitutes an Arms-Length Sale, or (ii) if not, in accordance
with the provisions of Section 2.2.2.1 and the Allonge; and
4.5.2.3.2 any remaining Funds shall be
released by Agent to MTP-South Tower.
4.6 PARTICIPATION INTEREST ON ARMS-LENGTH SALE. The amount of
Participation Interest due and payable upon an Arms-Length Sale shall be
determined as follows (unless such Arms-Length Sale closes on or before the
expiration of the Permitted Prepayment Period and results in Early
Repayment, as provided for in Section 3.1 above, in which event the
provisions of this Section 4.6 shall not apply):
4.6.1 To the extent, if any, that (a) the aggregate amount
of (i) net proceeds from such Arms-Length Sale, after payment of the
reasonable and customary costs associated with such sale (if the
Arms-Length Sale requires MTP-South Tower to fund post-closing obligations,
e.g., an income guaranty or a reserve for capital costs, then the
deductible costs associated with such sale shall include the cost to fund
appropriate reserves for such post-closing obligations of MTP-South Tower
to the buyer in connection with such sale), as reasonably approved by
Aetna, plus (ii) all amounts in the Deposit Account, in the Project Reserve
and (to the extent not required to pay or provide for then-accrued property
taxes on the Project) in the Tax and Insurance Escrow, plus (iii) all cash
and other assets of MTP-South Tower (other than the Excluded Assets),
exceeds (b) the sum of (i) the amount required to pay or provide for all
approved costs to satisfy obligations of MTP-South Tower to persons other
than Aetna (as such costs are provided for in Section 4.5.2.2 above), plus
(ii) the outstanding Loan obligations (other than Participation Interest
but including, without limitation, accrued Fixed Rate Interest, the unpaid
principal balance of the Loan and any Yield Maintenance Payment in
connection therewith) then due and payable to Aetna in accordance with
Section 4.5.1, then an amount equal to fifty percent (50%) of any excess
shall be due and owing to Aetna as Participation Interest on the Loan (and
an equal amount shall be retained by or disbursed, pari passu, to MTP-South
Tower); provided, however that the amount payable to Aetna as Participation
Interest shall not exceed the Maximum Participation Interest Amount, as
provided for in Section 2.2.2.1 above and in the Allonge (and after the
payment of such Maximum Participation Interest Amount to Aetna, any excess
shall be retained by or disbursed to MTP-South Tower).
4.6.2If reserves are created for post-closing obligations
of MTP-South Tower to the buyer in connection with such sale, as provided
for above, then following such closing Aetna shall be entitled to receive
50% of any amounts released from such reserves to the extent not used for
the purpose for which such funds were reserved, and at the closing of such
sale Aetna and MTP-South Tower shall enter into an agreement providing for
the obligation of MTP-South Tower to so share any such excess reserves upon
the release thereof pursuant to the applicable contract with the new owner
of the Project. If a third party holds and disburses such reserves, that
entity must be a party to such agreement between Aetna and MTP-South Tower;
if not, then such reserves shall be disbursed out of Aetna's Deposit
Account subject to reasonable approval rights of Aetna and MTP-South Tower
to be set forth in their agreement. Aetna shall have the right to require
such agreement in connection with the release of its liens upon the closing
of such Arms-Length Sale.
4.6.3 To the extent that MTP-South Tower then has non-cash
assets (other than the Excluded Assets) not sold as part of the Project
(e.g., without limitation, a right of MTP-South Tower to receive a property
tax refund, or a contingent right of MTP-South Tower to receive any
remaining unused balance of reserves created in connection with a sale,
including any interest earned thereon), there shall be an equitable
disbursement or allocation of such non-cash assets in accordance with the
foregoing, in a manner reasonably approved by Aetna. For example, assuming
Aetna is entitled to Participation Interest upon such sale (in accordance
with Section 4.6.1 above), then either, at the election of Aetna:
4.6.3.1 such non-cash assets may be retained by
MTP-South Tower and the amount of Participation Interest paid in cash to
Aetna shall be increased to reflect the fair market present value of such
retained non-cash assets, or
4.6.3.2 an undivided 50% interest in any such
non-cash assets may be assigned to Aetna, as Aetna's Participation Interest
with respect to such non-cash assets.
5. APPROVAL RIGHTS OF AETNA.
5.1 APPROVAL OF TRANSFERS AND ADDITIONAL DEBT. In addition to
the approval rights of Aetna in connection with leases and other agreements
pursuant to Section 5.3 and the other approval rights of Aetna provided for
herein, MTP-South Tower hereby agrees that Aetna's prior written approval
shall be required for:
5.1.1 any financing or refinancing of the Project, except
(i) upon repayment in full of the Loan, including but not limited to any
and all Participation Interest then accrued and any Yield Maintenance
Payment (in which event Aetna shall have no approval rights with respect to
such financing or refinancing), or (ii) upon repayment in full of the Loan
except for the creation of a Deferred Obligation in lieu of cash payment of
Participation Interest, as provided for in Section 4.2 in connection with
repayment of the Loan upon a refinancing (for which Aetna's approval rights
will be limited as provided for therein);
5.1.2 any other indebtedness of MTP-South Tower (excluding
trade payables and other obligations entered into in the ordinary course of
business);
5.1.3 any sale, conveyance, transfer or other disposition
of the Project or any part thereof or any interest therein, except in
connection with a sale, conveyance, transfer or other disposition of the
entire Project if both (i) MTP-South Tower has complied with the provisions
of Section 4.3 (right of first offer) in connection therewith, and (ii) the
entire Loan, including principal, accrued Fixed Rate Interest, any Yield
Maintenance Payment and any Participation Interest is paid in full in
accordance with this Agreement upon the closing of such sale, conveyance,
transfer or other disposition of the Project, in which event the approval
of Aetna shall not be required; and
5.1.4 certain transfers or changes with respect to equity
interests in MTP-South Tower described in Paragraph 17 of the Note.
Any approval required to be obtained from Aetna hereunder may be withheld
in the reasonable discretion of Aetna (as such standard is provided for in
Section 5.4) and shall not be unreasonably delayed, except: (i) if such
matters are entered into upon Early Repayment, in which event Aetna shall
have no approval rights, and (ii) in the event MTP-South Tower is in
Default under the Amended Loan Documents, in which event such approval may
be withheld or denied in the sole discretion of Aetna.
5.2 APPROVAL OF OPERATING AND CAPITAL BUDGETS.
5.2.1APPROVED OPERATING COSTS. As provided for in
Section 6 of the Lockbox Agreement, as supplemented by Section 7.2.1.4
below, any operating costs and expenses of the Project are subject to the
prior reasonable approval of Aetna (unless an Event of Default exists, in
which event such approval shall be subject to Aetna's sole discretion), and
that upon such approval, such costs and expenses shall constitute "Approved
Operating Costs" for purposes of the Lockbox Agreement and this Agreement.
Section 6 of the Lockbox Agreement provides for submission of monthly
schedules of operating costs and expenses to Aetna for such approval.
Following the Effective Date, in addition to the procedures provided for in
Section 6 of the Lockbox Agreement, MTP-South Tower shall have the right to
submit to Aetna for approval a reasonably detailed written proposed
operating budget (in form and detail reasonably acceptable to Aetna) of
anticipated operating monthly costs and expenses for each calendar year or
portion thereof following the Effective Date. Upon written approval of any
such annual operating budget by Aetna, which approval shall not be
unreasonably withheld or delayed (unless an Event of Default exists, in
which event such approval shall be subject to Aetna's sole discretion),
such operating budget shall constitute an "APPROVED OPERATING BUDGET" and
the costs and expenses shown thereon shall constitute "Approved Operating
Costs" for the applicable period for all purposes of this Agreement and the
Lockbox Agreement. Aetna shall respond to any such proposed operating
budget within thirty (30) days. If Aetna disapproves such a proposed
operating budget, Aetna shall specify the items that it disapproves so that
MTP-South Tower can submit a revised proposed operating budget that meets
the requirements of Aetna. Aetna and MTP-South Tower shall use best
efforts to reach agreement on a revised operating budget within thirty
days. Provided that MTP-South Tower has submitted a proposed operating
budget to Aetna at least thirty (30) days prior to the beginning of any
calendar year, if same has not been approved by Aetna, the prior Approved
Operating Budget shall remain in effect during the first month of the
following calendar year. MTP-South Tower shall have the right to obtain
disbursements for Approved Operating Costs in accordance with an Approved
Operating Budget without further approval of Aetna (in accordance with
disbursement requests to Agent as provided for in the Lockbox Agreement).
MTP-South Tower, shall, however, provide Aetna, on request or otherwise at
least annually, with a comparison of actual expenditures to date to the
Approved Operating Budget for such expenditures. MTP-South Tower shall
obtain Aetna's prior written approval of any expenditure for Operating
Costs which exceeds by more than 5% the budgeted amount therefor (on a line
item basis) in an Approved Operating Budget.
5.2.2APPROVED CAPITAL COSTS.
5.2.2.1 APPROVAL. The amounts of all
expenditures by MTP-South Tower (i) for leasing commissions, tenant
improvement costs and allowances and other closing costs in connection with
the execution and delivery of any lease at the Project or the build-out of
space in connection with any such lease, and (ii) for all other capital
improvements at the Project (except repairs and restoration funded from
insurance proceeds or other Capital Receipts in accordance with this
Agreement and the other Amended Loan Documents), shall be subject to the
prior written approval of Aetna, which approval shall not be unreasonably
withheld or delayed; provided, however, that Aetna, in its sole discretion,
shall have the right (in addition to all its other rights in accordance
with this Agreement and the other Amended Loan Documents) to withhold or
deny such approval, or to rescind any approval previously granted (to the
extent (i) amounts to pay such costs have not been disbursed in accordance
with Section 7.3.1.4 below, (ii) such costs have not been incurred by
MTP-South Tower, or (iii) such expenditures have not been committed by
MTP-South Tower in binding written agreements):
5.2.2.1.1 in Aetna's sole discretion at any
time a Default (as defined in Section 8.14.1) exists under the Amended Loan
Documents (whether or not an Event of Default has occurred); and
5.2.2.1.2 in Aetna's reasonable discretion at
any time after September 1, 2002, regardless of whether or not MTP-South
Tower is then in default.
Any such approval by Aetna may be in the form of approval of a budget or
schedule for such capital costs (including the leasing guidelines provided
for in Section 5.3), approval of a lease which provides for such
expenditures (including but not limited to execution of a subordination,
non-disturbance and attornment agreement with respect to a lease, which
shall constitute approval of such lease and the capital expenditures
provided for therein). Upon such approval by Aetna, until and unless such
approval is rescinded in accordance with the foregoing, such amounts shall
constitute "APPROVED CAPITAL COSTS" for purposes of this Agreement.
5.2.2.2 DISBURSEMENT. Approved Capital Costs
shall be subject to such disbursement conditions and requirements as Aetna
may reasonably establish, including, without limitation, requirements for
documentation of expenditures, rights of inspection, requirements for
tenant estoppel certificates, and requirements for lien waivers.
5.3 APPROVAL OF LEASES AND OTHER AGREEMENTS.
5.3.1 In addition to the approval rights of Aetna in
connection with transfers and additional debt pursuant to Section 5.1 and
the other approval rights of Aetna provided for herein, from and after the
Effective Date, the terms and conditions of the following, to the extent
entered into after the Effective Date, shall be subject to the prior
written approval of Aetna:
5.3.1.1 all leases at the Project, and any work
letters, subordination, non-disturbance and attornment agreements, and
other contracts or agreements associated therewith, involving (initially or
with expansion options) either (i) more than the area of a full floor, or
(ii) occupancy of any space then leased to IBM, other than IBM subleases
(collectively, "MAJOR LEASES");
5.3.1.2 the principal economic terms of all leases
and concession agreements at the Project other than Major Leases, pursuant
to a term sheet, in form reasonably acceptable to Aetna, to be delivered to
Aetna in connection with any such proposed lease or concession agreement;
5.3.1.3 any contract or agreement of MTP-South Tower
with an affiliate of MTP-South Tower or of any Equity Owner of MTP-South
Tower;
5.3.1.4 any material contract or agreement of
MTP-South Tower, involving either (i) a term of more than one year, unless
cancelable at any time without penalty on not more than 30 days' notice, or
(ii), unless such expenditure has previously been approved by Aetna (in a
budget or otherwise), the expenditure by MTP-South Tower of more than
$100,000 for a single item or contract;
5.3.1.5 any material amendment, modification, or
supplement of any of the foregoing, or any replacement of any of the
foregoing; and
5.3.1.6 any termination, or acceptance of a
cancellation or termination, of any of the foregoing or of any such lease,
contract or agreement entered into prior to the Effective Date, other than
an acceptance of a cancellation or termination by the other party thereto
in accordance with the terms of such instrument.
5.3.2 In addition to and without limiting the requirement
for an acknowledgment agreement in connection with any Major Lease in the
Project in accordance with Section 8.2 below, Aetna's approval with respect
to the matters described in Section 5.3.1 above shall not be unreasonably
withheld (and, at the request of MTP-South Tower, Aetna shall not
unreasonably withhold advance approval of annual schedules of minimum
acceptable economic terms for leases at the Project); provided, however,
that Aetna shall have the right to withhold or deny such approval (whether
or not any schedule of minimum acceptable terms has previously been
approved by Aetna):
5.3.2.1 in Aetna's sole discretion, at any time a
Default exists under the Amended Loan Documents (whether or not an Event of
Default has occurred); and
5.3.2.2 in Aetna's reasonable discretion, at any
time after September 1, 2002, regardless of whether or not MTP-South Tower
is then in default.
In connection with the foregoing, approval of a lease by Aetna (including
execution of a subordination, nondisturbance and attornment agreement by
Aetna for a lease) shall constitute Aetna's approval of the capital
expenditures provided for therein.
5.4 AETNA'S DISCRETION. Except as otherwise provided herein
(e.g., for matters subject to Aetna's "reasonable discretion"), each and
every decision, election, determination, estimate, request, consent,
approval or similar matter to be made or given by Aetna from time-to-time
pursuant to or in connection with this Agreement shall, unless and until a
Default (as defined in Section 8.14.1) exists, be made or given by Aetna
acting reasonably, and shall not be unreasonably withheld, conditioned,
denied or delayed, but upon and during the existence of a Default, such
decision, election, determination, estimate, request, requirement, consent,
approval or similar matter shall be made using Aetna's sole and absolute
discretion. For purposes of this Agreement, any approval or consent
subject to Aetna's "REASONABLE DISCRETION" may be denied or withheld by
Aetna, acting reasonably, based in whole or in part on the effect (or
Aetna's reasonable belief as to the effect) of such matter on the repayment
of the Loan or the value of Aetna's collateral; provided, however, that
upon and during the existence of a Default, any such approval or consent
shall be made using Aetna's sole and absolute discretion. Any consent or
approval granted by Aetna under this Agreement or the other Amended Loan
Documents shall not constitute a waiver of the requirement for consent or
approval for subsequent matters requiring Aetna's consent or approval. In
addition, no waiver by Aetna of any condition to any obligation of Aetna
hereunder shall constitute a waiver of the requirement that such condition
be satisfied in connection with subsequent performance by Aetna. Aetna
further agrees that for purposes of exercising Aetna's reasonable approval
pursuant to Section 5.2 and Section 5.3, the standard of operation,
maintenance and repair of the Project shall remain consistent with such
standards in effect as of the date of this Agreement.
6. LOCKBOX AGREEMENT.
6.1 LOCKBOX AGREEMENT TO REMAIN IN EFFECT. The Lockbox
Agreement and all obligations of MTP-South Tower thereunder, as same are
supplemented and modified by the terms of this Agreement (including but not
limited to the provisions of Section 11.8 of this Agreement), shall remain
in full force and effect following the Effective Date until the Loan and
all other obligations of MTP-South Tower to Aetna under the Amended Loan
Documents (including but not limited to the Deferred Obligation provided
for in Section 4.2) are paid in full.
6.2 GROSS RECEIPTS IN DEPOSIT ACCOUNT. Without limiting the
generality of Section 6.1, MTP-South Tower acknowledges and agrees that all
"GROSS RECEIPTS" (as defined in the Lockbox Agreement) must continue to be
immediately deposited into Aetna's Deposit Account established pursuant to
the Lockbox Agreement, and that the direct and indirect Equity Owners of
MTP-South Tower shall be and remain personally obligated to Aetna in
connection with such matters to the extent provided for in Section 2(g) of
the Lockbox Agreement, subject to the provisions of Section 11.8. For
purposes of this Agreement, Gross Receipts shall consist of either:
6.2.1"OPERATING RECEIPTS," including (i) all cash revenues
and receipts from the operation or leasing of the Project, including rent
receipts and all other revenues from operation of the Project, interest
income, amounts released from reserves (including the Project Reserve and
the Tax and Insurance Escrow) not used for the purpose of such reserves,
property tax refunds, forfeited tenant security deposits, and lease
termination payments, and (ii) any Excluded Asset Proceeds, as provided for
in Section 8.12.3; or
6.2.2"CAPITAL RECEIPTS," including all Gross Receipts
other than Operating Receipts, including but not limited to the proceeds of
capital events with respect to MTP-South Tower or the Project, such as
financing proceeds, sale proceeds, and insurance proceeds.
6.3 APPLICATION OF LOCKBOX AGREEMENT TO PROJECT RESERVE.
6.3.1FUNDS. For purposes of this Agreement, and for
purposes of the Lockbox Agreement from and after the Effective Date,
"FUNDS" shall mean all funds from time-to-time held in the Deposit Account,
the Tax and Insurance Escrow Account and the Project Reserve.
6.3.2AUTHORITY OF AGENT. Agent shall have the same power
and authority with respect to the Project Reserve as is granted or reserved
under the Lockbox Agreement as the power and authority of Agent with
respect to the Deposit Account and the Tax and Insurance Escrow.
6.3.3LIMITATION OF RIGHTS OF MTP-SOUTH TOWER.
6.3.3.1 The provisions of Section 2(c) of the
Lockbox Agreement, which prior to the Effective Date have applied to the
Deposit Account, the Tax and Insurance Escrow and Funds on deposit in
either, are hereby supplemented and amended to also include the Project
Reserve and Funds on deposit therein, and as so supplemented and amended is
restated as follows:
(c) Until the Loan and all other sums due and owing
to Aetna have been paid in full, MTP-South Tower also agrees that MTP-South
Tower shall not, and shall have no right to, amend, terminate or modify in
any way the agreement(s) with Bank of America pertaining to the Project
Reserve, to the Tax and Insurance Escrow Account, or to the Deposit Account
or the Lockbox arrangements applicable thereto. Only persons designated by
Aetna, in its discretion, shall have the authority to make withdrawals or
disbursements from the Project Reserve, the Deposit Account and the Tax and
Insurance Escrow Account, and MTP-South Tower shall have no right to
withdraw or otherwise transfer Funds from the Project Reserve, the Deposit
Account or the Tax and Insurance Escrow Account, to close the Project
Reserve, the Deposit Account or the Tax and Insurance Escrow Account, or to
otherwise modify or exercise any authority over the Project Reserve, the
Deposit Account, the Tax and Insurance Escrow Account or any Funds on
deposit in any of them.
The foregoing shall not limit the obligation of Aetna to cause Agent to
make the disbursements provided for in Section 7.1, Section 7.2 and
Section 7.3 in accordance with the terms and conditions of this Agreement.
6.3.3.2 The provisions of Section 2(g) of the
Lockbox Agreement shall continue to apply to Section 2 of the Lockbox
Agreement, including but not limited to said Section 2(c) as amended by
Section 6.3.3.1.
6.3.4PROJECT RESERVE SECURITY AGREEMENT AND REMEDIES. In
addition to the provisions of Section 10 of the Lockbox Agreement, which
shall continue to apply with respect to the Deposit Account and the Tax and
Insurance Escrow, MTP-South Tower and Aetna agree as provided for in this
Section 6.3.4 with respect to the Project Reserve.
6.3.4.1 To the extent MTP-South Tower has any
interest in the Project Reserve or Funds on deposit therein, MTP-South
Tower hereby pledges to Aetna, and grants to Aetna a security interest in,
the Project Reserve and such Funds, as additional security for the Loan and
for the obligations of MTP-South Tower under this Agreement and the other
Amended Loan Documents. In addition to Aetna's other rights and remedies
under this Agreement, the other Amended Loan Documents and applicable law,
MTP-South Tower hereby grants Aetna all rights and remedies relating to the
Project Reserve and the Funds on deposit therein of a secured party under
the Uniform Commercial Code of the California. The foregoing grant of a
security interest is not intended to derogate from the parties' intent that
the Project Reserve and all Funds on deposit therein are and shall be the
sole property of Aetna but, rather, is intended to protect Aetna's interest
in the Project Reserve and such Funds in the event that a court, contrary
to the parties' intent, determines that MTP-South Tower has a legal or
equitable interest therein.
6.3.4.2 Concurrently with the execution and delivery
of this Agreement MTP-South Tower and Aetna shall jointly notify Bank of
America confirming Aetna's security interest in the Project Reserve and all
Funds on deposit therein, as provided for herein.
6.4 AFFIRMATION OF AETNA'S RIGHTS IN FUNDS.
6.4.1Aetna hereby confirms the designation and appointment
of Agent as Aetna's bailee for purposes of taking possession of the Funds,
and as Aetna's agent for purposes of controlling the disbursement of the
Funds, as security for the Loan and for the obligations of MTP-South Tower
under the Amended Loan Documents and for purposes of effectuating Aetna's
rights and remedies relating to the Funds. MTP-South Tower hereby confirms
MTP-South Tower's irrevocable consent and agreement to such appointment and
to Agent's actions that may be taken in that capacity in accordance with
the terms of this Agreement and the Lockbox Agreement.
6.4.2 Without limiting the rights of Aetna pursuant to the
other provisions of this Agreement, the Lockbox Agreement or the other
Amended Loan Documents, Aetna may, at, or at any time after, the occurrence
of an Event of Default, in addition to exercising any or all of its other
rights and remedies under the Amended Loan Documents, direct Agent, in
writing, to pay over to Aetna all or any part of the Funds specified by
Aetna in such written direction, without demand or notice to MTP-South
Tower. Promptly after receiving such written direction, Agent shall pay
over to Aetna all of the Funds or the part thereof specified in such
written direction, as the case may be. Aetna may, at its option, without
demand or notice, (i) setoff or recoup or otherwise apply all or any part
of the Funds so received by Aetna against all or any part of the Loan
(whether matured or unmatured), in such order and priority as Aetna may
determine, or (ii) apply all or any part of the Funds so received by Aetna
to satisfy any of the other obligations of MTP-South Tower under the
Amended Loan Documents.
6.4.3 No application of all or any part of the Funds
pursuant to this Agreement, the Lockbox Agreement or the other Amended Loan
Documents shall in any way release, satisfy or discharge any of the unpaid
Loan or other obligations of MTP-South Tower to Aetna, except to the extent
applied to the Loan or such other obligations by Aetna pursuant to this
Agreement or the other Amended Loan Documents. No delay or omission of
Aetna to exercise any of its rights or remedies shall waive, exhaust or
impair any of Aetna's rights or remedies under the Amended Loan Documents.
Notwithstanding any such delay or omission, Aetna thereafter shall have the
right, from time-to-time and as often as Aetna deems advisable, to exercise
any of its rights or remedies.
7. PROJECT COSTS.
7.1 GENERALLY. Subject to the provisions of Section 6.4.2,
following the Effective Date, disbursements for costs associated with the
Project shall be made in accordance with the following referenced
provisions:
7.1.1CONTINUING OPERATING COSTS. Each month, from
Operating Receipts (as defined in Section 6.2.1) on deposit in the Deposit
Account, Agent shall make disbursements for Approved Operating Costs, for
funding the Tax and Insurance Escrow, for Fixed Rate Interest, for funding
the Project Reserve, for disbursements to MTP-South Tower in connection
with Additional Loan Advance Repayments and Excluded Asset Proceeds, and
for principal payments on the Loan, all in accordance with Section 7.2.1
below.
7.1.2CAPITAL COSTS. As required, from amounts on deposit
in the Project Reserve, Agent shall make disbursements for Approved Capital
Costs in accordance with Section 7.3.
7.1.3PROJECT TAXES AND INSURANCE. As required, from
amounts on deposit in the Tax and Insurance Escrow, Agent shall make
disbursements for property taxes and insurance premiums for the Project in
accordance with the Lockbox Agreement.
7.1.4CAPITAL TRANSACTION COSTS. Upon the receipt of any
Capital Receipts, from such sum (which is required to be deposited in the
Deposit Account in accordance with this Agreement), Agent shall make
disbursements for Capital Transaction Costs (as defined in Section 4.1.1
above and including, without limitation, commissions, fees and other
transaction costs) associated with such Capital Receipts which MTP-South
Tower is required to bear (i.e., excluding costs paid or to be paid by
escrow agents or other third parties from amounts not delivered to
MTP-South Tower as Capital Receipts) and shall disburse the balance of such
sum for application to the outstanding principal balance of the Loan, and
any Yield Maintenance Payment associated therewith, and (on a pari passu
basis with disbursements to MTP-South Tower) any Participation Interest,
all as provided for in Section 4.5.2 above, with respect to Capital
Receipts arising out of a sale of the Project, or Section 4.1.2 above, with
respect to any other Capital Receipts.
7.2 DISBURSEMENTS FROM DEPOSIT ACCOUNT. The provisions of
Section 5(a) of the Lockbox Agreement are hereby replaced by the following
provisions of this Section 7.2.
7.2.1MONTHLY DISBURSEMENT OF OPERATING RECEIPTS. Until
the Loan and all other sums due and owing to Aetna have been paid in full,
and subject to the provisions of Section 6.4.2 above, on the first business
day of each calendar month (the "DISBURSEMENT DATE") Agent (i) shall
withdraw all good, collected funds held in the Deposit Account other than
Capital Receipts (i.e., all Operating Receipts and the proceeds of any
Additional Loan Advance funded into the Deposit Account, as provided for in
Section 7.4.5), and (ii) shall withdraw any balance in the Project Reserve
in excess of the Project Reserve Maximum Balance (as provided for in
Section 1.9.3), whereupon Agent shall remit, pay and disburse such amount
in the order of priority set forth below in this Section 7.2.1; provided,
however, that in the event that such amount on any Disbursement Date is
less than the amount required to make all of the disbursements provided for
in Section 7.2.1.1 through Section 7.2.1.6 below on such Disbursement Date,
then prior to making such disbursements, Agent shall withdraw the amount of
such deficiency from the Project Reserve to the Deposit Account and shall
include such sum in the following disbursements:
7.2.1.1 first, on the Disbursement Date of each
calendar month or at such other time as Aetna may request, to Aetna to pay
any amounts due and payable by MTP-South Tower to Aetna under the Amended
Loan Documents other than principal and interest on the Loan;
7.2.1.2 next, on the Disbursement Date of any month
if there are Excluded Asset Proceeds in the Deposit Account and MTP-South
Tower has requested such disbursement by not less than ten business days
prior written notice to Aetna indicating the nature and amount of such
Excluded Asset Proceeds, the amount of such Excluded Asset Proceeds, to
MTP-South Tower;
7.2.1.3 next, on the Disbursement Date of each
calendar month, to Agent to pay all fees and expenses of Agent (which
expenses may include, without limitation, the charges of the depository
bank or banks in which the Deposit Account, the Project Reserve and the Tax
and Insurance Reserve are maintained);
7.2.1.4 next, on the Disbursement Date of each
calendar month, to MTP-South Tower, for deposit into MTP-South Tower's
Operating Account (as defined in the Lockbox Agreement), an amount equal to
the amount of any "APPROVED OPERATING COSTS" (as defined in the Lockbox
Agreement, except that following the Effective Date, Approved Operating
Costs shall also exclude Approved Capital Costs, as defined in Section 7.3
below) for such calendar month in accordance with the notice of approval
thereof received by Agent from Aetna under Section 6 of the Lockbox
Agreement or in accordance with a budget previously approved by Aetna in
accordance with Section 5.2.1 of this Agreement (if such an approved budget
exists) -- all such amounts disbursed to MTP-South Tower under this
Section 7.2.1.4 shall be used by MTP-South Tower solely to pay Approved
Operating Costs incurred or to be incurred in the operation of the Project,
only in accordance with the approved budget therefor pursuant to Section 6
of the Lockbox Agreement or Section 5.2.1 of this Agreement, and in
accordance with MTP-South Tower's usual custom and practice for such
operating costs, and any excess of such disbursement over the amount of
such Approved Operating Costs actually paid by MTP-South Tower shall be
credited against (and reduce) the amount of the disbursement to MTP-South
Tower under this Section 7.2.1.4 for the next calendar month;
7.2.1.5 next, on the Disbursement Date of each
calendar month, to Agent, for deposit into the Tax and Insurance Escrow
Account, the sum of $267,865.54 per month (an amount equal to $158,988.21
per month with respect to property taxes and $108,877.33 per month for
insurance), or such other amount as determined in accordance with
Section 1(d) of the Lockbox Agreement;
7.2.1.6 next, to Aetna, on the Disbursement Date of
each calendar month, an amount equal to accrued unpaid Fixed Rate Interest
on the Loan;
7.2.1.7 next, on the Disbursement Date of each
calendar month, to Agent, if the balance in the Project Reserve is then
less than the Project Reserve Maximum Balance (as defined and provided for
in Section 1.9.3), for deposit into the Project Reserve to the extent
required to cause the balance in the Project Reserve to equal the Project
Reserve Maximum Balance;
7.2.1.8 next, for Disbursement Dates after
January 1, 1997, there shall be a disbursement to MTP-South Tower pursuant
to this Section 7.2.1.8 if and only if each of the following conditions has
been satisfied on such Disbursement Date:
(1) MTP-South Tower must have made one or more
Additional Loan Advance Repayments following the Effective Date, and the
aggregate amount of all such Additional Loan Advance Repayments must exceed
the aggregate amount of all prior disbursements to MTP-South Tower since
the Effective Date pursuant to this Section 7.2.1.8 (the amount of such
excess on any Disbursement Date is referred to below as the "NET REPAYMENT
AMOUNT");
(2) the outstanding principal balance of the
Loan immediately preceding any such disbursement pursuant to this
Section 7.2.1.8 must equal or be less than the applicable required Maximum
Principal Balance for the immediately following Loan Year as provided for
in Section 3.4.1 and the schedule attached as Exhibit A (e.g., on
July 1, 1998, to satisfy this condition the outstanding principal balance
must be not more than the Maximum Principal Balance required on
September 1, 1998 and applicable to the Loan Year ending August 31, 1999);
(3) the balance in the Project Reserve,
following the disbursement provided for in Section 7.2.1.7 above on such
Disbursement Date, must equal the Project Reserve Maximum Balance; and
(4) no Default must then exist by MTP-South
Tower under the Amended Loan Documents;
if each of such conditions is satisfied, then on such
Disbursement Date, from any excess amount of Operating Receipts, an amount
shall be disbursed to MTP-South Tower up to the Net Repayment Amount on
such Disbursement Date; provided, however, that the right to receive any
disbursement pursuant to this Section 7.2.1.8 shall terminate on the
earliest of (i) the Maturity of the Loan, (ii) September 1, 2003, or
(iii) the date any Deferred Obligation is created pursuant to Section 4.2
(an example of the operation of Section 3.4.1 and this Section 7.2.1.8 is
attached hereto as Exhibit C);
7.2.1.9 next, to Aetna, on the Disbursement Date of
each calendar month, the entire remaining amount, if any, of such Operating
Receipts after the disbursements provided for above in this Section 7.2.1,
to be applied to payment of the unpaid balance of the Extension Fee
provided for in Section 2.1 above, until such Extension Fee has been paid
in full; and
7.2.1.10 last, to Aetna, on the Disbursement Date of
each calendar month, the entire remaining amount, if any, of such Operating
Receipts after the disbursements provided for above in this Section 7.2.1,
to be applied to reduction of the outstanding principal balance of the
Loan.
Such priority of disbursements from Aetna's Deposit Account shall not,
however, be construed as limiting the obligation of MTP-South Tower to pay
when due any Fixed Rate Interest or other obligation, whether or not there
are sufficient funds for such purpose disbursed in accordance with the
foregoing, except for the disbursements provided for in Section 7.2.1.7
through Section 7.2.1.10, which shall each be made only to the extent of
any remaining Funds on each Disbursement Date after making the
disbursements provided for in the respective preceding provisions of this
Section 7.2.1.
7.2.2DISBURSEMENT OF CAPITAL RECEIPTS. Subject to the
provisions of Section 6.4.2, Capital Receipts shall be paid and disbursed
from the Deposit Account in accordance with Section 4.1.2 or Section 4.5.2
of this Agreement, as applicable.
7.3 DISBURSEMENT OF PROJECT RESERVE FOR APPROVED CAPITAL COSTS.
7.3.1DISBURSEMENT PROCEDURES. Subject to the provisions
of Section 6.4.2, amounts required to pay Approved Capital Costs (as
defined and provided for in Section 5.2.2.1) shall be disbursed from the
Project Reserve in accordance with the terms of this Section 7.3.1.
7.3.1.1 Such disbursements shall be made only for
capital costs which have been approved by Aetna as Approved Capital Costs
in accordance with Section 5.2.2.1.
7.3.1.2 MTP-South Tower shall have the right to
request disbursements from the Project Reserve for payment of then-due
Approved Capital Costs not more than once each month (on a date which may
be different from the Disbursement Date for Approved Operating Costs), on
not less than ten days notice to Agent and Aetna, pursuant to a
disbursement request (in form reasonably acceptable to Aetna) showing the
total amount requested and an itemized list of the Approved Capital Costs
incurred which are to be paid by MTP-South Tower from such disbursement,
accompanied by copies of invoices and other documentation (including,
without limitation, appropriate lien waivers) reasonably acceptable to
Aetna. Subject to compliance with the other requirements of this
Agreement, Aetna shall cause Agent to make each disbursement for Approved
Capital Costs in accordance with each such disbursement request within ten
days.
7.3.1.3 Each request for such disbursement shall
constitute the certification by MTP-South Tower that such costs have been
incurred and are Approved Capital Costs in accordance with this Agreement,
which certification shall be subject to the provisions of Section 11.8
below limiting the liability of MTP-South Tower and the Equity Owners of
MTP-South Tower.
7.3.1.4 Each such disbursement by Agent from the
Project Reserve for one or more items which constitute currently-due
Approved Capital Costs shall be made as a single disbursement to MTP-South
Tower, for MTP-South Tower to use to pay such Approved Capital Costs.
7.3.1.5 Except as provided for above, such
disbursements by Agent from the Project Reserve shall be in accordance with
the terms, conditions and procedures set forth in this Agreement.
7.3.2PAYMENT OF APPROVED CAPITAL COSTS. MTP-South Tower
shall cause all amounts of such disbursements from the Project Reserve to
be applied promptly to the payment of Approved Capital Costs, in full
conformity with the applicable requirements of any contractual obligations
of MTP-South Tower. Any portion of any such disbursement not so applied to
an Approved Capital Cost within thirty (30) days shall be immediately
returned by MTP-South Tower to Agent, for re-deposit in the Project
Reserve. If MTP-South Tower fails to return any such amount, then in
addition to the other rights and remedies of Aetna under the Amended Loan
Documents, such sum may be offset against any other amounts to be disbursed
to MTP-South Tower pursuant to this Agreement.
7.3.3RESPONSIBILITY. MTP-South Tower shall be solely
responsible for incurring and paying all Approved Capital Costs in
accordance with the terms of this Agreement. Neither this Agreement nor
any approval of an Approved Capital Cost or a disbursement by Aetna or
Agent shall be construed to impose on Aetna or Agent any responsibility or
liability in connection with any Approved Capital Costs or any other cost
or expense in connection with the Project, and MTP-South Tower shall
indemnify, defend and hold Aetna and Agent harmless from and against any
liability, claim, obligation, cost or expense (including, without
limitation, reasonable attorneys' fees) in connection therewith, which
indemnification covenant shall be subject to the provisions of Section 11.8
below limiting the liability of MTP-South Tower and the Equity Owners of
MTP-South Tower.
7.4 ADDITIONAL LOAN ADVANCES.
7.4.1COMMITMENT. During the period between the Effective
Date and August 31, 2003, to the extent that at any time and from time to
time the balance of Operating Receipts in the Deposit Account plus the
balance available in the Project Reserve is insufficient to allow MTP-South
Tower pay currently due Approved Operating Costs (including the maintenance
of $250,000 of working capital in MTP-South Tower's Operating Account as
provided for in the Lockbox Agreement), accrued Fixed Rate Interest on the
Loan and Approved Capital Costs, then subject to satisfaction of the
conditions set forth in Section 7.4.3 below, Aetna shall advance the amount
of such deficiency to MTP-South Tower under the Loan (an "ADDITIONAL LOAN
ADVANCE") in accordance with the terms of this Agreement.
7.4.2DRAW REQUEST. MTP-South Tower shall have the right
to request Additional Loan Advances not more than once each month (on a
date which may be different from the Disbursement Date for Approved
Operating Costs), on not less than twenty-one (21) days' prior notice to
Aetna and Agent, pursuant to a draw request (in form reasonably acceptable
to Aetna) showing the amount of Funds available in the Deposit Account and
the Project Reserve and the total amount of Approved Operating Costs, Fixed
Rate Interest and Approved Capital Costs to be paid from such Funds and the
Additional Loan Advance.
7.4.3CONDITIONS. The obligation of Aetna to make any
Additional Loan Advance shall be subject to satisfaction of each of the
following conditions:
7.4.3.1 INADEQUATE FUNDS FOR CURRENT APPROVED
OBLIGATIONS. At the time of the funding of any such Additional Loan
Advance, the aggregate balance of Funds in the Project Reserve, in the
Deposit Account and in MTP-South Tower's Operating Account must be less
than the amount required to satisfy current obligations (due not more than
thirty (30) days following the date of such Additional Loan Advance) of
MTP-South Tower for Approved Operating Costs, accrued Fixed Rate Interest
on the Loan and Approved Capital Costs. The amount of such Additional Loan
Advance shall not exceed the amount of such deficiency. Any such Approved
Operating Costs and Approved Capital Costs must have been approved (or
deemed approved) by Aetna in accordance with the terms of this Agreement
and the Lockbox Agreement.
7.4.3.2 ABSENCE OF DEFAULT. No Default shall
have occurred and be continuing under the Amended Loan Documents.
7.4.3.3 TITLE INSURANCE. The title insurance
received by Aetna on the Effective Date contains an endorsement insuring
the first lien priority of up to $100 million of any Additional Loan
Advances made by Aetna pursuant to this Agreement. To the extent said
limit is ever exceeded, then as a condition to any further Additional Loan
Advances, Aetna shall have received, on the date of such Additional Loan
Advance, an endorsement to its title insurance policy insuring that the
Amended Loan Documents secure the entire amount of such Additional Loan
Advance, with no loss of priority. MTP-South Tower shall pay all premiums
and costs in connection therewith, as Approved Operating Costs hereunder.
If required by the title insurance company in connection with such
endorsement, MTP-South Tower shall execute, acknowledge and deliver an
amendment to the Deed of Trust (in form prepared by Aetna and reasonably
approved by MTP-South Tower) confirming such priority, and MTP-South Tower
shall bear all costs of preparation and recording of any such instrument.
7.4.3.4 LIMITATION ON AMOUNT. Aetna shall only
be required to make any such Additional Loan Advance to MTP-South Tower if
and to the extent that the outstanding principal balance of the Loan on the
date of such Additional Loan Advance is and would remain (after such
principal balance increases by the amount of the Additional Loan Advance)
less than the applicable Maximum Principal Balance for such Loan Year as
provided for in Section 3.4.1 and the schedule attached hereto as
Exhibit A.
7.4.4LIMITATION. Notwithstanding any other provision of
this Agreement, Aetna shall have no obligation to fund any Additional Loan
Advance:
7.4.4.1 at any time after August 31, 2003, whether
or not a default exists under the Amended Loan Documents;
7.4.4.2 at any time a Default has occurred and is
continuing under the Amended Loan Documents, whether or not same
constitutes an Event of Default;
7.4.4.3 at any time following the repayment in full
of the Loan; or
7.4.4.4 at any time following the date any Deferred
Obligation is created pursuant to Section 4.2.
7.4.5ADVANCE BY AETNA. Aetna shall fund any Additional
Loan Advance into the Deposit Account or the Project Reserve, and upon such
funding the entire amount of the Additional Loan Advance shall be added to
the outstanding principal balance of the Loan, shall bear Fixed Rate
Interest due and payable each month following such disbursement, and shall
be, without further act, evidenced and secured by the Amended Loan
Documents. Such amounts shall thereafter be disbursed by Agent from the
Deposit Account or the Project Reserve, as applicable, in accordance with
the terms and conditions of Section 7.2.1 or Section 7.3.1, respectively.
8. ADDITIONAL COVENANTS.
8.1 NO EQUITY DISTRIBUTIONS.
8.1.1RESTRICTION. The provisions for a disbursement to
MTP-South Tower of the sum of $100,000 per month for distribution to the
Equity Owners of MTP-South Tower provided for in the Lockbox Agreement
shall terminate from and after the Effective Date. MTP-South Tower
represents and warrants to Aetna that (i) since December 1, 1994, there
have been no Equity Distributions (as defined below) except as permitted
and provided for in the Lockbox Agreement, and (ii) that there has been no
Equity Distribution by MTP-South Tower since May 18, 1995. MTP-South Tower
covenants and agrees that until the Loan and all other obligations of
MTP-South Tower to Aetna under the Amended Loan Documents have been paid in
full, MTP-South Tower shall not make any Equity Distributions. As used
herein, "EQUITY DISTRIBUTION" means any distribution of MTP-South Tower
assets to any Equity Owner of MTP-South Tower, whether or not such a
distribution is permitted under the terms of MTP-South Tower's partnership
agreement or limited liability company operating agreement, as applicable,
including but not limited to (i) repayment of any loans made by Equity
Owners to MTP-South Tower, (ii) return of or return on capital
contributions, (iii) distributions upon termination, liquidation or
dissolution of MTP-South Tower, or (iv) any development, property
management, accounting or other fees payable to an Equity Owner (unless any
such fee is in accordance with the existing "Property Management Contract"
described in the Property Manager's Agreement or is otherwise expressly
included as an Approved Operating Cost approved by Aetna in accordance with
the Lockbox Agreement); provided, however, that Equity Distributions shall
exclude distributions by MTP-South Tower to its Equity Owners of any amount
disbursed to MTP-South Tower after the Effective Date pursuant to the
provisions of (a) Section 7.2.1.2 (distribution of any Excluded Asset
Proceeds), or (b) Section 3.4.3 and Section 7.2.1.8 (disbursements in
connection with Additional Loan Advance Repayments). In the event that
MTP-South Tower or its successors or assigns is or becomes a limited
liability company, a partnership, a corporation or any other form of
entity, the foregoing provisions applicable to Equity Owners shall apply
equally to the members, partners, shareholders or other beneficial owners
of any such new entity and to the agreements providing for the organization
thereof; provided, however, that any such change in structure shall require
the prior written consent of Aetna.
8.1.2LIABILITY OF EQUITY OWNERS. In the event of any
breach by MTP-South Tower of its covenants, agreements, representations or
warranties set forth in Section 8.1.1, the amount of any Equity
Distribution made in violation of the provisions of Section 8.1.1 shall be
immediately returned and deposited into Aetna's Deposit Account, and
notwithstanding any provision of the Amended Loan Documents to the
contrary, the direct and indirect Equity Owners of MTP-South Tower (but not
(i) JMB Realty Corporation, or (ii) any shareholder of the indirect Equity
Owners of MTP-South Tower) shall be personally liable to Aetna for the
obligation to so deposit such amount, but such obligation of the Equity
Owners shall be subject to the provisions of Section 11.8 and the
provisions of the Acknowledgment and Agreement appended to this Agreement.
8.2 MAJOR LEASE ACKNOWLEDGMENT AGREEMENTS. Without limiting
Aetna's approval rights under Section 5.3, simultaneously with the
execution of any Major Lease at the Project, MTP-South Tower shall execute
and deliver to Aetna an acknowledgment agreement for the benefit of Aetna,
in form reasonably acceptable to Aetna (and similar to the existing
acknowledgment agreements executed by MTP-South Tower and IBM in connection
with the Los Angeles Unified School District and Finova Capital Corporation
leases), providing for the following:
8.2.1 confirmation of MTP-South Tower's assignment to
Aetna of all leases at the Project including the subject lease;
8.2.2 confirmation that MTP-South Tower has directed the
tenant to pay all rents and other amounts payable under the subject lease
to Aetna's Deposit Account established pursuant to the Lockbox Agreement
and this Agreement;
8.2.3 estoppel certifications by MTP-South Tower with
respect to the subject lease;
8.2.4 the agreement of MTP-South Tower to promptly give
Aetna copies of all notices which MTP-South Tower is required to give or
may give the tenant under the subject lease;
8.2.5 the agreement of MTP-South Tower to not, without the
prior written consent of Aetna, amend, modify, supplement, replace or
terminate the subject lease, or, except in accordance with the terms of
such lease, accept a cancellation or termination of the subject lease;
8.2.6 confirmation by MTP-South Tower of all closing costs
in connection with the execution and delivery of the subject lease and the
build-out of space for such tenant (including, without limitation, all
allowances, commissions, and legal fees and expenses) -- the amount of such
closing costs shall be subject to the approval of Aetna as Approved Capital
Costs in accordance with Section 5.2.2.1 and subject to disbursement and
payment in accordance with Section 7.3;
8.2.7 confirmation by MTP-South Tower of all amounts
payable to affiliates of MTP-South Tower or its Equity Owners as
commissions or other closing costs in connection with such lease;
8.2.8 confirming the agreement of MTP-South Tower to
reimburse all of Aetna's reasonable costs and expenses in connection with
such lease (and MTP-South Tower hereby agrees that MTP-South Tower shall
promptly reimburse all of Aetna's reasonable costs and expenses (including
but not limited to legal fees and expenses) in connection with any lease or
proposed lease, whether or not a proposed lease is executed and whether or
not a proposed lease is approved by Aetna) -- all such reimbursable costs
and expenses shall constitute Approved Operating Costs hereunder;
8.2.9 if such space is being terminated from the IBM lease
at the Project, IBM shall join in the execution and delivery of such
acknowledgment agreement for the benefit of Aetna, to confirm the status of
the IBM lease, to confirm the amount of closing costs being paid by IBM, to
confirm the amount and terms of any subsidy or other payments by IBM to
MTP-South Tower, to confirm any arrangement for IBM to finance any portion
of closing costs being borne by MTP-South Tower and such other matters as
Aetna may request from IBM; and
8.2.10 such additional matters as Aetna may reasonably
request.
The requirement that MTP-South Tower deliver acknowledgment agreements only
in connection with Major Leases shall not be construed to relieve MTP-South
Tower of its obligations under this Agreement and the other Amended Loan
Documents in connection with such leases which are not Major Leases.
8.3 AFFILIATE COMMISSIONS.
8.3.1 The provisions of that letter agreement Re: Leasing
Commissions dated March 21, 1995, among Aetna, MTP-South Tower LP, IBM and
MTP-Development, providing for certain restrictions on leasing commissions
payable to MTP-Development or other affiliates of MTP-South Tower or its
Equity Owners, shall terminate on the Effective Date.
8.3.2 With the consent of Aetna, prior to the Effective
Date not more than 50% of certain commissions otherwise due have been paid
to MTP-Development in connection with The Los Angeles Unified School
District lease, the Finova Capital Corporation lease, and The Boston
Consulting Group lease, as provided for in the acknowledgment agreements
executed in connection with each such lease, pursuant to which the balance
of such commissions were to be neither due nor payable until and unless the
Loan and all other obligations of MTP-South Tower have been paid in full.
As provided for in Section 1.8.2 above, Aetna has waived such restrictions
and permitted such payment on the Effective Date, and Aetna hereby agrees
that such restrictions shall not apply in connection with such commissions
payable to MTP-Development or other affiliates of MTP-South Tower in
connection with leases executed after the Effective Date in accordance with
the terms and conditions of this Agreement.
8.3.3 None of Aetna, any entity which acquires title to
the Project upon foreclosure, deed in lieu or other realization under the
Aetna Loan Documents, or their respective successors and assigns shall have
any liability or obligation to pay any portion of any commissions to
MTP-Development, or to any other entity affiliated with MTP-South Tower or
any of its Equity Owners, in connection with the Project or any lease of
premises therein.
8.4 ▇▇▇▇▇ FARGO CENTER AGREEMENTS. MTP-South Tower shall
promptly and fully perform all of its obligations under the Center
Acknowledgment Agreement described in Recital I.(5) above, and under the
"Project Agreements" provided for therein.
8.5 PROJECT MANAGEMENT AND LEASING CONTRACTS.
8.5.1PROJECT MANAGER'S AGREEMENT. As of even date
herewith MTP-Development and MTP-South Tower have entered into the Property
Manager's Agreement for the benefit of Aetna. MTP-South Tower agrees to
promptly and fully perform its obligations under the Property Manager's
Agreement, and to cause MTP-Development to promptly and fully perform its
obligations thereunder. Without limiting the generality of the foregoing,
MTP-South Tower shall be obligated to enforce the provisions of Sections 4
and 5 of the Property Manager's Agreement for the benefit of Aetna upon the
occurrence of the events provided for therein.
8.5.2TERMINATION OF MTP-DEVELOPMENT PROPERTY MANAGEMENT
CONTRACT. MTP-South Tower hereby agrees that MTP-Development's property
management contract for the Project shall terminate in the event that
MTP-Development or any successor firm is no longer controlled by, and at
least 50% beneficially owned by, one or more of the existing officers and
employees of such firm or its general partner, or their successors in such
organization, i.e., in the event of a sale or other transfer of the
business or equity interests therein, unless one or more of the officers
and employees prior to such sale or other transfer continue to control such
organization and beneficially own at least one-half of the equity interests
therein following such sale or other transfer.
8.5.3ENFORCEMENT. MTP-South Tower shall cause
MTP-Development or any other property management firm for the Project to
promptly and fully perform its obligations under the applicable property
management contract with MTP-South Tower in accordance with its terms
(including, without limitation, the existing property management contract
with MTP-Development described in the Property Manager's Agreement).
MTP-South Tower also shall cause MTP-Development or any other leasing agent
for the Project to promptly and fully perform its obligations under the
applicable leasing services agreement with MTP-South Tower in accordance
with its terms (including, without limitation, the existing agreement with
MTP-Development described in the Property Manager's Agreement).
\1996REPLACEMENT. In the event that any property
management contract or leasing services agreement for the Project expires
or is terminated (including, but not limited to the existing property
management agreement between MTP-South Tower LP and MTP-Development), then:
8.5.4.1 MTP-South Tower shall promptly hire an
unaffiliated experienced and reputable property management firm to manage
the Project or leasing agent to lease the Project, as the case may be; and
8.5.4.2 such new Project property manager or leasing
agent and property management contract or leasing services agreement shall
be subject to the prior written approval of Aetna, which approval shall not
be unreasonably withheld, conditioned or delayed.
8.6 FINANCIAL REPORTS.
8.6.1 Within one hundred twenty (120) days following the
end of each calendar year, MTP-South Tower shall provide Aetna with annual
audited financial statements of MTP-South Tower, including a balance sheet,
an income statement, a reconciliation of limited liability company capital
accounts and, if applicable, income accounts, and such other statements as
may be reasonably required by Aetna, prepared in accordance with GAAP
(defined below) consistently applied and certified as true and complete
without qualification by the independent public accountants for MTP-South
Tower. As used herein, "GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be approved
by a significant segment of the accounting profession, which are applicable
to the circumstances as of the date of determination.
8.6.2 Within forty-five (45) days following the end of
each calendar quarter, MTP-South Tower shall deliver to Aetna the
following, certified as true and complete by an Equity Owner of MTP-South
Tower (which certification shall be subject to the provisions of
Section 11.8): (a) a rent roll for the Project, and (b) a quarterly
financial report on the Project, showing monthly and quarterly cash flow
during such quarter and including a Project balance sheet, income statement
and such other information as Aetna may reasonably require, all in form and
substance reasonably satisfactory to Aetna.
8.6.3 In addition to the financial statements and reports
which MTP-South Tower is required to provide pursuant to the preceding
provisions of this Section 8.6, MTP-South Tower shall promptly furnish to
Aetna from time-to-time such other information regarding the financial
condition of MTP-South Tower or the Project as Aetna may reasonably
request.
8.7 RIGHT TO INSPECT. Aetna and its accountants and
consultants shall have the right at any time and from time-to-time, to
inspect, review, audit and copy any and all books and records of MTP-South
Tower, including books and records related to the Project in the possession
of any manager or agent. Such records may include, without limitation, all
leases and other contracts and agreements.
8.8 ACCESS TO PROJECT AND DISSEMINATION OF INFORMATION.
MTP-South Tower hereby authorizes Aetna, any participant in the Loan, any
prospective participant, assignee or bidder at any foreclosure sale and
their respective officers, directors, employees, agents and independent
contractors to enter upon all or any portion of the Project at any time and
from time-to-time (including following the occurrence of a default) for the
purpose of conducting such tests, inspections, inquiries, examinations,
studies, analyses, samples, surveys and other information-gathering
activities (collectively, "TESTS AND STUDIES") with respect to the Project
as any of them may from time-to-time deem necessary or appropriate,
including Tests and Studies with respect to the structural integrity of
improvements, the presence of hazardous substances in or around the
Project, and the occurrence of any hazardous substances activity; provided,
however, that unless a Default then exists or Aetna has reason to believe
that a problem exists in connection with any of the foregoing matters, such
Tests and Studies shall not include drilling, boring or similar physical
invasion of the improvements at the Project. Aetna agrees that any such
entry shall be on reasonable notice to MTP-South Tower and shall be made
without unreasonable interference with the rights of tenants or the
operation of the Project. MTP-South Tower hereby covenants and agrees to
cooperate fully with such persons in their efforts to conduct Tests and
Studies, and further covenants and agrees to make available to such persons
such portions of the Project and the other collateral as any of them may
designate. The results of all Test and Studies shall be and at all times
remain the property of such persons, and under no circumstances shall any
such person have any obligation whatsoever to disclose or otherwise make
available to MTP-South Tower or any other person such results or any other
information obtained by them in connection with such Tests and Studies.
Notwithstanding the foregoing provisions of this Section 8.8, Aetna hereby
reserves the right, and MTP-South Tower hereby expressly authorizes Aetna,
to make available to any person (including any governmental agency or
authority and any prospective participant, assignee or bidder at any
foreclosure sale of the Project) any and all information which Aetna may
have with respect to the Project, whether provided by MTP-South Tower or
any other person or obtained as a result of Tests and Studies (including
environmental reports, surveys and engineering reports); provided, however,
that any such disclosure to any governmental agency or authority shall only
be to the extent required by applicable law. MTP-South Tower consents to
Aetna notifying any person (either as a part of a Notice of Sale or
otherwise) of the availability of any or all of the Tests and Studies, any
environmental reports and the information contained therein. MTP-South
Tower acknowledges that Aetna cannot control or otherwise assure the
truthfulness or accuracy of the Tests and Studies or any environmental
reports, and that the release of the Tests and Studies or any environmental
reports, or any information contained therein, to prospective bidders at
any foreclosure sale of the Project may have a material and adverse effect
upon the amount which a person may bid at such sale. MTP-South Tower
agrees that Aetna shall have no liability whatsoever as a result of
delivering any or all of the Tests and Studies and any environmental
reports or any information contained therein to any person permitted
hereby, and MTP-South Tower hereby releases, remises and forever discharges
Aetna from any and all claims, damages or causes of action arising out of,
connected with or incidental to the Tests and Studies, any environmental
reports or the delivery thereof as permitted herein; provided, however,
that Aetna shall be and remain responsible for claims, damages or causes of
action arising out of any physical damage to property or injury to persons
which occurs at the Project in the course of any such tests, inspections or
other activities conducted by Aetna or at Aetna's request pursuant to this
Section 8.8.
:\J FURTHER ASSURANCES. MTP-South Tower shall cooperate with
Aetna and shall execute and deliver, or cause to be executed and delivered,
all financing statements, payment notices and other documents and
instruments, and shall take all such other action as Aetna may reasonably
request from time-to-time in order to accomplish and satisfy the provisions
and purposes of this Agreement and the other Amended Loan Documents,
provided same do not adversely modify the rights or obligations of
MTP-South Tower under the Amended Loan Documents.
8.10 NOTICE OF LITIGATION, ETC. Promptly upon receiving notice
thereof, MTP-South Tower shall give, or cause to be given, prompt written
notice to Aetna of:
8.10.1 any action or proceeding instituted by or against
MTP-South Tower in an amount in excess of Two Hundred Fifty Thousand
Dollars ($250,000.00) in any Federal or state court or before any
commission or other regulatory body, Federal, state or local, foreign or
domestic; or
8.10.2 any such proceedings that are threatened against
MTP-South Tower which, if adversely determined, could have a material and
adverse effect upon the business, operations, property, assets, management,
nature of ownership or condition (financial or otherwise) or which would
constitute a breach or default under any of the Amended Loan Documents or
any other contract, instrument or agreement to which MTP-South Tower is a
party or by or to which MTP-South Tower or any of its assets may be bound
or subject; or
8.10.3 any other actions, proceedings or notices
materially and adversely affecting the Project (or any portion thereof) or
Aetna's interest therein.
8.11 LIENS. MTP-South Tower hereby confirms and agrees that
pursuant to the Loan Documents and the Amended Loan Documents Aetna has and
shall continue to hold first priority perfected liens on the Project and
all other property of MTP-South Tower, real and personal, tangible and
intangible, other than the Excluded Assets provided for in Section 8.12.1
and the proceeds from the Excluded Assets. On the Effective Date and at
any time and from time-to-time thereafter, MTP-South Tower shall promptly
execute, acknowledge and deliver any instrument Aetna may reasonably
request in order to evidence, confirm or perfect any such lien. Until the
Loan and all other obligations of MTP-South Tower under the Amended Loan
Documents have been fully satisfied, MTP-South Tower shall not create,
permit or suffer to exist any other lien or encumbrance on the Project or
on any other asset or property of MTP-South Tower.
8.12 EXCLUDED ASSETS.
8.12.1 WORKS OF ART. The works of art described on
the schedule attached hereto as Exhibit B and incorporated herein by
reference are owned by MTP-South Tower, but are not encumbered by Aetna's
liens. If any of the works of art described on Exhibit B are removed from
the Project, then:
8.12.1.1 MTP-South Tower shall promptly and fully
restore the portions of the Project where such work of art has been
removed; and
8.12.1.2 in the event that the Community
Redevelopment Agency of The City of Los Angeles or other applicable
governmental agency requires that such works of art be replaced, then
MTP-South Tower shall be obligated to obtain such replacements acceptable
to such agency.
The costs of any such restoration and replacements shall be borne and paid
by MTP-South Tower solely either (i) from any proceeds of the disposition
of such scheduled works of art, or (ii) from equity contributions by one or
more Equity Owners of MTP-South Tower; the Equity Owners of MTP-South Tower
other than Carlyle Real Estate Limited Partnership XIV and Carlyle Real
Estate Limited Partnership XV shall be personally liable for any failure of
MTP-South Tower to comply with the foregoing, and such liability shall be
subject to the provisions of Section 11.8 and the provisions of the
Acknowledgment and Agreement appended to this Agreement. All such
scheduled works of art and such replacements thereof shall constitute
"EXCLUDED ASSETS" for purposes of this Agreement; provided, however, that
any works of art acquired after the Effective Date using funds from Gross
Receipts shall not constitute Excluded Assets and shall be encumbered by
the liens of the Amended Loan Documents.
8.12.2 EXCESS PARKING RIGHTS. Prior to foreclosure or
other realization on the collateral encumbered by the Amended Loan
Documents, or acceptance of a deed or assignment in lieu thereof, MTP-South
Tower shall continue to have a right to transfer, by recorded covenants
burdening the Project, free of any security interest under the Amended Loan
Documents, the right to include parking capacity contained in the Project
in excess of applicable Los Angeles Municipal Code requirements for the
Project in the capacity considered in determining whether other property
has adequate parking capacity. Subject to the right of Aetna to reasonably
verify that such excess required parking capacity exists, Aetna shall join
in the execution and acknowledgment of any such covenant to evidence the
subordination of the Amended Loan Documents thereto.
8.12.3 EXCLUDED ASSET PROCEEDS. Any proceeds realized
by MTP-South Tower from (i) the disposition of works of art which
constitute Excluded Assets in accordance with Section 8.12.1, or (ii) the
sale of excess parking rights in accordance with Section 8.12.2
(collectively, "EXCLUDED ASSET PROCEEDS") shall, however, continue to be
included in Gross Receipts and must be deposited in the Deposit Account,
but such amounts shall be disbursed to MTP-South Tower in accordance with
Section 7.2.1.2.
8.13 SECURITY. The obligations of MTP-South Tower to Aetna
under this Agreement, under the Lockbox Agreement as supplemented and
modified hereby, under the Amended Note, and under the Environmental
Indemnity Agreement shall be secured by the Amended Loan Documents, and any
failure of MTP-South Tower to perform its obligations hereunder or under
the Amended Note or the Environmental Indemnity Agreement shall permit
Aetna to exercise any of its rights and remedies provided for in the
Amended Loan Documents.
8.14 DEFAULT; EVENT OF DEFAULT.
8.14.1 DEFAULT. As used herein in connection with
certain rights of Aetna under this Agreement, "DEFAULT" means either:
8.14.1.1 the occurrence and continuance of a
monetary breach or default by MTP-South Tower under this Agreement or any
of the Amended Loan Documents, following notice thereof to MTP-South Tower
but regardless of the expiration of any applicable cure period with respect
to such breach or default; or
8.14.1.2 the occurrence and continuance of any other
breach or default by MTP-South Tower under this Agreement or any of the
Amended Loan Documents, following notice thereof to MTP-South Tower and, if
there exists any cure period applicable to such default, the expiration of
such cure period.
The foregoing shall not limit any right that MTP-South Tower has under the
Amended Loan Documents or at law to cure any breach or default, within
applicable cure periods or otherwise, subject, however, to Aetna's right to
exercise its rights or remedies under this Agreement or the applicable
Amended Loan Documents or as otherwise permitted by law.
8.14.2 EVENT OF DEFAULT. The occurrence of any one or
more of the following events shall constitute an "EVENT OF DEFAULT" under
this Agreement and under each of the Amended Loan Documents:
8.14.2.1 if MTP-South Tower fails to comply with any
of the terms and conditions of this Agreement and such failure has not been
cured within five (5) business days following written notice from Aetna;
provided, however, that in the case of the failure to perform any
non-monetary obligation which cannot reasonably be cured within said five
(5) business day period, the failure to perform any such nonmonetary
obligation shall not constitute an Event of Default unless MTP-South Tower
fails to commence such cure within said five (5) business day period or
thereafter fails to proceed with diligence to cure such nonmonetary breach
within a reasonable period; or
8.14.2.2 if MTP-South Tower fails to comply with any
of the terms and conditions of any other instrument or agreement delivered
to Aetna in connection with the Project (including, without limitation, the
Acknowledgement Agreements previously executed by MTP-South Tower in
connection with The Los Angeles Unified School District Lease, the Finova
Capital Corporation Lease and The Boston Consulting Group Lease, and the
Center Acknowledgement Agreement), and such failure has not been cured
within the applicable cure period, if any, under such other instrument or
agreement; or
8.14.2.3 if an Event of Default, as defined in any
of the other Amended Loan Documents, occurs and is continuing.
Upon the occurrence of an Event of Default, Aetna shall be entitled to
exercise any and all rights and remedies available to Aetna under this
Agreement or the other Amended Loan Documents, at law, or in equity,
including but not limited to the right to accelerate the maturity of the
Loan upon an Event of Default (and upon such acceleration, all amounts due
at Maturity in accordance with Section 3.2 above, including but not limited
to any Yield Maintenance Payment and Participation Interest, shall be
immediately due and payable in full).
8.14.3 Subject to the disclaimers set forth in the
last paragraph of Section 1.1 above in the event the Effective Date does
not occur for any reason, Aetna acknowledges and confirms, as of the date
of this Agreement, that Aetna has no actual knowledge of the existence of
any defaults, any state of fact that with notice or the passage of time
would constitute a default, or any breach of any representation, by MTP-
South Tower under the Amended Loan Documents. As used in this
Section 8.14.3, the term "actual knowledge" shall mean the actual conscious
knowledge of employees of Aetna, without independent investigation or
review of Aetna's files.
9. CLOSING MATTERS.
9.1 REPRESENTATIONS AND WARRANTIES. As a material inducement
to Aetna to enter into this Agreement, MTP-South Tower hereby represents
and warrants to Aetna as follows:
9.1Default under the Amended Loan Documents, or any condition or event which
with notice or the lapse of time or both, would constitute an Event of
Default thereunder; MTP-South Tower has no rights of offset, defenses,
counterclaims, claims, or objections against Aetna with respect to the
Loan, the Amended Note, the Project, or any of the Amended Loan Documents,
or alternatively, if any and all such rights of offset, defenses,
counterclaims, claims, or objections of any nature whatsoever which
MTP-South Tower may have or claim, whether known or unknown, exist, such
claims are hereby expressly and irrevocably waived and released;
9.1.2 that the certified statement delivered by MTP-South
Tower in accordance with Section 9.2 below is true, complete and correct;
9.1.3 that the liens of Aetna under the Amended Loan
Documents on the property of MTP-South Tower described therein are valid,
perfected, binding and enforceable first liens on such property and that
there exist no other liens on any such property, other than liens for
property taxes not yet due and payable or other inchoate liens, and any
other liens shown on the title insurance policy or endorsement delivered to
Aetna at Closing in accordance with this Agreement;
9.1.4 that MTP-South Tower and its Equity Owners have
obtained all consents and permissions related to the transactions herein
contemplated and required to be obtained by MTP-South Tower or such Equity
Owners under any covenant, agreement, encumbrance, law or regulation;
9.1.5 that MTP-South Tower has the capacity and authority
to enter into this Agreement and nothing prohibits or restricts the right
or ability of MTP-South Tower to enter into this Agreement; and
9.1.6 that, without limiting the generality of the
foregoing, any necessary consent by any of the Equity Owners of MTP-South
Tower to the transactions provided for herein has been duly obtained.
The liability of MTP-South Tower and its Equity Owners in connection with
such representations and warranties shall be subject to the provisions of
Section 11.8.
9.2 CERTIFIED STATEMENT. As of the date of this Agreement,
MTP-South Tower shall execute a certified statement for the benefit of
Aetna, reflecting:
9.2.1 the rent roll for the Project, which shall include
the names of all tenants, a description of all leases and amendments, rent,
notice addresses, any outstanding landlord obligations, a statement of
whether any such defaults or disputes exist thereunder; and
9.2.2 a statement reflecting the extent of trade payables
of MTP-South Tower, real estate taxes on the Project (and the status of the
appeal thereof), leasing commissions due, if any and any other material
obligations of MTP-South Tower.
Such certified statement shall constitute representations and warranties of
MTP-South Tower, but the provisions of Section 11.8 shall apply to the
liability of MTP-South Tower and the Equity Owners of MTP-South Tower in
connection with any breach thereof or misrepresentation therein. Such
certified statement shall be transmitted to Chicago Title pursuant to the
Recording Instructions, for delivery to Aetna on the Effective Date.
9.3 TITLE INSURANCE. On the Effective Date, the Amendment to
Security Documents shall be recorded in the Official Records of Los Angeles
County, California and in connection therewith, Aetna shall receive either
a new policy of title insurance, or an endorsement of Aetna's policy of
title insurance issued in connection with the Loan, Policy ▇▇. ▇▇▇▇▇▇▇
dated November 28, 1984 issued by Ticor Title Insurance Company, in either
case insuring that the lien of the Deed of Trust, as modified by the
Amendment to Security Documents, continues in full force and effect, with
no loss of priority, and also insuring the right of Aetna to realize on
such lien in connection with the Participation Interest provided for
herein. The title insurance company issuing such policy or endorsement,
the form of such policy or endorsement and any exceptions therein, the
terms of any reinsurance agreements and direct access agreements Aetna may
require, and the parties to any such reinsurance agreements and direct
access agreements shall all be subject to the prior written approval of
Aetna. All recording fees, title insurance premiums and other charges in
connection therewith shall be borne by MTP-South Tower, as an Approved
Operating Cost hereunder.
9.4 LEGAL OPINION. As of the date of this Agreement, MTP-South
Tower shall cause legal counsel to MTP-South Tower to execute an opinion
addressed to Aetna, in form reasonably satisfactory to Aetna and its legal
counsel, to the effect that MTP-South Tower LP has been duly organized and
is in good standing under the laws of California, that MTP-South Tower LP
has duly authorized, executed and delivered this Agreement, the Allonge,
the Environmental Indemnity Agreement, the Amendment to Security Documents
and the other instruments and agreements provided for herein to be signed
by MTP-South Tower LP, that this Agreement, the Allonge, the Environmental
Indemnity Agreement, the Amendment to Security Documents and each of the
Loan Documents modified thereby constitutes the valid and binding
obligation of MTP-South Tower LP, enforceable in accordance with its terms
(subject to customary exceptions and exclusions), and such additional
matters as Aetna may require. Such legal opinion shall be transmitted to
Chicago Title pursuant to the Recording Instructions, for delivery to Aetna
on the Effective Date.
9.5 LEGAL FEES AND COSTS. On or before the Effective Date,
MTP-South Tower shall pay all reasonable fees and expenses of Aetna's
outside counsel, and all other reasonable costs and expenses incurred by
Aetna relating to the transactions provided for herein, which amounts shall
constitute Approved Operating Costs hereunder.
10. CLOSING.
10.1 CLOSING DATE. The Closing of the transactions contemplated
herein (the "CLOSING") shall be accomplished in accordance with the
Recording Instructions to Chicago Title in Los Angeles, California,
pursuant to which, following Chicago Title's receipt of (i) fully executed
counterparts of this Agreement and the other closing documents described in
Section 10.2.1 from all parties thereto, (ii) the $2,000,000 payment
described in Section 1.7, and (iii) the confirmation from Aetna of
Investment Committee approval contemplated by Section 1.1.2 above, Chicago
Title shall, provided that Recording Instructions have not then expired or
been terminated (as provided for in the Recording Instructions),
simultaneously: (i) from said $2,000,000 payment, retain not more than
$88,880 for title insurance premiums and recording costs and disburse the
balance to Aetna, (ii) record the Amendment to Security Documents and cause
the title insurance policy or endorsement provided for in Section 9.3 to be
issued, and (iii) deliver counterparts of this Agreement and the other
closing documents to Aetna and MTP-South Tower. The date of such Closing
(i.e., such disbursement, recording and delivery) shall constitute the
"EFFECTIVE DATE" for all purposes of this Agreement. As provided for in
the Recording Instructions, if the foregoing transactions have not closed
on or before September 26, 1996, time being of the essence, any general
partner of MTP-South Tower LP or Aetna may, each acting unilaterally and
with or without cause, terminate the Recording Instructions, in which event
this Agreement and the other instruments and agreements executed as of even
date herewith shall be null and void, and no party shall have any liability
or obligations hereunder or thereunder.
10.2 CONDITIONS TO CLOSING. Prior to the expiration or sooner
termination of the Recording Instructions, as conditions precedent to the
Effective Date and to the obligations and agreements of Aetna hereunder,
the following transactions must have occurred:
10.2.1 Aetna and MTP-South Tower LP must have
delivered to Chicago Title the following instruments and agreements, duly
executed by the parties thereto:
10.2.1.1 the Recording Instructions executed by
Aetna and MTP-South Tower LP;
10.2.1.2 this Agreement executed by Aetna and
MTP-South Tower LP;
10.2.1.3 the Allonge executed by Aetna and MTP-South
Tower LP;
10.2.1.4 the Environmental Indemnity executed by
MTP-South Tower LP;
10.2.1.5 the Amendment to Security Documents
executed by MTP-South Tower LP and Aetna;
-VII.5in Section 6.3.4.2 above, executed by MTP-South Tower LP;
10.2.1.7 the Center Acknowledgement Agreement
executed by MTP-South Tower LP and the Phase I Owner (and MTP-South
Tower LP shall cause the Phase I Owner to execute and deliver the Center
Acknowledgement Agreement);
10.2.1.8 the Property Manager's Agreement executed
by MTP-South Tower LP and MTP-Development (and MTP-South Tower LP shall
cause MTP-Development to execute and deliver the Property Manager's
Agreement);
10.2.1.9 the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Consent described in
Recital I.(7) above executed by MTP-South Tower LP and Aetna;
10.2.1.10 the certified statement provided for in
Section 9.2 above executed by MTP-South Tower LP; and
10.2.1.11 the legal opinion provided for in
Section 9.4 above executed by legal counsel to MTP-South Tower LP (and
MTP-South Tower LP shall cause such counsel to execute such opinion).
10.2.2 Prior to the expiration or sooner termination of
the Recording Instructions, Chicago Title must have received from or on
behalf of Aetna, confirmation of the Aetna Investment Committee approval
provided for in Section 1.1.2.
10.2.3 At or prior to the Closing, MTP-South Tower must
have reimbursed Aetna for reasonable legal fees and costs in accordance
with Section 9.5 above and Section 11.10 below, as Approved Operating Costs
hereunder.
10.2.4 Unless the Recording Instructions have sooner
terminated, following receipt of all of the items described in
Section 10.2.1 and Section 10.2.2, on the Closing Date, Chicago Title, in
accordance with the Recording Instructions: (i) must have caused the
Amendment to Security Documents to be recorded in the Official Records of
Los Angeles County, California, and (ii) must have caused the title
insurance policy or endorsement provided for in Section 9.3 above to be
delivered to Aetna; MTP-South Tower shall pay all title insurance premiums,
recording fees and other charges in connection therewith, as Approved
Operating Costs hereunder.
11. MISCELLANEOUS.
11.1 NOTICES. Any notice, report, demand, request or other
instrument or communication which any party hereto may be required or may
desire to give hereunder to any other party hereto shall be in writing and
shall be deemed to have been properly given or delivered, if addressed to
the party intended to receive the same at the address of such party set
forth below, (a) when delivered at such address by hand or by overnight
courier or delivery service, or (b) three (3) business days after the same
shall have been deposited in the United States Mail as first class
registered or certified mail, return receipt requested, postage prepaid,
whether or not the same actually shall have been received by such party:
If to MTP-South Tower :
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners-South Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners-South Tower
c/o Carlyle Real Estate Limited Partnership XIV
and Carlyle Real Estate Limited Partnership XV
c/o JMB Realty Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Professional Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Aetna:
Aetna Life Insurance Company
c/o Aetna Investment Group
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which any such notice, report, demand,
request or other instrument or communication intended to be received by
such party is to be delivered or mailed, by giving written notice of such
change to the other parties hereto, but no such notice of change shall be
effective against any party unless and until such notice of change shall
have been received by such party.
11.2 CHANGES, WAIVERS, ETC. Neither this Agreement nor any
provision hereof may be changed, waived, released, discharged, withdrawn,
revoked or terminated orally, or by any action or inaction. In order to be
effective and enforceable, any such change, waiver, release, discharge,
withdrawal, revocation or termination must be evidenced by a written
document or instrument signed by the party against which enforcement of
such change, waiver, release, discharge, withdrawal, revocation or
termination is sought, and then shall be effective and enforceable only to
the extent specifically provided in such document or instrument.
11.3 GOVERNING LAW; SEVERABILITY. This Agreement shall be
construed, interpreted, enforced and governed by and in accordance with the
internal laws of the State of California, without regard to principles of
conflicts of laws. All rights and remedies provided in this Agreement may
be exercised only to the extent that the exercise thereof does not violate
any applicable law and are intended to be limited to the extent necessary
to avoid rendering this Agreement invalid, illegal or unenforceable. In
the event that any of the provisions of this Agreement shall be deemed
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions of this Agreement shall in
no way be affected, prejudiced or disturbed thereby,.
11.4 MEANING OF CERTAIN TERMS. Each reference in this Agreement
to any gender shall be deemed also to include any other gender, and the use
in this Agreement of the singular shall be deemed also to include the
plural and vice versa, unless the context requires otherwise. As used in
this Agreement, the term "PERSON" shall mean and refer to any and all
individuals, sole proprietorships, partnerships, joint ventures,
associations, trusts, estates, business trusts, limited liability
companies, corporations (non-profit or otherwise), financial institutions,
governments (and agencies, instrumentalities and political subdivisions
thereof), and other entities and organizations.
11.5 HEADINGS. The headings and captions of the Sections,
paragraphs and other subdivisions of this Agreement are for convenience of
reference only, are not to be considered part of this Agreement and shall
not limit, expand or otherwise affect any of the provisions of this
Agreement.
11.6 BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.
Each reference in this Agreement to MTP-South Tower or Aetna shall be
deemed also to include the successors and assigns of such party. Nothing
set forth in this Section shall be deemed or construed to create, recognize
or allow any assignment or transfer rights not otherwise provided for in
this Agreement.
-10K EXCLUSIVE BENEFIT. This Agreement and the obligations of
Aetna and MTP-South Tower hereunder are and at all times shall be deemed to
be for the exclusive benefit of such parties and their respective
successors and permitted assigns. Nothing set forth herein shall be deemed
to be for the benefit of any other person.
11.8 NON-RECOURSE.
11.8.1 The provisions of this Section 11.8 shall
replace the provisions of Section 5.27 of the Deed of Trust, the
penultimate paragraph on the signature page of the Assignment of Rents,
Section 25 of the existing Lockbox Agreement, and any similar provisions of
the Loan Documents, the Amended Loan Documents or any other instrument or
agreement providing for or limiting the personal liability of MTP-South
Tower and its Equity Owners. Notwithstanding any other provision of the
Amended Loan Documents, with respect to any liability of MTP-South Tower
arising under this Agreement or the other Amended Loan Documents, except as
provided for below, the recourse of Aetna shall be limited to the Project
and the other assets of MTP-South Tower (other than the Excluded Assets or
the proceeds therefrom) encumbered at any time by the Amended Loan
Documents (including any collateral hereafter encumbered to secure the Loan
or the other obligations of MTP-South Tower to Aetna under the Amended Loan
Documents or any supplements thereto or amendments thereof hereafter
executed by MTP-South Tower), but neither MTP-South Tower nor the Equity
Owners of MTP-South Tower shall be personally liable for such obligations
of MTP-South Tower under this Agreement or the other Amended Loan
Documents, and no action or proceeding shall be brought by Aetna against
such Equity Owners, or such Equity Owners' other assets, for any deficiency
between the total amount of any such liability of MTP-South Tower and the
amount, if any, realized from the assets of MTP-South Tower; provided,
however, that MTP-South Tower and the direct and indirect Equity Owners of
MTP-South Tower (but not (i) JMB Realty Corporation, or (ii) any
shareholder of the indirect Equity Owners of MTP-South Tower) shall,
subject to Section 11.8.2 below, be personally jointly and severally liable
and obligated to Aetna:
11.8.1.1 for the matters provided for in
Section 2(g) of the Lockbox Agreement (as provided for in Section 6.2 and
Section 6.3.3 of this Agreement), in Section 8.1.2 and, with respect to any
Equity Owner other than Carlyle Real Estate Limited Partnership XIV and
Carlyle Real Estate Limited Partnership XV, in Section 8.12.1 above; and
11.8.1.2 for any damages suffered as a result of
fraud or misappropriation of cash or any asset (other than the Excluded
Assets) of MTP-South Tower (including, without limitation, any funds
disbursed to MTP-South Tower for payment of Approved Operating Costs or
Approved Capital Costs).
Nothing contained in this Section 11.8 shall be deemed to be a release or
impairment of the Loan or the security therefor provided by the Amended
Loan Documents, nor shall anything provided in this Section 11.8 preclude
Aetna from foreclosing (judicially or nonjudicially) or otherwise realizing
on the collateral security provided under the Amended Loan Documents, or
from obtaining a receiver as and when permitted by applicable law or
pursuant to the provisions of the Amended Loan Documents, or from bringing
any action to obtain or protect any income, revenues or other equitable
rights of Aetna arising from the Project or the other assets of MTP-South
Tower (other than the Excluded Assets), or to restrain or enjoin any action
by MTP-South Tower or its successors which would impair Aetna's security
for the Loan or would otherwise be in violation of the terms of the Amended
Loan Documents, or from enforcing any of its other rights under the Amended
Loan Documents except as provided herein.
11.8.2 Notwithstanding any other provision of the
Amended Loan Documents:
11.8.2.1 in the case of affirmative conduct of
MTP-South Tower which constitutes a breach of an applicable provision of
this Agreement or the Lockbox Agreement, or which constitutes fraud or
misappropriation as provided for above, for which the Equity Owners are
personally liable in accordance with the foregoing, the liability of any
Equity Owner shall be subject to the right of such Equity Owner to
establish (with such Equity Owner bearing burden of proof of such
assertion) that such Equity Owner neither caused such breach by MTP-South
Tower or participated in such fraud or misappropriation nor directly
received any benefit therefrom, in which event only the other Equity
Owner(s) of MTP-South Tower shall remain jointly and severally liable and
obligated to Aetna;
11.8.2.2 the Equity Owners of MTP-South Tower
shall not be liable to Aetna for punitive damages or consequential damages
under the provisions of this Section 11.8, and their liability shall be
limited to Aetna's actual damages;
11.8.2.3 in connection with any liability of
MTP-South Tower to Aetna, Aetna shall have no recourse to (and the Equity
Owners of MTP-South Tower shall have no liability to Aetna under) any
(i) deficit capital account or deficit make up obligation of any such
Equity Owner, (ii) claims against such Equity Owners by MTP-South Tower,
(iii) claims or obligations among such Equity Owners, or (iv) the Excluded
Assets; and
11.8.2.4 in the event ▇▇▇▇▇ Fargo Bank or its
nominee succeeds to the interest of Carlyle Real Estate Limited
Partnership XIV or Carlyle Real Estate Limited Partnership XV in MTP-South
Tower, the liability of such successor under this Section 11.8, except for
any liability under Section 11.8.1.2 caused by such successor, shall be
limited to its interest in MTP-South Tower.
11.8.3 The general partners of MTP-South Tower LP,
together with certain indirect general partners of ▇▇▇▇▇▇▇ Partners-Bunker
Hill, Ltd., one of the general partners of MTP-South Tower LP, have
executed the Acknowledgment and Agreement appended to this Agreement in
order to evidence certain acknowledgements and agreements concerning their
liabilities and obligations set forth or provided for in this Section 11.8,
subject to the limitations provided for in Section 11.8.2 above, and the
rights of Aetna in connection therewith. Such liabilities and obligations
shall survive the Effective Date and shall survive the formation of
MTP-South Tower LLC, as such direct and indirect general partners of
MTP-South Tower LP will be direct and indirect members of MTP-South
Tower LLC. The provisions of said Acknowledgment and Agreement are
incorporated by reference into this Section 11.8.
11.9 NO MORTGAGEE IN POSSESSION; NO JOINT VENTURE. MTP-South
Tower agrees that neither Aetna nor Agent is a mortgagee in possession with
respect to the Project and that this Agreement does not create any
obligation on the part of Aetna or Agent to manage or operate the Project
or give Aetna or Agent any control over the Project; it being agreed that
the obligation to manage and operate and the right to control the Project
remains with MTP-South Tower. The relationship between Aetna and MTP-South
Tower is that of creditor and debtor and not that of partners or joint
venturers. MTP-South Tower agrees that neither Aetna nor Agent shall have
any fiduciary obligations or trust obligations with respect to managing or
operating the Project.
11.10 LEGAL FEES AND EXPENSES. MTP-South Tower shall be
obligated to reimburse all of the reasonable legal fees and expenses of
O'Melveny & ▇▇▇▇▇ LLP, counsel to Aetna, in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
transactions provided for herein, the review of any proposed lease or other
matter submitted for approval by Aetna (whether or not such lease is
approved) and the preparation and negotiation of instruments in connection
therewith, and any breach or default by MTP-South Tower under the Amended
Loan Documents (including advice to Aetna with respect to its rights and
remedies thereunder). Such reimbursement obligations may be satisfied out
of Gross Receipts as Approved Operating Costs.
11.11 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties concerning the matters provided for herein,
and all prior or contemporaneous understandings, oral representations or
agreements had among the parties with respect to such matters are merged in
this Agreement. All prior written agreements executed by MTP-South Tower
and Aetna, as same may be supplemented and modified by this Agreement,
shall remain in effect; provided, however, that this Agreement replaces
that term sheet captioned "Binding Letter Agreement" executed by Aetna and
MTP-South Tower on December 29, 1995.
11.12 AUTHORITY. Each party executing this Agreement represents
that such party has the full authority and legal power to do so and
acknowledges that it was represented by counsel in the negotiation and
execution of this Agreement.
11.13 CONSTRUCTION. Except for specific provisions of this
Agreement that expressly amend specific provisions of the existing Loan
Documents, or for provisions of this Agreement which are contradictory to
provisions of the existing Loan Documents, it is the intention of the
parties that the provisions of this Agreement are in addition to, and
supplement, the provisions of the existing Loan Documents, which shall
continue to apply. To the extent of any conflict, however, the terms of
this Agreement shall govern and control over the terms of the existing Loan
Documents.
11.14 RATIFICATION. The Loan Documents, as supplemented,
modified and amended by this Agreement, the Allonge, the Amendment to
Security Documents and the Environmental Indemnity Agreement, shall remain
in full force and effect and are hereby ratified and affirmed in all
respects by Aetna and MTP-South Tower.
11.15 COUNTERPARTS. This Agreement, including the Acknowledgment
and Agreement appended hereto, may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which shall be
deemed to be one and the same Agreement.
WITNESS the execution of this Modification and Extension
Agreement by Aetna and MTP-South Tower as of the date first written above.
Aetna:
AETNA LIFE INSURANCE COMPANY, a Connecticut
corporation
By: ____________________________
Assistant Vice President
MTP-South Tower:
▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS-SOUTH TOWER, a
California limited partnership
By: ▇▇▇▇▇▇▇ PARTNERS-BUNKER HILL, LTD., a
California limited partnership, General
Partner
By: ▇▇▇▇▇▇▇ PARTNERS BGHS, LLC, a
California limited liability company,
Managing General Partner
By: ▇▇▇▇▇▇▇ PARTNERS SCS, INC., a
California corporation, Manager
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
By: ▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS, INC., a
California corporation, General Partner
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XIV, an Illinois limited
partnership, General Partner
By: JMB REALTY CORPORATION,
a Delaware corporation
Its general partner
By: _________________________
Title:
By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois limited
partnership, General Partner
By: JMB REALTY CORPORATION,
a Delaware corporation,
Its general partner
By: _________________________
Title:
ACKNOWLEDGEMENT AND AGREEMENT
THIS ACKNOWLEDGEMENT AND AGREEMENT is executed by ▇▇▇▇▇▇▇
PARTNERS-BUNKER HILL, LTD., a California limited partnership ("MPBH"),
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV, an Illinois limited
partnership ("Carlyle 14"), CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV, an
Illinois limited partnership ("CARLYLE 15"), ▇▇▇▇▇▇▇ PARTNERS BGHS, LLC, a
California limited liability company ("MPB"), ▇▇▇▇▇▇▇ PARTNERS SCS, INC., a
California corporation ("MPS"), and ▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS, INC., a
California corporation ("MTP"), each as an "ACKNOWLEDGING PARTY" herein, in
favor of AETNA LIFE INSURANCE COMPANY, a Connecticut corporation ("AETNA").
A. MPBH, Carlyle 14 and Carlyle 15 are the only general
partners in ▇▇▇▇▇▇▇/▇▇▇▇▇▇ Partners-South Tower, a California limited
partnership ("MTP-SOUTH TOWER LP"), MPB and MTP are the only general
partners of MPBH, and MPS is the Manager of MPB.
B. As provided for in the foregoing Modification and Extension
Agreement (the "MODIFICATION AGREEMENT") between Aetna and MTP-South
Tower LP to which this Acknowledgment and Agreement is appended, and in the
Lockbox Agreement referred to therein, each of the Acknowledging Parties,
as direct and indirect general partners in MTP-South Tower LP, has certain
liability to Aetna as described and provided for in Section 11.8.1.1 and
Section 11.8.1.2 of the Modification Agreement, subject, however, to the
provisions of Section 11.8.2 of the Modification Agreement.
C. As provided for in the Modification Agreement, the
Acknowledging Parties plan to cause a limited liability company to be
formed under California law, to be named ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners-South
Tower, LLC ("MTP-SOUTH TOWER LLC"), and to cause MTP-South Tower LLC to
succeed by operation of law to all of the assets of and liabilities of
MTP-South Tower LP (including, without limitation, the Project, as defined
in the Modification Agreement) and to all of the liabilities of MTP-South
Tower LP and will assume, subject to the provisions of Section 11.8 of the
Modification Agreement, the obligations of MTP-South Tower LP under the
Modification Agreement and the other Amended Loan Documents (as defined in
the Modification Agreement).
D. Because under California law the direct and indirect members
of a limited liablity company do not have the same personal liability for
the obligations of the limited liability company as the direct and indirect
general partners have for the obligations of a limited partnership, the
Acknowledging Parties are executing this Acknowledgment and Agreement to
evidence and affirm their continuing liability to Aetna for the matters
provided for in Section 11.8 of the Modification Agreement notwithstanding
their formation of a limited liability company in which they will be the
direct and indirect members, and notwithstanding the transactions by that
limited liability company described in Recital C above.
IN CONSIDERATION of the foregoing recitals and the covenants and
agreements set forth in the Modification Agreement, and to induce Aetna to
execute and deliver the Modification Agreement and to consent to the
formation of MTP-South Tower LLC to own the Project (as defined in the
Modification Agreement), each Acknowledging Party agrees as follows for the
benefit of Aetna:
1. Initially capitalized terms used in this Acknowledgement and Agreement
without definition are defined in the Modification Agreement.
2. (a) For purposes of this Acknowledgement and Agreement, the term
"ACKNOWLEDGED OBLIGATIONS" means the matters for which each Acknowledging
Party and all of them are personally jointly and severally liable to Aetna
as described and provided for in Section 11.8.1.1 and Section 11.8.1.2 of
the Modification Agreement, subject, however, to the provisions of
Section 11.8.2 of the Modification Agreement, and the provisions of
Section 11.8 of the Modification Agreement are incorporated by reference
herein.
(b) Each Acknowledging Party hereby acknowledges and agrees that it
is and shall remain, notwithstanding the formation of MTP-South Tower LLC,
until the Loan and all other obligations of MTP-South Tower LP and
MTP-South Tower LLC (collectively, or either of them, "MTP-SOUTH TOWER")
under the Modification Agreement and the other Amended Loan Documents have
been paid in full, jointly and severally liable to Aetna for the
Acknowledged Obligations.
3. Each Acknowledging Party waives any and all other rights and defenses
available to such Acknowledging Party against Aetna by reason of Sections
2787 to 2855, inclusive, of the California Civil Code. Notwithstanding the
foregoing, the Acknowledging Parties do not waive any rights and defenses
available to such Acknowledging Parties by reason of Sections 2787 to 2855
against the other Acknowledging Parties, provided, however, that each such
Acknowledging Party does hereby subordinate each and all of such rights and
defenses to the rights of Aetna against each of the Acknowledging Parties
until such time as all obligations of MTP-South Tower to Aetna under the
Modification Agreement and the other Amended Loan Documents have been fully
satisfied. No other provision of this Acknowledgement and Agreement shall
be construed as limiting the generality of any of the covenants and waivers
set forth in this Section 3.
4. Each Acknowledging Party represents and warrants to Aetna that it is a
direct or indirect general partner in MTP-South Tower LP. In that regard,
each Acknowledging Party agrees that it will substantially benefit from the
transactions with Aetna being entered into concurrently herewith pursuant
to the Modification Agreement, and from the organization of MTP-South
Tower LLC to own the Project as provided for herein, and each Acknowledging
Party further agrees as follows:
(a) Each Acknowledging Party shall continue to be liable under this
Acknowledgement and Agreement and the provisions hereof shall remain in
full force and effect notwithstanding (i) the formation of MTP-South
Tower LLC and the transactions described in Recital C above, and any
modification, agreement or stipulation between MTP-South Tower and Aetna,
or their respective successors and assigns, with respect to the
Modification Agreement or the other Amended Loan Documents or the
obligations encompassed thereby, including, without limitation, the
Acknowledged Obligations, (ii) Aetna's waiver of or failure to enforce any
of the terms, covenants or conditions contained in the Modification
Agreement or the other Amended Loan Documents or in any modification
thereof, (iii) any discharge or release of MTP-South Tower or any other
Acknowledging Party from any liability with respect to the Acknowledged
Obligations, (iv) any discharge, release, exchange or subordination of any
real or personal property then held by Aetna as security for the
performance of the obligations of MTP-South Tower under the Modification
Agreement or the other Amended Loan Documents (including, but not limited
to, the Acknowledged Obligations), (v) any additional security taken for
the obligations of MTP-South Tower under the Modification Agreement or the
other Amended Loan Documents (including, but not limited to, the
Acknowledged Obligations), whether real or personal property, (vi) any
additional loans or financial accommodations to MTP-South Tower, and
(vii) the manner or order by which payments are applied to principal,
interest or other obligations under the Modification Agreement or the other
Amended Loan Documents. Without limiting the generality of the foregoing,
each Acknowledging Party hereby waives the rights and benefits under
California Civil Code ("CC") Section 2819, and agrees that by doing so such
Acknowledging Party's liability shall continue even if Aetna alters any
obligations under the Modification Agreement or the other Amended Loan
Documents in any respect or Aetna's remedies or rights against MTP-South
Tower or any other Acknowledging Party are in any way impaired or suspended
without such Acknowledging Party's consent.
(b) No provision of this Acknowledgment and Agreement shall be deemed
to preclude Aetna, in any action between Aetna and MTP-South Tower
(including, but not limited to, an action for judicial foreclosure), from
joining any Acknowledging Party in such action to enforce obligations for
the Acknowledged Obligations provided for herein.
(c) Each Acknowledging Party's liability under this Acknowledgement
and Agreement shall continue until all sums due under the Amended Note have
been paid in full and until all obligations of MTP-South Tower to Aetna
under the Modification Agreement and the other Amended Loan Documents
(including, but not limited to, the Acknowledged Obligations) have been
fully satisfied.
(d) Each Acknowledging Party represents and warrants to Aetna that it
now has and will continue to have full and complete access to any and all
information concerning the transactions contemplated by the Modification
Agreement and the other Amended Loan Documents or referred to therein.
Each Acknowledging Party further represents and warrants that it has
reviewed and approved copies of the Modification Agreement and the other
Amended Loan Documents and is fully informed of the remedies Aetna may
pursue, with or without notice to MTP-South Tower, in the event of default
under the Amended Note, the Modification Agreement or the other Amended
Loan Documents.
(e) The liability of each Acknowledging Party under this
Acknowledgement and Agreement is personal liability for the Acknowledged
Obligations and is not a guaranty of repayment or collectibility and is not
conditioned or contingent upon the genuineness, validity, regularity or
enforceability of the Modification Agreement or the other Amended Loan
Documents, or other instruments relating to the creation or performance of
the obligations of MTP-South Tower under the Modification Agreement or the
other the Amended Loan Documents (including, but not limited to, the
Acknowledged Obligations), or the pursuit by Aetna of any remedies which it
now has or may hereafter have with respect thereto under the Modification
Agreement or the other Amended Loan Documents, at law, in equity or
otherwise. Each Acknowledging Party hereby waives any and all benefits and
defenses under CC Section 2810 and agrees that by doing so Acknowledging
Party shall be liable even if MTP-South Tower had no liability at the time
of execution of the Modification Agreement or any of the other Amended Loan
Documents or thereafter ceases to be liable. Each Acknowledging Party
hereby waives any and all benefits and defenses under CC Section 2809 and
agrees that by doing so such Acknowledging Party's liability may be larger
in amount and more burdensome than that of MTP-South Tower. Each
Acknowledging Party's liability hereunder shall not be limited or affected
in any way by any impairment or any diminution or loss of value of any
security or collateral for the Loan, whether caused by hazardous substances
or otherwise, Aetna's failure to perfect a security interest in such
security or collateral, or any disability or other defense of MTP-South
Tower.
5. Each Acknowledging Party hereby waives to the extent permitted by law:
(i) all notices to Acknowledging Party, to MTP-South Tower, or to any other
Person, including, but not limited to, notices of the acceptance of this
Acknowledgement and Agreement or the creation, renewal, extension,
modification, accrual of any of the obligations of MTP-South Tower under
the Modification Agreement or the other Amended Loan Documents (including,
but not limited to, the Acknowledged Obligations) owed to Aetna and, except
to the extent set forth in Section 7 hereof, enforcement of any right or
remedy with respect thereto, and notice of any other matters relating
thereto; (ii) diligence and demand of payment, presentment, protest,
dishonor and notice of dishonor; (iii) any statute of limitations affecting
such Acknowledging Party's liability hereunder or the enforcement thereof;
and (iv) all principles or provisions of law which conflict with the terms
of this Acknowledgement and Agreement.
6. Notwithstanding anything to the contrary, Aetna hereby acknowledges
that nothing contained herein shall be deemed or construed as a waiver by
any of the Acknowledging Parties of any rights or defenses arising under
California "one-action" laws or anti-deficiency legislation, including,
without limitation any and all benefits and defenses under (i) California
Code of Civil Procedure ("CCP") Section 580a, (ii) CCP Sections 580b and
580d, and (iii) CCP Section 726.
7. Any notice, report, demand, request or other instrument or
communication which any party hereto may be required or may desire to give
hereunder to any other party hereto shall be in writing and shall be deemed
to have been properly given or delivered, if addressed to the party
intended to receive the same at the address of such party set forth below,
(a) when delivered at such address by hand or by overnight courier or
delivery service, or (b) three (3) business days after the same shall have
been deposited in the United States Mail as first class registered or
certified mail, return receipt requested, postage prepaid, whether or not
the same actually shall have been received by such party:
(a) If to Carlyle 14 or Carlyle 15:
c/o JMB Realty Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to MPBH, MPB, MTP or MPS:
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Professional Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to Aetna, to the addresses for Aetna set forth in the
Modification Agreement.
Any Acknowledging Party may change any address to which any such
notice, report, demand, request or other instrument or communication
intended to be received by such party is to be delivered or mailed, by
giving written notice of such change to Aetna, but no such notice of change
shall be effective against Aetna unless and until such notice of change
shall have been received by Aetna. Aetna may change any address to which
any such notice, report, demand, request or other instrument or
communication intended to be received by Aetna is to be delivered or
mailed, by giving written notice of such change to MTP-South Tower in
accordance with the Modification Agreement, but no such notice of change
shall be effective against any Acknowledging Party unless and until such
notice of change shall have been received by MTP-South Tower.
8. Aetna may assign the Modification Agreement or the other Amended Loan
Documents, without in any way affecting Acknowledging Party's liability
hereunder. This Acknowledgement and Agreement shall be binding upon each
Acknowledging Party, and the respective heirs, representatives,
administrators, executors, successors and assigns of each of them, and
shall inure to the benefit of and shall be enforceable by Aetna, its
successors, endorsees and assigns. As used herein, the singular shall
include the plural, and the masculine shall include the feminine and neuter
and vice versa, if the context so requires.
9. In the event of any dispute or litigation regarding the enforcement or
validity of this Acknowledgement and Agreement, each Acknowledging Party
shall be obligated to pay all charges, costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred by Aetna, whether
or not any action or proceeding is commenced regarding such dispute and
whether or not such litigation is prosecuted to judgment.
10. THIS ACKNOWLEDGEMENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
11. No provision of this Acknowledgement and Agreement may be changed,
waived, revoked or amended without Aetna's prior written consent. Every
provision of this Acknowledgement and Agreement is intended to be
severable. In the event any term or provision hereof is declared to be
illegal or invalid for any reason whatsoever by a court of competent
jurisdiction, such illegality or invalidity shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, subject to the limitations set forth in
Section 11.8 of the Modification Agreement.
12. This Acknowledgement and Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of
which shall be deemed to be one and the same agreement.
13. This Acknowledgement and Agreement embodies the entire agreement among
the parties hereto with respect to the matters set forth herein, and
supersedes all prior agreements among the parties with respect to the
matters set forth herein. No course of prior dealing among the parties, no
usage of trade, and no parol or extrinsic evidence of any nature shall be
used to supplement, modify or vary any of the terms hereof. There are no
conditions to the full effectiveness of this Acknowledgement and Agreement.
No failure or delay on the part of Aetna to exercise any power, right or
privilege under this Acknowledgement and Agreement, or under the
Modification Agreement or the other Amended Loan Documents, shall impair
any such power, right or privilege, or be construed to be a waiver of any
default or an acquiescence therein, nor shall any single or partial
exercise of such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
14. EACH ACKNOWLEDGING PARTY ACKNOWLEDGES THAT SUCH ACKNOWLEDGING PARTY
HAS BEEN AFFORDED THE OPPORTUNITY TO READ THIS DOCUMENT CAREFULLY AND TO
REVIEW IT WITH AN ATTORNEY OF ACKNOWLEDGING PARTY'S CHOICE BEFORE SIGNING
IT. EACH ACKNOWLEDGING PARTY ACKNOWLEDGES HAVING READ AND UNDERSTOOD THE
MEANING AND EFFECT OF THIS DOCUMENT BEFORE SIGNING IT.
IN WITNESS WHEREOF, each Acknowledging Party has executed this
Acknowledgement and Agreement as of the date of the Modification Agreement
first above written.
▇▇▇▇▇▇▇ PARTNERS-BUNKER HILL, LTD., a
California limited partnership
By: ▇▇▇▇▇▇▇ PARTNERS BGHS, LLC, a California
limited liability company, Managing General
Partner
By: ▇▇▇▇▇▇▇ PARTNERS SCS, INC., a
California corporation, Manager
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
By: ▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS, INC., a
California corporation, General Partner
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
▇▇▇▇▇▇▇ PARTNERS BGHS, LLC, a California
limited liability company
By: ▇▇▇▇▇▇▇ PARTNERS SCS, INC., a California
corporation, Manager
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
▇▇▇▇▇▇▇ PARTNERS SCS, INC., a California
corporation
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS, INC., a California
corporation
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV,
an Illinois limited partnership
By: JMB REALTY CORPORATION, a Delaware
corporation, general partner
By: _________________________
Title:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION, a Delaware
corporation, general partner
By: _________________________
Title:
EXHIBIT A
---------
Schedule of Maximum Permitted Amortized Loan Balance
Principal Balance on the date of this Agreement: $189,060,308
Adjustment Date: *Maximum Principal Balance: During Loan Year:
n/a $189,060,308* Effective Date to
8/31/97
September 1, 1997 $187,966,923* 9/1/97 to 8/31/98
September 1, 1998 $186,873,538* 9/1/98 to 8/31/99
September 1, 1999 $185,780,154* 9/1/99 to 8/31/00
September 1, 2000 $184,686,769* 9/1/00 to 8/31/01
September 1, 2001 $183,595,385* 9/1/01 to 8/31/02
September 1, 2002 $182,500,000* 9/1/02 to 8/31/03
* The amount of the Maximum Principal Balance for every Loan Year
shall be reduced by the amount of any principal payments by MTP-South Tower
following the Effective Date, other than: (i) principal payments made from
monthly disbursements of Operating Receipts, as provided for in
Section 7.2.1.10, (ii) Additional Loan Advance Repayments in accordance
with Section 3.4.1, or (iii) principal payments made from the proceeds of
condemnation awards or insurance recoveries, as provided for in
Section 4.1.2.2. Such reduction of the Maximum Principal Balance for the
current and each subsequent Loan Year shall become effective immediately
upon receipt of any such principal payment.
Exhibit B
---------
SCHEDULE OF WORKS OF ART EXCLUDED FROM AETNA'S LIENS
Night Sail (1985)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (1900-1989) aluminum and steel sculpture located
in plaza area near entrance to building;
together with the following sculptures to the extent, if any, that
such works of art are located at the Project (some or all of these may be
located on the adjacent property of the Phase I Owner):
Work: Artist:
La Caresse d'un Oiseau Miro
Le Dandy Dubuffet
Four Female Figures ▇▇▇▇▇▇
Sequi ▇▇▇▇▇▇
Light Touches Fall Color Wile
Lock Down Aonoldi
Sawtooth Obulick
Exhibit C
---------
EXAMPLE
Additional Loan Advance Repayments and Disbursements to MTP-South Tower
1. Assume an Additional Loan Advance of $2,000,000 by Aetna during
the Loan Year ending August 31, 1999. If on September 1, 1999, the unpaid
principal balance of the Loan was $1,025,000 less than the Maximum
Principal Balance provided for in Exhibit A, and no partial payments of
principal have been made to reduce the Maximum Principal Balance in
accordance with Exhibit A, then an Additional Loan Repayment of $1,025,000
would be due pursuant to Section 3.4.1 (the lesser of (i) the $2,000,000
Additional Loan Advance during the Loan Year ending August 31, 1999 plus
zero in disbursements to MTP-South Tower pursuant to Section 7.2.1.8 during
that Loan Year, or (ii) the $1,025,000 by which the principal balance of
the Loan exceeded the Maximum Principal Balance for that date shown on
Exhibit A). As a result of such payment, the principal balance of the Loan
would be reduced to an amount equal to the applicable Maximum Principal
Balance on September 1, 1999 pursuant to Exhibit A.
2. Assume that thereafter during the subsequent Loan Year ending
August 31, 2000, Operating Receipts disbursed pursuant to Section 7.2.1
were sufficient to restore the Project Reserve Maximum Balance by
February 1, 2001 (by disbursements pursuant to Section 7.2.1.7).
Thereafter, no amounts would be disbursed to MTP-South Tower pursuant to
Section 7.2.1.8 until disbursements to Aetna pursuant Section 7.2.1.10
reduced the principal balance of the Loan to the Maximum Principal Balance
shown on Exhibit A for the next following Adjustment Date,
September 1, 2001.
3. Assume that such disbursements to Aetna pursuant
Section 7.2.1.10 reduced the principal balance of the Loan to less than
said sum on June 1, 1999.
4. If on July 1, 2001, following the disbursements provided for in
Sections 7.2.1.1 through 7.2.1.7 on said date, the sum of $500,000 remained
available for disbursement, then absent the failure of the applicable
conditions precedent, such entire sum would be disbursed to MTP-South Tower
pursuant to Section 7.2.1.8 (as such sum is less than the aggregate amount
of Additional Loan Advance Repayments, $1,025,000, minus the aggregate
amount of previous disbursements to MTP-South Tower pursuant to
Section 7.2.1.8, zero).
5. If on August 1, 2001, following the disbursements provided for
in Sections 7.2.1.1 through 7.2.1.7 on said date, the sum of $600,000
remained available for disbursement, then absent the failure of the
applicable conditions precedent, $525,000 would be disbursed to MTP-South
Tower pursuant to Section 7.2.1.8 (an amount equal to the aggregate amount
of Additional Loan Advance Repayments, $1,025,000, minus the aggregate
amount of previous disbursements to MTP-South Tower pursuant to
Section 7.2.1.8, $500,000), and the excess ($75,000) would be disbursed to
Aetna pursuant to Section 7.2.1.10.
6. Assume that on August 15, 2001, Aetna makes an Additional Loan
Advance equal to $3,000,000, causing the principal balance of the Loan to
increase on said date. On September 1, 2001, an Additional Loan Repayment
would be due pursuant to Section 3.4.1 (the lesser of (i) the $3,000,000
Additional Loan Advance during the preceding Loan Year ending
August 31, 2001 plus $1,025,000 in disbursements to MTP-South Tower
pursuant Section 7.2.1.8 to during that Loan Year, or (ii) the amount by
which the actual principal balance of the Loan exceeded the Maximum
Principal Balance for September 1, 2001 shown on Exhibit A).
EXHIBIT D
---------
FORM OF MTP-SOUTH TOWER LLC ACKNOWLEDGMENT
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
O'Melveny & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
File No. 8,750-102
Space Above Line for Recorder's Use
AMENDMENT TO DEED OF TRUST
AND
ACKNOWLEDGEMENT AGREEMENT
THIS AGREEMENT is made as of ___________, 1996, by ▇▇▇▇▇▇▇
▇▇▇▇▇▇ PARTNERS-SOUTH TOWER, LLC, a California limited liability company
("MTP-South Tower LLC") which is the successor by operation of law to
▇▇▇▇▇▇▇/▇▇▇▇▇▇ Partners-South Tower, a California limited partnership
("MTP-South
Tower LP"), whose place of business is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Chairman,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Partners, in favor of AETNA LIFE INSURANCE COMPANY, a Connecticut
corporation
("Aetna") whose place of business is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn.: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Investment Officer, Aetna
Investment
Group.
A. Aetna is the holder of that indebtedness of MTP-South
Tower LP
(the "LOAN") evidenced and secured by, among other instruments and
agreements:
(1) that $200,000,000 Promissory Note dated
November 26, 1984
(as at any time heretofore amended, extended, restated or replaced, the
"NOTE"), by
MTP-South Tower LP (then known as ▇▇▇▇▇▇▇ Partners - ▇▇▇▇▇▇▇ Properties -
South
Tower) payable to the order of The Aetna Casualty and Surety Company, a
Connecticut
corporation ("AETNA CASUALTY AND SURETY");
(2) that Deed of Trust, Assignment of Rents and Security
Agreement dated as of November 26, 1984, (as at any time heretofore
amended, extended,
restated or replaced, the "DEED OF TRUST"), by MTP-South Tower LP (then
known as
▇▇▇▇▇▇▇ Partners - ▇▇▇▇▇▇▇ Properties - South Tower), as Trustor, to Ticor
Title Insurance
Company of California, as Trustee, for the benefit of Aetna Casualty and
Surety, as
Beneficiary, and recorded November 28, 1984 as Instrument Number ▇▇-▇▇▇▇▇▇▇
in the
Official Records of Los Angeles County, California;
(3) that California Assignment of Rents and Leases dated
as of
November 26, 1984 (as at any time heretofore amended, extended, restated or
replaced,
the "ASSIGNMENT OF RENTS"), by MTP-South Tower LP (then known as ▇▇▇▇▇▇▇
Partners - ▇▇▇▇▇▇▇ Properties - South Tower), as assignor, to Aetna
Casualty and Surety,
as assignee, and recorded November 28, 1984 as Instrument Number ▇▇-▇▇▇▇▇▇▇
in the
Official Records of Los Angeles County, California (Aetna Casualty and
Surety assigned
and transferred its interest under the Deed of Trust and the Assignment of
Rents to Aetna
pursuant to that Assignment dated October 29, 1986 and recorded on
December 4, 1986 as
Instrument Number ▇▇-▇▇▇▇▇▇▇ in the Official Records of Los Angeles County,
California.); and
(4) that Lockbox Agreement dated as of December 1, 1994
(as
heretofore supplemented and amended, the "LOCKBOX AGREEMENT"), among
MTP-South Tower LP, Aetna and CB Commercial Real Estate Group, Inc., as
Agent for
Aetna.
B. The Deed of Trust encumbers, with first lien priority, that
improved real
property in Los Angeles, California more particularly described in
Exhibit A to the Deed
of Trust (the "PROPERTY"), which improvements include, without limitation,
the
45-story office building project now known as the "IBM Tower" located at
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, together with associated subterranean parking and a garage
penthouse
structure, and the "X-2 Garage" located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇.
C. As of September 19, 1996, Aetna and MTP-South Tower LP
executed
certain instruments and agreements providing for an extension of the
scheduled maturity
date of the Loan and certain other matters, but conditioned upon, among
other things, the
due execution and delivery of this Agreement by MTP-South Tower LLC. Such
instruments and agreements, including those described below, are only
effective as of the
date of the recording of both the Amendment of Security Documents (as
defined below)
and this Agreement in the Official Records of Los Angeles County,
California. Such
instruments and agreements include, without limitation:
(1) that Modification and Extension Agreement dated as
of
September 19, 1996 (the "MODIFICATION AND EXTENSION AGREEMENT"),
between MTP-South Tower LP and Aetna;
(2) that Amendment to Deed of Trust, Assignment of Rents
and
Security Agreement and to California Assignment of Rents and Leases and
Fixture Filing
dated as of September 19, 1996 (the "AMENDMENT OF SECURITY DOCUMENTS"),
between MTP-South Tower LP and Aetna, and recorded as of even date with the
recording of this Agreement in the Official Records of Los Angeles County,
California;
(3) that Allonge to Promissory Note dated as of
September 19, 1996 (the "ALLONGE"), between MTP-South Tower LP and Aetna:
and
(4) that Environmental Indemnity dated as of as of
September 19, 1996 (the "ENVIRONMENTAL INDEMNITY AGREEMENT"), by
MTP-South Tower LP to and for the benefit of Aetna.
D. Immediately prior to the execution and delivery of this
Agreement, and
as permitted in the Modification and Extension Agreement, the partners of
MTP-South
Tower LP have caused MTP-South Tower LLC to be organized and have caused
MTP-South Tower LLC to succeed by operation of law to all of the assets and
liabilities
of MTP-South Tower LP, including but not limited to the Property.
E. MTP-South Tower LLC now wishes to acknowledge and ratify
its
obligations under the instruments and agreements evidencing and securing
the Loan.
IN CONSIDERATION of the recitals and agreements set forth
herein and
in the Modification and Extension Agreement, and to induce Aetna to execute
the
Modification and Extension Agreement and the other instruments and
agreements provided
for therein (the effectiveness of which are conditioned, among other
things, upon the due
execution and delivery of this Agreement), MTP-South Tower LLC agrees as
follows for
the benefit of Aetna:
1. ASSUMPTION OF LOAN DOCUMENTS. Subject to the provisions of
Section 3 below, MTP-South Tower LLC hereby assumes all of the obligations
of
MTP-South Tower LP under the Note, as amended by the Allonge, under the
Deed of
Trust and Assignment of Rents, as amended by the Amendment to Security
Documents,
under the Lockbox Agreement, under the Modification and Extension
Agreement, under
the Environmental Indemnity, and under all other instruments and agreements
evidencing
or securing the Loan (collectively, the "LOAN DOCUMENTS").
2. AFFIRMATION OF LIEN ON PROPERTY. MTP-South Tower LLC
hereby acknowledges and agrees that the Deed of Trust and the Assignment of
Rents, as
amended by the Amendment of Security Documents, encumbers the Property,
with first
lien priority, to secure the Loan and Loan Documents.
3. NON-RECOURSE. The liability of MTP-South Tower LLC and its
members in connection with the Loan and the Loan Documents shall be
governed and
controlled by the provisions of Section 11.8 of the Modification and
Extension Agreement
and the provisions of the Acknowledgment and Agreement appended thereto,
which
provisions are hereby incorporated by reference herein.
4. COUNTERPARTS. This Agreement may be executed and acknowledged
in
counterparts, all of which executed and acknowledged counterparts shall
together constitute a single agreement. Signature and acknowledgment pages
may be detached from the
counterparts and attached to a single copy of this document to physically
form one document, which may be recorded.
WITNESS the execution and acknowledgment of this Agreement by
MTP-South
Tower LLC as of the date first written above.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS-SOUTH
TOWER, LLC, a California limited liability
company
By: ▇▇▇▇▇▇▇ PARTNERS-BUNKER HILL,
LTD., a California limited partnership,
Manager
By: ▇▇▇▇▇▇▇ PARTNERS BGHS, LLC, a
California limited liability company,
Managing
General Partner
By: ▇▇▇▇▇▇▇ PARTNERS SCS, INC.,
a California corporation, Manager
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
By: ▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS, INC.,
a California corporation, General Partner
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chairman
By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XIV, an Illinois limited
partnership,
Manager
By: JMB REALTY CORPORATION,
a Delaware corporation
Its general partner
By: _________________________
Title:
By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois limited
partnership,
Manager
By: JMB REALTY CORPORATION,
a Delaware corporation,
Its general partner
By: _________________________
Title:
STATE OF _______________ )
) ss
COUNTY OF ____________ )
On _______________, 1996 before me, ________________, a Notary
Public
in and for said State, personally appeared _______________________ proved
to me on
the basis of satisfactory evidence to be the person whose name is
subscribed to the within
instrument and acknowledged to me that he executed the same in his
authorized capacity,
and that by his signature on the instrument the person, or the entity upon
behalf of which
the person acted executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public
[SEAL]
STATE OF _______________ )
) ss
COUNTY OF ____________ )
On ____________________, 1996 before me, ________________, a
Notary
Public in and for said State, personally appeared _______________________
proved to
me on the basis of satisfactory evidence to be the person whose name is
subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized
capacity, and that by his signature on the instrument the person, or the
entity upon behalf
of which the person acted executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public
[SEAL]
STATE OF _______________ )
) ss
COUNTY OF ____________ )
On _____________________, 1996 before me, ________________, a
Notary
Public in and for said State, personally appeared _______________________
proved to
me on the basis of satisfactory evidence to be the person whose name is
subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized
capacity, and that by his signature on the instrument the person, or the
entity upon behalf
of which the person acted executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public
[SEAL]
Exhibit E
---------
FORM OF MTP-SOUTH TOWER LLC FIXTURE FILING
EXHIBIT F
---------
FORM OF MTP-SOUTH TOWER LLC FINANCING STATEMENTS
MODIFICATION AND EXTENSION AGREEMENT
AETNA LIFE INSURANCE COMPANY
▇▇▇▇▇▇▇/▇▇▇▇▇▇ PARTNERS-SOUTH TOWER
September 19, 1996
TABLE OF CONTENTS
1. Transactions on Effective Date and LLC Conversion . . . . . . . 3
1.1 Conditions Precedent to Effective Date. . . . . . . . . . 3
1.2 Effective Date. . . . . . . . . . . . . . . . . . . . . . 4
1.3 Consent to Equity Transaction . . . . . . . . . . . . . . 4
1.4 Conversion to Limited Liability Company . . . . . . . . . 4
1.5 MTP-South Tower; Equity Owners. . . . . . . . . . . . . . 5
1.6 Application of Pre-Closing Payments . . . . . . . . . . . 6
1.7 Additional Payment at Closing . . . . . . . . . . . . . . 6
1.8 Application of Funds at Closing . . . . . . . . . . . . . 7
1.9 Establishment of Project Reserve Account. . . . . . . . . 8
2. Extension and Interest. . . . . . . . . . . . . . . . . . . . . 9
2.1 Extension; Extension Fee. . . . . . . . . . . . . . . . . 9
2.2 Interest. . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Payment of the Loan . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Early Repayment . . . . . . . . . . . . . . . . . . . . . 11
3.2 Amounts Due at Maturity . . . . . . . . . . . . . . . . . 11
3.3 Yield Maintenance Payment . . . . . . . . . . . . . . . . 12
3.4 Repayment of Additional Loan Advances . . . . . . . . . . 12
4. Capital Events. . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Payments Upon Receipt of Capital Proceeds . . . . . . . . 14
4.2 Subordination of Participation Interest on Refinancing. . 16
4.3 Right of First Offer. . . . . . . . . . . . . . . . . . . 19
4.4 Arms-Length Sale of Project . . . . . . . . . . . . . . . 21
4.5 Proceeds of Sale of Project . . . . . . . . . . . . . . . 21
4.6 Participation Interest on Arms-Length Sale. . . . . . . . 23
5. Approval Rights of Aetna. . . . . . . . . . . . . . . . . . . . 24
5.1 Approval of Transfers and Additional Debt . . . . . . . . 24
5.2 Approval of Operating and Capital Budgets . . . . . . . . 25
5.3 Approval of Leases and Other Agreements . . . . . . . . . 27
5.4 Aetna's Discretion. . . . . . . . . . . . . . . . . . . . 28
6. Lockbox Agreement . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Lockbox Agreement to Remain in Effect . . . . . . . . . . 28
6.2 Gross Receipts in Deposit Account . . . . . . . . . . . . 29
6.3 Application of Lockbox Agreement to Project Reserve . . . 29
6.4 Affirmation of Aetna's Rights in Funds. . . . . . . . . . 31
7. Project Costs . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Disbursements from Deposit Account. . . . . . . . . . . . 32
7.3 Disbursement of Project Reserve for Approved Capital Costs 35
7.4 Additional Loan Advances. . . . . . . . . . . . . . . . . 37
8. Additional Covenants. . . . . . . . . . . . . . . . . . . . . . 38
8.1 No Equity Distributions . . . . . . . . . . . . . . . . . 39
8.2 Major Lease Acknowledgment Agreements . . . . . . . . . . 40
8.3 Affiliate Commissions . . . . . . . . . . . . . . . . . . 41
8.4 ▇▇▇▇▇ Fargo Center Agreements . . . . . . . . . . . . . . 41
8.5 Project Management and Leasing Contracts. . . . . . . . . 42
8.6 Financial Reports . . . . . . . . . . . . . . . . . . . . 43
8.7 Right to Inspect. . . . . . . . . . . . . . . . . . . . . 43
8.8 Access to Project and Dissemination of Information. . . . 43
8.9 Further Assurances. . . . . . . . . . . . . . . . . . . . 44
8.10 Notice of Litigation, Etc . . . . . . . . . . . . . . . . 45
8.11 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.12 Excluded Assets . . . . . . . . . . . . . . . . . . . . . 45
8.13 Security. . . . . . . . . . . . . . . . . . . . . . . . . 46
8.14 Default; Event of Default. . . . . . . . . . . . . . . . 46
9. Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . 48
9.1 Representations and Warranties. . . . . . . . . . . . . . 48
9.2 Certified Statement . . . . . . . . . . . . . . . . . . . 49
9.3 Title Insurance . . . . . . . . . . . . . . . . . . . . . 49
9.4 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . 50
9.5 Legal Fees and Costs. . . . . . . . . . . . . . . . . . . 50
10. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . . 50
10.2 Conditions to Closing . . . . . . . . . . . . . . . . . . 50
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.2 Changes, Waivers, Etc . . . . . . . . . . . . . . . . . . 54
11.3 Governing Law; Severability . . . . . . . . . . . . . . . 54
11.4 Meaning of Certain Terms. . . . . . . . . . . . . . . . . 54
11.5 Headings. . . . . . . . . . . . . . . . . . . . . . . . . 54
11.6 Binding Effect. . . . . . . . . . . . . . . . . . . . . . 54
11.7 Exclusive Benefit . . . . . . . . . . . . . . . . . . . . 55
11.8 Non-Recourse. . . . . . . . . . . . . . . . . . . . . . . 55
11.9 No Mortgagee In Possession; No Joint Venture. . . . . . . 57
11.10 Legal Fees and Expenses . . . . . . . . . . . . . . . . . 57
11.11 Entire Agreement. . . . . . . . . . . . . . . . . . . . . 57
11.12 Authority . . . . . . . . . . . . . . . . . . . . . . . . 57
11.13 Construction. . . . . . . . . . . . . . . . . . . . . . . 58
11.14 Ratification. . . . . . . . . . . . . . . . . . . . . . . 58
11.15 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 58