EXHIBIT 10.40
================================================================================
JUNIOR MEZZANINE LOAN AGREEMENT
Dated as of November 21, 2003
Among
▇▇▇▇▇▇▇ PROPERTIES - 555 W. FIFTH JUNIOR MEZZANINE, LLC
and
▇▇▇▇▇▇▇ PROPERTIES - 808 S. OLIVE JUNIOR MEZZANINE, LLC
collectively,
as Borrower
and
BANK OF AMERICA, N.A.,
as Lender
================================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS; PRINCIPLES OF CONSTRUCTION................... 3
Section 1.1. Definitions........................................... 3
Section 1.2. Principles of Construction............................ 17
ARTICLE II GENERAL TERMS............................................. 17
Section 2.1. Loan Commitment; Disbursement to Borrower............. 17
Section 2.2. Interest Rate Protection Agreement.................... 17
Section 2.3. Loan Payments......................................... 19
Section 2.4. Late Payment Charge................................... 20
Section 2.5. Prepayment............................................ 20
Section 2.6. Payments after Default................................ 22
Section 2.7. Intentionally Deleted................................. 23
Section 2.8. Usury Savings......................................... 23
Section 2.9. Unavailability of Rate; Foreign Taxes; Increased
Costs................................................. 23
Section 2.10. Extension............................................. 26
Section 2.11. Additional Payment Provisions......................... 27
ARTICLE III CONDITIONS PRECEDENT...................................... 29
Section 3.1. Representations and Warranties; Compliance with
Conditions............................................ 29
Section 3.2. Delivery of Loan Documents; Title Policies............ 29
Section 3.3. Related Documents..................................... 30
Section 3.4. Organizational Documents.............................. 31
Section 3.5. Opinions of Borrower's Counsel........................ 31
Section 3.6. Annual Budget......................................... 31
Section 3.7. Taxes and Other Charges............................... 31
Section 3.8. Completion of Proceedings............................. 31
Section 3.9. Payments.............................................. 31
Section 3.10. Transaction Costs..................................... 31
Section 3.11. No Material Adverse Change............................ 31
Section 3.12. Leases and Rent Roll.................................. 32
Section 3.13. Tenant Estoppels...................................... 32
Section 3.14. [Intentionally omitted]............................... 32
Section 3.15. Subordination and Attornment.......................... 32
Section 3.16. Tax Lot............................................... 32
Section 3.17. Physical Conditions Report............................ 32
Section 3.18. Management Agreement.................................. 32
Section 3.19. Appraisal............................................. 32
Section 3.20. Financial Statements.................................. 32
Section 3.21. [Intentionally Deleted]............................... 32
Section 3.22. Further Documents..................................... 33
Section 3.23. Intentionally Deleted................................. 33
Section 3.24. Opinion Letter........................................ 33
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................ 33
Section 4.1. Organization.......................................... 33
Section 4.2. Status of Borrower.................................... 33
Section 4.3. Validity of Documents................................. 34
Section 4.4. No Conflicts.......................................... 34
Section 4.5. Litigation............................................ 34
Section 4.6. Agreements............................................ 34
Section 4.7. Solvency.............................................. 35
Section 4.8. Full and Accurate Disclosure.......................... 35
Section 4.9. No Plan Assets........................................ 35
Section 4.10. Not a Foreign Person.................................. 36
Section 4.11. Enforceability........................................ 36
Section 4.12. Business Purposes..................................... 36
Section 4.13. Compliance............................................ 36
Section 4.14. Financial Information................................. 36
Section 4.15. Illegal Activity...................................... 37
Section 4.16. Permitted Encumbrances................................ 37
Section 4.17. Federal Reserve Regulations........................... 37
Section 4.18. Investment Company Act................................ 37
Section 4.19. No Change in Facts or Circumstances; Disclosure....... 37
Section 4.20. Special Purpose Entity................................ 37
Section 4.21. Assumptions........................................... 38
Section 4.22. Intellectual Property................................. 38
Section 4.23. Embargoed Person...................................... 38
Section 4.24. Patriot Act........................................... 38
Section 4.25. Mortgage Loan Representations......................... 39
Section 4.26. No Contractual Obligations............................ 39
Section 4.27. Subsidiaries.......................................... 39
Section 4.28. Pledged Company Interests............................. 39
Section 4.29. Survival.............................................. 40
Section 4.30. Senior Mezzanine Loan Representations................. 40
ARTICLE V BORROWER COVENANTS........................................ 40
Section 5.1. Existence; Compliance With Legal Requirements......... 40
Section 5.2. Maintenance and Use of Property....................... 41
Section 5.3. Waste................................................. 41
Section 5.4. Taxes and Other Charges............................... 41
Section 5.5. Litigation............................................ 42
Section 5.6. Access to the Property................................ 42
Section 5.7. Notice of Default..................................... 42
Section 5.8. Cooperate in Legal Proceedings........................ 42
Section 5.9. Performance by Borrower............................... 42
Section 5.10. Awards; Insurance Proceeds............................ 42
Section 5.11. Financial Reporting................................... 43
Section 5.12. Estoppel Statement.................................... 45
Section 5.13. Leasing Matters....................................... 46
ii
Section 5.14. Property Management................................... 47
Section 5.15. Liens................................................. 48
Section 5.16. Debt Cancellation..................................... 48
Section 5.17. Zoning................................................ 49
Section 5.18. ERISA................................................. 49
Section 5.19. No Joint Assessment................................... 49
Section 5.20. Alterations........................................... 49
Section 5.21. [Intentionally Deleted.].............................. 50
Section 5.22. Reciprocal Easement Agreement......................... 50
Section 5.23. [Intentionally Deleted.].............................. 50
Section 5.24. [Intentionally Deleted.].............................. 50
Section 5.25. Special Distributions................................. 50
Section 5.26. Curing................................................ 50
Section 5.27. Liens................................................. 51
Section 5.28. Limitation on Securities Issuances.................... 51
Section 5.29. Limitations on Distributions.......................... 51
Section 5.30. Other Limitations..................................... 51
Section 5.31. Intentionally Deleted................................. 52
Section 5.32. Refinancing........................................... 52
ARTICLE VI ENTITY COVENANTS.......................................... 53
Section 6.1. Single Purpose Entity/Separateness.................... 53
Section 6.2. Change of Name, Identity or Structure................. 57
Section 6.3. Business and Operations............................... 58
Section 6.4. Independent Managers.................................. 58
ARTICLE VII NO SALE OR ENCUMBRANCE.................................... 59
Section 7.1. Transfer Definitions.................................. 59
Section 7.2. No Sale/Encumbrance................................... 59
Section 7.3. Permitted Transfers................................... 60
Section 7.4. Lender's Rights....................................... 61
Section 7.5. Assumption............................................ 62
ARTICLE VIII INSURANCE; CASUALTY; CONDEMNATION; RESTORATION............ 64
Section 8.1. Insurance............................................. 64
Section 8.2. Casualty.............................................. 68
Section 8.3. Condemnation.......................................... 68
Section 8.4. Restoration........................................... 69
ARTICLE IX RESERVE FUNDS............................................. 73
ARTICLE X CASH MANAGEMENT........................................... 74
ARTICLE XI EVENTS OF DEFAULT; REMEDIES............................... 74
Section 11.1. Event of Default...................................... 74
Section 11.2. Remedies.............................................. 77
ARTICLE XII ENVIRONMENTAL PROVISIONS.................................. 77
iii
Section 12.1. Environmental Representations and Warranties.......... 77
Section 12.2. Environmental Covenants............................... 78
Section 12.3. Lender's Rights....................................... 79
Section 12.4. Operations and Maintenance Programs................... 79
Section 12.5. Environmental Definitions............................. 79
ARTICLE XIII SECONDARY MARKET.......................................... 80
Section 13.1. Transfer of Loan...................................... 80
Section 13.2. Delegation of Servicing............................... 80
Section 13.3. Dissemination of Information.......................... 80
Section 13.4. Cooperation........................................... 81
Section 13.5. Securitization Indemnification........................ 82
Section 13.6. [Intentionally omitted]............................... 85
Section 13.7. [Intentionally omitted]............................... 85
Section 13.8. Mortgage Loan Securitization.......................... 85
ARTICLE XIV INDEMNIFICATIONS.......................................... 85
Section 14.1. General Indemnification............................... 85
Section 14.2. Intangible Tax Indemnification........................ 86
Section 14.3. ERISA Indemnification................................. 86
Section 14.4. Survival.............................................. 86
ARTICLE XV EXCULPATION............................................... 86
Section 15.1. Exculpation........................................... 86
ARTICLE XVI NOTICES................................................... 90
Section 16.1. Notices............................................... 90
ARTICLE XVII FURTHER ASSURANCES........................................ 91
Section 17.1. Replacement Documents................................. 91
Section 17.2. [Intentionally Omitted]............................... 91
Section 17.3. Further Acts, Etc..................................... 91
Section 17.4. Changes in Tax, Debt, Credit and Documentary Stamp
Laws.................................................. 92
Section 17.5. Expenses.............................................. 92
ARTICLE XVIII WAIVERS................................................... 93
Section 18.1. Remedies Cumulative; Waivers.......................... 93
Section 18.2. Modification, Waiver in Writing....................... 94
Section 18.3. Delay Not a Waiver.................................... 94
Section 18.4. Trial by Jury......................................... 94
Section 18.5. Waiver of Notice...................................... 95
Section 18.6. Remedies of Borrower.................................. 95
Section 18.7. Waiver of Marshalling of Assets....................... 95
Section 18.8. Waiver of Statute of Limitations...................... 95
Section 18.9. Waiver of Counterclaim................................ 96
Section 18.10. Gradsky Waivers 96
iv
ARTICLE XIX GOVERNING LAW............................................. 97
Section 19.1. Choice of Law......................................... 97
Section 19.2. Severability.......................................... 97
Section 19.3. Preferences........................................... 97
ARTICLE XX MISCELLANEOUS............................................. 98
Section 20.1. Survival.............................................. 98
Section 20.2. Lender's Discretion................................... 98
Section 20.3. Headings.............................................. 98
Section 20.4. Cost of Enforcement................................... 98
Section 20.5. Schedules Incorporated................................ 98
Section 20.6. Offsets, Counterclaims and Defenses................... 99
Section 20.7. No Joint Venture or Partnership; No Third Party
Beneficiaries......................................... 99
Section 20.8. Publicity............................................. 100
Section 20.9. Conflict; Construction of Documents; Reliance......... 100
Section 20.10. Entire Agreement ..................................... 101
Section 20.11. Certain Additional Rights of Lender (VCOC) ........... 101
Section 20.12. Liability ............................................ 102
Section 20.13. Contribution ......................................... 102
EXHIBITS
Exhibit A - Annual Budget
Exhibit B - Borrower Organizational Structure
Exhibit C - Form of Lease
v
JUNIOR MEZZANINE LOAN AGREEMENT
THIS JUNIOR MEZZANINE LOAN AGREEMENT, dated as of November 21, 2003 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between BANK OF AMERICA, N.A., a national banking
association, having an address at Bank of America Corporate Center, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together with its successors
and/or assigns, "LENDER") and ▇▇▇▇▇▇▇ PROPERTIES - 555 W. FIFTH JUNIOR
MEZZANINE, LLC, a Delaware limited liability company, having an address at c/▇
▇▇▇▇▇▇▇ Properties, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("555 Junior") and ▇▇▇▇▇▇▇ PROPERTIES - 808 S. OLIVE JUNIOR MEZZANINE, LLC, a
Delaware limited liability company, having an address at c/▇ ▇▇▇▇▇▇▇ Properties,
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ("808 Junior", and
collectively with 555 Junior, together with their respective successors and/or
assigns, "BORROWER").
RECITALS:
Bank of America, N.A., a national banking association, as mortgage
lender ("MORTGAGE LENDER"), has made a loan in the original principal amount of
TWO HUNDRED FIFTY MILLION and No/100 Dollars ($250,000,000.00) to ▇▇▇▇▇▇▇
Properties - 555 W. Fifth, LLC and ▇▇▇▇▇▇▇ Properties - 808 S. Olive, LLC
(collectively, "MORTGAGE BORROWER") pursuant to a certain Loan Agreement, dated
as of June 27, 2003, between Mortgage Borrower and Mortgage Lender (as amended,
restated, replaced, supplemented or otherwise modified from time to time,
including that certain Amended and Restated Loan Agreement, dated as of the date
hereof, the "MORTGAGE LOAN AGREEMENT");
Pursuant to the Mortgage Loan Agreement, the original principal
amount of the loan was decreased to TWO HUNDRED THIRTY MILLION and No/100
Dollars ($230,000,000.00) (the "MORTGAGE LOAN"). The Mortgage Loan is evidenced
by a Promissory Note, dated as of June 27, 2003, made by Mortgage Borrower to
Mortgage Lender as amended, restated, replaced, consolidated or otherwise
modified from time to time, (the "MORTGAGE NOTE") and secured by, among other
things, that certain Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated as of June 27, 2003 granted by Mortgage
Borrower in favor of Mortgage Lender as amended, restated, replaced,
supplemented or otherwise modified from time to time, (the "MORTGAGE"), pursuant
to which Mortgage Borrower has granted to Mortgage Lender a first priority
mortgage on, among other things, the real property and other collateral as more
fully described in the Mortgage (collectively, the "PROPERTY");
Bank of America, N.A., a national banking association, as senior
mezzanine lender ("SENIOR MEZZANINE LENDER"), has made a loan in the original
principal amount of THIRTY MILLION and No/100 Dollars ($30,000,000.00) (the
"SENIOR MEZZANINE LOAN") to ▇▇▇▇▇▇▇ Properties - 555 W. Fifth Mezzanine, LLC and
▇▇▇▇▇▇▇ Properties - 808 S. Olive Mezzanine, LLC (collectively, "ORIGINAL
MEZZANINE BORROWER") pursuant to a certain Mezzanine Loan Agreement, dated as of
June 27, 2003, between Original Mezzanine Borrower and Senior Mezzanine Lender
as amended, restated, replaced, supplemented or otherwise modified from time to
time, including that certain Amended and Restated Senior Mezzanine Loan
Agreement, dated as of the date hereof, (the "SENIOR MEZZANINE LOAN AGREEMENT"),
as evidenced by a Mezzanine Promissory Note, dated as of June 27, 2003, made by
Original
Mezzanine Borrower to Senior Mezzanine Lender as amended, restated, replaced,
consolidated or otherwise modified from time to time (the "SENIOR MEZZANINE
NOTE") and secured by, among other things, that certain Pledge and Security
Agreement, dated as of June 27, 2003 granted by Original Mezzanine Borrower in
favor of Senior Mezzanine Lender as amended, restated, replaced, supplemented or
otherwise modified from time to time, (the "SENIOR MEZZANINE PLEDGE AGREEMENT"),
pursuant to which Original Mezzanine Borrower has granted to Senior Mezzanine
Lender a first priority security interest in all of Original Mezzanine
Borrower's right, title and interest to the collateral as more fully described
in the Senior Mezzanine Pledge Agreement (collectively, the "SENIOR MEZZANINE
COLLATERAL"). The Senior Mezzanine Loan Agreement, Senior Mezzanine Note, Senior
Mezzanine Pledge Agreement and other documents and instruments entered into in
connection with the Senior Mezzanine Loan, each as amended, supplemented or
otherwise modified from time to time, are collectively referred to as the
"SENIOR MEZZANINE LOAN DOCUMENTS";
Original Mezzanine Borrower has contributed all of its right, title and
interest in the Senior Mezzanine Collateral (the "PLEDGED COMPANY INTERESTS") to
▇▇▇▇▇▇▇ Properties - 555 W. Fifth Senior Mezzanine, LLC and ▇▇▇▇▇▇▇ Properties -
808 S. ▇▇▇▇▇ ▇▇▇▇▇▇ Mezzanine, LLC (collectively, the "SENIOR MEZZANINE
BORROWER") Senior Mezzanine Borrower has assumed all obligations of Original
Mezzanine Borrower under the Senior Mezzanine Loan Documents, and Senior
Mezzanine Lender has released Original Mezzanine Borrower from all obligations
under the Senior Mezzanine Loan Documents pursuant to that certain Assignment
and Assumption Agreement by and among Original Mezzanine Borrower, Senior
Mezzanine Borrower and Senior Mezzanine Lender;
Original Mezzanine Borrower has changed its name to ▇▇▇▇▇▇▇ Properties -
555 W. Fifth Junior Mezzanine, LLC and ▇▇▇▇▇▇▇ Properties - 808 S. Olive Junior
Mezzanine, LLC;
Borrower has requested that Lender make a loan in the original principal
amount of TWENTY MILLION and No/100 Dollars ($20,000,000.00) (the "LOAN")
pursuant to the terms and conditions of this Agreement, which Loan is evidenced
by that certain Junior Mezzanine Promissory Note, dated as of the date hereof,
made by Borrower to Lender, as amended, restated, replaced, consolidated or
otherwise modified from time to time (the "NOTE"), and secured by, among other
things, the Pledge Agreement (as defined below); and
As a condition precedent to the obligation of Lender to make the Loan to
Borrower, Borrower has entered into that certain Pledge and Security Agreement,
dated of even date herewith, in favor of Lender (as amended, restated, replaced,
supplemented or otherwise modified from time to time, "PLEDGE AGREEMENT"),
pursuant to which Borrower has granted to Lender a first priority security
interest in the Collateral (as defined in the Pledge Agreement) as collateral
security for the Debt (as defined below).
In consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the
parties hereto hereby covenant, agree, represent and warrant as follows:
- 2 -
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:
"ACCEPTABLE ACCOUNTANT" shall mean a "Big Four" accounting firm or other
independent certified public accountant acceptable to Lender.
"ACCEPTABLE COUNTERPARTY" shall mean any counterparty to the Interest Rate
Protection Agreement that has, as of the date hereof, and shall maintain until
the expiration of the applicable Interest Rate Protection Agreement a credit
rating of not less than "AA-" from S&P and not less than Aa3 from ▇▇▇▇▇'▇.
"ACT" shall have the meaning set forth in Section 6.1(c) hereof.
"AFFILIATE" shall mean, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person or of an Affiliate
of such Person.
"AFFILIATED LOANS" shall mean a loan made by Lender to a parent,
subsidiary or such other entity affiliated with Borrower or Borrower Principal.
"AFFILIATED MANAGER" shall have the meaning set forth in Section 7.1
hereof.
"ALTERATION THRESHOLD" shall mean $1,000,000.00.
"ANNUAL BUDGET" shall mean the operating budget, including all planned
capital expenditures, for the Property approved by Lender in accordance with
Section 5.11(a)(iv) hereof for the applicable calendar year or other period.
"ASSIGNMENTS OF MANAGEMENT AGREEMENT" shall mean, collectively, that
certain Assignment and Subordination of Management Agreement dated the date
hereof among Lender, West Fifth and Manager, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time, with
respect to the Tower Parcel and that certain Assignment and Subordination of
Management Agreement dated the date hereof among Lender, South Olive and
Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, with respect to the Garage Parcel.
"AWARD" shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of the Property.
"BASE MANAGEMENT FEE" shall mean a monthly amount equal to $83,333.
- 3 -
"BORROWER OPERATING AGREEMENT" shall mean, collectively, the Amended and
Restated Limited Liability Company Agreement for ▇▇▇▇▇▇▇ Properties - 555 W.
Fifth Junior Mezzanine, LLC and the Amended and Restated Limited Liability
Company Agreement for ▇▇▇▇▇▇▇ Properties - 808 S. Olive Junior Mezzanine, LLC.
"BORROWER PRINCIPAL" shall mean ▇▇▇▇▇▇▇ Properties, L.P., a Maryland
limited partnership.
"BORROWER PRINCIPAL OBLIGATIONS" shall have the meaning set forth in
Section 18.10(c).
"BREAKAGE COSTS" shall have the meaning set forth in Section 2.9(e)
hereof.
"BUSINESS DAY shall mean a day on which Lender is open for the conduct of
substantially all of its banking business at its office in the city in which the
Note is payable (excluding Saturdays and Sundays), except that when used with
respect to the determination of LIBOR, "Business Day" shall mean a day on which
commercial banks are open for international business (including dealings in U.S.
Dollar deposits) in London, England.
"CASUALTY" shall have the meaning set forth in Section 8.2 hereof.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"COLLATERAL" shall have the meaning set forth in the Pledge Agreement.
"COLLATERAL ASSIGNMENT OF INTEREST RATE PROTECTION AGREEMENT" shall mean
that certain Collateral Assignment of Interest Rate Protection Agreement, dated
as of the date hereof, executed by Borrower in connection with the Loan for the
benefit of Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result, in lieu or in anticipation, of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"CONSEQUENTIAL LOSS" shall have the meaning set forth in Section 2.11(d)
hereof.
"CONTRACTUAL OBLIGATION" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound, or
any provision of the foregoing.
"CONTROL" shall have the meaning set forth in Section 7.1 hereof.
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to its debts or debtors.
- 4 -
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Pledge Agreement or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of time,
scheduled principal and/or interest payments under the Note.
"DEFAULT" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
four percent (4%) above the Note Rate.
"DETERMINATION DATE" shall mean (a) with respect to any Interest Period
prior to the Interest Period that commences in the month during which the
Securitization Closing Date occurs, two (2) Business Days prior to the start of
the applicable Interest Period; (b) with respect to the Interest Period that
commences in the month during which the Securitization Closing Date occurs, the
date that is two (2) Business Days prior to the Securitization Closing Date and
(c) with respect to each Interest Period thereafter, the date that is two (2)
Business Days prior to the beginning of such Interest Period.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section 13.5
hereof.
"ELIGIBILITY REQUIREMENTS" means, with respect to any Person, that such
Person (i) has total assets (in name or under management) in excess of
$600,000,000 and (except with respect to a pension advisory firm or similar
fiduciary) capital/statutory surplus or shareholder's equity of $250,000,000 and
(ii) is regularly engaged in the business of making or owning commercial real
estate loans or operating commercial mortgage properties.
"EMBARGOED PERSON" shall have the meaning set forth in Section 4.23
hereof.
"ENVIRONMENTAL INDEMNITY" shall mean that certain Junior Mezzanine
Environmental Indemnity Agreement, dated as of the date hereof, executed by
Borrower and Borrower Principal in connection with the Loan for the benefit of
Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL LIENS" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL REPORT" shall have the meaning set forth in Section 12.5
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statutes thereto and applicable
regulations issued pursuant thereto in temporary or final form.
- 5 -
"EVENT OF DEFAULT" shall have the meaning set forth in Section 11.1
hereof.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"EXTENSION FEE" shall mean an amount equal to 0.125% of the outstanding
principal balance of the Loan.
"FACTORY MUTUAL" shall have the meaning set forth in Section 8.1(b)
hereof.
"FITCH" shall mean Fitch, Inc.
"FOREIGN TAXES" shall have the meaning set forth in Section 2.9(b)(i).
"FOURTH ANNIVERSARY" shall mean the Payment Date occurring in July, 2007.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"GARAGE PARCEL" shall mean the parking garage and other improvements
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, as more particularly
described in the Mortgage.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, department,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, state, county, municipal, city, town, special
district or otherwise) in the United States whether now or hereafter in
existence.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 12.5
hereof.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause of
the Mortgage.
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in Section 14.1
hereof.
"INDEMNIFIED PARTIES" shall mean (a) Lender, (b) any prior owner or holder
of the Loan or Participations in the Loan, (c) any Investor or prior Investor of
the Loan, (d) any Investor or prior Investor in any Securities, (e) any
trustees, custodians or other fiduciaries who hold or who have held a full or
partial interest in the Loan for the benefit of any Investor or other third
party, (f) any receiver or other fiduciary appointed in a foreclosure or other
Creditors Rights Laws proceeding, (g) any officers, directors, shareholders,
partners, members, employees, agents, representatives, affiliates or
subsidiaries of any and all of the foregoing, and (h) the heirs, legal
representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties' assets
and business), in all cases whether during the term of the Loan or as part of or
following a foreclosure of the Mortgage.
"INDEPENDENT MANAGER" shall have the meaning set forth in Section 6.4(a)
hereof.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section 8.1(b)
hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
- 6 -
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement, dated of
even date herewith, between Lender and Mortgage Lender.
"INTEREST FLOOR DIFFERENTIAL" shall mean, with respect to any Interest
Period for which part (ii) of the definition of LIBOR is less than 2% an amount
of interest computed at the Interest Floor Differential Rate and based on a
notional principal amount equal to the Interest Floor Notional Amount.
"INTEREST FLOOR DIFFERENTIAL RATE" shall mean the positive difference of
two percent (2%) minus the rate of interest described in part (ii) of the
definition of LIBOR.
"INTEREST FLOOR NOTIONAL AMOUNT" shall mean either (i) in the event the
Loan has been paid in full, the portion (if any) of the principal amount of the
Senior Mezzanine Loan in excess of Twenty Million Dollars ($20,000,000), or (ii)
in the event the Loan has not been paid in full, the principal balance (if any)
of the Senior Mezzanine Loan, but in no event more than the Ten Million Dollars
($10,000,000).
"INTEREST PERIOD" shall mean (a) with respect to the initial period for
the accrual of interest due under this Agreement, the period from and including
the Closing Date through but excluding the Selected Day first occurring after
the date hereof, and (b) with respect to the Payment Date occurring in November,
2003 and each Payment Date thereafter, the period from and including the
Selected Day immediately preceding the applicable Payment Date through but
excluding the Selected Day next occurring after the applicable Payment Date.
Notwithstanding the foregoing clause (b), if Lender so elects at any time, the
"Interest Period" shall be the calendar month preceding each Payment Date.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, as applicable (A) an
interest rate cap with a maturity date of the Maturity Date entered into with an
Acceptable Counterparty with a notional amount equal to the Loan Amount for the
term of the Loan and a LIBOR strike price not greater than seven and ninety-two
hundredths percent (7.92%); provided, however, that in the event the rating
assigned by any Rating Agency to the counterparty to any Interest Rate
Protection Agreement is downgraded, such Interest Rate Protection Agreement will
be replaced by an Interest Rate Protection Agreement in the same form and
substance as the Interest Rate Protection Agreement delivered by the Borrower in
connection with the closing of the Loan or in a form otherwise approved by
Lender in its reasonable discretion and shall be obtained from a counterparty
with a credit rating meeting the requirements of an Acceptable Counterparty; and
provided, that, each Interest Rate Protection Agreement shall provide for (i)
the calculation of interest, (ii) the determination of the interest rate, (iii)
the modification of the Interest Period and (iv) the distribution of payments
thereunder to be identical to the definition of Interest Period set forth
herein, and (B) a Replacement Interest Rate Protection Agreement.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"INVESTOR" shall have the meaning set forth in Section 13.3 hereof.
- 7 -
"ISSUER GROUP" shall have the meaning set forth in Section 13.5(b) hereof.
"ISSUER PERSON" shall have the meaning set forth in Section 13.5(b)
hereof.
"JUNIOR SUBORDINATED MANAGEMENT FEE" shall mean a monthly amount equal to
(a) 3.0% of all Project Income (as defined in the Management Agreement) for such
month, minus (b) the Base Management Fee.
"LEASE" shall have the meaning set forth in the Mortgage.
"LEGAL REQUIREMENTS" shall mean all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting Borrower, Borrower Principal, Mortgage Borrower (or any of
their respective Affiliates), the Collateral or the Property or any part
thereof, or the construction, use, alteration or operation thereof, whether now
or hereafter enacted and in force, and all permits, licenses, authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Borrower
or Mortgage Borrower, at any time in force affecting Borrower, Borrower
Principal, Mortgage Borrower (or any of their respective Affiliates), the
Collateral or the Property or any part thereof, including, without limitation,
any which may (a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use and enjoyment
thereof.
"LETTER OF CREDIT" shall mean a clean, irrevocable and unconditional
letter of credit in form and substance acceptable to Lender (a) that is issued
by a commercial bank, the long term unsecured obligations of which are rated no
less than AA- (or the equivalent) by the Rating Agencies, (b) that is payable
upon presentation of sight draft only in New York, New York or Los Angeles,
California to the order of Lender, (c) that has an initial expiration date of
not less than one (1) year from the date of issuance and is automatically
renewable, at least thirty (30) days prior to expiration, for successive one (1)
year periods, (d) that is transferable by Lender without the consent of the
issuing bank and (e) for which neither Borrower nor Mortgage Borrower have any
reimbursement or payment obligations.
"LIBOR" shall mean, with respect to each Interest Period, the greater of
(i) two percent (2%) and (ii) a rate of interest per annum obtained by dividing
(a) with respect to each Interest Period, the rate for deposits in U.S.
Dollars, for a period equal to one month, which appears on the Telerate Page
3750 as of 11:00 a.m., London time, on the related Determination Date; provided,
however, if more than one rate is specified on Reuters Screen LIBOR Page, the
LIBOR Rate shall be the arithmetic mean of all rates. Lender shall determine the
LIBOR Rate for each Interest Period and the determination of the LIBOR Rate by
Lender shall be binding upon Borrower absent manifest error, by
(b)a percentage equal to 100% minus the applicable Reserve Percentage then
in effect.
LIBOR may or may not be the lowest rate based upon the market for U.S.
Dollar deposits in the London Interbank Eurodollar Market at which Lender prices
loans on the date which LIBOR is determined by Lender as set forth above.
- 8 -
"LIBOR LOAN" shall mean the Loan at such time as interest thereon accrues
at the LIBOR Rate.
"LIBOR MARGIN" shall mean 6.625%.
"LIBOR RATE" shall mean, for any applicable Interest Period, a rate per
annum equal to the sum of (i) LIBOR plus (ii) the LIBOR Margin.
"LIEN" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting, Borrower, Mortgage Borrower, the Collateral,
the Property, any portion thereof or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic's, materialmen's
and other similar liens and encumbrances.
"LIQUIDATION EVENT" shall have the meaning set forth in Section 2.5(g)(i).
"LITIGATION INDEMNITY" shall mean that certain Indemnity and Agreement
dated as of the date hereof among Borrower, Borrower Principal and Lender.
"LLC AGREEMENT" shall have the meaning set forth in Section 6.1(c).
"LOAN" shall have the meaning set forth in the Recitals.
"LOAN AMOUNT" shall mean the outstanding principal balance of the Loan.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Pledge Agreement, the Collateral Assignment of Interest Rate Protection
Agreement, the Intercreditor Agreement, the Subordination of Management
Agreement and any and all other documents, agreements and certificates executed
and/or delivered in connection with the Loan, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"LOCKOUT PERIOD" shall mean the period commencing on the date hereof and
ending on the date immediately preceding the Payment Date in August 2006.
"LOCKOUT PREPAYMENT PREMIUM" shall mean an amount equal to five percent
(5%) of the then outstanding principal amount of the Loan.
"LOSSES" shall mean any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, fines, penalties, charges, fees,
judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to legal fees and other costs of defense).
"MAJOR DECISIONS" shall mean (i) the sale of all or a substantial portion
of the Property, (ii) the approval of the Annual Budget, (iii) the execution of
any Lease which does not substantially comply with leasing guidelines then in
effect with respect to the Property; (iv) any material modification of
- 9 -
the leasing guidelines then in effect; (v) any material modification of any Loan
Documents requested by Borrower; (vi) any material modification or refinancing
of the Permitted Junior Mezzanine Financing; (vii) any merger or consolidation
of Borrower with any other entity, or the liquidation or dissolution of Borrower
other than in accordance with the terms of the Borrower's operating agreement;
(viii) any proposed settlement or compromise of any claim, litigation or other
legal proceeding by or against Borrower for more than $1,000,000 (net of
insurance coverage); (ix) any petition in bankruptcy or reorganization or
instituting any other type of bankruptcy, reorganization or insolvency
proceeding with respect to Borrower, the admission in writing by Borrower of its
inability to pay its debts generally as they become due or the making by
Borrower of a general assignment for the benefit of its creditors; (x) except
for the Management Agreement, any material agreement between Borrower and any
Affiliate of Borrower and (xi) such other items similar in scope to the
foregoing which (A) are consistent with veto rights typically held by
institutional investors holding majority but non-managing, non-controlling
interests in an entity, but (B) would not reasonably be deemed to constitute a
change in Control with respect to such entity.
"MAJOR LEASE" shall mean as to the Property (i) any Lease which,
individually or when aggregated with all other leases at the Property with the
same Tenant or its Affiliate, either (A) demises in the aggregate more than one
(1) full occupied floor of the Property, or (B) covers seventy-five (75) or more
parking spaces, (ii) any Lease which contains any option, offer, right of first
refusal or other similar entitlement to acquire all or any portion of the
Property, or (iii) any instrument guaranteeing or providing credit support for
any Lease meeting the requirements of (i) or (ii) above.
"MANAGEMENT AGREEMENT" shall mean the management agreement entered into by
and between ▇▇▇▇▇▇▇ Properties - 555 West Fifth, LLC and Manager with respect to
the Tower Parcel, and the management agreement entered into between ▇▇▇▇▇▇▇
Properties - 808 S. Olive, LLC and Manager with respect to the Garage Parcel,
pursuant to which Manager is to provide management and other services with
respect to the Property, together with the sub-contract entered into between
Manager and ▇▇▇▇▇▇▇ Properties Services, Inc., as the foregoing documents may be
amended, restated, replaced, supplemented or otherwise modified in accordance
with the terms of this Agreement.
"MANAGER" shall mean ▇▇▇▇▇▇▇ Properties L.P., a Maryland limited
partnership or such other entity selected as the manager of the Property in
accordance with the terms of this Agreement.
"MATERIAL ADVERSE CHANGE" shall mean any event that is reasonably likely
to cause a material and adverse impact on a party's financial condition, or the
business of the Property, or the Collateral or could be anticipated to prevent
any person from complying with its material obligations under the Loan Documents
to which it is a party.
"MATURITY DATE" shall mean the Payment Date occurring in July 2007 or, if
the Extension Option is exercised in accordance with the terms of Section 2.10
hereof, the Payment Date occurring in July 2008.
"MAXIMUM LEGAL RATE" shall mean the maximum non-usurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on
- 10 -
the indebtedness evidenced by the Note and as provided for herein or the other
Loan Documents, under the laws of such state or states whose laws are held by
any court of competent jurisdiction to govern the interest rate provisions of
the Loan.
"MEMBER" shall have the meaning set forth in Section 6.1(c) hereof.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE BORROWER COMPANY AGREEMENT" shall mean, collectively, each
Limited Liability Company Agreement of the Mortgage Borrower.
"MORTGAGE LOAN DEFAULT" shall mean a "Default" under and as defined in the
Mortgage Loan Agreement.
"MORTGAGE LOAN DOCUMENTS" shall mean, collectively, the Mortgage Loan
Agreement, the Mortgage Note, the Mortgage, and any and all other documents
defined as the "Loan Documents" in the Mortgage Loan Agreement, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"MORTGAGE LOAN EVENT OF DEFAULT" shall mean an "Event of Default" under
and as defined in the Mortgage Loan Agreement.
"MORTGAGE RESERVE ACCOUNTS" shall mean the "Reserve Accounts" as defined
in the Mortgage Loan Agreement.
"NET LIQUIDATION PROCEEDS AFTER DEBT SERVICE" with respect to any
Liquidation Event, all amounts paid or payable to or received by or on behalf of
Mortgage Borrower or Senior Mezzanine Borrower in connection with such
Liquidation Event, less amounts required or permitted to be deducted therefrom
pursuant to the Mortgage Loan Documents or Senior Mezzanine Loan Documents, as
applicable, and amounts paid pursuant to the Mortgage Loan Documents to Mortgage
Lender or pursuant to Senior Mezzanine Loan Documents to Senior Mezzanine
Lender, as applicable, including, without limitation, proceeds of any sale,
refinancing or other disposition or liquidation, the amount of any award or
payment incurred in connection with any condemnation or taking by eminent
domain, and the amount of any insurance proceeds paid in connection with any
casualty loss, as applicable, other than, in the case of a casualty loss or
condemnation award, amounts required or permitted by the terms of the Mortgage
Loan Documents or Senior Mezzanine Loan Documents to be applied to the
restoration or repair of the Mortgaged Property, less (i) in the case of a
foreclosure sale or transfer of the Property or in the case of a foreclosure
sale or transfer of the Senior Mezzanine Collateral in connection with
realization thereon following an Event of Default under the Mortgage Loan or
Senior Mezzanine Loan or other disposition, such reasonable and customary costs
and expenses of sale or other disposition (including attorneys' fees and
brokerage commissions), (ii) in the case of a foreclosure sale, (a) such costs
and expenses incurred by Mortgage Lender under the Mortgage Loan Documents as
Mortgage Lender shall be entitled to receive reimbursement for under the terms
of the Mortgage Loan Documents with respect to a foreclosure under the Mortgage
Loan, or (b) as applicable, such costs and expenses incurred by Senior Mezzanine
Lender under the Senior Mezzanine Loan Documents as Senior Mezzanine Lender
shall be entitled to receive reimbursement for under the terms of the Senior
Mezzanine Loan Documents with respect to a
- 11 -
foreclosure under the Senior Mezzanine Loan, (iii) in the case of a casualty
loss or condemnation, such costs and expenses of collection (including
attorneys' fees) of the related insurance proceeds or condemnation award as
shall be approved by Mortgage Lender pursuant to the terms of the Mortgage Loan
Documents, or if the Mortgage Loan has been paid in full, by Lender, and (iv) in
the case of a refinancing of the Mortgage Loan, Senior Mezzanine Loan, the
Property or Senior Mezzanine Collateral, such costs and expenses (including
attorneys' fees) of such refinancing as shall be reasonably approved by Lender.
"NET PROCEEDS" shall have the meaning set forth in Section 8.4(b) hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
8.4(b)(vi) hereof.
"NOTE" shall mean that certain promissory note of even date herewith in
the original principal amount of $20,000,000.00, made by Borrower in favor of
Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"NOTE RATE" shall mean an interest rate per annum equal to (i) the LIBOR
Rate (in all cases where clause (ii) below does not apply), or (ii) the Static
LIBOR Rate, to the extent provided in accordance with the provisions of Section
2.9.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender by
Borrower which is signed by an authorized senior officer of Borrower or an
entity authorized to act on behalf of Borrower.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"OWNER'S TITLE INSURANCE POLICY" shall mean that certain ALTA owner's
title insurance policy issued to Borrower with respect to the Property.
"PARTICIPATIONS" shall have the meaning set forth in Section 13.1 hereof.
"PAYMENT DATE" shall mean the day that is six (6) Business Days prior to
the Selected Day.
"PERMITTED ENCUMBRANCES" shall mean, with respect to the Property,
collectively, (a) the Liens and security interests created by the Mortgage Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy (as defined in the Mortgage Loan Agreement), (c) Liens, if any,
for Taxes imposed by any Governmental Authority not yet delinquent, and (d) such
other title and survey exceptions as Lender has approved or may approve in
writing in Lender's sole discretion.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
- 12 -
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage.
"PHYSICAL CONDITIONS REPORT" shall mean a report regarding the physical
condition of the Property prepared by Certified Environments, Inc. or a company
otherwise satisfactory to Lender, in form and substance satisfactory to Lender
in its sole discretion.
"PLEDGE AGREEMENT" shall have the meaning set forth in the Recitals.
"PLEDGED COMPANY INTERESTS" shall have the meaning set forth in the
Recitals.
"POLICIES" shall have the meaning set forth in Section 8.1(b) hereof.
"POLICY" shall have the meaning set forth in Section 8.1(b) hereof.
"PROHIBITED TRANSFER" shall have the meaning set forth in Section 7.2(a)
hereof.
"PROVIDED INFORMATION" shall have the meaning set forth in Section 13.4(a)
hereof.
"QUALIFIED INVESTOR" shall mean one or more of the following:
(A) a real estate investment trust, bank, saving and loan
association, investment bank, insurance company, trust company, commercial
credit corporation, pension plan, pension fund or pension advisory firm,
mutual fund, government entity or plan, provided that any such Person
referred to in this clause (A) satisfies the Eligibility Requirements;
(B) an investment company, money management firm or "qualified
institutional buyer" within the meaning of Rule 144A under the Securities
Act of 1933, as amended, or an institutional "accredited investor" within
the meaning of Regulation D under the Securities Act of 1933, as amended,
provided that any such Person referred to in this clause (B) satisfies the
Eligibility Requirements;
(C) an institution substantially similar to any of the foregoing
entities described in clauses (ii)(A) or (ii)(B) that satisfies the
Eligibility Requirements;
(D)any entity Controlled by any of the entities described in clause (i) or
clauses (ii)(A) or (ii)(C) above.
For purposes of this definition of Qualified Investor, "Control" means the
ownership, directly or indirectly, in the aggregate of more than fifty percent
(50%) of the beneficial ownership interests of an entity and the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of an entity, whether through the ability to exercise
voting power, by contract or otherwise. "Controlled by," "controlling" and
"under common control with" shall have the respective correlative meaning
thereto.
- 13 -
"QUALIFIED MANAGER" shall mean Manager or a reputable and experienced
professional management organization (a) which manages, together with its
affiliates, at least five (5) first class office buildings totaling at least
2,500,000 square feet of gross leasable area, exclusive of the Property and (b)
approved by Lender, which approval shall not have been unreasonably withheld and
for which Mortgage Lender and Lender shall have received a Rating Confirmation.
"RATING AGENCY" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any other
nationally-recognized statistical rating agency which has been approved by
Lender.
"RATING CONFIRMATION" with respect to the transaction or matter in
question, shall mean: (i) if all or any portion of the Mortgage Loan, Senior
Mezzanine Loan or the Loan, by itself or together with other loans, has been the
subject of a Securitization, then each applicable Rating Agency shall have
confirmed in writing that such transaction or matter shall not result in a
downgrade, qualification, or withdrawal of any rating then in effect for any
class of certificates or other securities issued in connection with such
Securitization; and (ii) if the Mortgage Loan and the Loan or any portion
thereof has not been the subject of a Securitization, (a) the applicable Rating
Agency shall have confirmed in writing that such transaction or matter shall not
result in a downgrade, qualification, or withdrawal of any shadow rating or
other rating provided to the Loan or any portion thereof not the subject of a
Securitization, and (b) Lender shall have determined in its reasonable
discretion (taking into consideration such factors as Lender may determine,
including the attributes of the loan pool in which the Loan might reasonably be
expected to be securitized) that no rating for any certificate or other
securities that would be issued in connection with Securitization of such
portion of the Mortgage Loan or the Loan would be downgraded, qualified, or
withheld by reason of such transaction or matter.
"REA" shall mean that certain Reciprocal Easement Agreement dated as of
June 1, 1989, recorded April 5, 1990 as Instrument No. 90-655583 Official
Records executed by Pacific ▇▇▇▇, American Telephone and Telegraph and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Partners-Fifth & Grand, Ltd. (predecessor to Borrower) and that certain
Parking Easement Agreement dated December 13, 2000, a memorandum of which was
recorded December 27, 2000 as Instrument No. 00-2009212 Official Records
executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners-▇▇▇▇▇▇▇ Development Company and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Partners-Fifth & Grand, Ltd.
"RELEASE" shall have the meaning set forth in Section 12.5 hereof.
"RENEWAL LEASE" shall have the meaning set forth in Section 5.13 hereof.
"RENT ROLL" shall have the meaning set forth in the Mortgage Loan
Documents.
"RENTS" shall have the meaning set forth in the Mortgage.
"REP & WARRANTY BREACH" shall have the meaning set forth in Section
11.1(e).
"REPLACEMENT INTEREST RATE PROTECTION AGREEMENT" shall mean an interest
rate cap from an Acceptable Counterparty with terms identical to the Interest
Rate Protection Agreement.
"RESERVE PERCENTAGE" shall mean, with respect to any day of any Interest
Period, that percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of
- 14 -
Governors of the Federal Reserve System (or any successor), for determining the
maximum reserve requirement (including basic, supplemental, emergency, special
and marginal reserves) generally applicable to financial institutions regulated
by the Federal Reserve Board comparable in size and type to Lender in respect of
"Eurocurrency liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on the Loan is
determined), whether or not Lender has any Eurocurrency liabilities or such
requirement otherwise in fact applies to Lender. The LIBOR Rate shall be
adjusted automatically as of the effective date of each change in the Reserve
Percentage. As of the date hereof, the Reserve Percentage is zero, however,
there can be no assurance as to what such amount may be in the future.
"RESTORATION" shall mean, following the occurrence of a Casualty or a
Condemnation which is of a type necessitating the repair of the Property, the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"RESTORATION CONSULTANT" shall have the meaning set forth in Section
8.4(b)(iii) hereof.
"RESTORATION RETAINAGE" shall have the meaning set forth in Section
8.4(b)(iv) hereof.
"RESTRICTED PARTY" shall have the meaning set forth in Section 7.1 hereof.
"S&P" shall mean Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SALE OR PLEDGE" shall have the meaning set forth in Section 7.1 hereof.
"SECURITIES" shall have the meaning set forth in Section 13.1 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES LIABILITIES" shall have the meaning set forth in Section
13.5(b) hereof.
"SECURITIZATION" shall have the meaning set forth in Section 13.1 hereof.
"SECURITIZATION CLOSING DATE" shall mean a date selected by Lender in its
sole discretion by providing not less than twenty-four (24) hours prior notice
to Borrower.
"SELECTED DAY" means the fifteenth (15th) day of each calendar month or
such other date as determined by Lender pursuant to Section 2.3(g) hereof.
"SENIOR MEZZANINE BORROWER COMPANY AGREEMENT" shall mean, collectively,
each Limited Liability Company Agreement of the Senior Mezzanine Borrower.
"SENIOR MEZZANINE LOAN DEFAULT" shall mean a "Default" under and as
defined in the Senior Mezzanine Loan Agreement.
- 15 -
"SENIOR MEZZANINE LOAN DOCUMENTS" shall mean, collectively, the Senior
Mezzanine Loan Agreement, the Senior Mezzanine Note, the Senior Mezzanine Pledge
Agreement, and any and all other documents defined as the "Loan Documents" in
the Senior Mezzanine Loan Agreement, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"SENIOR MEZZANINE LOAN EVENT OF DEFAULT" shall mean an "Event of
Default" under and as defined in the Senior Mezzanine Loan Agreement.
"SERVICER" shall have the meaning set forth in Section 13.2 hereof.
"SPECIAL MEMBER" shall have the meaning set forth in Section 6.1(c)
hereof.
"SPONSOR" shall mean ▇▇▇▇▇▇▇ Properties, Inc.
"STATE" shall mean, with respect to the Property, the State or
Commonwealth in which the Property or any part thereof is located.
"STATIC LIBOR RATE" shall have the meaning set forth in Section 2.9
hereof.
"STATIC LIBOR RATE LOAN" shall have the meaning set forth in Section
2.9(c) hereof.
"SUBORDINATION OF MANAGEMENT AGREEMENT" shall mean that certain
Subordination of Management Agreement dated the date hereof among Lender,
Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"SUBSIDIARY" shall mean any corporation, partnership, limited liability
company or other entity in which a Person holds an equity interest which is more
than ten (10%) of the equity classes issued by such entity.
"SYNDICATION" shall have the meaning set forth in Section 13.1 hereof.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property (or any part thereof) or the Collateral (or any
part thereof).
"TENANT" shall mean any Person leasing, subleasing or otherwise
occupying any portion of the Property under a Lease or other occupancy agreement
with Mortgage Borrower (including, without limitation, any Major Lease).
"TOWER PARCEL" shall mean Gas Company Tower, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, as more particularly described in the Mortgage.
"TRIBUNAL" shall mean any state, commonwealth, federal, foreign,
territorial or other court or governmental department, commission, board,
bureau, district, authority, agency, central bank, or instrumentality or any
arbitration authority.
-16-
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the State of Delaware.
"UCC-9 TITLE POLICY" shall mean that certain UCC-9 title policy issued
with respect to the Collateral and insuring the lien of the Pledge Agreement
encumbering such Collateral as of the date hereof.
"UNDERWRITER GROUP" shall have the meaning set forth in Section 13.5(b)
hereof.
Section 1.2. PRINCIPLES OF CONSTRUCTION
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
ARTICLE II
GENERAL TERMS
Section 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER
(a) Subject to and upon the terms and conditions set forth herein,
Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on
the Closing Date.
(b) Borrower may request and receive only one borrowing in respect of
the Loan and any amount borrowed and repaid in respect of the Loan may not be
re-borrowed.
(c) The Loan shall be evidenced by the Note and secured by the Pledge
Agreement and the other Loan Documents.
(d) Borrower shall use the proceeds of the Loan to (i) make an equity
contribution to the Senior Mezzanine Borrower, on the condition that Senior
Mezzanine Borrower use such proceeds to make an equity contribution to Mortgage
Borrower in order to cause Mortgage Borrower to partially prepay the Mortgage
Loan.
Section 2.2. INTEREST RATE PROTECTION AGREEMENT Prior to or
contemporaneously with the Closing Date, Borrower shall have obtained the
Interest Rate Protection Agreement, which shall be coterminous with, or extend
beyond, the initial term of the Loan and have a notional amount which shall not
at any time be less than the outstanding principal balance of the Loan. The
Interest Rate Protection Agreement shall be maintained throughout the term of
the Loan with an Acceptable Counterparty. If the provider of the Interest Rate
Protection Agreement ceases to be an Acceptable Counterparty, Borrower shall
obtain a Replacement Interest Rate Protection Agreement from an Acceptable
Counterparty within ten (10) Business Days of receipt of notice from Lender or
Borrower's obtaining knowledge that the
-17-
then-current counterparty under the Interest Rate Protection Agreement is no
longer an Acceptable Counterparty; provided, however, in the event that the
Interest Rate Protection Agreement counterparty is Bank of America, N.A., the
provisions of this sentence shall not apply.(b) Borrower shall collaterally
assign to Lender pursuant to the Collateral Assignment of Interest Rate
Protection Agreement all of its right, title and interest to receive any and all
payments under the Interest Rate Protection Agreement (and any related
guarantee, if any) and shall deliver to Lender counterparts of such Collateral
Assignment of Interest Rate Protection Agreement executed by the Borrower and by
the Acceptable Counterparty and notify the Acceptable Counterparty of such
collateral assignment (either in such Interest Rate Protection Agreement or by
separate instrument). At such time as the Loan is repaid in full, all of
Lender's right, title and interest in the Interest Rate Protection Agreement
shall terminate and Lender shall execute and deliver at Borrower's sole cost and
expense, such documents as may be required to evidence Lender's release of the
Interest Rate Protection Agreement and to notify the Acceptable Counterparty of
such release.
(c) Borrower shall comply with all of its obligations under the terms
and provisions of the Interest Rate Protection Agreement. All amounts paid by
the Acceptable Counterparty under the Interest Rate Protection Agreement to
Borrower or Lender shall be deposited immediately with Lender. Borrower shall
take all actions reasonably requested by Lender to enforce Lender's rights under
the Interest Rate Protection Agreement in the event of a default by the
Acceptable Counterparty and shall not waive, amend or otherwise modify any of
its rights thereunder.
(d) In the event that Borrower fails to purchase, maintain and / or
deliver to Lender the Interest Rate Protection Agreement in accordance with the
terms and provisions of this Agreement, Lender may purchase the Interest Rate
Protection Agreement and the cost incurred by Lender in purchasing the Interest
Rate Protection Agreement shall be paid by Borrower to Lender with interest
thereon at the Default Rate from the date such cost was incurred by Lender until
such cost is reimbursed by Borrower to Lender.
(e) In connection with the Interest Rate Protection Agreement and any
Replacement Interest Rate Protection Agreement, Borrower shall obtain and
deliver to Lender an opinion from counsel (which counsel may be in-house counsel
for the Acceptable Counterparty) for the Acceptable Counterparty (upon which
Lender and its successors and assigns may rely) which shall provide, in relevant
part, that:
(i) the Acceptable Counterparty is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation and has the organizational power and authority to execute
and deliver, and to perform its obligations under, the Interest Rate
Protection Agreement;
(ii) the execution and delivery of the Interest Rate
Protection Agreement by the Acceptable Counterparty, and any other
agreement which the Acceptable Counterparty has executed and delivered
pursuant thereto, and the performance of its obligations thereunder
have been and remain duly authorized by all necessary action and do not
contravene any provision of its certificate of incorporation or by-laws
(or
-18-
equivalent organizational documents) or any law, regulation or
contractual restriction binding on or affecting it or its property;
(iii) all consents, authorizations and approvals required for
the execution and delivery by the Acceptable Counterparty of the
Interest Rate Protection Agreement, and any other agreement which the
Acceptable Counterparty has executed and delivered pursuant thereto,
and the performance of its obligations thereunder have been obtained
and remain in full force and effect, all conditions thereof have been
duly complied with, and no other action by, and no notice to or filing
with any governmental authority or regulatory body is required for such
execution, delivery or performance; and
(iv) the Interest Rate Protection Agreement, and any other
agreement which the Acceptable Counterparty has executed and delivered
pursuant thereto, has been duly executed and delivered by the
Acceptable Counterparty and constitutes the legal, valid and binding
obligation of the Acceptable Counterparty, enforceable against the
Acceptable Counterparty in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 2.3. LOAN PAYMENTS
(a) The Loan shall bear interest at a rate per annum equal to the LIBOR
Rate or the Static LIBOR Rate, as applicable (the "NOTE RATE"). Interest shall
be computed based on the daily rate produced assuming a three hundred sixty
(360) day year, multiplied by the actual number of days elapsed. Except as
otherwise set forth in this Agreement, interest shall be paid in arrears.
(b) Borrower hereby agrees to pay sums due under the Note as follows:
Except as may be adjusted in accordance with Section 2.3(c), (i) consecutive
monthly installments of interest calculated at the applicable Note Rate for the
applicable Interest Period shall be payable pursuant to the terms of Section
2.3(d) and (ii) if applicable, the Interest Floor Differential (the "MONTHLY
PAYMENT AMOUNT") on each Payment Date. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance, all accrued and unpaid interest
and all other amounts due hereunder and under the Note, the Mortgage and other
Loan Documents. The accrued and unpaid interest due on the Maturity Date shall
be calculated for the full final Interest Period, notwithstanding that such
Interest Period may extend beyond the Maturity Date. Notwithstanding any other
provision hereof to the contrary, Borrower's obligation to pay the Interest
Floor Differential shall survive the payment in full of the Loan as an unsecured
obligation.
(c) All interest shall be computed on the basis of a three hundred
sixty (360) day year and paid for the actual number of days elapsed in an
Interest Period. Lender shall determine the Note Rate applicable to the Debt in
accordance with this Agreement and its determination thereof shall be conclusive
in the absence of manifest error. The books and records of Lender shall be prima
facie evidence of all sums owing to Lender from time to time under this
-19-
Agreement, but the failure to record any such information shall not limit or
affect the obligations of Borrower under the Loan Documents.
(d) Each payment by Borrower hereunder or under the Note shall be
payable at ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Commercial
Mortgage Loan Servicing #1777, or at such other place as the Lender may
designate from time to time in writing, on the date such payment is due, to
Lender by deposit to such account as Lender may designate by written notice to
Borrower. Each payment by Borrower hereunder or under the Note shall be made in
funds settled through the New York Clearing House Interbank Payments System or
other funds immediately available to Lender by 2:00 p.m., New York City time, on
the date such payment is due, to Lender by deposit to such account as Lender may
designate by written notice to Borrower. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the first Business Day preceding such scheduled due
date.
(e) Prior to the occurrence of an Event of Default, all monthly
payments made as scheduled under this Agreement and the Note shall be applied to
the payment of interest computed at the Note Rate. All voluntary and involuntary
prepayments on the Note shall be applied, to the extent thereof, to accrued but
unpaid interest on the amount prepaid, to the remaining principal amount, and
any other sums due and unpaid to Lender in connection with the Loan, in such
manner and order as Lender may elect in its sole and absolute discretion.
Following the occurrence of an Event of Default, any payment made on the Note
shall be applied to accrued but unpaid interest, late charges, accrued fees, the
unpaid principal amount of the Note, and any other sums due and unpaid to Lender
in connection with the Loan, in such manner and order as Lender may elect in its
sole and absolute discretion.
(f) All payments made by Borrower hereunder or under the Note or the
other Loan Documents shall be made irrespective of, and without any deduction
for, any setoff, defense or counterclaims.
(g) Borrower acknowledges that in connection with a Securitization of
the Loan, the Senior Mezzanine Loan and/or the Mortgage Loan, Lender may in its
sole discretion change the day of the month that constitutes the Selected Day.
Section 2.4. LATE PAYMENT CHARGE
Except for the payment due on the Maturity Date, if any principal or
interest payment is not paid by Borrower on or before the date on which same is
due, Borrower shall pay to Lender upon demand an amount equal to the lesser of
four percent (4%) of such unpaid sum or the maximum amount permitted by
applicable law in order to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment. Any such amount shall be secured by the Mortgage
and the other Loan Documents to the extent permitted by applicable law.
Section 2.5. PREPAYMENT
Except as otherwise expressly permitted by this Section 2.5 no
voluntary prepayments, whether in whole or in part, of the Loan or any other
amount at any time due and owing under
-20-
the Note can be made by Borrower or any other Person without the express written
consent of Lender.
(a) Lockout Period. Borrower has no right to make, and Lender shall
have no obligation to accept, any voluntary prepayment, whether in whole or in
part, of the Loan during the Lockout Period. Notwithstanding the foregoing, if
either (i) Lender, in its sole and absolute discretion, accepts a full or
partial voluntary prepayment during the Lockout Period or (ii) there is an
involuntary prepayment during the Lockout Period, then, in either case, Borrower
shall, in addition to any portion of the Loan prepaid (together with all
interest accrued and unpaid thereon), pay to Lender a prepayment premium in an
amount calculated in accordance with Section 2.5(c) hereof.
(b) Intentionally omitted.
(c) Involuntary Prepayment During the Lockout Period. If, during the
Lockout Period, payment of all or any part of the Debt is tendered by Borrower
or otherwise recovered by Lender in the exercise of its remedies under the Loan
Documents, such tender or recovery shall be (i) made on the next occurring
Payment Date together with the Monthly Payment Amount and (ii) deemed a
voluntary prepayment by Borrower in violation of the prohibition against
prepayment set forth in this Section 2.5 and Borrower shall pay, in addition to
the Debt, (x) an amount equal to the Lockout Yield Maintenance Premium and (y)
the accrued and unpaid interest calculated for the full Interest Period in which
such voluntary prepayment occurs.
(d) Insurance and Condemnation Proceeds; Excess Interest.
Notwithstanding any other provision herein to the contrary, and provided no
Event of Default exists, Borrower shall not be required to pay any prepayment
premium in connection with any prepayment occurring solely as a result of (i)
the application of Insurance Proceeds or Condemnation Proceeds pursuant to the
terms of the Loan Documents, or (ii) the application of any interest in excess
of the maximum rate permitted by applicable law to the reduction of the Loan.
(e) After the Lockout Period. Commencing on the day after the
expiration of the Lockout Period, and upon giving Lender at least sixty (60)
days (but not more than ninety (90) days) prior written notice, Borrower may
voluntarily prepay (without premium) the Note in whole (but not in part) on a
Payment Date. Lender shall accept a prepayment pursuant to this Section 2.5(e)
on a day other than a Payment Date provided that, in addition to payment of the
full outstanding principal balance of the Note, Borrower pays to Lender a sum
equal to the amount of interest which would have accrued on the Note if such
prepayment occurred on the next Payment Date.
(f) Limitation on Partial Prepayments. In no event shall Lender have
any obligation to accept a partial prepayment.
(g) Liquidation Events.
(i) In the event of (A) any Casualty to the Property or any
material portion thereof, (B) any Condemnation of the Property or any
material portion thereof, (C) any transfer of the Property or the
Senior Mezzanine Collateral in connection with a realization thereon
following a Mortgage Event of Default or a Senior Mezzanine Event
-21-
of Default, including, without limitation, a foreclosure sale, or (D)
any refinancing of the Property, Senior Mezzanine Collateral or the
Mortgage Loan (each, a "LIQUIDATION EVENT"), Borrower or Senior
Mezzanine Borrower shall cause the related Net Liquidation Proceeds
After Debt Service to be deposited directly into the Junior Mezzanine
Debt Service Account. On each date on which Lender actually receives a
distribution of Net Liquidation Proceeds After Debt Service, Borrower
shall prepay the outstanding principal balance of the Note in an amount
equal to one hundred percent (100%) of such Net Liquidation Proceeds
After Debt Service, together with interest which would have accrued on
such amount through the next Payment Date. Any amounts of Net
Liquidation Proceeds After Debt Service in excess of the Debt shall be
paid to Borrower. Any prepayment received by Lender pursuant to this
Section 2.5(g)(i) on a date other than a Payment Date shall be held by
Lender as collateral security for the Loan in an interest bearing
account, with such interest accruing to the benefit of Borrower, and
shall be applied by Lender on the next Payment Date.
(ii) Borrower shall notify Lender of any Liquidation Event no
later than one (1) Business Day following the first date on which
Borrower has knowledge of such event. Borrower shall be deemed to have
knowledge of (i) a sale (other than a foreclosure sale) of the Property
or Senior Mezzanine Collateral on the date on which a contract of sale
for such sale is entered into, and a foreclosure sale, on the date
notice of such foreclosure sale is given, and (ii) a refinancing of the
Property or Senior Mezzanine Collateral, on the date on which a
commitment for such refinancing has been entered into. The provisions
of this Section 2.5(g)(ii) shall not be construed to contravene in any
manner the restrictions and other provisions regarding refinancing of
(i) the Mortgage Loan or the Sale or Pledge of the Property set forth
in this Agreement and the other Loan Documents or (ii) the Senior
Mezzanine Loan or a Sale or Pledge of the Senior Mezzanine Collateral
set forth in this Agreement and the Other Loan Documents.
(h) Prepayment of Mortgage Loan/Mortgage Borrower's Failure to Extend
Mortgage Loan. Except as provided in Section 5.32 hereof, in the event that (i)
the Mortgage Loan is paid in full at any time prior to the then Maturity Date of
the Loan or (ii) the Mortgage Borrower does not exercise its right to extend the
Mortgage Loan pursuant to Section 2.10 of the Mortgage Loan Agreement, the Debt
shall then be immediately due and payable regardless of the Maturity Date of the
Loan.
Section 2.6. PAYMENTS AFTER DEFAULT
Upon the occurrence and during the continuance of an Event of Default,
interest on the outstanding principal balance of the Loan and, to the extent
permitted by law, overdue interest and other amounts due in respect of the Loan,
(a) shall accrue at the Default Rate, and (b) Lender shall be entitled to
receive and Borrower shall pay or cause to be paid to Lender all cash flow from
the Property in accordance with the terms of Article 10 of the Mortgage Loan
Agreement, such amount to be applied by Lender to the payment of the Debt in
such order as Lender shall determine in its sole discretion, including, without
limitation, alternating applications thereof between interest and principal.
Interest at the Default Rate shall be computed from the occurrence of the Event
of Default until the earlier of (i) the actual receipt and collection of the
Debt (or that portion thereof that is then due) and (ii) the cure of such Event
of Default. To the
-22-
extent permitted by applicable law, interest at the Default Rate shall be added
to the Debt, shall itself accrue interest at the same rate as the Loan and shall
be secured by the Pledge Agreement. This paragraph shall not be construed as an
agreement or privilege to extend the date of the payment of the Debt, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default; the acceptance of any payment from Borrower
shall not be deemed to cure or constitute a waiver of any Event of Default; and
Lender retains its rights under this Agreement to accelerate and to continue to
demand payment of the Debt upon the happening of and during the continuance any
Event of Default, despite any payment by Borrower to Lender.
Section 2.7. INTENTIONALLY DELETED
Section 2.8. USURY SAVINGS
This Agreement and the Note are subject to the express condition that
at no time shall Borrower be obligated or required to pay interest on the
principal balance of the Loan at a rate which could subject Lender to either
civil or criminal liability as a result of being in excess of the Maximum Legal
Rate. If, by the terms of this Agreement or the other Loan Documents, Borrower
is at any time required or obligated to pay interest on the principal balance
due hereunder at a rate in excess of the Maximum Legal Rate, the Note Rate or
the Default Rate, as the case may be, shall be deemed to be immediately reduced
to the Maximum Legal Rate and all previous payments in excess of the Maximum
Legal Rate shall be deemed to have been payments in reduction of principal and
not on account of the interest due hereunder. All sums paid or agreed to be paid
to Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.
Section 2.9. UNAVAILABILITY OF RATE; FOREIGN TAXES; INCREASED COSTS. In
the event that Lender shall have determined in its reasonable discretion that
none of the methods set forth in the definition of "LIBOR" herein are available,
then Lender shall forthwith give notice by telephone of such determination,
confirmed in writing, to Borrower at least one (1) day prior to the last day of
the related Interest Period. If such notice is given, the Note Rate, commencing
with such related Interest Period shall be the LIBOR Rate in effect for the most
recent Interest Period (the "Static LIBOR Rate").
(a) If, pursuant to the terms of this Agreement, the Loan has been
converted to the Static LIBOR Rate and Lender shall determine (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that the event(s) or circumstance(s) which resulted in such conversion
shall no longer be applicable, Lender shall give notice thereof to Borrower, and
the Loan will be converted from the Static LIBOR Rate to the LIBOR Rate
effective on the first day of the next succeeding Interest Period.
Notwithstanding any provision of this Agreement to the contrary, in no event
shall Borrower have the right to elect to convert from the LIBOR Rate to the
Static LIBOR Rate.
-23-
(b) (i) All payments made by Borrower hereunder shall be made free and
clear of, and without reduction for or on account of, income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions, reserves or
withholdings imposed, levied, collected, withheld or assessed by any
Governmental Authorities, which are imposed, enacted or become effective on or
after the Closing Date (such non-excluded taxes being referred to collectively
as "FOREIGN TAXES"), excluding income and franchise taxes of the United States
of America or any political subdivision or taxing authority thereof or therein.
If any Foreign Taxes are required to be withheld from any amounts payable to
Lender hereunder and such Foreign Taxes are not a result of activities of Lender
unrelated to the Loan or Borrower, the amounts so payable to Lender shall be
increased to the extent necessary to yield to Lender (after payment of all
Foreign Taxes) interest or any such other amounts payable hereunder at the rate
or in the amounts specified hereunder. Whenever any Foreign Taxes are payable
pursuant to applicable law by Borrower, as promptly as possible thereafter,
Borrower shall send to Lender an original official receipt, if available, or
certified copy thereof showing payment of such Foreign Taxes. Borrower hereby
indemnifies Lender for any incremental taxes, interest or penalties that may
become payable by Lender which may result from any failure by Borrower to pay
any such Foreign Taxes when due to the appropriate taxing authority of which
Lender shall have provided Borrower with prior written notice, if possible, or
any failure by Borrower to remit to Lender the required receipts or other
required documentary evidence. Lender's inability to notify Borrower of any such
Foreign Taxes in accordance with the immediately preceding sentence shall in no
way relieve Borrower of its obligations under this Section 2.9(b). (ii) A Lender
that is entitled to an exemption from or reduction of any Foreign Taxes, with
respect to payments under this Agreement shall deliver to the Borrower, at the
time or times prescribed by applicable law or reasonably requested by the
Borrower, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate. In addition, at Borrower's request, Lender shall provide to
Borrower its understanding as to whether any Foreign Taxes will be applicable to
any forthcoming payments due under the Loan Documents. Lender shall not be
entitled to claim compensation pursuant to this Section 2.9(b) for any Foreign
Taxes to the extent that such Foreign Taxes result from a failure to comply with
the requirements of this paragraph. (iii) If Lender determines in good faith
that a reasonable basis exists for contesting any Foreign Taxes for which
indemnification has been demanded hereunder, Lender shall cooperate with
Borrower in challenging such Taxes at Borrower's expense if so requested by
Borrower. If Lender receives a refund of Foreign Taxes for which a payment has
been made by Borrower pursuant to this Agreement, which refund in the good faith
judgment of Lender is attributable to such payment made by Borrower, then Lender
shall reimburse Borrower for such amount (together with any interest received
thereon) as Lender determines to be the proportion of the refund as will leave
it, after such reimbursement, in no better or worse position than it would have
been in if the payment had not been required. (iv) If the Borrower is required
to pay additional amounts to or for the account of any Lender pursuant to this
Section 2.9(b) as a result of a change in law or treaty occurring after such
Lender first became a party to this Agreement, then such Lender will, at the
request of the Borrower, change the jurisdiction of its applicable lending
office if such change (x) will eliminate or reduce any such additional payment
which may thereafter accrue and (y) is, in such Lender's sole, reasonable
discretion, determined not to be materially disadvantageous or cause
unreasonable hardship to such Lender, provided that fees, charges, costs or
expenses that are related to such change shall be borne by the Borrower on
behalf of a Lender, and the mere existence of such
-24-
expenses, fees or costs shall not be deemed to be materially disadvantageous or
cause undue hardship to the Lender. Lender agrees that it will (A) take all
reasonable actions reasonably requested by the Borrower in writing that are
without material risk and cost to Lender and consistent with the internal
policies of such Lender and applicable legal and regulatory restrictions (as the
case may be) to maintain all exemptions, if any, available to it from
withholding taxes (whether available by treaty or existing administrative
waiver) and (B) to the extent reasonable and without material risk and cost to
it, otherwise cooperate with the Borrower to minimize any amounts payable by the
Borrower under this Section 2.9(b); provided, however, that in each case, any
cost relating to such action or cooperation requested by the Borrower shall be
borne by the Borrower.
(c) If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender to make or maintain a Loan with the Note Rate being based on LIBOR as
contemplated hereunder, (i) the obligation of Lender hereunder to make or
continue the Loan based on LIBOR or to convert the Loan from the Static LIBOR
Rate to the LIBOR Rate shall be canceled forthwith and (ii) any outstanding
LIBOR Loan shall be converted automatically to a loan bearing interest at the
Static LIBOR Rate (the "STATIC LIBOR RATE LOAN") on the next succeeding Payment
Date or within such earlier period as required by law. Borrower hereby agrees
promptly to pay Lender, upon demand, any additional amounts necessary to
compensate Lender for any costs incurred by Lender in making any conversion in
accordance with this Agreement, including, without limitation, any interest or
fees payable by Lender to lenders of funds obtained by it in order to make or
maintain the LIBOR Loan hereunder. If Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.9(c), Lender shall provide
Borrower with not less than ninety (90) days written notice specifying in
reasonable detail the event by reason of which it has become so entitled and the
additional amount required to fully compensate Lender for such additional costs.
Lender's notice of such costs, as certified to Borrower, shall be conclusive
absent manifest error.
(d) In the event that any change in any requirement of law or in the
interpretation or application thereof, or compliance by Lender with any request
or directive (whether or not having the force of law) hereafter issued from any
central bank or other Governmental Authority:
(i) shall hereafter impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of Lender which is not
otherwise included in the determination of the LIBOR Rate hereunder;
(ii) shall hereafter have the effect of reducing the rate of
return on Lender's capital as a consequence of its obligations
hereunder to a level below that which Lender could have achieved but
for such adoption, change or compliance (taking into consideration
Lender's policies with respect to capital adequacy) by any amount
deemed by Lender to be material; or
(iii) shall hereafter impose on Lender any other condition and
the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining loans or extensions of credit or to
reduce any amount receivable hereunder other than
-25-
with respect to taxes; then, in any such case, Borrower shall promptly
pay Lender, upon demand, any additional amounts necessary to compensate
Lender for such additional cost or reduced amount receivable which
Lender deems to be material as determined by Lender. If Lender becomes
entitled to claim any additional amounts pursuant to this Section
2.9(d), Lender shall provide Borrower with not less than ninety (90)
days written notice specifying in reasonable detail the event by reason
of which it has become so entitled and the additional amount required
to fully compensate Lender for such additional cost or reduced amount.
A certificate (together with such supporting documentation as Lender
shall provide) as to any additional costs or amounts payable pursuant
to the foregoing sentence submitted by Lender to Borrower shall be
conclusive in the absence of error. This provision shall survive
payment of the Note and the satisfaction of all other obligations of
Borrower under this Agreement and the Loan Documents.
(e) Borrower agrees to indemnify Lender and to hold Lender harmless
from any loss or expense which Lender sustains or incurs as a consequence of (i)
any default by Borrower in payment of the principal of or interest on a LIBOR
Loan, including, without limitation, any such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain a LIBOR Loan hereunder, (ii) any prepayment (whether voluntary or
mandatory) of the LIBOR Loan that did not include all interest which had accrued
(or would have accrued) at the Note Rate through the end of the related Interest
Period, including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain the LIBOR Loan hereunder, and (iii) the conversion (for any reason
whatsoever, whether voluntary or involuntary) of the Note Rate from the LIBOR
Rate to the Static LIBOR Rate with respect to any portion of the outstanding
principal amount of the Loan then bearing interest at the LIBOR Rate on a date
other than the Payment Date immediately following the last day of an Interest
Period, including, without limitation, such loss or expenses arising from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain a LIBOR Loan hereunder (the amounts referred to in clauses (i), (ii)
and (iii) are herein referred to collectively as the "BREAKAGE COSTS");
provided, however, Borrower shall not indemnify Lender from any loss or expense
arising from Lender's gross negligence or willful misconduct. This provision
shall survive payment of the Note in full and the satisfaction of all other
obligations of Borrower under this Agreement and the other Loan Documents.
Lender shall not be entitled to claim compensation pursuant to this
Section 2.9(e) for any Foreign Taxes, increased cost or reduction in amounts
received or receivable hereunder, or any reduced rate of return, which was
incurred or which accrued more than ninety (90) days before the date Lender
notified Borrower of the change in law or other circumstance on which such claim
of compensation is based and delivered to Borrower a written statement setting
forth in reasonable detail the basis for calculating the additional amounts owed
to Lender under this Section 2.9(e), which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
Section 2.10. EXTENSION
(a) Borrower shall have the option to extend the term of the Loan (the
"EXTENSION OPTION") beyond the initial Maturity Date for one (1) term (the
"EXTENSION TERM") of one (1)
-26-
year to the Payment Date occurring in July, 2008, upon satisfaction of the
following terms and conditions:
(i) no Event of Default shall have occurred and be continuing
at the time Borrower delivers notice to Lender of its intention to
exercise the Extension Option and on the date that the extension term
is commenced;
(ii) Borrower shall notify Lender in writing of its election
to extend the Maturity Date as aforesaid not earlier than three (3)
months, and no later than one (1) month, prior to the then applicable
Maturity Date, which election shall be irrevocable commencing on the
fifteenth (15th ) day prior to the date on which the Extension Term
will commence.
(iii) Borrower shall obtain and deliver to Lender as security
for the Loan prior to the commencement of the Extension Term, one or
more Interest Rate Protection Agreements, which Interest Rate
Protection Agreements shall be effective commencing on the first day of
such Extension Term and shall have a maturity date not earlier than the
Maturity Date, as extended pursuant to the terms of this Section 2.10;
(iv) in connection with the Extension Option, Borrower shall
have delivered to Lender together with its notice pursuant to
subsection (b) of this Section 2.10 and as of the commencement of the
Extension Term, a certificate from an officer of Borrower in form
acceptable to the Lender certifying that each of the representations
and warranties of Borrower contained in the Loan Documents is true,
complete and correct in all material respects as of the date of such
certificate to the extent such representations and warranties are not
matters which by their nature can no longer be true and correct as a
result of the passage of time;
(v) in connection with the exercise of the Extension Option,
Borrower shall have paid to Lender the Extension Fee; and
(vi) the Mortgage Loan has been concurrently extended pursuant
to Section 2.10 of the Mortgage Loan Agreement.
(b) All references in this Agreement and in the other Loan Documents to
the Maturity Date shall mean the Maturity Date, as the same may be extended
pursuant and subject to this Section 2.10.
Section 2.11. ADDITIONAL PAYMENT PROVISIONS
(a) Within fifteen (15) days after request by Lender (or at the time of
any prepayment), Borrower shall pay to Lender such amount or amounts as will
compensate Lender for any loss, cost, expense, penalty, claim or liability,
including any loss incurred in obtaining, prepaying, liquidating or employing
deposits or other funds from third parties and any loss of yield, as determined
by Lender in its judgment reasonably exercised, incurred by it with respect to
the Loan as a result of the payment or prepayment of any amount on a date other
than the date such amount is required or permitted to be paid or prepaid;
provided that Lender delivers to Borrower a certificate as to the amounts of
such costs described herein, which certificate shall be
-27-
conclusive in the absence of manifest error. Lender shall have no obligation to
purchase, sell and/or match funds in connection with the funding or maintaining
of the Loan or any portion thereof. The obligations of Borrower under this
Section shall survive any termination of the Loan Documents and payment of the
Note and shall not be waived by any delay by Lender in seeking such
compensation.
(b) All payments made by Borrower hereunder or under the other Loan
Documents shall be made irrespective of, and without any deduction for, any
setoff, defense or counterclaims.
(c) Remittances in payment of any part of the Loan in less than the
required amount in immediately available U.S. funds shall not, regardless of any
receipt or credit issued therefor, constitute payment until the required amount
is actually received by the holder hereof in immediately available U.S. funds
and shall be made and accepted subject to the condition that any check or draft
may be handled for collection in accordance with the practices of the collecting
bank or banks.
(d) If at any time after the date hereof, Lender (which shall include,
for purposes of this Section, any corporation controlling Lender) reasonably
determines that due to the adoption or modification of any Legal Requirement
regarding taxation, Lender's required levels of reserves, deposits, Federal
Deposit Insurance Corporation insurance or capital (including any allocation of
capital requirements or conditions), or similar requirements, or any
interpretation or administration thereof by any Tribunal or compliance of Lender
with any of such requirements, has or would have the effect of (a) increasing
Lender's costs relating to the Loan, or (b) reducing the yield or rate of return
of Lender on the Loan, to a level below that which Lender could have achieved
but for the adoption or modification of any such Legal Requirements, Borrower
shall, within fifteen (15) days of any request by Lender, pay to Lender such
additional amounts as (in Lender's sole judgment, after good faith and
reasonable computation) will compensate Lender for such increase in costs or
reduction in yield or rate of return of Lender (a "CONSEQUENTIAL LOSS"). No
failure by Lender to immediately demand payment of any additional amounts
payable hereunder shall constitute a waiver of Lender's right to demand payment
of such amounts at any subsequent time. Nothing herein contained shall be
construed or so operate as to require Borrower to pay any interest, fees, costs
or charges greater than is permitted by applicable Law. If a change in the
applicable lending office of Lender would eliminate any Consequential Loss,
Lender shall use its best efforts to change such office, so long as such change
would not be materially disadvantageous or cause unreasonable hardship to
Lender.
(e) Any demand for payment pursuant to this Section 2.11 shall be
accompanied by an acknowledgement from Lender that it is applying these
provisions generally with respect to similar loan transactions and borrowers.
-28-
ARTICLE III
CONDITIONS PRECEDENT
The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by Borrower or waiver by Lender of the following conditions
precedent no later than the Closing Date
Section 3.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS. The representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date hereof with the same effect as if made on and as
of such date, and Lender shall have determined that no Default or an Event of
Default shall have occurred and be continuing nor will any Default or Event of
Default occur immediately following the date hereof and Borrower shall be in
compliance in all material respects with all terms and conditions set forth in
this Agreement and in each other Loan Document on its part to be observed or
performed.
Section 3.2. DELIVERY OF LOAN DOCUMENTS; TITLE POLICIES
(a) Pledge Agreement, Loan Agreement and Note. Lender shall have
received from Borrower fully executed and acknowledged counterparts of the
Pledge Agreement and evidence that the Uniform Commercial Code financing
statements have been delivered to the title company for recording and/or filing,
in the reasonable judgment of Lender, so as to effectively create upon such
recording and/or filing valid and enforceable Liens upon the Collateral, of
first priority, in favor of Lender (or such other trustee as may be required or
desired under local law). Lender shall have also received from Borrower fully
executed counterparts of this Agreement, the Note, the Collateral Assignment of
Interest Rate Protection Agreement and all other Loan Documents.
(b) Owner's Title Policy; UCC-9 Title Policy.
(i) Lender shall have received an Owner's Title Insurance
Policy issued by a title company acceptable to Lender and dated as of
the Closing Date. Such Title Insurance Policy shall (i) provide such
coverage as may be reasonably acceptable to Lender, free and clear of
all exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the
terms of any endorsements), (ii) contain such endorsements and
affirmative coverages as Lender may reasonably request (including,
without limitation, the mezzanine financing endorsement), and (iii)
name Mortgage Borrower as the insured. The Owner's Title Insurance
Policy shall be assignable. Lender also shall have received evidence
that all premiums in respect of such Owner's Title Insurance Policy
have been paid.
(ii) Lender shall have received a UCC-9 Title Policy with
respect to the Collateral, issued by a title company acceptable to
Lender and dated as of the date hereof. Such UCC-9 Title Policy shall
(i) provide coverage in the Loan Amount or such other amount as
required by Lender, (ii) insure Lender that the Pledge Agreement
insured by such UCC-9 Title Policy creates a valid, perfected lien on
the Collateral of the requisite
-29-
priority and that Borrower is the sole owner of the Collateral, free
and clear of all exceptions from coverage other than the standard
exceptions and exclusions from coverage, (iii) contain such
endorsements and affirmative coverages as Lender may reasonably
request, and (iv) name Lender as the insured. The UCC-9 Title Policy
shall be assignable. Lender also shall have received evidence that all
premiums in respect of such UCC-9 Title Policy have been paid.
(c) Survey. Lender shall have received a current title survey for the
Property, certified to the title company and Lender and their successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys. The survey shall meet the classification of an "Urban Survey" and
the following additional items from the list of "Optional Survey
Responsibilities and Specifications" (Table A) should be added to each survey:
2, 3, 4, 6, 8, 9, 10, 11 and 13. Such survey shall reflect the same legal
description contained in the Title Insurance Policy referred to in subsection
(b) above and shall include, among other things, a metes and bounds description
of the real property comprising part of the Property reasonably satisfactory to
Lender. The surveyor's seal shall be affixed to the survey and the surveyor
shall provide a certification for the survey in form and substance acceptable to
Lender.
(d) Insurance. Lender shall have received copies of the Policies
required hereunder, satisfactory to Lender in its sole discretion, and evidence
of the payment of all Insurance Premiums payable for the existing policy period.
(e) Environmental Reports. Lender shall have received an Environmental
Report in respect of the Property satisfactory to Lender.
(f) Zoning/Building Code. Lender shall have received evidence of
compliance with zoning and building ordinances and codes with respect to the
Property, including, without limitation, required certificates of occupancy,
reasonably acceptable to Lender.
(g) Encumbrances. Borrower shall have taken or caused to be taken such
actions in such a manner so that Lender has a valid and perfected first Lien as
of the date hereof on the Collateral, subject only to applicable Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents, and Lender shall have received satisfactory evidence thereof.
(h) Lien Searches. Borrower shall have delivered to Lender certified
search results pertaining to Borrower, Borrower Principal and such other Persons
as reasonably required by Lender for state and federal tax liens, bankruptcy,
judgment, litigation and state and local UCC filings.
Section 3.3. RELATED DOCUMENTS. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and at Lender's written request, Lender shall have received and approved
certified copies thereof.
-30-
Section 3.4. ORGANIZATIONAL DOCUMENTS. On or before the date hereof,
Borrower shall deliver or cause to be delivered to Lender (a) copies certified
by Borrower of all organizational documentation related to Borrower and Borrower
Principal which must be acceptable to Lender in its sole discretion, and (b)
such other evidence of the formation, structure, existence, good standing and/or
qualification to do business of the Borrower and Borrower Principal, as Lender
may request in its sole discretion, including, without limitation, good standing
or existence certificates, qualifications to do business in the appropriate
jurisdictions, resolutions authorizing the entering into of the Loan and
incumbency certificates as may be requested by Lender.
Section 3.5. OPINIONS OF BORROWER'S COUNSEL. Lender shall have received
opinions of Borrower's counsel (a) with respect to non-consolidation issues, and
(b) with respect to due execution, authority, enforceability of the Loan
Documents and such other matters as Lender may require, and (c) with respect to
the perfection of Lender's security interest in the Collateral, all such
opinions in form, scope and substance satisfactory to Lender and Lender's
counsel in their sole discretion.
Section 3.6. ANNUAL BUDGET. Borrower shall have delivered, and Lender
shall have approved, the Annual Budget for the current fiscal year, a copy of
which is attached as Exhibit A hereto.
Section 3.7. TAXES AND OTHER CHARGES. Mortgage Borrower shall have paid
all Taxes and Other Charges (including any in arrears) relating to the Property,
which amounts shall be funded with proceeds of the Mortgage Loan and Loan.
Section 3.8. COMPLETION OF PROCEEDINGS. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents and all documents
incidental thereto shall be satisfactory in form and substance to Lender, and
Lender shall have received all such counterpart originals or certified copies of
such documents as Lender may reasonably request.
Section 3.9. PAYMENTS. All payments, deposits or escrows required to be
made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the date hereof shall have been paid.
Section 3.10. TRANSACTION COSTS. Except as otherwise expressly provided
herein, Borrower shall have paid or reimbursed Lender for all out of pocket
expenses in connection with the underwriting, negotiation, and closing of the
Loan, including title insurance premiums and other title company charges;
registration, filing and similar fees, taxes and charges; transfer, deed, stamp
or documentary taxes or similar fees or charges; costs of third-party reports,
including without limitation, environmental studies, credit reports, seismic
reports, engineer's reports, appraisals and surveys; underwriting and
origination expenses; and all actual, reasonable legal fees and expenses charged
by counsel to Lender.
Section 3.11. NO MATERIAL ADVERSE CHANGE. There shall have been no
Material Adverse Change in the financial condition or business condition of the
Property, Mortgage Borrower, Borrower, Borrower Principal, Manager or any other
person or party contributing to the operating income and operations of the
Property since the date of the most recent financial
-31-
statements and/or other information delivered to Lender. The income and expenses
of the Property, the occupancy and leases thereof, and all other features of the
transaction shall be as represented to Lender without material adverse change.
None of Borrower, Mortgage Borrower, Borrower Principal, or Affiliated Manager
shall be the subject of any bankruptcy, reorganization, or insolvency
proceeding.
Section 3.12. LEASES AND RENT ROLL. Lender shall have received copies
of all Leases affecting the Property, which shall be satisfactory in form and
substance to Lender. Lender shall have received a current certified rent roll of
the Property, reasonably satisfactory in form and substance to Lender.
Section 3.13. TENANT ESTOPPELS. Borrower shall have delivered to Lender
copies of the executed tenant estoppel letters delivered to Mortgage Lender,
which shall be in form and substance satisfactory to Lender, from (a) each
Tenant under a Major Lease and (b) disregarding the area leased by those Tenants
described in clause (a) herein, Tenants leasing, in the aggregate, not less than
seventy-five percent (75%) of the remaining gross leasable area of the Property.
Section 3.14. [INTENTIONALLY OMITTED]
Section 3.15. SUBORDINATION AND ATTORNMENT. Borrower shall deliver to
Lender copies of the executed instruments delivered to Mortgage Lender
subordinating to the Mortgage all of the Leases previously designated by
Mortgage Lender.
Section 3.16. TAX LOT. Lender shall have received evidence that the
Property constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
Section 3.17. PHYSICAL CONDITIONS REPORT. Lender shall have received a
Physical Conditions Report with respect to the Property, which report shall be
reasonably satisfactory in form and substance to Lender.
Section 3.18. MANAGEMENT AGREEMENT. Lender shall have received a
certified copy of the Management Agreement, which shall be satisfactory in form
and substance to Lender.
Section 3.19. APPRAISAL. Lender shall have received an appraisal for
the Property, which shall be satisfactory in form and substance to Lender.
Section 3.20. FINANCIAL STATEMENTS. Lender shall have received
financial statements and related information in form and substance satisfactory
to Lender and in compliance with any Legal Requirements promulgated by the
Securities and Exchange Commission, including, without limitation, a balance
sheet, income and expense statement and statement of cash flows with respect to
Borrower and an operating statement with respect to the Property for the
year-to-date 2003, 2002, 2001, and 2000, audited (except with respect to the
year-to-date 2003) by an Acceptable Accountant and together with an unqualified
opinion of such Acceptable Accountant that such statements have been prepared in
accordance with GAAP applied on a consistent basis.
Section 3.21. [INTENTIONALLY DELETED]
-32-
Section 3.22. FURTHER DOCUMENTS. Lender or its counsel shall have
received such other and further approvals, opinions, documents and information
as Lender or its counsel may have reasonably requested including the Loan
Documents in form and substance satisfactory to Lender and its counsel.
Section 3.23. INTENTIONALLY DELETED
Section 3.24. OPINION LETTER. Borrower shall deliver to Lender on or
before the date hereof an opinion letter from counsel relating to Lender's
security interest being perfected by the delivery of certificates evidencing
limited liability company interests or by the filing of the UCC-1 Financing
Statement with the Delaware Secretary of State.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of Borrower and, where specifically indicated, Borrower Principal
represents and warrants to Lender as of the date hereof that:
Section 4.1. ORGANIZATION. Borrower, Mortgage Borrower, Senior
Mezzanine Borrower and Borrower Principal (when not an individual) (a) has been
duly organized and is validly existing and in good standing with requisite power
and authority to own its properties and to transact the businesses in which it
is now engaged, (b) is duly qualified to do business and is in good standing in
each jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations, (c) possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership and management of Mortgage
Borrower, and (d) in the case of Borrower, has full power, authority and legal
right to grant, bargain, sell, pledge, assign, warrant, transfer and convey the
Collateral pursuant to the terms of the Loan Documents, and in the case of
Borrower, Mortgage Borrower and Borrower Principal, has full power, authority
and legal right to keep and observe all of the terms of the Loan Documents or
Mortgage Loan Documents (as applicable) to which it is a party. Borrower and
Borrower Principal represent and warrant that the chart attached hereto as
Exhibit B sets forth an accurate listing of the direct and indirect owners of
the equity interests in Borrower and Borrower Principal (when not an
individual), to the extent such entity is not publicly traded.
Section 4.2. STATUS OF BORROWER. Borrower's exact legal name is
correctly set forth on the first page of this Agreement, on the Pledge
Agreement, and on any UCC-1 Financing Statements filed in connection with the
Loan. Borrower is an organization of the type specified on the first page of
this Agreement. Borrower is incorporated in or organized under the laws of the
state of Delaware. Borrower's principal place of business and chief executive
office, and the place where Borrower keeps its books and records, including
recorded data of any kind or nature, regardless of the medium of recording,
including software, writings, plans, specifications and schematics, has been for
the preceding four months (or, if less, the entire period of the existence of
Borrower) the address of Borrower set forth on the first page of this Agreement.
555 Junior's organizational identification number assigned by the state of
incorporation or organization is
-33-
3658034, and 808 Junior's organizational identification number assigned by the
state of incorporation or organization is 3658032.
Section 4.3. VALIDITY OF DOCUMENTS. Borrower, Mortgage Borrower and
Borrower Principal have taken all necessary action to authorize the execution,
delivery and performance of this Agreement and the other Loan Documents and
Mortgage Loan Documents to which they are parties. This Agreement, the other
Loan Documents and the Mortgage Loan Documents have been duly executed and
delivered by or on behalf of Borrower, Mortgage Borrower and Borrower Principal
(as applicable) and constitute the legal, valid and binding obligations of
Borrower, Mortgage Borrower and Borrower Principal (as applicable) enforceable
against Borrower, Mortgage Borrower and Borrower Principal (as applicable) in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
Section 4.4. NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents and the Mortgage Loan Documents by
Borrower, Mortgage Borrower and Borrower Principal, to the extent such Person is
a party thereto, will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance (other than pursuant to the
Loan Documents or Mortgage Loan Documents) upon any of the property or assets of
Borrower, Mortgage Borrower or Borrower Principal pursuant to the terms of any
agreement or instrument to which Borrower, Mortgage Borrower or Borrower
Principal is a party or by which any of Borrower's, Mortgage Borrower's or
Borrower Principal's property or assets is subject, nor will such action result
in any violation of the provisions of any statute or any order, rule or
regulation of any Governmental Authority having jurisdiction over Borrower,
Mortgage Borrower or Borrower Principal or any of Borrower's, Mortgage
Borrower's or Borrower Principal's properties or assets, and any consent,
approval, authorization, order, registration or qualification of or with any
Governmental Authority required for the execution, delivery and performance by
Borrower, Mortgage Borrower or Borrower Principal of this Agreement or any of
the other Loan Documents or any of the Mortgage Loan Documents has been obtained
and is in full force and effect.
Section 4.5. LITIGATION. Except as disclosed on Schedule 4.5 attached
hereto, there are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending for which Borrower
or an Affiliate of Borrower has been served or, to Borrower's or Borrower
Principal's knowledge, threatened in writing against or affecting Borrower,
Mortgage Borrower or Borrower Principal, which actions, suits or proceedings, if
determined against Borrower, Mortgage Borrower or Borrower Principal, would
materially adversely affect the condition (financial or otherwise) or business
of Borrower, Mortgage Borrower or Borrower Principal or the condition or
ownership of the Collateral or the Property (as applicable).
Section 4.6. AGREEMENTS. Neither Borrower nor Mortgage Borrower is a
party to any agreement or instrument or subject to any restriction which would
materially and adversely affect Borrower, Mortgage Borrower, the Property or the
Collateral, or Borrower's or Mortgage Borrower's business, properties or assets,
operations or condition, financial or otherwise.
-34-
Neither Borrower nor Mortgage Borrower is in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower, Mortgage Borrower, the Property or the Collateral is bound.
Neither Borrower nor Mortgage Borrower has any material financial obligation
under any agreement or instrument to which Borrower or Mortgage Borrower is a
party or by which Borrower, Mortgage Borrower, the Property or the Collateral is
otherwise bound, other than (a) obligations incurred in the ordinary course of
the ownership of the Collateral or the Property (as applicable) and (b)
obligations under the Loan Documents or Mortgage Loan Documents (as applicable).
Section 4.7. SOLVENCY. Except as disclosed on Schedule 4.7 attached
hereto, Borrower and Borrower Principal have (a) not entered into the
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder, delay or defraud any creditor and (b) received
reasonably equivalent value in exchange for their obligations under such Loan
Documents. Giving effect to the Loan, the fair saleable value of the assets of
Borrower and Borrower Principal exceeds and will, immediately following the
making of the Loan, exceed the total liabilities of Borrower and Borrower
Principal, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. No petition in bankruptcy has been filed against
Borrower, Borrower Principal, or Affiliated Manager in the last ten (10) years,
and neither Borrower nor Borrower Principal, or Affiliated Manager in the last
ten (10) years has made an assignment for the benefit of creditors or taken
advantage of any Creditors Rights Laws. Neither Borrower nor Borrower Principal,
or Affiliated Manager is contemplating either the filing of a petition by it
under any Creditors Rights Laws or the liquidation of all or a major portion of
Borrower's assets or property, and Borrower has no knowledge of any Person
contemplating the filing of any such petition against Borrower or Borrower
Principal, or Affiliated Manager.
Section 4.8. FULL AND ACCURATE DISCLOSURE. No statement of fact made by
or on behalf of Borrower, Mortgage Borrower or Borrower Principal in this
Agreement or in any of the other Loan Documents or in any other document or
certificate delivered by Borrower, Mortgage Borrower or Borrower Principal or
any Affiliate thereof or, to Borrower's knowledge, in any third party reports
delivered on behalf of Borrower, Mortgage Borrower or Borrower Principal
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no material fact presently known to Borrower or Borrower Principal
which has not been disclosed to Lender which adversely affects, nor as far as
Borrower or Borrower Principal can reasonably foresee, might adversely affect,
the Collateral or the Property or the business, operations or condition
(financial or otherwise) of Borrower, Mortgage Borrower or Borrower Principal.
Section 4.9. NO PLAN ASSETS. Borrower is not an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and
none of the assets of Borrower constitutes or will constitute "plan assets" of
one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In
addition, (a) Borrower is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (b) transactions by or with Borrower are not subject
to state statutes regulating investment of, and fiduciary obligations with
respect to, governmental plans similar to the provisions of Section 406 of ERISA
or Section 4975 of the Internal Revenue
-35-
Code currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Agreement.
Section 4.10. NOT A FOREIGN PERSON. Neither Borrower nor Borrower
Principal is a "foreign person" within the meaning of Section 1445(f)(3) of the
Internal Revenue Code.
Section 4.11. ENFORCEABILITY. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including the
defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable as a whole, and neither Borrower nor Borrower Principal has
asserted any right of rescission, set-off, counterclaim or defense with respect
thereto. No Default or Event of Default exists under or with respect to any Loan
Document.
Section 4.12. BUSINESS PURPOSES. The Loan is solely for the business
purpose of Borrower (including distributions to Borrower's constituent entity
and all subsequent upstream distributions), and is not for personal, family,
household, or agricultural purposes.
Section 4.13. COMPLIANCE. Borrower, Mortgage Borrower and the Property,
and the use and operation of the Property, comply in all material respects with
all Legal Requirements, including, without limitation, building and zoning
ordinances and codes and the Americans with Disabilities Act. To Borrower's
knowledge, neither Borrower nor Mortgage Borrower is in default or violation of
any order, writ, injunction, decree or demand of any Governmental Authority and
Borrower has received no written notice of any such default or violation. There
has not been committed by Borrower, Mortgage Borrower or, to Borrower's
knowledge, any other Person in occupancy of or involved with the operation or
use of the Property any act or omission affording any Governmental Authority the
right of forfeiture as against the Property or any part thereof or any monies
paid in performance of Borrower's obligations under any of the Loan Documents.
Section 4.14. FINANCIAL INFORMATION. All financial data, including,
without limitation, the balance sheets, statements of cash flow, statements of
income and operating expense and rent rolls, that have been delivered to Lender
in respect of Borrower, Mortgage Borrower, Borrower Principal and/or the
Property (a) are true, complete and correct in all material respects, (b)
accurately represent in all material respects the financial condition of
Borrower, Mortgage Borrower, Borrower Principal or the Property, as applicable,
as of the date of such reports, and (c) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein. Neither
Borrower nor Mortgage Borrower has any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that are known to Borrower or Mortgage
Borrower and reasonably likely to have a material adverse effect on the Property
or the current and/or intended operation thereof, except as referred to or
reflected in said financial statements. Since the date of such financial
statements, there has been no materially adverse change in the financial
condition, operations or business of Borrower, Mortgage Borrower or Borrower
Principal from that set forth in said financial statements.
-36-
Section 4.15. ILLEGAL ACTIVITY. No portion of the Collateral or the
Property has been or will be purchased with proceeds of any illegal activity,
and no part of the proceeds of the Loan will be used in connection with any
illegal activity.
Section 4.16. PERMITTED ENCUMBRANCES. None of the Permitted
Encumbrances, individually or in the aggregate, materially interferes with the
benefits of the security intended to be provided by the Mortgage Loan Documents,
materially and adversely affects the value of the Property, impairs the use or
the operation of the Property or impairs Mortgage Borrower's or Borrower's
ability to pay its obligations in a timely manner.
Section 4.17. FEDERAL RESERVE REGULATIONS. Borrower will use the
proceeds of the Loan for the purposes set forth in Section 2.1(d) hereof and not
for any illegal activity. No part of the proceeds of the Loan will be used for
the purpose of purchasing or acquiring any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System or for any
other purpose which would be inconsistent with such Regulation U or any other
Regulations of such Board of Governors, or for any purposes prohibited by Legal
Requirements or prohibited by the terms and conditions of this Agreement or the
other Loan Documents.
Section 4.18. INVESTMENT COMPANY ACT. Borrower is not (a) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (b) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (c)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
Section 4.19. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by Borrower, Mortgage Borrower or their respective agents
to Lender and in all financial statements, rent rolls, reports, certificates and
other documents submitted in connection with the Loan or in satisfaction of the
terms thereof and all statements of fact made by Borrower, Borrower Principal
and Mortgage Borrower in this Agreement, in any other Loan Document or in the
Mortgage Loan Documents, as may be updated by Borrower prior to the closing of
the Loan, are accurate and correct in all material respects and sufficiently
complete as to not be misleading in any material respect. To the best of
Borrower's knowledge, there has been no material adverse change in any
condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects or might materially and adversely
affect the Collateral, the Property or the business operations or the financial
condition of Borrower, Borrower Principal or Mortgage Borrower. Borrower and
Mortgage Borrower have each disclosed to Lender all material facts and have not
failed to disclose any material fact that could cause any representation or
warranty made herein or in any other documents delivered to Lender by Borrower,
Mortgage Borrower or any of their respective Affiliates or agents to be
materially misleading.
Section 4.20. SPECIAL PURPOSE ENTITY. Borrower meets all of the
requirements of Article VI hereof as of the date hereof.
-37-
Section 4.21. ASSUMPTIONS. Each of the assumptions contained in the
opinion related to issues of substantive consolidation delivered by Borrower to
Lender on the date hereof are true and accurate.
Section 4.22. INTELLECTUAL PROPERTY. All trademarks, trade names and
service marks necessary to the business of Borrower as presently conducted or as
Borrower contemplates conducting its business are in good standing and, to the
extent of Borrower's actual knowledge, uncontested. Borrower has not infringed,
is not infringing, and has not received notice of infringement with respect to
asserted trademarks, trade names and service marks of others. To Borrower's
knowledge, there is no infringement by others of trademarks, trade names and
service marks of Borrower.
Section 4.23. EMBARGOED PERSON. To the best of Borrower's knowledge, as
of the date hereof and at all times throughout the term of the Loan, including
after giving effect to any transfers of interests permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower and Borrower
Principal constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions
under U.S. law, including but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. SectionSection 1701 et seq., The Trading with the
Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder with the result that the investment in Borrower or
Borrower Principal, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by Lender is in violation of law ("EMBARGOED
PERSON"); (b) no Embargoed Person has any interest of any nature whatsoever in
Borrower or Borrower Principal, as applicable, with the result that the
investment in Borrower or Borrower Principal, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of Borrower or Borrower Principal, as applicable, have been
derived from any unlawful activity with the result that the investment in
Borrower or Borrower Principal, as applicable (whether directly or indirectly),
is prohibited by law or the Loan is in violation of law.
Section 4.24. PATRIOT ACT. All capitalized words and phrases and all
defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October
26, 2001) and in other statutes and all orders, rules and regulations of the
United States government and its various executive departments, agencies and
offices related to the subject matter of the Patriot Act, including Executive
Order 13224 effective September 24, 2001 (collectively referred to in this
Section only as the "PATRIOT ACT") and are incorporated into this Section. Each
of Borrower and Borrower Principal hereby represents and warrants that Borrower
and Borrower Principal and each and every Person affiliated with Borrower or
Borrower Principal or that to Borrower's knowledge has an economic interest in
Borrower, or, to Borrower's knowledge, that has or will have an interest in the
transaction contemplated by this Agreement or in the Property or will
participate, in any manner whatsoever, in the Loan, is: (i) not a "blocked"
person listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and
all modifications thereto or thereof (as used in this Section only, the
"ANNEX"); (ii) in full compliance with the requirements of the Patriot Act and
all other requirements contained in the rules and regulations of the Office of
Foreign Assets Control, Department of the Treasury (as used in this Section
only, "OFAC"); (iii) operated under policies, procedures and practices, if any,
that are in compliance with the Patriot Act and available to Lender for Lender's
review and inspection during normal business hours and upon reasonable prior
notice; (iv) not in receipt of any notice from the Secretary of State or
-38-
the Attorney General of the United States or any other department, agency or
office of the United States claiming a violation or possible violation of the
Patriot Act; (v) not listed as a Specially Designated Terrorist or as a
"blocked" person on any lists maintained by the OFAC pursuant to the Patriot Act
or any other list of terrorists or terrorist organizations maintained pursuant
to any of the rules and regulations of the OFAC issued pursuant to the Patriot
Act or on any other list of terrorists or terrorist organizations maintained
pursuant to the Patriot Act; (vi) not a person who has been determined by
competent authority to be subject to any of the prohibitions contained in the
Patriot Act; and (vii) not owned or controlled by or now acting and or will in
the future act for or on behalf of any person named in the Annex or any other
list promulgated under the Patriot Act or any other person who has been
determined to be subject to the prohibitions contained in the Patriot Act.
Borrower covenants and agrees that in the event Borrower receives any notice
that Borrower Principal or Borrower (or any of its beneficial owners or
affiliates or participants) become listed on the Annex or any other list
promulgated under the Patriot Act or is indicted, arraigned, or custodially
detained on charges involving money laundering or predicate crimes to money
laundering, Borrower shall immediately notify Lender. It shall be an Event of
Default hereunder if Borrower, Borrower Principal or any other party to any Loan
Document becomes listed on any list promulgated under the Patriot Act or is
indicted, arraigned or custodially detained on charges involving money
laundering or predicate crimes to money laundering.
Section 4.25. MORTGAGE LOAN REPRESENTATIONS. All of the representations
and warranties contained in the Mortgage Loan Documents are hereby incorporated
into this Agreement and deemed made by Borrower hereunder and are true and
correct as of the date hereof and shall remain incorporated without regard to
any waiver, amendment or other modification thereof by the Mortgage Lender or to
whether the related Mortgage Loan Document has been repaid, defeased or
otherwise terminated, unless otherwise consented to in writing by Lender.
Section 4.26. NO CONTRACTUAL OBLIGATIONS. Except in connection with its
activities as the sole member of Mortgage Borrower and other than the Loan
Documents, the Borrower Operating Agreement and the Mortgage Borrower Operating
Agreement, as of the date of this Agreement, Borrower is not subject to any
Contractual Obligations and has not entered into any agreement, instrument or
undertaking by which it or its assets are bound, or has incurred any
indebtedness (other than the Loan), and prior to the date of this Agreement,
neither Borrower nor any of its Subsidiaries has entered into any Contractual
Obligation, or any agreement, instrument or undertaking by which it or its
assets are bound or incurred any indebtedness (other than the Loan or the
Mortgage Loan (as applicable)).
Section 4.27. SUBSIDIARIES. Effective as of the consummation of the
transactions contemplated by this Agreement, one hundred percent (100%) of the
limited liability company interests in Borrower is owned by Borrower Principal
free and clear of all Liens (other than the Liens created by the Loan
Documents). Borrower does not have any Subsidiaries except the Mortgage
Borrower. Borrower does not own any equity interests other than the Pledged
Company Interests.
Section 4.28. PLEDGED COMPANY INTERESTS. There are no Liens on the
Pledged Company Interests (other than the Liens created by the Loan Documents).
-39-
Section 4.29. SURVIVAL. Borrower agrees that, unless expressly provided
otherwise, all of the representations and warranties of Borrower set forth in
this Agreement and in the other Loan Documents shall survive for so long as any
portion of the Debt remains owing to Lender. All representations, warranties,
covenants and agreements made in this Agreement or in the other Loan Documents
by Borrower shall be deemed to have been relied upon by Lender notwithstanding
any investigation heretofore or hereafter made by Lender or on its behalf.
Section 4.30. SENIOR MEZZANINE LOAN REPRESENTATIONS. All of the
representations and warranties contained in the Senior Mezzanine Loan Documents
are hereby incorporated into this Agreement and deemed made by Borrower
hereunder and are true and correct as of the date hereof and shall remain
incorporated without regard to any waiver, amendment or other modification
thereof by the Senior Mezzanine Lender or to whether the related Senior
Mezzanine Loan Document has been repaid, defeased or otherwise terminated,
unless otherwise consented to in writing by Lender.
ARTICLE V
BORROWER COVENANTS
From the date hereof and until repayment of the Debt in full and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Pledge Agreement (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:
Section 5.1. EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS
(a) Borrower, Senior Mezzanine Borrower and Mortgage Borrower shall do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its existence, rights, licenses, permits and franchises and comply in
all material respects with all Legal Requirements applicable to it, Mortgage
Borrower, Senior Mezzanine Borrower and the Property. Borrower hereby covenants
and agrees not to commit, permit or suffer to exist any act or omission
affording any Governmental Authority the right of forfeiture as against the
Collateral, the Property or any part thereof or any monies paid in performance
of Borrower's obligations under any of the Loan Documents. Borrower shall at all
times maintain, preserve and protect all franchises and trade names used in
connection with the operation of the Property.
(b) After prior written notice to Lender, Borrower, at its own expense,
may permit Mortgage Borrower to contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the Legal
Requirements affecting the Property, provided that (i) no Default or Event of
Default has occurred and is continuing; (ii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
to which Borrower, Senior Mezzanine Borrower, Mortgage Borrower or the Property
is subject and shall not constitute a default thereunder; (iii) neither the
Property, any part thereof or interest therein, any of the tenants or occupants
thereof, nor Mortgage Borrower, nor Borrower shall be affected in any material
adverse way as a result of such proceeding; (iv) non-compliance with the Legal
Requirements shall not impose civil or criminal liability on Borrower, Mortgage
Borrower or Lender; (v) Borrower shall have furnished, or shall have caused
Mortgage Borrower to furnish, the security as may be required in the proceeding
or by Lender to ensure compliance by
-40-
Borrower and Mortgage Borrower with the Legal Requirements; and (vi) Borrower
shall have furnished, or shall caused Mortgage Borrower to furnish, to Lender
all other items reasonably requested by Lender.
Section 5.2. MAINTENANCE AND USE OF PROPERTY. Borrower shall cause
Mortgage Borrower to maintain the Property in a good and safe condition and
repair. The Improvements and the Personal Property shall not be removed,
demolished or, other than in accordance with the provisions of Section 5.20,
materially altered (except for normal replacement or disposal of the Personal
Property in the ordinary course of Borrower's or Mortgage Borrower's business)
without the prior written consent of Lender, not to be unreasonably withheld,
conditioned or delayed. If under applicable zoning provisions the use of all or
any portion of the Property is or shall become a nonconforming use, Borrower
will not cause or permit the nonconforming use to be discontinued or the
nonconforming Improvement to be abandoned without the express written consent of
Lender.
Section 5.3. WASTE. Borrower shall not commit or suffer, and shall not
cause Mortgage Borrower to commit or suffer, any physical or actual waste of the
Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security
for the Loan. Borrower will not, without the prior written consent of Lender,
permit any drilling or exploration for or extraction, removal, or production of
any minerals from the surface or the subsurface of the Property, regardless of
the depth thereof or the method of mining or extraction thereof.
Section 5.4. TAXES AND OTHER CHARGES
(a) Borrower shall cause Mortgage Borrower to pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Property or
any part thereof prior to delinquency; provided, however, Borrower's obligation
to cause Mortgage Borrower to directly pay Taxes shall be suspended for so long
as Mortgage Borrower complies with the terms and provisions of Section 9.6 of
the Mortgage Loan Agreement. Borrower shall cause Mortgage Borrower to furnish
to Lender receipts for the payment of the Taxes and the Other Charges prior to
the date the same shall become delinquent (provided, however, that Borrower is
not required to cause Mortgage Borrower to furnish such receipts for payment of
Taxes in the event that such Taxes have been paid by Mortgage Lender pursuant to
Section 9.6 of the Mortgage Loan Agreement). Subject to Section 5.4(b), Borrower
shall cause Mortgage Borrower to not suffer and shall promptly cause Mortgage
Borrower to pay and discharge any Lien or charge whatsoever which may be or
become a Lien or charge against the Property, and shall cause Mortgage Borrower
to promptly pay for all utility services provided to the Property.
(b) After prior written notice to Lender, Borrower, at its own expense,
may permit Mortgage Borrower to contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any Taxes, Other
Charges or any Liens, provided that (i) no Default or Event of Default has
occurred and remains uncured; (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable Legal
-41-
Requirements; (iii) neither the Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, canceled or
lost; (iv) Borrower shall cause Mortgage Borrower to promptly upon final
determination thereof pay the amount of any such Taxes, Other Charges or any
Liens, together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes, Other Charges or any Liens from the Property; and (vi) Borrower
shall deliver evidence to Lender that Mortgage Borrower shall have furnished
Mortgage Lender with such security as may be required in the proceeding, or
shall have delivered to Mortgage Lender such reserve deposits as may be
requested by Mortgage Lender, to insure the payment of any such Taxes, Other
Charges or any Liens, together with all interest and penalties thereon (unless
Mortgage Borrower has paid all of the Taxes, Other Charges or any Liens under
protest).
Section 5.5. LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened in
writing against Borrower, Borrower Principal or Mortgage Borrower which might
materially adversely affect Borrower's, Borrower Principal's or Mortgage
Borrower's condition (financial or otherwise) or business or the Property.
Section 5.6. ACCESS TO THE PROPERTY. Borrower shall cause Mortgage
Borrower to permit agents, representatives and employees of Lender to inspect
the Property or any part thereof at reasonable hours upon reasonable advance
notice, provided Lender shall use reasonable efforts to minimize interference
with the business of any tenants.
Section 5.7. NOTICE OF DEFAULT. Borrower shall promptly advise Lender of
any Material Adverse Change in the condition (financial or otherwise) of
Borrower, Mortgage Borrower, Borrower Principal, the Property or of the
occurrence of any Default or Event of Default hereunder or any Mortgage Loan
Event of Default (or any event which, but for the giving of notice or passage of
time, or both, would be a Mortgage Loan Event of Default) of which Borrower has
knowledge.
Section 5.8. COOPERATE IN LEGAL PROCEEDINGS. Borrower shall at Borrower's
expense cooperate fully with Lender with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
other Loan Documents and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.
Section 5.9. PERFORMANCE BY BORROWER. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision to be
observed and performed by Borrower under this Agreement and the other Loan
Documents and any other material agreement or instrument affecting or pertaining
to the Collateral and any amendments, modifications or changes thereto.
Section 5.10. AWARDS; INSURANCE PROCEEDS. Borrower shall, and shall cause
Mortgage Borrower to, cooperate with Lender in obtaining for Lender the benefits
of any Awards or Insurance Proceeds lawfully or equitably payable in connection
with the Property, and Lender shall be reimbursed for any expenses
-42-
incurred in connection therewith (including reasonable, actual attorneys' fees
and disbursements and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of a Casualty or Condemnation affecting the Property or
any part thereof) out of such Awards or Insurance Proceeds.
Section 5.11. FINANCIAL REPORTING
(a) Borrower and Borrower Principal shall, and shall cause Mortgage
Borrower to, keep adequate books and records of account in accordance with GAAP,
consistently applied and shall furnish or cause to be furnished to Lender:
(i) monthly (if required by Lender), quarterly, and annual certified
rent rolls signed and dated by Borrower and Mortgage Borrower, detailing
the names of all Tenants of the Improvements, the portion of Improvements
(in terms of square footage) occupied by each Tenant, the base rent,
additional rent and any other charges payable under each Lease (including
annual store sales required to be reported by Tenant under any Lease), and
the term of each Lease, including the commencement and expiration dates
and any tenant extension, expansion or renewal options, the extent to
which any Tenant is in default under any Lease, and any other information
as is reasonably required by Lender, within thirty (30) days after the end
of each calendar month, forty-five (45) days after the end of each fiscal
quarter or ninety (90) days after the close of each fiscal year of
Borrower and Mortgage Borrower, as applicable;
(ii) monthly (if required by Lender), quarterly, and annual
operating statements of the Property, prepared and certified by the chief
financial officer of Borrower and Mortgage Borrower in form acceptable to
Lender in its reasonable discretion (with the annual operating statement
prepared and audited by an Acceptable Accountant), detailing the revenues
received, the expenses incurred and the net operating income before and
after debt service (principal and interest) and major capital improvements
for the period of calculation and containing appropriate year-to-date
information, within thirty (30) days after the end of each calendar month,
forty-five (45) days after the end of each fiscal quarter or ninety (90)
days after the close of each fiscal year of Borrower and Mortgage
Borrower, as applicable;
(iii) quarterly and annual balance sheets, profit and loss
statements, statements of cash flows, and statements of change in
financial position of Borrower, Mortgage Borrower and Borrower Principal
in form reasonably acceptable to Lender (with the annual financial
statements prepared and audited by an Acceptable Accountant), within
forty-five (45) days after the end of each fiscal quarter or ninety (90)
days after the close of each fiscal year of Borrower, Mortgage Borrower
and Borrower Principal, as applicable, as the case may be; and
(iv) an Annual Budget not later than thirty (30) days prior to the
commencement of each fiscal year of Borrower and Mortgage Borrower in form
reasonably satisfactory to Lender. In the event that Lender objects to a
proposed Annual Budget submitted by or on behalf of Borrower, Lender shall
advise Borrower of such objections within fifteen (15) days after receipt
thereof (and deliver to Borrower a
-43-
reasonably detailed description of such objections) and Borrower shall
promptly revise such Annual Budget and resubmit the same to Lender. Lender
shall advise Borrower in writing of any objections to such revised Annual
Budget within ten (10) days after receipt thereof (and deliver to Borrower
a reasonably detailed description of such objections) and Borrower shall
promptly revise the same in accordance with the process described in this
subsection until Lender approves the Annual Budget. Lender shall have a
period of thirty (30) days from receipt of such Annual Budget, together
with any other related documentation reasonably requested by Lender, in
which to approve or reject such Annual Budget, provided that such Annual
Budget is accompanied by a written request from Borrower marked in bold
lettering with the following language: "LENDER'S RESPONSE IS REQUIRED
WITHIN THIRTY (30) DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF
A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and the envelope
containing the request must be marked "PRIORITY - LENDER'S RESPONSE
REQUIRED IN THIRTY (30) DAYS." In the event that Lender fails to approve
or reject such Annual Budget in such period of time, Lender's consent to
such Annual Budget shall be deemed given. Until such time that Lender
approves a proposed Annual Budget, which approval shall not be
unreasonably withheld, conditioned or delayed, the most recent Annual
Budget shall apply; provided that, such approved Annual Budget shall be
adjusted to reflect actual increases in Taxes, Insurance Premiums,
utilities expenses and expenses under the Management Agreement. Without
the prior written consent of Lender, Borrower shall not approve or consent
to Mortgage Borrower entering into any contracts or other agreements or
expending any funds not provided for in the approved Annual Budget, other
than expenditures required to be made by reason of the occurrence of any
emergency (i.e., an unexpected event which threatens imminent harm to
persons or property at the Property) and with respect to which it would be
impracticable, under the circumstances, to obtain Lender's prior consent
thereto. Borrower shall notify Lender as promptly as practicable with
respect to any such emergency expenditures made with respect to the
Property. At the request of Lender, Borrower agrees to cause Mortgage
Borrower to deliver evidence in a form satisfactory to Lender that amounts
allocated to budgeted expenses have been paid in accordance with the
approved Annual Budget.
(b) Upon request from Lender, Borrower shall promptly furnish or cause to
be furnished to Lender:
(i) a property management report for the Property, containing a list
of prospective tenants and any other information requested by Lender, in
reasonable detail and certified by Borrower and Mortgage Borrower under
penalty of perjury to be true and complete, but no more frequently than
quarterly;
(ii) an accounting of all security deposits held in connection with
any Lease of any part of the Property, including the name and
identification number of the accounts in which such security deposits are
held, the name and address of the financial institutions in which such
security deposits are held and the name of the Person to contact at such
financial institution, along with any authority or release necessary for
Lender to obtain information regarding such accounts directly from such
financial institutions; and
-44-
(iii) a report of all letters of credit provided by any Tenant in
connection with any Lease of any part of the Property, including the
account numbers of such letters of credit, the names and addresses of the
financial institutions that issued such letters of credit and the names of
the Persons to contact at such financial institutions, along with any
authority or release necessary for Lender to obtain information regarding
such letters of credit directly from such financial institutions.
(c) Borrower and Borrower Principal shall furnish Lender (or cause
Mortgage Borrower to furnish to Lender) with such other additional financial or
management information (including state and federal tax returns) as may, from
time to time, be reasonably required by Lender in form and substance
satisfactory to Lender (including, without limitation, any financial reports
required to be delivered by any Tenant or any guarantor of any Lease pursuant to
the terms of such Lease), and shall furnish to Lender and its agents convenient
facilities for the examination and audit of any such books and records.
(d) All items requiring the certification of Borrower or Mortgage Borrower
shall, except where Borrower or Mortgage Borrower is an individual, require a
certificate executed by the general partner, managing member or chief executive
officer of Borrower or Mortgage Borrower, as applicable (and the same rules
shall apply to any sole shareholder, general partner or managing member which is
not an individual).
Section 5.12. ESTOPPEL STATEMENT
(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the rate of
interest on the Note, (iii) the unpaid principal amount of the Note, (iv) the
date installments of interest and/or principal were last paid, (v) any offsets
or defenses to the payment of the Debt, if any, and (vi) that the Note, this
Agreement, the Pledge Agreement and the other Loan Documents are valid, legal
and binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) After request by Borrower, Lender shall promptly deliver to Borrower a
beneficiary's statement on Lender's (or its servicer's) then current form of
such document, which shall include the balance of the Loan and the then
applicable interest rate. In a separate writing, Lender shall provide to
Borrower, to the extent true, a statement that Lender has not delivered any
notices of default to Borrower.
(c) Borrower shall use its best efforts to deliver (or cause Mortgage
Borrower to deliver) to Lender, promptly upon request, duly executed estoppel
certificates from any one or more Tenants as required by Lender attesting to
such facts regarding the related Lease as Lender may require, including, but not
limited to attestations that each Lease covered thereby is in full force and
effect with no defaults thereunder on the part of any party, that none of the
Rents have been paid more than one month in advance, except as security, and
that the Tenant claims no defense or offset against the full and timely
performance of its obligations under the Lease. Other than in connection with a
Securitization, Borrower shall not be required to use its best efforts to
deliver such estoppel certificates more than once per year so long as no Event
of Default exists.
-45-
Section 5.13. LEASING MATTERS
(a) Borrower may permit Mortgage Borrower to enter into a proposed Lease
(including the renewal or extension of an existing Lease (a "Renewal Lease"))
without the prior written consent of Lender, provided such proposed Lease or
Renewal Lease (i) provides for rental rates and terms comparable to existing
local market rates and terms (taking into account the type and quality of the
tenant) as of the date such Lease is executed by Mortgage Borrower (unless, in
the case of a Renewal Lease, the rent payable during such renewal, or a formula
or other method to compute such rent, is provided for in the original Lease),
(ii) is an arm's-length transaction with a bona fide, independent third party
tenant, (iii) does not have a materially adverse effect on the value of the
Property taken as a whole, (iv) is subject and subordinate to the Mortgage and
the Tenant thereunder agrees to attorn to Lender, either by the terms of such
Renewal Lease or pursuant to a subordination, non-disturbance and attornment
agreement on Lender's then current form (v) does not contain any option, offer,
right of first refusal, or other similar right to acquire all or any portion of
the Property, (vi) has a base term of less than fifteen (15) years including
options to renew, (vii) has no rent, credits, free rents or concessions granted
thereunder, other than as consistent with then market standards for prudent
institutional owners of Class A office buildings in the sub-market where the
Property is located, and (viii) is written on the standard form of lease
approved by Lender and attached hereto as Exhibit C, subject to tenant specific
negotiated changes which do not, individually or in the aggregate, cause a
Material Adverse Change with respect to the Property or the financial condition
of Borrower. All proposed Leases which do not satisfy the requirements set forth
in this subsection shall be at Borrower's expense and subject to the prior
approval of Lender and its counsel, not to be unreasonably withheld or delayed.
Borrower shall cause Mortgage Borrower to promptly deliver to Lender copies of
all Leases which are entered into pursuant to this subsection together with
Borrower's certification that it has satisfied all of the conditions of this
Section.
(b) Borrower (i) shall cause Mortgage Borrower to observe and perform all
the obligations imposed upon the landlord under the Leases (or refrain from such
observance or performance to the extent the same is in accordance with prudent
institutional ownership practices for properties similar to and in the same
sub-market as Property) and shall not do or permit to be done anything to impair
the value of any of the Leases as security for the Debt; (ii) shall cause
Mortgage Borrower to promptly send copies to Lender of all notices of default
which Mortgage Borrower shall send or receive thereunder; (iii) shall cause
Mortgage Borrower to enforce all of the material terms, covenants and conditions
contained in the Leases upon the part of the tenant thereunder to be observed or
performed unless Borrower, in accordance with prudent institutional ownership
practices for properties similar and in the same sub-market as the Property,
elects not to enforce any such term, covenant or condition; (iv) shall not
permit Mortgage Borrower to collect any of the Rents more than one (1) month in
advance (except security deposits shall not be deemed Rents collected in
advance); (v) shall not permit Mortgage Borrower to execute any other assignment
of the landlord's interest in any of the Leases or the Rents; and (vi) shall not
permit Mortgage Borrower to consent to any assignment of or subletting under any
Leases not in accordance with their terms, without the prior written consent of
Lender, such consent not to be unreasonably withheld, conditioned or delayed.
(c) Borrower may, without the prior written consent of Lender, permit
Mortgage Borrower to amend, modify or waive the provisions of any Lease or
terminate, reduce Rents under, accept a surrender of space under, or shorten the
term of, any Lease (including any guaranty, letter of credit or other credit
support with respect thereto) provided that such action (taking into account, in
the case of a termination, reduction in rent, surrender of space or
-46-
shortening of term, the planned alternative use of the affected space) does not
have a materially adverse effect on the value of the Property taken as a whole,
and provided that such Lease, as amended, modified or waived, is otherwise in
compliance with the requirements of this Agreement and any subordination
agreement binding upon Lender with respect to such Lease. A termination of a
Lease with a tenant who is in default beyond applicable notice and grace periods
shall not be considered an action which has a materially adverse effect on the
value of the Property taken as a whole. Any amendment, modification, waiver,
termination, rent reduction, space surrender or term shortening which does not
satisfy the requirements set forth in this subsection shall be subject to the
prior approval of Lender and its counsel, at Borrower's expense. Borrower shall
cause Mortgage Borrower to promptly deliver to Lender copies of amendments,
modifications and waivers which are entered into pursuant to this subsection
together with Borrower's certification that it has satisfied all of the
conditions of this subsection.
(d) Notwithstanding anything contained herein to the contrary, Borrower
shall not permit Mortgage Borrower, without the prior written consent of Lender,
to enter into, renew, extend, amend, modify, waive any material provisions of,
terminate, reduce Rents under, accept a surrender of space under, or shorten the
term of any Major Lease.
(e) Notwithstanding anything to the contrary contained herein, to the
extent Lender's prior approval is required for any leasing matters set forth in
this Section 5.13, Lender shall have ten (10) Business Days from receipt of
written request and all required information and documentation relating thereto
in which to approve or disapprove such matter, provided that such request to
Lender is marked in capitalized bold lettering with the following language:
"LENDER'S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS
NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND
LENDER" and the envelope containing the request must be marked "PRIORITY -
LENDER'S RESPONSE REQUIRED IN TEN (10) BUSINESS DAYS." In the event that Lender
fails to respond to the leasing matter in question within such time, Lender's
approval shall be deemed given for all purposes. Borrower shall provide Lender
with such information and documentation as may be reasonably required by Lender,
including, without limitation, lease comparables and other market information as
required by Lender.
Section 5.14. PROPERTY MANAGEMENT
(a) Borrower shall cause Mortgage Borrower to (i) promptly perform and
observe all of the covenants required to be performed and observed by it under
the Management Agreement and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify Lender of any
default under the Management Agreement of which it is aware; (iii) promptly
deliver to Lender a copy of any notice of default or other material notice
received by Mortgage Borrower under the Management Agreement; (iv) promptly give
notice to Lender of any notice or information that Borrower receives which
indicates that Manager is terminating the Management Agreement or that Manager
is otherwise discontinuing its management of the Property; and (v) promptly
enforce the performance and observance of all of the covenants required to be
performed and observed by Manager under the Management Agreement.
(b) If at any time, (i) Manager shall become insolvent or a debtor in a
bankruptcy proceeding, (ii) an Event of Default has occurred
-47-
and is continuing, or (iii) a default has occurred and is continuing beyond
applicable cure periods under the Management Agreement, Borrower shall, at the
request of Lender, cause Mortgage Borrower to terminate the Management Agreement
upon sixty (60) days prior notice to Manager and replace Manager with a
Qualified Manager reasonably approved by Lender in accordance with the terms and
conditions satisfactory to Lender, it being understood and agreed that the
management fee for such replacement manager shall not exceed then prevailing
market rates.
(c) In addition to the foregoing, in the event that Lender, in Lender's
reasonable discretion, at any time prior to the termination of the Subordination
of Management Agreement, determines that the Property is not being managed in
accordance with generally accepted management practices for projects similarly
situated, Lender may deliver written notice thereof to Borrower, Mortgage
Borrower and Manager, which notice shall specify with particularity the grounds
for Lender's determination. If Lender reasonably determines that the conditions
specified in Lender's notice are not remedied to Lender's reasonable
satisfaction by Borrower, Mortgage Borrower or Manager within sixty (60) days
from the date of such notice or that Borrower or Manager have failed to
diligently undertake correcting such conditions within such sixty (60) day
period, Lender may direct Borrower to terminate the Management Agreement,
provided Borrower has the right to do so pursuant to the terms of the Management
Agreement, and to replace Manager with a Qualified Manager approved by Lender on
terms and conditions satisfactory to Lender, it being understood and agreed that
the management fee for such replacement manager shall not exceed then prevailing
market rates.
(d) Borrower shall not permit Mortgage Borrower, without the prior written
consent of Lender (which consent shall not be unreasonably withheld, conditioned
or delayed) to (i) surrender, terminate or cancel the Management Agreement or
otherwise replace Manager or enter into any other management agreement with
respect to the Property; (ii) reduce or consent to the reduction of the term of
the Management Agreement; (iii) increase or consent to the increase of the
amount of any charges under the Management Agreement; or (iv) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under, the Management Agreement in any material respect. In the event
that Borrower replaces Manager at any time during the term of Loan pursuant to
this subsection, such Manager shall be a Qualified Manager.
(e) No resignation of Manager shall be effective unless (i) Manager
provides ninety (90) days prior written notice of its intent to resign and (ii)
a Qualified Manager has assumed responsibility for the management of the
Property pursuant to a written management agreement in form and substance
acceptable to Lender.
Section 5.15. LIENS. Borrower shall not permit Mortgage Borrower, without
the prior written consent of Lender, to create, incur, assume or suffer to exist
any Lien on any portion of the Property or permit any such action to be taken,
except Permitted Encumbrances. Borrower shall not create, incur, assume or
suffer to exist any Lien on any portion of the Collateral or permit any such
action to be taken.
Section 5.16. DEBT CANCELLATION. Borrower shall not cancel or otherwise
forgive or release any claim or debt owed to Borrower by any Person, except for
adequate consideration and in the ordinary course of Borrower's business.
Borrower shall not permit Mortgage
-48-
Borrower to cancel or otherwise forgive or release any claim or debt (other than
termination of Leases in accordance herewith) owed to Mortgage Borrower by any
Person, except for adequate consideration and in the ordinary course of Mortgage
Borrower's business
Section 5.17. ZONING. Borrower shall not permit Mortgage Borrower to,
initiate or consent to any zoning reclassification of any portion of the
Property or seek any variance under any existing zoning ordinance or use or
permit the use of any portion of the Property in any manner that could result in
such use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of
Lender.
Section 5.18. ERISA
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (i) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true:
(A) Limited liability company interests in Borrower are publicly
offered securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(B) Less than twenty-five percent (25%) of each outstanding class of
limited liability company interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(c) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R.Section 2510.3-101(c) or (e).
Section 5.19. NO JOINT ASSESSMENT. Borrower shall not permit Mortgage
Borrower to suffer, permit or initiate the joint assessment of the Property with
(a) any other real property constituting a tax lot separate from the Property,
or (b) any portion of the Property which may be deemed to constitute personal
property, or any other procedure whereby the Lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
the Property.
Section 5.20. ALTERATIONS. Lender's prior approval (not to be unreasonably
withheld) shall be required in connection with any alterations to any
Improvements, exclusive of alterations to tenant spaces required under any
Lease, (a) that may have a material adverse effect on the Property, (b) that
affect the structure of the applicable building or (c) that, together with any
other alterations undertaken at the same time (including any related
alterations, improvements or replacements), are reasonably anticipated to have a
cost in excess of the Alteration Threshold. If
-49-
the total unpaid amounts incurred and to be incurred with respect to such
alterations to the Improvements shall at any time exceed the Alteration
Threshold, Borrower shall promptly deliver to Lender as security for the payment
of such amounts and as additional security for Borrower's obligations under the
Loan Documents any of the following: (i) cash, (ii) direct non-callable
obligations of the United States of America or other obligations which are
"government securities" within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, to the extent acceptable to Lender, (iii) other securities
acceptable to Lender, or (iv) a completion bond, provided that such completion
bond is acceptable to Lender. Such security shall be in an amount equal to the
excess of the total unpaid amounts incurred and to be incurred with respect to
such alterations to the Improvements over the Alteration Threshold.
Section 5.21. [INTENTIONALLY DELETED.]
Section 5.22. RECIPROCAL EASEMENT AGREEMENT. Borrower shall not permit
Mortgage Borrower to enter into, terminate or modify any REA without Lender's
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed. Borrower shall cause Mortgage Borrower to enforce,
comply with, and cause each of the parties to an REA to comply with all of the
material economic terms and conditions contained in such REA.
Section 5.23. [INTENTIONALLY DELETED.]
Section 5.24. [INTENTIONALLY DELETED.]
Section 5.25. SPECIAL DISTRIBUTIONS
(a) On each date on which amounts are required to be disbursed to Lender
pursuant to the terms of Section 10.2 of the Mortgage Loan Agreement or are
required to be paid to Lender under any of the Loan Documents, Borrower shall
cause Senior Mezzanine Borrower to exercise its rights under the Mortgage
Borrower Company Agreement to cause Mortgage Borrower to make to Senior
Mezzanine Borrower a distribution in an aggregate amount such that Lender shall
receive the amount required to be disbursed or otherwise paid to Lender on such
date.
(b) On each date on which amounts are required to be disbursed to Lender
pursuant to the terms of Section 10.2 of the Senior Mezzanine Loan Agreement or
are required to be paid to Lender under any of the Loan Documents, Borrower
shall exercise its rights under the Senior Mezzanine Borrower Company Agreement
to cause Senior Mezzanine Borrower to make to Borrower a distribution in an
aggregate amount such that Lender shall receive the amount required to be
disbursed or otherwise paid to Lender on such date.
Section 5.26. CURING
(a) Lender shall have the right, but shall not have the obligation, to
exercise Borrower's rights under the Senior Mezzanine Borrower Company Agreement
to cause Senior Mezzanine Borrower to cause Mortgage Borrower (i) to cure a
Mortgage Loan Default or Mortgage Loan Event of Default and (ii) to satisfy any
Liens, claims or judgments against the Property (except for Liens permitted by
the Mortgage Loan Documents), in the case of either (i) or (ii), unless Senior
Mezzanine Borrower or Mortgage Borrower shall be diligently pursuing remedies to
cure to Lender's sole satisfaction. Borrower shall reimburse Lender on demand
for
-50-
any and all costs incurred by Lender in connection with curing any such Mortgage
Loan Default or Mortgage Loan Event of Default or satisfying any Liens, claims
or judgments against the Property.
(b) Lender shall have the right, but shall not have the obligation, to
exercise Borrower's rights under the Senior Mezzanine Borrower Company Agreement
(i) to cure a Senior Mezzanine Loan Default or Senior Mezzanine Loan Event of
Default and (ii) to satisfy any Liens, claims or judgments against the Senior
Mezzanine Collateral (except for Liens permitted by the Senior Mezzanine Loan
Documents), in the case of either (i) or (ii), unless Borrower or Senior
Mezzanine Borrower shall be diligently pursuing remedies to cure to Lender's
sole satisfaction. Borrower shall reimburse Lender on demand for any and all
costs incurred by Lender in connection with curing any such Senior Mezzanine
Loan Default or Senior Mezzanine Loan Event of Default or satisfying any Liens,
claims or judgments against the Senior Mezzanine Collateral.
Section 5.27. LIENS. Neither Borrower nor any of its Subsidiaries shall
take any action that would impair the Lien created under this Agreement, the
Pledge Agreement or any other Loan Document.
Section 5.28. LIMITATION ON SECURITIES ISSUANCES. None of Borrower or any
of its Subsidiaries shall issue any limited liability company interests or other
securities, other than those that have been issued as of the date hereof.
Section 5.29. LIMITATIONS ON DISTRIBUTIONS. Following the occurrence and
during the continuance of an Event of Default, Borrower shall not make any
distributions to its members.
Section 5.30. OTHER LIMITATIONS. Prior to the payment in full of the Debt,
Borrower shall not, without the prior written consent of Lender (which may be
furnished or withheld at its sole and absolute discretion), give its consent or
approval to any of the following actions or items:
(a) except as permitted by the Mortgage Loan Documents, the Senior
Mezzanine Loan Documents and the Loan Documents (i) any refinance of the
Mortgage Loan or Senior Mezzanine Loan, (ii) any prepayment in full of the
Mortgage Loan or Senior Mezzanine Loan, (iii) any Sale or Pledge of the Property
or Senior Mezzanine Collateral or any portion thereof, or (iv) any action in
connection with or in furtherance of the foregoing;
(b) intentionally deleted;
(c) any material modification, amendment, consolidation, spread,
restatement, waiver or termination of any of the Mortgage Loan Documents or the
Senior Mezzanine Loan Documents;
(d) the distribution to the partners, members or shareholders of Mortgage
Borrower or Senior Mezzanine Borrower of property other than cash, except in
accordance with the provisions of Mortgage Borrower's organizational documents
or Senior Mezzanine Borrower's organizational documents;
-51-
(e) except as set forth in an approved Annual Budget or as permitted under
the Mortgage Loan Documents, any (i) material improvement, renovation or
refurbishment of all or any part of the Property to a materially higher standard
or level than that of comparable properties in the same market segment and in
the same geographical area as the Property, except in connection with Tenant
Improvements undertaken in accordance with the terms of the Mortgage Loan
Agreement (ii) except in connection with Tenant Improvements undertaken in
accordance with the terms of the Mortgage Loan Agreement, removal, demolition or
material alteration of the improvements or equipment on the Property or (iii)
material increase in the square footage or gross leasable area of the
improvements on the Property if a material portion of any of the expenses in
connection therewith are paid or incurred by Mortgage Borrower;
(f) any material change in the method of conduct of the business of
Borrower or any of its Subsidiaries, such consent to be given in the sole
discretion of Lender;
(g) except as required by the Mortgage Loan Documents, any determination
to restore the Property after a Casualty or Condemnation.
Section 5.31. INTENTIONALLY DELETED
Section 5.32. REFINANCING. Borrower shall not consent to or permit a
refinancing of the Mortgage Loan or the Senior Mezzanine Loan unless it obtains
the prior consent of Lender, provided that Lender shall consent to a refinancing
in full of the Mortgage Loan or the Senior Mezzanine Loan if, after considering
the following factors, Lender determines in its reasonable discretion that such
factors have been satisfied:
(a) no Event of Default or event which with the giving of notice and/or
lapse of time would constitute an Event of Default under this Agreement shall
have occurred and be continuing;
(b) the new mortgage loan ("NEW MORTGAGE LOAN") shall have (i) an interest
rate that is no higher than the then current interest rate for the Mortgage
Loan, as determined by Lender in its sole discretion (and shall provide for an
interest rate cap substantially identical to the Interest Rate Protection
Agreement), (ii) a principal balance that is no more than the balance of the
Mortgage Loan on the date of the refinancing, (iii) if the New Mortgage Loan
provides for amortization, an amortization schedule that provides for repayment
in monthly installments each of which is no greater than the monthly payments
due under the Mortgage Note, and (iv) a maturity date that is no earlier than
that provided for under the Mortgage Loan at the time of the closing thereof
(c) the new senior mezzanine loan ("NEW SENIOR MEZZANINE LOAN") shall have
(i) an interest rate that is no higher than the then current interest rate for
the Senior Mezzanine Loan, as determined by Senior Mezzanine Lender in its sole
discretion (and shall provide for an interest rate cap substantially identical
to the Interest Rate Protection Agreement), (ii) a principal balance that is no
more than the balance of the Senior Mezzanine Loan on the date of the
refinancing, (iii) if the New Senior Mezzanine Loan provides for amortization,
an amortization schedule that provides for repayment in monthly installments
each of which is no greater than
-52-
the monthly payments due under the Senior Mezzanine Note, and (iv) a maturity
date that is no earlier than that provided for under the Senior Mezzanine Loan
at the time of the closing thereof;
(d) the terms of the New Mortgage Loan and the New Senior Mezzanine Loan
shall not (i) have any other payment requirements not in the Mortgage Loan and
the Senior Mezzanine Loan respectively (for example, equity kickers), (ii) have
more onerous prepayment provisions than those currently in the Mortgage Loan and
the Senior Mezzanine Loan respectively, (iii) have any new collateral, and (iv)
have any defaults not in the Mortgage Loan and the Senior Mezzanine Loan
respectively;
(e) the terms of the New Mortgage Loan and the New Senior Mezzanine Loan,
shall provide the same express rights to Lender as the Mortgage Loan or the same
express rights to Senior Mezzanine Lender as the Senior Mezzanine Loan, as
applicable, and shall not conflict with the terms of the Loan and the new
mortgage lender shall enter into an intercreditor agreement with Lender with
terms any less favorable to Lender than the Intercreditor Agreement;
(f) no portion of the Property or the Senior Mezzanine Collateral may be
transferred in connection with such refinancing except pursuant to a Sale or
Pledge made in accordance with Article VII of this Agreement;
(g) Borrower shall pay all costs and expenses of Lender incurred in
connection with any such refinancing, including, without limitation, reasonable
fees and expenses of Lender's counsel;
(h) Borrower shall execute and deliver such amendments to this Agreement
and the other Loan Documents as Lender may request in connection with such New
Mortgage Loan and such New Senior Mezzanine Loan; and
(i) Lender shall have received such settlement statements, pay-off
letters, opinions and other documentation as it shall reasonably request in
connection with such refinancing.
Upon the satisfaction of the foregoing, Borrower may permit or consent to
a refinancing of the Mortgage Loan and the Senior Mezzanine Loan, whereupon such
New Mortgage Loan and such New Senior Mezzanine Loan shall be deemed to be the
Mortgage Loan and/or the Senior Mezzanine Loan as applicable, as defined herein.
ARTICLE VI
ENTITY COVENANTS
Section 6.1. SINGLE PURPOSE ENTITY/SEPARATENESS. Until the Debt has been
paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not, and will not permit Mortgage Borrower
or Senior Mezzanine Borrower to:
-53-
(i) (x) with respect to Borrower and Senior Mezzanine Borrower,
engage in any business or activity other than the ownership of the Pledged
Company Interests, Senior Mezzanine Collateral and the Collateral, as
applicable, and any activities incidental thereto or (y) with respect to
the Mortgage Borrower, engage in any business or activity other than the
ownership, operation and maintenance of the Property, and any activities
incidental thereto;
(ii) (x) with respect to Borrower and Senior Mezzanine Borrower,
acquire or own any assets other than (A) the Pledged Company Interests,
Senior Mezzanine Collateral or the Collateral, as applicable, and (B) such
incidental Personal Property as may be necessary for the ownership of the
Pledged Company Interests and the Collateral or (y) with respect to the
Mortgage Borrower, acquire or own any assets other than (A) the Property,
and (B) such incidental Personal Property as may be necessary for the
operation of the Property;
(iii) merge into or consolidate with any Person, or dissolve,
terminate, liquidate in whole or in part, transfer or otherwise dispose of
all or substantially all of its assets or change its legal structure;
(iv) fail to observe all organizational formalities or fail to
preserve its existence as an entity duly organized, validly existing and
in good standing (if applicable) under the applicable Legal Requirements
of the jurisdiction of its organization or formation, or amend, modify,
terminate or fail to comply with the provisions of its organizational
documents;
(v) own any Subsidiary, or make any investment in, any Person;
(vi) commingle its assets with the assets of any other Person;
(vii) (x) with respect to Borrower and Senior Mezzanine Borrower,
incur any debt, secured or unsecured, other than the Loan and the Senior
Mezzanine Loan respectively, direct or contingent (including guaranteeing
any obligation) or (y) with respect to Mortgage Borrower, incur any debt,
secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than (A) the Debt (as defined in the Mortgage Loan
Agreement), (B) trade and operational indebtedness incurred in the
ordinary course of business with trade creditors, provided such
indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on
commercially reasonable terms and conditions, and (4) due not more than
sixty (60) days past the date incurred and paid on or prior to such date,
and/or (C) financing leases and purchase money indebtedness incurred in
the ordinary course of business relating to Personal Property on
commercially reasonable terms and conditions; provided however, the
aggregate amount of the indebtedness described in (B) and (C) shall not
exceed at any time three percent (3%) of the outstanding principal amount
of the Mortgage Note;
(viii) fail to maintain its records, books of account, bank
accounts, financial statements, accounting records and other entity
documents separate and apart from those of any other Person; except that
Borrower's, Senior Mezzanine Borrower's and Mortgage
-54-
Borrower's financial position, assets, liabilities, net worth and
operating results may be included in the consolidated financial statements
of an Affiliate, provided that such consolidated financial statements
contain a footnote indicating that Borrower, Senior Mezzanine Borrower and
Mortgage Borrower are separate legal entities and that they maintain
separate books and records;
(ix) enter into any contract or agreement with any general partner,
member, shareholder, principal, guarantor of the obligations of Borrower,
of Senior Mezzanine Borrower or of Mortgage Borrower, or any Affiliate of
the foregoing, except upon terms and conditions that are intrinsically
fair, commercially reasonable and substantially similar to those that
would be available on an arm's-length basis with unaffiliated third
parties;
(x) maintain its assets in such a manner that it will be costly or
difficult to segregate, ascertain or identify its individual assets from
those of any other Person;
(xi) (A) assume or guaranty the debts of any other Person, hold
itself out to be responsible for the debts of any other Person, or
otherwise pledge its assets for the benefit of any other Person or hold
out its credit as being available to satisfy the obligations of any other
Person or (B) other than with respect to (I) the obligations of Borrower,
Senior Mezzanine Borrower or Mortgage Borrower guaranteed by Borrower
Principal pursuant to the terms of the Loan Documents, (II) reimbursement
obligations, if any, of Borrower Principal or its Affiliates (other than
Mortgage Borrower, Senior Mezzanine Borrower or Borrower) to the Issuing
Bank with respect to the Reserve Letters of Credit (as such terms are
defined in the Mortgage Loan Agreement) or (III) the Principals Guaranty
(as defined in the Mortgage Loan Agreement), permit any of its partners,
members, shareholders or other Affiliates to guarantee, become obligated
for or hold its credit out to be responsible for any of the debts or
obligations of Borrower, Senior Mezzanine Borrower or Mortgage Borrower;
(xii) make any loans or advances to any Person;
(xiii) fail to file its own tax returns or file a consolidated
federal income tax return with any Person (unless prohibited or required,
as the case may be, by applicable Legal Requirements);
(xiv) identify itself as a division of an Affiliate or fail either
to hold itself out to the public as a legal entity separate and distinct
from any other Person or to conduct its business solely in its own name or
fail to correct any known misunderstanding regarding its separate
identity;
(xv) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations;
(xvi) without the unanimous written consent of all of its members,
and the written consent of 100% of the managers of Borrower, Senior
Mezzanine Borrower or Mortgage Borrower, as applicable, including, without
limitation, each Independent
-55-
Manager, (a) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any Creditors Rights Laws,
(b) seek or consent to the appointment of a receiver, liquidator or any
similar official, (c) take any action that might cause such entity to
become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to allocate, fairly and reasonably, shared expenses
(including, without limitation, shared office space and services performed
by an employee of an Affiliate) among the Persons sharing such expenses
and to use separate stationery, invoices and checks;
(xviii) fail to remain solvent or pay its own liabilities
(including, without limitation, salaries of its own employees) only from
its own funds;
(xix) acquire obligations or securities of its partners, members,
shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with
respect to Borrower, Senior Mezzanine Borrower, or Mortgage Borrower and
their principals in any opinion letter pertaining to substantive
consolidation delivered to Lender in connection with the Loan;
(xxi) fail to maintain a sufficient number of employees in light of
its contemplated business operations;
(xxii) form, acquire, or hold any Subsidiary (other than Senior
Mezzanine Borrower);
(xxiii) permit any Affiliate independent access to its bank accounts
other than with respect to the Manager in its capacity as manager of the
Property pursuant to the Management Agreement;
(xxiv) fail to maintain the resolutions, agreements and other
instruments regarding the transactions contemplated by the Loan as
official records; or
(xxv) fail to make all oral and written communication, including,
without limitation, letters, invoices, purchase orders, contracts,
statements, and applications solely in the name of Borrower.
(b) Borrower shall have as its sole member the Borrower Principal.
Borrower shall maintain its status as a single member Delaware limited liability
company.
(c) The limited liability company agreement of Borrower (the "LLC
AGREEMENT") shall provide that (i) upon the occurrence of any event that causes
the sole member of Borrower ("MEMBER") to cease to be the member of Borrower
(other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee in accordance
with the Loan Documents and the LLC Agreement, or (B) the resignation of Member
and the admission of an additional member of Borrower in accordance with the
terms of the Loan Documents and the LLC Agreement), any person acting as
-56-
Independent Manager of Borrower shall, without any action of any other Person
and simultaneously with the Member ceasing to be the member of Borrower,
automatically be admitted to Borrower ("SPECIAL MEMBER") and shall continue
Borrower without dissolution and (ii) Special Member may not resign from
Borrower or transfer its rights as Special Member unless (A) a successor Special
Member has been admitted to Borrower as Special Member in accordance with
requirements of Delaware law and (B) such successor Special Member has also
accepted its appointment as an Independent Manager. The LLC Agreement shall
further provide that (i) Special Member shall automatically cease to be a member
of Borrower upon the admission to Borrower of a substitute Member, (ii) Special
Member shall be a member of Borrower that has no interest in the profits, losses
and capital of Borrower and has no right to receive any distributions of
Borrower assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the "ACT"), Special Member shall not be required to make
any capital contributions to Borrower and shall not receive a limited liability
company interest in Borrower, (iv) Special Member, in its capacity as Special
Member, may not bind Borrower and (v) except as required by any mandatory
provision of the Act, Special Member, in its capacity as Special Member, shall
have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the merger,
consolidation or conversion of Borrower; provided, however, such prohibition
shall not limit the obligations of Special Member, in its capacity as
Independent Manager, to vote on such matters required by the Loan Documents or
the LLC Agreement. In order to implement the admission to Borrower of Special
Member, Special Member shall execute a counterpart to the LLC Agreement. Prior
to its admission to Borrower as Special Member, Special Member shall not be a
member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be a
member of Borrower, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in Borrower, agree
in writing (i) to continue Borrower and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of Borrower, effective as of the occurrence of the event that terminated
the continued membership of Member of Borrower in Borrower. Any action initiated
by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower and
upon the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.
Section 6.2. CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower shall not
change or permit to be changed (a) Borrower's name, (b) Borrower's identity
(including its trade name or names), (c) Borrower's principal place of business
set forth on the first page of this Agreement, (d) the corporate, partnership or
other organizational structure of Borrower, (e) Borrower's state of
organization, or (f) Borrower's organizational identification number, without in
each case notifying Lender of such change in writing at least thirty (30) days
prior to the effective date of such change and, in the case of a change in
Borrower's structure, without first obtaining the prior written consent of
Lender. In addition, Borrower shall not change or permit to be changed any
organizational documents of Borrower if such change would adversely impact the
covenants set
-57-
forth in Sections 6.1 and 6.4 hereof. Borrower authorizes Lender to file any
financing statement or financing statement amendment required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Borrower intends to operate under, and representing and warranting that Borrower
does business under no other trade name with respect to the Property. If
Borrower does not now have an organizational identification number and later
obtains one, or if the organizational identification number assigned to Borrower
subsequently changes, Borrower shall promptly notify Lender of such
organizational identification number or change.
Section 6.3. BUSINESS AND OPERATIONS
(a) Borrower will qualify to do business and will remain in good standing
under the laws of the State as and to the extent the same are required for the
ownership, maintenance, management and operation of the Pledged Company
Interests and the Collateral. Borrower shall not enter into any line of business
other than the ownership of the Pledged Company Interests and the Collateral, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business.
(b) Borrower will cause Mortgage Borrower and Senior Mezzanine Borrower to
qualify to do business and to remain in good standing under the laws of each
State as and to the extent the same are required for the ownership, maintenance,
management and operation of the Property. Borrower shall not permit Mortgage
Borrower and Senior Mezzanine Borrower to enter into any line of business other
than the ownership of the Property and Senior Mezzanine Collateral, as
applicable, or make any material change in the scope or nature of its business
objectives, purposes or operations, or undertake or participate in activities
other than the continuance of its present business.
Section 6.4. INDEPENDENT MANAGERS
(a) The organizational documents of Borrower shall provide that at all
times there shall be, and Borrower shall cause there to be, at least two duly
appointed Independent Managers of Borrower reasonably satisfactory to Lender
each of whom are not at the time of such individual's initial appointment, and
shall not have been at any time during the preceding five (5) years, and shall
not be at any time while serving as a director of Borrower, either (i) a
shareholder (or other equity owner) of, or an officer, director, partner,
manager, member (other than as a Special Member in the case of single member
Delaware limited liability companies), employee, attorney or counsel of,
Borrower, or any of their respective shareholders, partners, members,
subsidiaries or affiliates; (ii) a customer or creditor of, or supplier to,
Borrower or any of its respective shareholders, partners, members, subsidiaries
or affiliates who derives any of its purchases or revenue from its activities
with Borrower or any Affiliate of any of them; (iii) a Person who Controls or is
under common Control with any such shareholder, officer, director, partner,
manager, member, employee, supplier, creditor or customer; or (iv) a member of
the immediate family of any such shareholder, officer, director, partner,
manager, member, employee, supplier, creditor or customer.
-58-
(b) The organizational documents of Borrower shall provide that the board
of managers of Borrower shall not take any action which, under the terms of any
certificate of incorporation, by-laws, articles of organization, operating
agreement or any voting trust agreement with respect to any limited liability
company interest (as applicable), requires a unanimous vote of the board of
managers of Borrower unless at the time of such action there shall be at least
two members of the board of managers who are Independent Managers. Borrower will
not, without the unanimous written consent of its board of managers including
each Independent Manager, on behalf of itself, Mortgage Borrower or Senior
Mezzanine Borrower (as applicable) (i) file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of any applicable
Creditors Rights Laws; (ii) seek or consent to the appointment of a receiver,
liquidator or any similar official; (iii) take any action that might cause such
entity to become insolvent; or (iv) make an assignment for the benefit of
creditors.
ARTICLE VII
NO SALE OR ENCUMBRANCE
Section 7.1. TRANSFER DEFINITIONS. For purposes of this Article 7, an
"AFFILIATED MANAGER" shall mean any managing agent of the Property, other than
Borrower Principal, in which Mortgage Borrower, Senior Mezzanine Borrower,
Borrower, Borrower Principal or any affiliate of such entities has, directly or
indirectly, any Controlling legal, beneficial or economic interest; "CONTROL"
shall mean the power to direct the management and policies of a Restricted
Party, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; "RESTRICTED
PARTY" shall mean Mortgage Borrower, Senior Mezzanine Borrower, Borrower,
Borrower Principal, any Affiliated Manager, or any shareholder, partner, member
or non-member manager, or any direct or indirect legal or beneficial owner of
Mortgage Borrower, Senior Mezzanine Borrower, Borrower, Borrower Principal, any
Affiliated Manager or any non-member manager, provided, however, that no direct
or indirect owners of Borrower Principal, other than Sponsor, shall be included
within the definition of a Restricted Party; and a "SALE OR PLEDGE" shall mean a
voluntary or involuntary sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, grant of any options with respect to, or any
other transfer or disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) of a legal or beneficial interest, except for
Permitted Encumbrances.
Section 7.2. NO SALE/ENCUMBRANCE
(a) Except as provided in Section 7.3 below, Borrower shall not cause,
suffer or permit a Sale or Pledge of the Collateral, Senior Mezzanine Collateral
or the Property or any part thereof or any legal or beneficial interest therein
nor permit a Sale or Pledge of an interest in any Restricted Party (in each
case, a "PROHIBITED TRANSFER"), other than pursuant to Leases of space in the
Improvements to Tenants in accordance with the provisions of Section 5.13,
without the prior written consent of Lender
(b) A Prohibited Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Mortgage Borrower agrees to sell the
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Mortgage Borrower leasing all or a substantial
-59-
part of the Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Mortgage Borrower's right, title and interest in and to
any Leases or any Rents; (iii) if a Restricted Party is a corporation, any
merger, consolidation or Sale or Pledge of such corporation's stock or the
creation or issuance of new stock in one or a series of transactions; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
or limited partner or any profits or proceeds relating to such partnership
interests or the creation or issuance of new partnership interests; (v) if a
Restricted Party is a limited liability company, any merger or consolidation or
the change, removal, resignation or addition of a managing member or non-member
manager (or if no managing member, any member) or the Sale or Pledge of the
membership interest of any member or any profits or proceeds relating to such
membership interest; (vi) if a Restricted Party is a trust or nominee trust, any
merger, consolidation or the Sale or Pledge of the legal or beneficial interest
in a Restricted Party or the creation or issuance of new legal or beneficial
interests; (vii) the removal or the resignation of a Manager (including, without
limitation, an Affiliated Manager) other than in accordance with Section 5.14.
Section 7.3. PERMITTED TRANSFERS. Notwithstanding the provisions of
Section 7.2, the following transfers shall not be deemed to be a Prohibited
Transfer: (a) a transfer by devise or descent or by operation of law upon the
death of a member, partner or shareholder of a Restricted Party; (b) the Sale or
Pledge, in one or a series of transactions, of not more than forty-nine percent
(49%) of the stock, partnership interests or membership interests (as the case
may be) in a Restricted Party other than Mortgage Borrower or Senior Mezzanine
Borrower; provided, however, no such transfers shall result in a change in
Control in Borrower, Mortgage Borrower, Senior Mezzanine Borrower or Borrower
Principal or a change in the Manager, and as a condition to each transfer of
direct interests in Borrower (to the extent otherwise permitted hereunder),
Lender shall receive not less than thirty (30) days prior written notice of such
proposed transfer, (c) the transfer of interests held by Sponsor and its
Affiliates in any Restricted Party other than Borrower or Mortgage Borrower or
Senior Mezzanine Borrower in connection with the purchase, sale and/or financing
of the ownership interests in other properties owned by Sponsor, provided that
(i) no such transfers shall result in a change in Control in Borrower or
Mortgage Borrower or Senior Mezzanine Borrower or a change in Control of the
Manager (ii) Sponsor remains at all times the general partner of Borrower
Principal, and (iii) Sponsor continues to own no less than twenty-five percent
(25%) of the direct or indirect interests in Borrower, (d) transfers of direct
or indirect interests in Borrower Principal, provided that (i) no such transfers
shall result in a change in Control in Borrower, Mortgage Borrower, Senior
Mezzanine Borrower or Manager, (ii) Sponsor remains at all times the general
partner of Borrower Principal, and (iii) Sponsor continues to own no less than
twenty-five (25%) of the direct or indirect interests in Borrower, (e) so long
as Sponsor is a publicly traded company, the pledge of Sponsor's interests in
any Restricted Party other than Borrower or Mortgage Borrower or Senior
Mezzanine Borrower to secure an operating debt facility of Sponsor, provided
that (i) such operating debt facility is secured by a pledge of interests in
entities having a direct or indirect interest in substantially all of the
properties directly or indirectly owned by Sponsor and (ii) the beneficiary of
such pledge shall be a major financial institution with significant real estate
experience involving properties similar to the Property, (f) Sponsor and its
Affiliates may sell (but not pledge) to a Qualified Investor up to 75% of the
direct or indirect, non-managing limited liability company interests in
Borrower, provided that (i) Sponsor at all times maintains Control
-60-
of the Borrower, Mortgage Borrower and Senior Mezzanine Borrower (subject to the
veto rights, if any, of such Qualified Investor with respect to Major Decisions,
provided that no such veto right shall be construed to affect any rights or
remedies of Lender under the Loan Documents) and Borrower (ii) Sponsor shall at
all times own, directly or indirectly, at least 25% of the ownership interests
in Borrower and Mortgage Borrower and (iii) the Property shall at all times be
managed by a Qualified Manager, (g) transfers of ownership interests in Sponsor
so long as Sponsor is a publicly traded entity, (h) the merger of Sponsor with
or into another entity, provided that (x) the surviving entity is publicly
traded and (y) such merger does not result in a change of Control in Borrower,
Mortgage Borrower, Senior Mezzanine Borrower or Borrower Principal, (i)
encumbrances of the Tower Parcel portion of the Property with 365 parking
covenants for the benefit of the property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ pursuant to the terms of the Mortgage Loan Agreement, or
(j) with respect to the Garage Parcel, the execution of a parking covenant
agreement pursuant to the terms of the Mortgage Loan Agreement. Notwithstanding
anything to the contrary contained in this Section 7.3, if any Sale or Pledge
permitted under this Section 7.3 results in any Person and its Affiliates owning
in excess of forty-nine percent (49%) of the ownership interests in Borrower or
Borrower Principal, Borrower shall, prior to such transfer, and in addition to
any other requirement for Lender consent contained herein, deliver a revised
substantive non-consolidation opinion to Lender reflecting such transfer, which
opinion shall be in form, scope and substance acceptable in all respects to
Lender and the Rating Agencies.
Section 7.4. LENDER'S RIGHTS. Lender reserves the right to condition the
consent to a Prohibited Transfer requested hereunder upon (a) a modification of
the terms hereof and an assumption of the Note and the other Loan Documents as
so modified by the proposed Prohibited Transfer, (b) receipt of payment of a
transfer fee equal to one half of one percent (0.5%) of the outstanding
principal balance of the Loan and all of Lender's expenses incurred in
connection with such Prohibited Transfer, (c) the proposed transferee's
continued compliance with the covenants set forth in this Agreement (including,
without limitation, the covenants in Article 6) and the other Loan Documents,
(d) to the extent that a Prohibited Transfer would result in a change of Control
of Borrower or Mortgage Borrower or Senior Mezzanine Borrower, a new manager for
the Property and a new management agreement satisfactory to Lender, (e) the
satisfaction of all conditions set forth in Section 7.4 of the Mortgage Loan
Agreement, and (f) the satisfaction of such other conditions and/or legal
opinions as Lender shall determine in its reasonable discretion to be in the
interest of Lender. All expenses incurred by Lender shall be payable by Borrower
whether or not Lender consents to the Prohibited Transfer. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon a Prohibited Transfer made without Lender's consent. This provision
shall apply to each and every Prohibited Transfer, whether or not Lender has
consented to any previous Prohibited Transfer. Notwithstanding anything to the
contrary contained in this Section 7.4, if any Sale or Pledge results in any
Person and its Affiliates owning in excess of forty-nine percent (49%) of the
ownership interests in a Restricted Party, Borrower shall, prior to such
transfer, and in addition to any other requirement for Lender consent contained
herein, deliver a revised substantive non-consolidation opinion to Lender
reflecting such Prohibited Transfer, which opinion shall be in form, scope and
substance acceptable in all respects to Lender.
-61-
Section 7.5. ASSUMPTION
(a) In the event Mortgage Borrower obtains the consent of Mortgage Lender
and the Senior Mezzanine Lender to a Transfer of the Property subject to, and
assuming, the Mortgage Loan Documents to another Person (a "TRANSFEREE MORTGAGE
BORROWER"), such Transfer shall nevertheless not be permitted hereunder unless
(1) the sole holder of 100% of the equity interests in the Transferee Senior
Mezzanine Borrower (defined below) (the "TRANSFEREE JUNIOR MEZZANINE BORROWER")
pledges its entire equity interest in the Transferee Senior Mezzanine Borrower
to Lender pursuant to a pledge agreement in the form of the Pledge Agreement or
otherwise acceptable to Lender in its sole discretion, (2) the Transferee Junior
Mezzanine Borrower is substituted for and assumes all of Borrower's obligations
under the Loan Documents, and replacement guarantors and indemnitors assume all
of the obligations of Borrower Principal under the Loan Documents (collectively,
a "TRANSFER AND ASSUMPTION"), (3) Lender approves such Transfer and Assumption
(including without limitation the creditworthiness of the proposed "Transferee
Senior Mezzanine Borrower") in Lender's reasonable discretion, and (4)
Transferee Senior Mezzanine Borrower pledges 100% of its interest in Transferee
Mortgage Borrower and otherwise complies with all of the terms of Section 7.5 of
the Senior Mezzanine Loan Agreement. For purposes of this Section 7.5,
"Transferee Senior Mezzanine Borrower" shall mean the sole holder of 100% of the
equity interests in the Transferee Mortgage Borrower. Borrower may make a
written application to Lender for Lender's consent to the Transfer and
Assumption, subject to the conditions set forth in paragraphs (b) and (c) of
this Section below. Together with such written application, Borrower will pay to
Lender the reasonable review fee, not to exceed $25,000, then required by
Lender. Borrower also shall pay on demand all of the costs and expenses incurred
by Lender, including reasonable attorneys' fees and expenses, and including the
fees and expenses of Rating Agencies, if applicable, and other outside entities,
in connection with considering any proposed Transfer and Assumption, whether or
not the same is permitted or occurs.
(b) Lender may grant or withhold its consent to a Transfer and Assumption
in its reasonable discretion, subject, however, to satisfaction of the following
conditions:
(i) No Default or Event of Default shall have occurred and be
continuing;
(ii) Borrower shall have submitted to Lender true, correct and
complete copies of any and all information and documents of any kind
reasonably requested by Lender concerning the Property, Transferee Junior
Mezzanine Borrower, replacement guarantors and indemnitors;
(iii) Evidence satisfactory to Lender shall have been provided
showing that the Transferee Junior Mezzanine Borrower and such of its
Affiliates as shall be designated by Lender comply and will comply with
Article 6, as those provisions may be modified by Lender taking into
account the ownership structure of Transferee Junior Mezzanine Borrower
and its Affiliates;
(iv) Borrower shall have obtained (and delivered to Lender) a Rating
Confirmation with respect to the Transfer and Assumption and all related
transactions;
-62-
(v) Borrower shall have paid all of Lender's costs and expenses in
connection with considering the Transfer and Assumption, and shall have
paid the amount requested by Lender as a deposit against Lender's costs
and expenses in connection with effecting the Transfer and Assumption;
(vi) Borrower, the Transferee Junior Mezzanine Borrower, and the
replacement guarantors and indemnitors shall have indicated in writing in
form and substance reasonably satisfactory to Lender their readiness and
ability to satisfy the conditions set forth in Subsection (c) below; and
(vii) The identity, experience, and financial condition of the
Transferee Junior Mezzanine Borrower and the replacement guarantors and
indemnitors shall be satisfactory to Lender in its sole and absolute
discretion, exercised in good faith.
(c) If Lender consents to the Transfer and Assumption, the Transferee
Junior Mezzanine Borrower and/or Borrower, as the case may be, shall deliver the
following to Lender:
(i) Borrower (or Transferee Junior Mezzanine Borrower) shall deliver
to Lender an assumption fee in the amount of 1.0% of the then unpaid
principal balance of the Loan at the closing of the Transfer and
Assumption;
(ii) Borrower, Transferee Junior Mezzanine Borrower, the original
and replacement guarantors and indemnitors shall execute and deliver any
and all documents reasonably required by Lender, in form and substance
reasonably required by Lender, to evidence the Transfer and Assumption,
including Loan Document modifications reasonably appropriate in light of
such Transfer and Assumption (modifying documentation if Lender requires
to address variations in the ownership structure of the Transferee Junior
Mezzanine Borrower from that of the Borrower, for example, so long as such
modifications do not alter the economics of the Loan or materially
increase the Borrower's obligations thereunder);
(iii) Counsel to the Transferee Junior Mezzanine Borrower and
replacement guarantors and indemnitors shall deliver to Lender opinions in
form and substance satisfactory to Lender as to such matters as Lender and
the Rating Agencies, if applicable, shall require, which may include
opinions as to substantially the same matters as were required in
connection with the origination of the Loan including, without limitation,
a bankruptcy non-consolidation opinion and a perfection opinion;
(iv) Borrower shall cause to be delivered to Lender, (A) an
endorsement (relating to the change in the identity of the vestee and
execution and delivery of the Transfer and Assumption documents) to the
Owner's Policy of Title Insurance, and (B) a new UCC Title Policy, each in
form and substance acceptable to Lender, in Lender's reasonable
discretion;
(v) Borrower shall deliver to Lender a payment in the amount of all
remaining unpaid costs incurred by Lender in connection with the Transfer
and Assumption, including but not limited to, Lender's reasonable
attorneys fees and expenses, all
-63-
recording fees, and all fees payable to the title company in connection
with the Transfer and Assumption; and
(d) Notwithstanding the foregoing, with respect to any proposed Transfer
or Assumption, if required by Lender, the Loan shall either be repaid in full or
shall be assumed by the new member of the Transferee Junior Mezzanine Borrower
pursuant to an assumption permitted and approved by the Lender under the Loan
Documents.
Upon completion of a Transfer and Assumption approved in writing by Lender
and permitted hereunder and execution of replacement guaranties by replacement
guarantors as provided in (c) above, and provided that Lender has approved the
replacement guarantors as substitutes for the original Borrower Principal as
provided in (b) above, Borrower and any original Borrower Principal shall, as
part of the documentation executed at the closing of the Transfer and
Assumption, be released from liability under the Loan Documents accruing from
and after the completion of the Transfer and Assumption, but not from any
liabilities for acts and occurrences taking place prior to such Transfer and
Assumption or under the Environmental Indemnity Agreement.
ARTICLE VIII
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
Section 8.1. INSURANCE
(a) Borrower shall cause Mortgage Borrower to obtain and maintain, at all
times insurance for Mortgage Borrower and for the Property providing at least
the following coverages:
(i) comprehensive "all risk" insurance on the Improvements and the
Personal Property, in each case (A) in an amount equal to one hundred
percent (100%) of the "Full Replacement Cost," which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $100,000 for all
such insurance coverage; and (D) if any of the Improvements or the use of
the Property shall at any time constitute legal non-conforming structures
or uses, providing coverage for contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements and containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement. In addition, Borrower shall obtain: (y) if any
portion of the Improvements is currently or at any time in the future
located in a "special flood hazard area" designated by the Federal
Emergency Management Agency, flood hazard insurance in an amount equal to
the maximum amount of such insurance available under the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the
National Flood Insurance Reform Act of 1994, as each may be amended; and
(z) earthquake insurance in amounts and in form and substance reasonably
satisfactory to Lender in the event the Property is located in an area
with a high degree of seismic risk, provided that the
-64-
insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required under
this subsection (i), provided, further, that the insurance pursuant to
clause (z) hereof shall provide for no deductible in excess of 5% of the
total insurable value (which includes annual rental value) of the
properties insured under the applicable policy;
(ii) Commercial General Liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon,
in or about the Property, with such insurance (A) to be on the so-called
"occurrence" form with a general aggregate limit of not less than
$2,000,000 and a per occurrence limit of not less than $1,000,000; (B) to
continue at not less than the aforesaid limit until required to be changed
by Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards:
(1) premises and operations; (2) products and completed operations; (3)
independent contractors; (4) blanket contractual liability; and (5)
contractual liability covering the indemnities contained in Article 12 and
Article 14 hereof to the extent the same is available;
(iii) loss of rents insurance or business income insurance, as
applicable, (A) with loss payable to Lender, subject to the terms of the
Mortgage Loan Agreement; (B) covering all risks required to be covered by
the insurance provided for in subsection (i) above; and (C) which provides
that after the physical loss to the Improvements and Personal Property
occurs, the loss of rents or income, as applicable, will be insured until
such rents or income, as applicable, either return to the same level that
existed prior to the loss, or the expiration of twenty-four (24) months,
whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) which contains an extended period
of indemnity endorsement which provides that after the physical loss to
the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the
same level it was at prior to the loss, or the expiration of twelve (12)
months from the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that
the policy may expire prior to the end of such period. The amount of such
loss of rents or business income insurance, as applicable, shall be
determined prior to the date hereof and at least once each year thereafter
based on Borrower's reasonable estimate of the gross income from the
Property for the succeeding period of coverage required above. All
proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan
Documents from time to time due and payable hereunder and under the Note;
provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to pay the obligations secured by the
Loan Documents on the respective dates of payment provided for in the
Note, this Agreement and the other Loan Documents except to the extent
such amounts are actually paid out of the proceeds of such loss of rents
or business income insurance, as applicable;
(iv) at all times during which material structural construction,
repairs or alterations are being made with respect to the Improvements,
and only if the Property coverage form does not otherwise apply, (A)
owner's contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the above
-65-
mentioned commercial general liability insurance policy; and (B) the
insurance provided for in subsection (i) above written in a so-called
Builder's Risk Completed Value form (1) on a non-reporting basis, (2)
against "all risks" insured against pursuant to subsection (i) above, (3)
including permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of the
State, and employer's liability insurance in respect of any work or
operations on or about the Property, or in connection with the Property or
its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with
the commercial property insurance policy required under subsection (i)
above;
(vii) excess liability insurance in an amount not less than
$50,000,000 per occurrence on terms consistent with the commercial general
liability insurance required under subsection (ii) above; and
(viii) upon sixty (60) days' written notice, such other reasonable
insurance and in such reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the Property located
in or around the region in which the Property is located.
The Policies required to be maintained pursuant to clauses (i) through
(viii) above shall contain no exclusion for Losses resulting from acts of
terrorism as certified under the Terrorism Risk Insurance Act of 2002, as the
same may be amended from time to time.
(b) All insurance provided for in Section 8.1(a) shall be obtained under
valid and enforceable policies (collectively, the "POLICIES" or in the singular,
the "POLICY"), and shall be subject to the approval of Lender as to insurance
companies, amounts, deductibles, loss payees and insureds. The Policies shall be
issued by financially sound and responsible insurance companies authorized to do
business in the State and having a claims paying ability rating of "AA-" or
better by at least two Rating Agencies, one of which must be S&P or such other
Rating Agencies approved by Lender, provided, however, that if Borrower elects
to have its insurance coverage provided by a syndicate of insurers, then (i) if
such syndicate consists of 5 or more members, (A) at least 60% of the insurance
coverage (and 100% of the first layer of such coverage) shall be provided by
insurance companies having a claims paying ability rating of "AA-" or better by
at least two Rating Agencies, one of which must be S&P, and (B) of the remaining
40% of the coverage, (I) 30% (of the total syndicate) shall be provided by
insurance companies having a claims paying ability rating of "BBB-" or better by
at least two Rating Agencies, one of which must be S&P, and (II) the remaining
10% (of the total syndicate) shall be provided by insurance carriers having a
general policy rating of "A" or better and a financial class of "XII" or better
by A.M. Best Company, Inc., or (ii) if such syndicate consists of four or fewer
members, (A) at least 75% of the insurance coverage (and 100% of the first layer
of such coverage) shall be provided by insurance companies having a claims
paying ability rating of "AA" or better by at least two Rating Agencies, one of
which must be S&P, and (B) of the remaining 25% of the coverage, (I) 15% (of the
total syndicate) shall be provided by insurance
-66-
companies having a claims paying ability rating of "BBB-" or better by at least
two Rating Agencies, one of which must be S&P, and (II) the remaining 10% (of
the total syndicate) shall be provided by insurance carriers having a general
policy rating of "A" or better and a financial class of "XII" or better by A.M.
Best Company, Inc. Notwithstanding anything to the contrary contained herein,
Lender shall accept an "all-risk" Policy issued by Factory Mutual Insurance
Company ("Factory Mutual"), provided that (I) Factory Mutual maintains a general
policy rating of "A" or better and a financial class of "XII" or better by A.M.
Best Company, Inc. and a claims paying ability rating of "A+" or better by
Fitch, and (II) in connection with a Securitization, Lender confirms that, in
Lender's reasonable determination based on information from the Rating Agencies,
the ratings assigned to the portion or the Securitization represented by the
Loan will not be adversely affected as a result of the "all-risk" Policy being
issued by Factory Mutual. The Policies described in Section 8.1(a) shall
designate Lender and its successors and assigns as a "Named Insured." Not less
than ten (10) days prior to the expiration dates of the Policies theretofore
furnished to Lender, renewal Policies accompanied by evidence satisfactory to
Lender of payment of the premiums due thereunder (the "INSURANCE PREMIUMS")
shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 8.1(a).
(d) All Policies provided for or contemplated by Section 8.1(a), except
for the Policy referenced in Section 8.1(a)(v), shall name Mortgage Borrower as
the insured, Lender as a "Named Insured," and Mortgage Lender as an additional
insured, as their interests may appear, and in the case of property damage,
boiler and machinery, flood and earthquake insurance, shall provide that the
loss thereunder shall be payable to Mortgagee Lender, as mortgagee and loss
payee, and Lender, as their interests may appear.
(e) All Policies provided for in Section 8.1(a) shall contain clauses or
endorsements to the effect that:
(i) no act or negligence of Mortgage Borrower, or anyone acting for
Mortgage Borrower, or of any Tenant or other occupant, or failure to
comply with the provisions of any Policy, which might otherwise result in
a forfeiture of the insurance or any part thereof, shall in any way affect
the validity or enforceability of the insurance insofar as Lender is
concerned;
(ii) the Policies shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least
thirty (30) days' prior written notice to Lender;
(iii) the issuers thereof shall give written notice to Lender if the
Policies have not been renewed thirty (30) days prior to its expiration;
-67-
(iv) Lender shall not be liable for (A) any Insurance Premiums
thereon or subject to any assessments thereunder or (B) any reporting
requirements under such Policies; and
(v) any claim or defense the insurance company may have against
Borrower or Mortgage Borrower to deny payment of any claim by Borrower or
Mortgage Borrower thereunder shall not be effective against Lender (and
affirmatively providing that the insurance company will pay the proceeds
of such Policies to Lender notwithstanding any claim or defense of the
insurance company against Lender) and such Policies shall contain an
endorsement to such effect.
(f) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Property, including, without limitation,
obtaining such insurance coverage as Lender in its sole discretion deems
appropriate. All premiums incurred by Lender in connection with such action or
in obtaining such insurance and keeping it in effect shall be paid by Borrower
to Lender upon demand and shall bear interest at the Default Rate.
Section 8.2. CASUALTY. If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty (a "CASUALTY"), Borrower shall give
prompt notice of such damage to Lender and shall cause Mortgage Borrower to
promptly commence and diligently prosecute the Restoration of the Property in
accordance with Section 8.4 of this Agreement and Section 8.4 of the Mortgage
Loan Agreement, whether or not Mortgage Lender or Lender makes any Net Proceeds
available pursuant to Section 8.4 of the Mortgage Loan Agreement or Section 8.4
hereof (as applicable) (unless Borrower has satisfied all conditions set forth
in Section 8.4 and Lender does not disburse the Net Proceeds, in which case
Borrower shall have no obligation under this Agreement to restore the Property).
Borrower shall cause Mortgage Borrower to pay all costs of such Restoration
whether or not such costs are covered by insurance. Lender may, but shall not be
obligated to make proof of loss if not made promptly by Borrower, subject to the
rights and obligations of Mortgage Lender and Mortgage Borrower under the
Mortgage Loan Documents. Borrower shall cause Mortgage Borrower to adjust all
claims for Insurance Proceeds in consultation with, and approval of, Lender;
provided, however, if an Event of Default has occurred and is continuing, Lender
shall have the exclusive right to participate in the adjustment of all claims
for Insurance Proceeds.
Section 8.3. CONDEMNATION. Borrower shall promptly give Lender notice of
the actual or threatened commencement of any proceeding for the Condemnation of
the Property of which Borrower has knowledge and shall cause Mortgage Borrower
to deliver to Lender copies of any and all papers served in connection with such
proceedings. Lender may participate in any such proceedings, and Borrower shall
from time to time deliver to Lender all instruments requested by it to permit
such participation. Borrower shall cause Mortgage Borrower to, at its expense,
diligently prosecute any such proceedings, and shall consult with Lender, its
attorneys and experts, and cooperate with them in the carrying on or defense of
any such proceedings. Notwithstanding any taking by any public or quasi-public
authority through Condemnation or otherwise (including but not limited to any
transfer made in lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Debt at the time and in the manner
-68-
provided for its payment in the Note and in this Agreement and the Debt shall
not be reduced until any Award shall have been actually received and applied by
Lender, after the deduction of expenses of collection, to the reduction or
discharge of the Debt. Lender shall not be limited to the interest paid on the
Award by the condemning authority but shall be entitled to receive out of the
Award interest at the rate or rates provided herein or in the Note. If the
Property or any portion thereof is taken by a condemning authority, Borrower
shall cause Mortgage Borrower to promptly commence and diligently prosecute the
Restoration of the Property and otherwise comply with the provisions of Section
8.4 hereof and Section 8.4 of the Mortgage Loan Agreement, whether or not Lender
or Mortgage Lender makes any Net Proceeds available pursuant to Section 8.4
hereof or Section 8.4 of the Mortgage Loan Agreement (as applicable). Subject to
the terms and provisions of the Mortgage Loan Documents, if the Collateral is
sold, through foreclosure or otherwise, prior to the receipt by Lender of the
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall have been sought, recovered or denied, to receive the Award, or a
portion thereof sufficient to pay the Debt.
Section 8.4. RESTORATION. Subject to the rights of Mortgage Lender and the
obligations of Mortgage Borrower under the Mortgage Loan Documents, the
following provisions shall apply in connection with the Restoration of the
Property:
(a) If the Net Proceeds shall be less than $2,500,000 and the costs of
completing the Restoration shall be less than $2,500,000, the Net Proceeds will
be disbursed by Lender to Borrower or Mortgage Borrower upon receipt, provided
that all of the conditions set forth in Section 8.4(b)(i) below and those
conditions set forth in Section 8.4(b)(i) of the Mortgage Loan Agreement are
each met and Borrower delivers to Lender a written undertaking by Mortgage
Borrower to expeditiously commence and to satisfactorily complete with due
diligence the Restoration in accordance with the terms of this Agreement and the
Mortgage Loan Agreement.
(b) If the Net Proceeds are equal to or greater than $2,500,000 or the
costs of completing the Restoration are equal to or greater than $2,500,000,
Lender shall make the Net Proceeds available for the Restoration in accordance
with the provisions of this Section 8.4. The term "NET PROCEEDS" for purposes of
this Section 8.4 shall mean: (i) the net amount of all insurance proceeds
received by Lender pursuant to Section 8.1(a)(i), (iv), (vi) and (vii) as a
result of a Casualty, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("INSURANCE PROCEEDS"), or (ii) the net amount of the Award as a result
of a Condemnation, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("CONDEMNATION PROCEEDS"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower or Mortgage
Borrower for Restoration provided that each of the following conditions
are met:
(A) Mortgage Lender is permitting such Net Proceeds to be
applied toward the Restoration of the Property in accordance with
the Mortgage Loan Documents;
(B) no Event of Default shall have occurred and be continuing;
-69-
(C) (1) in the event the Net Proceeds are Insurance Proceeds,
less than thirty percent (30%) of the total floor area of the
Improvements on the Property has been damaged, destroyed or rendered
unusable as a result of a Casualty or (2) in the event the Net
Proceeds are Condemnation Proceeds, less than fifteen percent (15%)
of the land constituting the Property is taken, such land is located
along the perimeter or periphery of the Property, and no portion of
the Improvements is located on such land;
(D) Leases covering in the aggregate at least seventy-five
percent (75%) of the total rentable space in the Property which has
been demised under executed and delivered Leases in effect as of the
date of the occurrence of such Casualty or Condemnation, whichever
the case may be, and each Major Lease in effect as of such date
shall remain in full force and effect during and after the
completion of the Restoration without abatement of rent beyond the
time required for Restoration;
(E) Borrower shall commence or cause Mortgage Borrower to
commence the Restoration as soon as reasonably practicable (but in
no event later than ninety (90) days after such Casualty or
Condemnation, whichever the case may be, occurs) and shall
diligently pursue the same to satisfactory completion, with
commencement defined for purposes hereof to mean the filing of the
requisite applications and ancillary paperwork necessary to receive
building permits;
(F) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the
Note, which will be incurred with respect to the Property as a
result of the occurrence of any such Casualty or Condemnation,
whichever the case may be, will be covered out of the insurance
coverage referred to in Section 8.1(a)(iii) above;
(G) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) six (6) months
prior to the Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases or material agreements
affecting the Property, (3) such time as may be required under
applicable zoning law, ordinance, rule or regulation, or (4) the
expiration of the insurance coverage referred to in Section
8.1(a)(iii);
(H) the Property and the use thereof after the Restoration
will be in compliance with and permitted under all Legal
Requirements;
(I) the Restoration shall be done and completed by Borrower or
Mortgage Borrower, as applicable, in an expeditious and diligent
fashion and in compliance with all applicable Legal Requirements;
(J) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the Property or the Improvements,
which access is otherwise
-70-
not replaced via new improvements to the Property or an access
easement (respectively);
(K) Borrower shall deliver, or cause to be delivered, to
Lender a signed detailed budget approved in writing by Mortgage
Borrower's architect or engineer stating the estimated entire cost
of completing the Restoration, which budget shall be reasonable
acceptable to Lender; and
(L) the Net Proceeds together with any cash or cash equivalent
deposited by Borrower or Mortgage Borrower with Lender are
sufficient in Lender's reasonable judgment to cover the cost of the
Restoration.
(ii) Subject to the terms and provisions of the Mortgage Loan
Documents, the Net Proceeds shall be held by Lender until disbursements
commence, and, until disbursed in accordance with the provisions of this
Section 8.4, shall constitute additional security for the Debt and other
obligations under the Loan Documents. The Net Proceeds shall be disbursed
by Lender to, or as directed by, Borrower from time to time during the
course of the Restoration, upon receipt of evidence satisfactory to Lender
that (A) all the conditions precedent to such advance, including those set
forth in Section 8.4(b)(i), have been satisfied, (B) all materials
installed and work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in connection with the
related Restoration item have been paid for in full, and (C) there exist
no notices of pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or encumbrances of
any nature whatsoever on the Property which have not either been fully
bonded to the satisfaction of Lender (and in accordance with applicable
Legal Requirements) and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company issuing the
Title Insurance Policy (as defined in the Mortgage Loan Agreement).
Notwithstanding the foregoing, Insurance Proceeds from the Policies
required to be maintained by Borrower pursuant to Section 8.1(a)(iii)
shall be controlled by Lender at all times, shall not be subject to the
provisions of this Section 8.4 and shall be used solely for the payment of
the obligations under the Loan Documents and Operating Expenses.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected by
Lender (the "RESTORATION CONSULTANT"). Lender shall have the use of the
plans and specifications and all permits, licenses and approvals required
or obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration, as
well as the contracts in excess of $250,000 under which they have been
engaged, shall be subject to prior review and acceptance by Lender and the
Restoration Consultant. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration,
including, without limitation, reasonable counsel fees and disbursements
and the Restoration Consultant's fees, shall be paid by Borrower or
Mortgage Borrower.
(iv) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for
-71-
work in place as part of the Restoration, as certified by the Restoration
Consultant, minus the Restoration Retainage. The term "Restoration
Retainage" shall mean an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as
certified by the Restoration Consultant, until the Restoration has been
completed. The Restoration Retainage shall be reduced to five percent (5%)
of the costs incurred upon receipt by Lender of satisfactory evidence that
fifty percent (50%) of the Restoration has been completed. The Restoration
Retainage shall in no event, and notwithstanding anything to the contrary
set forth above in this Section 8.4(b), be less than the amount actually
held back by Borrower or Mortgage Borrower, as applicable, from
contractors, subcontractors and materialmen engaged in the Restoration.
The Restoration Retainage shall not be released until the Restoration
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 8.4(b) and that all
approvals necessary for the re-occupancy and use of the Property have been
obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration
have been paid in full or will be paid in full out of the Restoration
Retainage; provided, however, that Lender will release the portion of the
Restoration Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date
upon which the Restoration Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily completed all
work and has supplied all materials in accordance with the provisions of
the contractor's, subcontractor's or materialman's contract, the
contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or
by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the
continued priority of the lien of the Mortgage and evidence of payment of
any premium payable for such endorsement. If required by Lender, the
release of any such portion of the Restoration Retainage shall be approved
by the surety company, if any, which has issued a payment or performance
bond with respect to the contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in consultation
with the Restoration Consultant, be sufficient to pay in full the balance
of the costs which are estimated by the Restoration Consultant to be
incurred in connection with the completion of the Restoration, Borrower or
Mortgage Borrower shall deposit the deficiency (the "NET PROCEEDS
DEFICIENCY") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender
shall be held by Lender and shall be disbursed for costs actually incurred
in connection with the Restoration on the same conditions applicable to
the disbursement of the Net Proceeds, and until so disbursed pursuant to
this Section 8.4(b) shall constitute additional security for the Debt and
other obligations under the Loan Documents.
-72-
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender
after the Restoration Consultant certifies to Lender that the Restoration
has been completed in accordance with the provisions of this Section
8.4(b) and Section 8.4(b) of the Mortgage Loan Agreement, and the receipt
by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full, shall be remitted
by Lender to Borrower (or as directed by Borrower), provided no Event of
Default shall have occurred and shall be continuing under the Note, this
Agreement or any of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 8.4(b)(vii) above may (x) be retained and applied by Lender toward
the payment of the Debt whether or not then due and payable in such order,
priority and proportions as Lender in its sole discretion shall deem proper, or,
(y) at the sole discretion of Lender, the same may be paid, either in whole or
in part, to Borrower for such purposes and upon such conditions as Lender shall
designate.
(d) Notwithstanding anything herein to the contrary, in the event that the
Property is being restored by Mortgage Borrower pursuant to the Mortgage Loan
Documents, Lender shall agree to the release of the Net Proceeds for Restoration
of the Property pursuant to the terms and provisions of the Mortgage Loan
Documents, subject to Lender's rights to receive and approve in its discretion
all deliverables set forth in this Section 8.4.
ARTICLE IX
RESERVE FUNDS
Borrower shall cause Senior Mezzanine Borrower to cause Mortgage Borrower
to comply with all of its obligations under Article IX of the Mortgage Loan
Agreement. Notwithstanding anything to the contrary contained in this Agreement,
if at any time and for any reason (including, without limitation, the
satisfaction of the Mortgage Loan), Mortgage Borrower is no longer maintaining
any of the Reserve Accounts (as defined in the Mortgage Loan Agreement) in
accordance with the terms of the Mortgage Loan Documents or, with respect to the
Replacement Reserve Funds, the Reserve Letter of Credit in lieu thereof in
accordance with the terms of the Mortgage Loan Agreement, and Senior Mezzanine
Lender has not required Senior Mezzanine Borrower to maintain any of the Reserve
Accounts (as defined in the Mortgage Loan Agreement) in accordance with the
terms of the Mortgage Loan Documents or, with respect to the Replacement Reserve
Funds, the Reserve Letter of Credit in lieu thereof in accordance with the terms
of the Mortgage Loan Agreement then (i) Borrower shall promptly establish and
maintain with Lender and for the benefit of Lender, reserves in replacement and
substitution thereof, which substitute reserves shall be subject to all of the
same terms and conditions applicable under the Mortgage Loan Documents with
respect to the Reserve Accounts being replaced (including, but not limited to,
Article X of the Mortgage Loan Agreement relating to cash management and
Borrower shall, and shall cause Senior Mezzanine Borrower and Mortgage Borrower
to, acknowledge and agree to the amendments to this Agreement relating to such
substitution to cash management provided such amendments are substantially
similar to Article X of the Mortgage Loan Agreement), and (ii) to the extent not
prohibited by Mortgage
-73-
Lender under the Mortgage Loan Documents, Borrower shall cause Senior Mezzanine
Borrower to cause Mortgage Lender to remit to Lender any funds from Reserve
Accounts that were remaining in such reserves at the time of the termination of
such reserves for the purpose of funding the equivalent substitute reserves. In
addition, upon the occurrence of a Mezzanine Litigation Event (as defined in the
Litigation Indemnity), Lender may cause Borrower to establish (or establish on
Borrower's behalf) an account to collect excess cash flow pursuant to the terms
of the Litigation Indemnity.
ARTICLE X
CASH MANAGEMENT
Borrower and Lender acknowledge and agree that all Rent and other income
from the Property will be deposited and disbursed in accordance with Article X
of the Mortgage Loan Agreement entitled "Cash Management." Notwithstanding
anything to the contrary contained in this Agreement, if at any time and for any
reason (including, without limitation, the satisfaction of the Mortgage Loan),
Mortgage Borrower is no longer maintaining the accounts established pursuant to
Article X of the Mortgage Loan Agreement or if the cash management arrangement
referred to in the Mortgage Loan Agreement is no longer in full force and
effect, and Senior Mezzanine Lender has not required Senior Mezzanine Borrower
to establish a cash management arrangement acceptable to Lender, Borrower shall
promptly enter into a substitute cash management agreement and related lockbox
agreement with Agent (as defined in the Mortgage Loan Agreement) (or such other
depository institution as Lender shall direct, or another agent selected by
Borrower and reasonably acceptable to Lender) on substantially the same terms as
the agreements entered into as of the date hereof in connection with the related
Mortgage Loan.
ARTICLE XI
EVENTS OF DEFAULT; REMEDIES
Section 11.1. EVENT OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an "EVENT OF DEFAULT":
(a) if any regularly scheduled portion of the Debt is not paid on or prior
to the date the same is due or if the entire Debt is not paid on or before the
Maturity Date or if any other portion of the Debt is not paid within five (5)
days of the date the same is due;
(b) intentionally omitted;
(c) if the Policies are not kept in full force and effect, or if certified
copies of the Policies are not delivered to Lender as provided in Section 8.1;
(d) if any covenant contained in Article 6 or any covenant contained in
Article 7 hereof is breached;
-74-
(e) if any representation or warranty of, or with respect to, Borrower,
Senior Mezzanine Borrower, Mortgage Borrower, Borrower Principal, or any member,
general partner, principal or beneficial owner of any of the foregoing, made
herein, in any other Loan Document, or in any certificate, report, financial
statement or other instrument or document furnished to Lender at the time of the
closing of the Loan or during the term of the Loan shall have been false or
misleading in any material respect when made (a "REP & WARRANTY BREACH"), unless
(i) Borrower notifies Lender of such Rep & Warranty Breach promptly upon
becoming aware of it and (ii) such Rep & Warranty Breach (A) was unintentional,
(B) is immaterial and (iii) if capable of being cured, is cured within thirty
(30) days following notice from Lender;
(f) if (i) Borrower, Senior Mezzanine Borrower or Mortgage Borrower shall
commence any case, proceeding or other action (A) under any Creditors Rights
Laws, seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or
Borrower, Senior Mezzanine Borrower or Mortgage Borrower shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against Borrower, Senior Mezzanine Borrower or Mortgage Borrower any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
sixty (60) days; or (iii) there shall be commenced against Borrower, Senior
Mezzanine Borrower or Mortgage Borrower any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of any order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or (iv) Borrower, Senior Mezzanine Borrower or Mortgage Borrower
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) Borrower, Senior Mezzanine Borrower or Mortgage shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due;
(g) if Borrower shall be in default beyond applicable notice and grace
periods under any other pledge agreement or other security agreement covering
any part of the Collateral, whether it be superior or junior in lien to the
Pledge Agreement;
(h) intentionally omitted;
(i) if any federal tax lien is filed against Borrower, any member or
general partner of Borrower, Borrower Principal, the Collateral or the Property
and same is not discharged of record within thirty (30) days after same is
filed;
(j) if a judgment is filed against the Borrower in excess of $50,000 which
is not fully covered by insurance or which is not vacated or discharged within
90 days;
(k) if any default occurs under any guaranty or indemnity executed in
connection herewith and such default continues after the expiration of
applicable grace periods, if any;
-75-
(l) if Borrower, Senior Mezzanine Borrower or Mortgage Borrower shall
permit any event within its control to occur that would cause any REA to
terminate without notice or action by any party thereto or would entitle any
party to terminate any REA and the term thereof by giving notice to Borrower,
Senior Mezzanine Borrower or Mortgage Borrower; or any REA shall be surrendered,
terminated or canceled for any reason or under any circumstance whatsoever
except as provided for in such REA; or any term of any REA shall be modified or
supplemented without Lender's prior written consent; or Borrower, Senior
Mezzanine Borrower or Mortgage Borrower shall fail, within ten (10) Business
Days after demand by Lender, to exercise its option to renew or extend the term
of any REA or shall fail or neglect to pursue diligently all actions necessary
to exercise such renewal rights pursuant to such REA except as provided for in
such REA;
(m) if any of the assumptions contained in any opinion relating to issues
of substantive consolidation delivered to Lender in connection with the Loan, or
in any other opinion relating to substantive consolidation delivered subsequent
to the closing of the Loan, is or shall become untrue in any material respect;
(n) If any of Borrower or its Subsidiaries shall breach any of the terms
of:
(i) Section 2.5(g) (Payments upon a Liquidation Event);
(ii) Section 5.15 (Liens);
(iii) intentionally deleted;
(iv) Section 5.25 (Special Distributions);
(v) Section 5.28 (Limitations);
(vi) Section 5.29 (Limitations on Distributions);
(vii) Section 5.30 (Other Limitations);
(viii) intentionally deleted;
(ix) Section 5.32 (Refinancing);
(o) if a Mortgage Loan Event of Default occurs;
(p) if a Senior Mezzanine Loan Event of Default occurs; or
(q) if Borrower shall continue to be in default under any other term,
covenant or condition of this Agreement or any of the Loan Documents for more
than ten (10) days after notice from Lender in the case of any default which can
be cured by the payment of a sum of money or for thirty (30) days after notice
from Lender in the case of any other default, provided that if such default
cannot reasonably be cured within such thirty (30) day period and Borrower shall
have commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be
-76-
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be
for a period in excess of sixty (60) days.
Section 11.2. REMEDIES
(a) Upon the occurrence of an Event of Default (other than an Event of
Default described in Section 11.1(f) above) and at any time thereafter Lender
may, in addition to any other rights or remedies available to it pursuant to
this Agreement and the other Loan Documents or at law or in equity, take such
action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrower and in the Collateral, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents and may exercise all the rights and remedies of a secured party under
the UCC, as adopted and enacted by the State of Delaware or States where any of
the Collateral is located, against Borrower and the Collateral, including,
without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in Section 11.1(f) above, the Debt and all
other obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default, all or any one or more of
the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Debt shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Collateral. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singularly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
ARTICLE XII
ENVIRONMENTAL PROVISIONS
Section 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, based upon the Environmental Report of
the Property and information that Borrower knows or should reasonably have
known, that: (a) there are no Hazardous Materials or underground storage tanks
in, on, or under the Property, except those that are both (i) in compliance with
Environmental Laws and with permits issued pursuant thereto (if such permits are
required), if any, and (ii) either (A) in the case of Hazardous Materials, in
amounts not in excess of that necessary to operate the Property for the purposes
set forth herein or (B) fully disclosed to and approved by Lender in writing
pursuant to the
-77-
Environmental Report; (b) there are no past, present or threatened Releases of
Hazardous Materials in violation of any Environmental Law or which would require
remediation by a Governmental Authority in, on, under or from the Property
except as described in the Environmental Report; (c) there is no threat of any
Release of Hazardous Materials migrating to the Property except as described in
the Environmental Report; (d) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property except as described in the Environmental Report; (e) Borrower does
not know of, and has not received, any written or oral notice or other
communication from any Person relating to Hazardous Materials in, on, under or
from the Property; and (f) Borrower has truthfully and fully provided to Lender,
in writing, any and all information relating to environmental conditions in, on,
under or from the Property known to Borrower or contained in Borrower's files
and records, including but not limited to any reports relating to Hazardous
Materials in, on, under or migrating to or from the Property and/or to the
environmental condition of the Property.
Section 12.2. ENVIRONMENTAL COVENANTS
Borrower covenants and agrees that so long as Mortgage Borrower owns,
manages, is in possession of, or otherwise controls the operation of the
Property: (a) all uses and operations on or of the Property, whether by Mortgage
Borrower or any other Person, shall be in compliance with all Environmental Laws
and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous
Materials in, on, under or from the Property; (c) there shall be no Hazardous
Materials in, on, or under the Property, except those that are both (i) in
compliance with all Environmental Laws and with permits issued pursuant thereto,
if and to the extent required, and (ii) (A) in amounts not in excess of that
necessary to operate the Property for the purposes set forth herein or (B) fully
disclosed to and approved by Lender in writing; (d) cause Mortgage Borrower to
keep the Property free and clear of all Environmental Liens; (e) cause Mortgage
Borrower to, at its sole cost and expense, fully and expeditiously cooperate in
all activities pursuant to Section 12.4 below, including but not limited to
providing all relevant information and making knowledgeable persons available
for interviews; (f) Borrower shall cause Mortgage Borrower, at its sole cost and
expense, to perform any environmental site assessment or other investigation of
environmental conditions in connection with the Property, pursuant to any
reasonable written request of Lender, upon Lender's reasonable belief that the
Property is not in full compliance with all Environmental Laws and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof; (g)
Borrower shall or shall cause Mortgage Borrower to, at its sole cost and
expense, comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from the
Property that are found to be in violation of Environmental Law; and (ii) comply
with any Environmental Law; (h) Borrower shall not allow Mortgage Borrower, any
tenant or other user of the Property to violate any Environmental Law; and (i)
Borrower shall immediately notify Lender in writing after it has become aware of
(A) any presence or Release or threatened Release of Hazardous Materials in, on,
under, from or migrating towards the Property; (B) any non-compliance with any
Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien against the Property; (D) any required or proposed
remediation of environmental conditions relating to the Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but
-78-
not limited to a Governmental Authority) relating in any way to Hazardous
Materials. Any failure of Borrower to perform its obligations pursuant to this
Section 12.2 shall constitute bad faith waste with respect to the Property.
Section 12.3. LENDER'S RIGHTS
Lender and any other Person designated by Lender, including but not
limited to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon the Property at all
reasonable times to assess any and all aspects of the environmental condition of
the Property and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in
Lender's sole discretion) and taking samples of soil, groundwater or other
water, air, or building materials, and conducting other invasive testing. To the
extent that any such Person is an agent of Lender, Lender shall require that
such Person is bonded and insured. Provided Lender gives Borrower at least 2
days advance notice and agrees to use reasonable efforts to minimize
interference with any tenants, Borrower shall cooperate with and provide (or
cause Mortgage Borrower to provide) access to Lender and any such person or
entity designated by Lender. Other than in connection with what Lender
determines to be an emergency situation, Lender agrees not to conduct any
invasive testing.
Section 12.4. OPERATIONS AND MAINTENANCE PROGRAMS
If recommended by the Environmental Report or any other environmental
assessment or audit of the Property, Borrower shall cause Mortgage Borrower to
establish and comply with an operations and maintenance program with respect to
the Property, in form and substance reasonably acceptable to Lender, prepared by
an environmental consultant reasonably acceptable to Lender, which program shall
address any asbestos-containing material or lead based paint that may now or in
the future be detected at or on the Property. Without limiting the generality of
the preceding sentence, Lender may require (a) periodic notices or reports to
Lender with regard to Borrower's operations and maintenance programs in form,
substance and at such intervals as Lender may specify, (b) an amendment to such
operations and maintenance program to address changing circumstances, laws or
other matters, (c) at Borrower's sole expense, supplemental examination of the
Property by consultants specified by Lender, (d) provided Lender gives Borrower
at least 2 days advance notice and agrees to use reasonable efforts to minimize
interference with any tenants, access to the Property by Lender, its agents or
servicer, to review and assess the environmental condition of the Property and
Mortgage Borrower's compliance with any operations and maintenance program, and
(e) variation of the operations and maintenance program in response to the
reports provided by any such consultants.
Section 12.5. ENVIRONMENTAL DEFINITIONS
"ENVIRONMENTAL LAW" means any present and future federal, state and local
laws, statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act, that apply to Borrower or the Property
and relate to Hazardous Materials or protection of human health or the
-79-
environment. "ENVIRONMENTAL LIENS" means all Liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other Person. "ENVIRONMENTAL REPORT" means the written reports
resulting from the environmental site assessments of the Property delivered to
Lender in connection with the Loan. "HAZARDOUS MATERIALS" shall mean petroleum
and petroleum products and compounds containing them, including gasoline, diesel
fuel and oil; explosives, flammable materials; radioactive materials;
polychlorinated biphenyls and compounds containing them; lead and lead-based
paint; asbestos or asbestos-containing materials in any form that is or could
become friable; underground or above-ground storage tanks, whether empty or
containing any substance; any substance the presence of which on the Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material", "hazardous waste",
"toxic substance", "toxic pollutant", "contaminant", or "pollutant" within the
meaning of any Environmental Law. "RELEASE" of any Hazardous Materials includes
but is not limited to any release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Materials.
ARTICLE XIII
SECONDARY MARKET
Section 13.1. TRANSFER OF LOAN. Lender may, at any time, sell, pledge,
transfer or assign the Loan Documents, or grant participations therein (all of
the foregoing, "PARTICIPATIONS") or syndicate the Loan ("SYNDICATION") or issue
mortgage pass-through certificates or other securities evidencing a beneficial
interest in a rated or unrated public offering or private placement
("SECURITIES") (the Syndication or the issuance of Participations and/or
Securities, a "SECURITIZATION").
Section 13.2. DELEGATION OF SERVICING. At the option of Lender, the Loan
may be serviced by a servicer/trustee selected by Lender ("SERVICER") and Lender
may delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents to such servicer/trustee pursuant to a servicing
agreement between Lender and such servicer/trustee.
Section 13.3. DISSEMINATION OF INFORMATION. Lender may forward to each
purchaser, transferee, assignee, or servicer of, and each participant, or
investor in, the Loan, or any Participations and/or Securities or any of their
respective successors (collectively, the "INVESTOR") or any Rating Agency rating
the Loan, or any Participations and/or Securities, each prospective Investor,
and any organization maintaining databases on the underwriting and performance
of commercial mortgage loans, all documents and information which Lender now has
or may hereafter acquire relating to the Debt and to Borrower, Mortgage
Borrower, any managing member or general partner thereof, Borrower Principal,
and the Property, including financial statements, whether furnished by Borrower
or otherwise, as Lender determines necessary or desirable. Borrower irrevocably
waives any and all rights it may have under applicable Legal Requirements to
prohibit such disclosure, including but not limited to any right of privacy.
-80-
Section 13.4. COOPERATION. At the request of the holder of the Note and,
to the extent not already required to be provided by Borrower under this
Agreement, Borrower and Borrower Principal shall use reasonable efforts to
provide information not in the possession of the holder of the Note in order to
satisfy the market standards to which the holder of the Note customarily adheres
or which may be reasonably required in the marketplace or by the Rating Agencies
in connection with such sales or transfers, including, without limitation, to:
(a) provide, or cause Mortgage Borrower to provide, (i) updated financial,
budget and other information with respect to the Property, the Collateral,
Borrower, Mortgage Borrower, Sponsor, Borrower Principal and Manager and (ii)
modifications and/or updates to the appraisals, market studies, environmental
reviews and reports (Phase I reports and, if appropriate, Phase II reports) and
engineering reports of the Property obtained in connection with the making of
the Loan (all of the foregoing being referred to as the "PROVIDED INFORMATION"),
together, if customary, with appropriate verification and/or consents of the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating Agencies;
(b) make changes to the organizational documents of Borrower, Senior
Mezzanine Borrower or Mortgage Borrower;
(c) at Borrower's expense, cause counsel to render or update existing
opinion letters as to enforceability and non-consolidation, which may be relied
upon by the holder of the Note, the Rating Agencies and their respective
counsel, which shall be dated as of the closing date of the Securitization;
(d) provided Lender gives at least 2 days advance notice and agrees to use
reasonable efforts to minimize interference with any tenants, permit site
inspections, appraisals, market studies and other due diligence investigations
of the Property, as may be reasonably requested by the holder of the Note or the
Rating Agencies or as may be necessary or appropriate in connection with the
Securitization;
(e) make the representations and warranties with respect to the Property,
the Collateral, Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Borrower
Principal, Manager and the Loan Documents as Borrower has made in the Loan
Documents and, subject to such knowledge or diligence qualifiers as may be
necessary, such other representations and warranties with respect to Borrower,
Senior Mezzanine Borrower, Mortgage Borrower, the Property, the Collateral and
Manager, as may be reasonably requested by the holder of the Note or the Rating
Agencies;
(f) execute such amendments to the Loan Documents as may be requested by
the holder of the Note or the Rating Agencies or otherwise to effect the
Securitization including, without limitation, bifurcation of the Loan into two
or more components and/or separate notes and/or creating a senior/subordinate
note structure; provided, however, that Borrower shall not be required to modify
or amend any Loan Document if such modification or amendment would (i) change
the interest rate, the stated maturity or the amortization of principal set
forth in the Note, except in connection with a bifurcation of the Loan which may
result in varying fixed interest rates and amortization schedules, but which
shall have the same initial weighted average
- 81 -
coupon of the original Note, or (ii) in the reasonable judgment of Borrower,
modify or amend any other material economic term of the Loan, or (iii) in the
reasonable judgment of Borrower, materially increase Borrower's obligations and
liabilities, or materially decrease Borrower's rights, under the Loan Documents.
Borrower acknowledges that in connection with a Securitization, Lender may
change the Selected Day in its sole discretion, but in no event to earlier than
the fifth (5th) of each month.
(g) deliver to Lender and/or any Rating Agency, (i) one or more
certificates executed by an officer of Borrower certifying as to the accuracy,
as of the closing date of the Securitization, of all representations made by
Borrower in the Loan Documents as of the date hereof in all relevant
jurisdictions or, if such representations are no longer accurate, certifying as
to what modifications to the representations would be required to make such
representations accurate as of the closing date of the Securitization, and (ii)
certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower as of
the date of the closing date of the Securitization;
(h) have reasonably appropriate personnel participate in a bank meeting
and/or presentation for the Rating Agencies or Investors; and
(i) cooperate with and assist Lender in obtaining ratings of the
Securities from two (2) or more of the Rating Agencies.
Borrower shall pay all costs and expenses incurred by Borrower in
connection with the compliance of Borrower and, if applicable, Mortgage Borrower
and Borrower Principal, with requests made under this Section 13.4, including,
without limitation, any additional costs and expenses payable in connection with
the substitution for Factory Mutual of an acceptable insurer pursuant to Section
8.1 hereof; provided, however, that Borrower shall not be responsible for the
payment of any costs or expenses incurred by or on behalf of Lender, or any
Rating Agency fees, in connection with a Securitization.
In the event that Borrower requests any consent or approval hereunder and
the provisions of this Agreement or any Loan Documents require the receipt of
written confirmation from each Rating Agency with respect to the rating on the
Securities, or, in accordance with the terms of the transaction documents
relating to a Securitization, such a rating confirmation is required in order
for the consent of Lender to be given, Borrower shall pay all of the costs and
expenses of Lender, Lender's servicer and each Rating Agency in connection
therewith, and, if applicable, shall pay any fees imposed by any Rating Agency
as a condition to the delivery of such confirmation.
Section 13.5. SECURITIZATION INDEMNIFICATION
(a) Borrower and Borrower Principal understand that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization, including, without limitation, a prospectus, prospectus
supplement, offering memorandum or private placement memorandum (each, a
"DISCLOSURE DOCUMENT") and may also be included in filings with the Securities
and Exchange Commission pursuant to the Securities Act or the Exchange Act, or
provided or made available to investors or prospective investors in the
- 82 -
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower and Borrower Principal
will cooperate with the holder of the Note in updating the Disclosure Document
by providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects.
(b) Borrower and Borrower Principal agree to provide in connection with
each of (i) a preliminary and a final offering memorandum or private placement
memorandum or similar document (including any Investor or Rating Agency "term
sheets" or presentations relating to the Property and/or the Loan) or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable, which
are delivered to Borrower and Borrower Principal for review, an indemnification
certificate (A) certifying that (I) Borrower and Borrower Principal have
carefully examined such memorandum or prospectus or other document actually
delivered by or on behalf of Lender (including any Investor or Rating Agency
"term sheets" or presentations relating to the Property and/or the Loan), as
applicable, including without limitation, the sections entitled "Special
Considerations," and/or "Risk Factors," and "Certain Legal Aspects of the
Mortgage Loan," or similar sections, and all sections relating to Borrower,
Borrower Principal, Manager, their Affiliates, the Loan, the Loan Documents and
the Property, and any risks or special considerations relating thereto, and any
other sections reasonably requested by Lender (all such sections, collectively,
the "DISCLOSED MATERIALS"), and (II) to the best of Borrower's knowledge except
as specifically identified by Borrower, the Disclosed Materials do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 13.5, Lender hereunder shall include
its officers and directors) and the Affiliate of Lender that (i) has filed the
registration statement, if any, relating to the Securitization and/or (ii) which
is acting as issuer, depositor, sponsor and/or a similar capacity with respect
to the Securitization (any Person described in (i) or (ii), an "ISSUER PERSON"),
and each director and officer of any Issuer Person, and each Person or entity
who controls any Issuer Person within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "ISSUER
GROUP"), and each Person which is acting as an underwriter, manager, placement
agent, initial purchaser or similar capacity with respect to the Securitization,
each of its directors and officers and each Person who controls any such Person
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act (collectively, the "UNDERWRITER GROUP") for any Losses to which
Lender, the Issuer Group or the Underwriter Group may become subject insofar as
the Losses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Disclosed Materials or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated in the Disclosed Materials or necessary in
order to make the statements in the Disclosed Materials or in light of the
circumstances under which they were made, not misleading (collectively the
"SECURITIES LIABILITIES") and (C) agreeing to reimburse Lender, the Issuer Group
and the Underwriter Group for any legal or other expenses reasonably incurred by
Lender and Issuer Group in connection with investigating or defending the
Securities Liabilities; provided, however, that Borrower will be liable in any
such case under clauses (B) or (C) above only to the extent that any such
Securities Liabilities arise out of or is based upon any such untrue statement
or omission made therein in reliance upon the Disclosed Materials or any reports
delivered by or on behalf of Borrower or Borrower Principal in connection with
the underwriting of the Loan, including, without limitation, financial
statements
- 83 -
of Borrower or Borrower Principal, operating statements, rent rolls,
environmental site assessment reports and Property condition reports with
respect to the Property. This indemnity agreement will be in addition to any
liability which Borrower and Borrower Principal may otherwise have. Moreover,
the indemnification provided for in Clauses (B) and (C) above shall be effective
whether or not an indemnification certificate described in (A) above is provided
and, if Borrower or Borrower Principal do not provide the indemnification
certificate, shall be applicable based on information previously provided by
Borrower and Borrower Principal or their Affiliates.
(c) In connection with filings under the Exchange Act or any information
provided to holders of Securities on an ongoing basis, Borrower and Borrower
Principal agree to indemnify (i) Lender, the Issuer Group and the Underwriter
Group for Losses to which Lender, the Issuer Group or the Underwriter Group may
become subject insofar as the Securities Liabilities arise out of or are based
upon the omission or alleged omission to state in the Provided Information a
material fact required to be stated in the Provided Information in order to make
the statements in the Provided Information, in light of the circumstances under
which they were made not misleading and (ii) reimburse Lender, the Issuer Group
or the Underwriter Group for any legal or other expenses reasonably incurred by
Lender, the Issuer Group or the Underwriter Group in connection with defending
or investigating the Securities Liabilities.
(d) Promptly after receipt by an indemnified party under this Section 13.5
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 13.5, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party under this Section 13.5 the indemnifying party shall be responsible for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one such separate counsel unless an indemnified party
shall have reasonably concluded that there may be legal defenses available to it
that are different from or additional to those available to another indemnified
party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 13.5(c)
or Section 13.5(d) is or are for any
- 84 -
reason held to be unenforceable by an indemnified party in respect of any
losses, claims, damages or liabilities (or action in respect thereof) referred
to therein which would otherwise be indemnifiable under Section 13.5(c) or
Section 13.5(d), the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages or
liabilities (or action in respect thereof); provided, however, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, the following factors
shall be considered: (i) the indemnified party's, Borrower's and Borrower
Principal's relative knowledge and access to information concerning the matter
with respect to which claim was asserted; (ii) the opportunity to correct and
prevent any statement or omission; and (iii) any other equitable considerations
appropriate in the circumstances. Lender, Borrower and Borrower Principal hereby
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.
(f) The liabilities and obligations of Borrower, Borrower Principal and
Lender under this Section 13.5 shall survive the satisfaction of this Agreement
and the satisfaction and discharge of the Debt.
Section 13.6. [INTENTIONALLY OMITTED]
Section 13.7. [INTENTIONALLY OMITTED]
Section 13.8. MORTGAGE LOAN SECURITIZATION. Borrower also agrees to
cooperate with Mortgage Lender in connection with the Securitization of the
Mortgage Loan as set forth in Section 13.4 of the Mortgage Loan Agreement and,
to the extent set forth therein, at Borrower's expense.
ARTICLE XIV
INDEMNIFICATIONS
Section 14.1. GENERAL INDEMNIFICATION. Borrower shall indemnify, defend
and hold harmless the Indemnified Parties from and against any and all Losses
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Property or any part thereof or
on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (b) any use, nonuse or condition in, on or about the Property
or any part thereof or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (c) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property or any part thereof; (d) any failure of the Property or the Collateral
to be in compliance with any applicable Legal Requirements; (e) any and all
claims and demands whatsoever which may be asserted against Lender by reason of
any alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants, or agreements contained in any Lease; (f) the holding
or investing of the Mortgage Reserve Accounts or the performance of the Required
Work (as defined in the Mortgage Loan Agreement), or (g) the payment of any
commission,
- 85 -
charge or brokerage fee to anyone which may be payable in connection with the
funding of the Loan (collectively, the "INDEMNIFIED LIABILITIES"); provided,
however, that Borrower shall not have any obligation to Lender hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender. To the extent that the
undertaking to indemnify, defend and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.
Section 14.2. INTANGIBLE TAX INDEMNIFICATION. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making of the Pledge
Agreement, the Note or any of the other Loan Documents, but excluding any
income, franchise or other similar taxes.
Section 14.3. ERISA INDEMNIFICATION. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all Losses (including, without limitation,
reasonable attorneys' fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or in the
sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender's sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Section 4.9 or Section 5.18 of this Agreement.
Section 14.4. SURVIVAL. The obligations and liabilities of Borrower under
this Article 14 shall fully survive indefinitely notwithstanding any
termination, satisfaction, or assignment of the Collateral pledged in the Pledge
Agreement. Notwithstanding the foregoing, if the Loan is paid off in full on the
Maturity Date, Borrower shall have no further liability under this Article 14
with respect to any event that occurs subsequent to the Maturity Date.
ARTICLE XV
EXCULPATION
Section 15.1. EXCULPATION
(a) Except as otherwise provided herein or in the other Loan Documents,
Lender shall not enforce the liability and obligation of Borrower or Borrower
Principal, as applicable, to perform and observe the obligations contained
herein or in the other Loan Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower, except that Lender may bring an
action under the UCC, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and realize upon
this Agreement, the Note, the Pledge Agreement and the other Loan Documents, and
the interest in the Collateral and any other collateral given to Lender created
by this Agreement, the Note, the Pledge Agreement and the other Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against
- 86 -
Borrower or Borrower Principal, as applicable, only to the extent of Borrower's
or Borrower Principal's interest in the Collateral and in any other collateral
given to Lender. Lender, by accepting this Agreement, the Note, the Pledge
Agreement and the other Loan Documents, agrees that it shall not, except as
otherwise provided in this Section 15.1, ▇▇▇ for, seek or demand any deficiency
judgment against Borrower or Borrower Principal in any such action or
proceeding, under or by reason of or under or in connection with this Agreement,
the Note, the Pledge Agreement or the other Loan Documents. The provisions of
this Section 15.1 shall not, however, (i) constitute a waiver, release or
impairment of any obligation evidenced or secured by this Agreement, the Note,
the Pledge Agreement or the other Loan Documents; (ii) impair the right of
Lender to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under this Agreement and the Pledge Agreement; (iii) affect
the validity or enforceability of any indemnity (including, without limitation,
those contained in Section 13.5 and Article 14 of this Agreement and the
Environmental Indemnity), guaranty, master lease or similar instrument made in
connection with this Agreement, the Note, the Pledge Agreement and the other
Loan Documents; (iv) impair the right of Lender to obtain the appointment of a
receiver; (v) impair the enforcement of the assignment of leases provisions
contained in the Pledge Agreement; or (vi) impair the right of Lender to obtain
a deficiency judgment or other judgment on the Note against Borrower or Borrower
Principal if necessary to obtain any Insurance Proceeds or Awards to which
Lender would otherwise be entitled under this Agreement; provided however,
Lender shall only enforce such judgment to the extent of the Insurance Proceeds
and/or Awards.
(b) Notwithstanding the provisions of this Section 15.1 to the contrary,
Borrower and Borrower Principal shall be personally liable to Lender on a joint
and several basis for Losses due to:
(i) fraud or intentional misrepresentation by Borrower, Borrower
Principal or any other Affiliate of Borrower or Borrower Principal in
connection with the execution and the delivery of this Agreement, the
Note, the Pledge Agreement, any of the other Loan Documents, or any
certificate, report, financial statement or other instrument or document
furnished to Lender at the time of the closing of the Loan or during the
term of the Loan;
(ii) Mortgage Borrower's, Senior Mezzanine Borrower's or Borrower's
misapplication or misappropriation of Rents received by Mortgage Borrower,
Senior Mezzanine Borrower or Borrower after the occurrence of an Event of
Default;
(iii) Mortgage Borrower's, Senior Mezzanine Borrower's or Borrower's
misapplication or misappropriation of tenant security deposits or Rents
collected in advance;
(iv) the misapplication or the misappropriation of Insurance
Proceeds or Awards;
(v) Borrower's, Senior Mezzanine Borrower's or Mortgage Borrower's
failure to pay Taxes, Other Charges (except to the extent that sums
sufficient to pay such amounts have been deposited in escrow with Mortgage
Lender pursuant to the terms of
- 87 -
the Mortgage Loan Agreement or with Lender pursuant to the terms hereof
and there exists no impediment to Mortgage Lender's or Lender's
utilization thereof), charges for labor or materials or other charges that
can create liens on the Property beyond any applicable notice and cure
periods specified herein;
(vi) Borrower's, Senior Mezzanine Borrower's or Mortgage Borrower's
failure to return or to reimburse Lender for all Personal Property taken
from the Property by or on behalf of Mortgage Borrower, Senior Mezzanine
Borrower or Borrower and not replaced with Personal Property of the same
utility and of the same or greater value;
(vii) the misappropriation by Mortgage Borrower, Senior Mezzanine
Borrower or Borrower of any Net Liquidation Proceeds or other amounts due
to Lender;
(viii) Borrower's, Senior Mezzanine Borrower's or Mortgage
Borrower's failure following any Event of Default to deliver to Lender
upon demand all Rents and books and records relating to the Property or
Collateral;
(ix) any act of intentional waste or arson by Mortgage Borrower,
Senior Mezzanine Borrower, Borrower, any principal, Affiliate, member or
general partner thereof or by Borrower Principal, any principal,
Affiliate, member or general partner thereof; or
(x) Borrower's, Senior Mezzanine Borrower's or Mortgage Borrower's
gross negligence or willful misconduct.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability against Borrower and Borrower Principal as set forth in
subsection (a) above SHALL BECOME NULL AND VOID and shall be of no further force
and effect and the Debt shall be fully recourse to Borrower, Senior Mezzanine
Borrower and Borrower Principal jointly and severally in the event of (i) a
default by Borrower or Borrower Principal of any of the covenants set forth in
Article 6, or a breach by Mortgage Borrower under Article 6 of the Mortgage Loan
Agreement, or a breach by Senior Mezzanine Borrower under Article 6 of the
Senior Mezzanine Loan Agreement, provided, however, that a breach of the
covenants set forth in Article 6 of this Agreement, Senior Mezzanine Loan
Agreement or the Mortgage Loan Agreement, as applicable, shall not result in
recourse liability hereunder unless such breach was material and, within fifteen
(15) days of notice from Lender, Borrower fails to cure such breach and fails to
deliver to Lender a new or revised substantive non-consolidation opinion, in
form and substance and from counsel reasonably satisfactory to Lender in
accordance with the Rating Agency standards for the same, to the effect that
such failure does not negate/impair the opinion previously delivered to Lender,
(ii) a default by Borrower or Borrower Principal with respect to any of the
covenants set forth in Article 7 hereof, or (iii) if (A) a voluntary bankruptcy
or insolvency proceeding is commenced by Borrower, Senior Mezzanine Borrower or
Mortgage Borrower, or (B) an involuntary bankruptcy or insolvency proceeding is
commenced against Borrower, Senior Mezzanine Borrower or Mortgage Borrower which
is not dismissed within ninety (90) days of filing (provided, however, that
Borrower and Borrower Principal shall not have recourse liability hereunder in
connection with any involuntary bankruptcy or insolvency proceeding unless such
involuntary proceeding is solicited, procured, consented to or acquiesced in by
Borrower, Senior
- 88 -
Mezzanine Borrower, Mortgage Borrower, Borrower Principal or any Affiliate of
the foregoing in bad faith collusion with an intent to circumvent the
prohibition on recourse liability against the Borrower or Borrower Principal set
forth herein).
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Pledge Agreement or to require that all collateral shall continue
to secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Pledge Agreement or the other Loan Documents.
(e) Notwithstanding any provisions of this Article 15 to the contrary, in
no event shall Borrower's failure to pay Operating Expenses in the event cash
flow is insufficient to pay such expenses be considered an act of waste.
(f) Notwithstanding any other provision hereof, in the event that of a
foreclosure under the Pledge Agreement, and the subsequent transfer of interests
in Mortgage Borrower to Lender, Borrower Principal shall be released from its
liabilities under this Article 15 with respect to any matters arising from
events occurring subsequent to the date of such transfer, as of the effective
date of such transfer of interests in Mortgage Borrower.
(g) The liability of the Borrower Principal and the Borrower under this
Section 15.1 shall be direct and immediate and not conditional or contingent
upon the pursuit of any remedies against Borrower or any other Person, nor
against the Collateral, and shall not be impaired or limited by any event,
including, without limitation, the following events, in each case whether
occurring with or without notice to the Borrower Principal or with or without
consideration:
(i) any extensions of time for performance required by any of the
Loan Documents or any extension or renewal of the Note;
(ii) any sale, assignment or foreclosure of the Note, the Pledge
Agreement or any of the other Loan Documents, the Mortgage Loan Documents
or the Senior Mezzanine Loan Documents or any sale or transfer of any or
all of the Collateral;
(iii) any Assumption or any other change in the composition of
Borrower including the withdrawal or removal of the Borrower Principal
from any current or future position of ownership, management or control of
Borrower;
(iv) the accuracy or inaccuracy of the representations made by
Borrower in any of the Loan Documents;
(v) the release of Borrower or of any other Person from performance
or observance of any of the agreements, covenants, terms or conditions
contained in any of the Loan Documents, Senior Mezzanine Loan Documents or
Mortgage Loan Documents by operation of law, Lender's voluntary act or
otherwise; or
(vi) the modification of the terms of any one or more of the Loan
Documents, Senior Mezzanine Loan Documents or the Mortgage Loan Documents.
- 89 -
Borrower Principal acknowledges that Lender would not make the Loan but for the
personal liability undertaken by the Borrower Principal in this Agreement. The
Borrower Principal agrees that it shall not demand or accept any payment from
Borrower in respect of any amounts owing or paid by the Borrower Principal
hereunder until one year and one day after such time as the Debt shall have been
paid in full.
ARTICLE XVI
NOTICES
Section 16.1. NOTICES
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, (b)
expedited prepaid overnight delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or by (c) telecopier (with
answer back acknowledged provided an additional notice is given pursuant to
subsection (b) above), addressed as follows (or at such other address and Person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section):
If to Lender: Bank of America, N.A.
Capital Markets Servicing Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
6th Floor
CA9-706-06-42
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Servicing Manager
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Bank of America Legal Department
GCIB/CMBS
NC1-007-20-01
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: ▇▇▇▇▇▇▇ Properties - 555 W. Fifth Junior Mezzanine, LLC/
▇▇▇▇▇▇▇ Properties - 808 S. Olive Junior Mezzanine, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Lammas, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 90 -
With a copy to: ▇▇▇, Castle & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: ▇▇▇▇▇▇▇ Properties, L.P.
Principal ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Lammas, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇, Castle & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
ARTICLE XVII
FURTHER ASSURANCES
Section 17.1. REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any other Loan Document which is not of public record: (i) with respect to
any Loan Document other than the Note, Borrower will issue, in lieu thereof, a
replacement of such other Loan Document, dated the date of such lost, stolen,
destroyed or mutilated Loan Document in the same principal amount thereof and
otherwise of like tenor and (ii) with respect to the Note, (a) Borrower will
execute a reaffirmation of the Debt as evidenced by such Note acknowledging that
Lender has informed Borrower that the Note was lost, stolen destroyed or
mutilated and that such Debt continues to be an obligation and liability of the
Borrower as set forth in the Note, a copy of which shall be attached to such
reaffirmation and (b) if requested by Lender, Borrower will execute a
replacement note and Lender or Lender's custodian (at Lender's option) shall
provide to Borrower Lender's (or Lender's custodian's) then standard form of
lost note affidavit and indemnity, which such form shall be reasonably
acceptable to Borrower.
Section 17.2. [INTENTIONALLY OMITTED]
Section 17.3. FURTHER ACTS, ETC. Borrower will, at the cost of Borrower,
and without expense to Lender, do, execute, acknowledge and deliver all and
every further acts, deeds, conveyances, deeds of trust, mortgages, assignments,
security agreements, control agreements, notices of assignments, transfers and
assurances as Lender shall, from time to time, reasonably
- 91 -
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property and rights hereby mortgaged, deeded,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Agreement or
for filing or registering of the Pledge Agreement, or for complying with all
Legal Requirements. Borrower, on demand, will execute and deliver, and in the
event it shall fail to so execute and deliver, hereby authorizes Lender to
execute in the name of Borrower or without the signature of Borrower to the
extent Lender may lawfully do so, one or more financing statements and financing
statement amendments to evidence more effectively, perfect and maintain the
priority of the security interest of Lender in the Collateral. Borrower grants
to Lender an irrevocable power of attorney coupled with an interest for the
purpose of exercising and perfecting any and all rights and remedies available
to Lender at law and in equity, including without limitation, such rights and
remedies available to Lender pursuant to this Section 17.3.
Section 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS
(a) If any law is enacted or adopted or amended after the date of this
Agreement which imposes a tax, either directly or indirectly, on the Debt or
Lender's interest in the Property or the Collateral, Borrower will pay the tax,
with interest and penalties thereon, if any. If Lender is advised by counsel
chosen by it that the payment of tax by Borrower would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury then Lender
shall have the option by written notice of not less than one hundred twenty
(120) days to declare the Debt immediately due and payable
(b) Borrower will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property or the Collateral, or any part thereof which
imposes a tax either directly or indirectly on the Debt or Lender's interest in
the Property or the Collateral, and no deduction shall otherwise be made or
claimed from the assessed value of the Property or the Collateral, or any part
thereof, for real estate or personal property tax purposes by reason of the
Mortgage, the Pledge Agreement or the Debt. If such claim, credit or deduction
shall be required by law, Lender shall have the option, by written notice of not
less than one hundred twenty (120) days, to declare the Debt immediately due and
payable.
(c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Pledge Agreement, or any of the other Loan Documents or
impose any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
Section 17.5. EXPENSES
Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender upon receipt of written notice from Lender for all reasonable
costs and expenses (including reasonable, actual attorneys' fees and
disbursements and the allocated costs of internal legal services and all actual
disbursements of internal counsel) reasonably incurred by Lender in accordance
with this Agreement in connection with (a) the underwriting and closing of the
Loan,
- 92 -
including, without limitation, expenses related to Lender's legal
representation, underwriting, third party reports, travel and site inspections,
interest rate hedging and other customary items (except with respect to a
Securitization, any costs and expenses related to which that are payable by
Borrower shall be as set forth in Article 13 hereof) and all the costs of
furnishing all opinions by counsel for Borrower (including without limitation
any opinions requested by Lender as to any legal matters arising under this
Agreement or the other Loan Documents with respect to the Property or the
Collateral); (b) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement, the
Pledge Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements; (c) following a
request by Borrower, Lender's ongoing performance and compliance with all
agreements and conditions contained in this Agreement, the Pledge Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (d) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Lender; (e) securing Borrower's compliance with any requests made
pursuant to the provisions of this Agreement; (f) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Lien in favor of Lender pursuant to this
Agreement, the Pledge Agreement and the other Loan Documents; (g) enforcing or
preserving any rights, in response to third party claims or the prosecuting or
defending of any action or proceeding or other litigation, in each case against,
under or affecting Borrower, this Agreement, the other Loan Documents, the
Collateral, or any other security given for the Loan; and (h) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or the
Collateral or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings; provided, however, that Borrower shall
not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.
ARTICLE XVIII
WAIVERS
Section 18.1. REMEDIES CUMULATIVE; WAIVERS
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or Borrower Principal pursuant to this Agreement or
the other Loan Documents, or existing at law or in equity or otherwise. Lender's
rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's
sole discretion. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy, right or power
may be exercised from time to time and as often as may be deemed expedient. A
waiver of one Default or Event of Default with respect to
- 93 -
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
Section 18.2. MODIFICATION, WAIVER IN WRITING
No modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement, or of the Note, or of any other Loan Document,
nor consent to any departure by Borrower or Borrower Principal therefrom, shall
in any event be effective unless the same shall be in a writing signed by the
party against whom enforcement is sought, and then such waiver or consent shall
be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to, or demand on
Borrower or Borrower Principal, shall entitle Borrower or Borrower Principal to
any other or future notice or demand in the same, similar or other
circumstances.
Section 18.3. DELAY NOT A WAIVER
Neither any failure nor any delay on the part of Lender in insisting upon
strict performance of any term, condition, covenant or agreement, or exercising
any right, power, remedy or privilege hereunder, or under the Note or under any
other Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
Section 18.4. TRIAL BY JURY
BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER
PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN
ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER, BORROWER
PRINCIPAL AND LENDER.
- 94 -
Section 18.5. WAIVER OF NOTICE
Borrower nor Borrower Principal shall not be entitled to any notices of
any nature whatsoever from Lender except with respect to matters for which this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower or Borrower Principal and except with
respect to matters for which Borrower or Borrower Principal is not, pursuant to
applicable Legal Requirements, permitted to waive the giving of notice. Borrower
and Borrower Principal hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Agreement or the other
Loan Documents do not specifically and expressly provide for the giving of
notice by Lender to Borrower or Borrower Principal.
Section 18.6. REMEDIES OF BORROWER
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower and Borrower Principal agree that neither Lender nor its agents shall
be liable for any monetary damages (except to the extent that Borrower or
Borrower Principal, as applicable, can prove Lender's bad faith or willful
misconduct), and Borrower's and Borrower Principal's sole remedies shall be
limited to commencing an action seeking injunctive relief or declaratory
judgment. The parties hereto agree that any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment. Lender agrees that, in such event, it shall cooperate in
expediting any action seeking injunctive relief or declaratory judgment.
Section 18.7. WAIVER OF MARSHALLING OF ASSETS
To the fullest extent permitted by law, Borrower and Borrower Principal,
each for itself and its successors and assigns, waives all rights to a
marshalling of the assets of Borrower, Senior Mezzanine Borrower, Mortgage
Borrower and other Persons with interests in Borrower or Mortgage Borrower, and
of the Property, Senior Mezzanine Collateral and the Collateral, and agrees not
to assert any right under any laws pertaining to the marshalling of assets, the
sale in inverse order of alienation, homestead exemption, the administration of
estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of the Collateral
for the collection of the Debt without any prior or different resort for
collection or of the right of Lender to the payment of the Debt out of the net
proceeds of the Collateral in preference to every other claimant whatsoever.
Section 18.8. WAIVER OF STATUTE OF LIMITATIONS
Borrower and Borrower Principal hereby expressly waive and release, to the
fullest extent permitted by law, the pleading of any statute of limitations as a
defense to payment of the Debt or performance of its other obligations set forth
in the Loan Documents.
- 95 -
Section 18.9. WAIVER OF COUNTERCLAIM
Borrower and Borrower Principal hereby waive the right to assert a
counterclaim, other than a compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents.
Section 18.10. GRADSKY WAIVERS
Borrower Principal hereby waives each of the following:
(a) Any rights of Borrower Principal of subrogation, reimbursement,
indemnification, and/or contribution against Borrower or any other person or
entity, and any other rights and defenses that are or may become available to
Borrower Principal or any other person or entity by reasons of Sections
2787-2855, inclusive of the California Civil Code;
(b) Any rights or defenses that may be available by reason of any election
of remedies by Lender (including, without limitation, any such election which in
any manner impairs, effects, reduces, releases, destroys or extinguishes
Borrower Principal's subrogation rights, rights to proceed against Borrower for
reimbursement, or any other rights of Borrower Principal to proceed against any
other person, entity or security, including but not limited to any defense based
upon an election of remedies by Lender under the provisions of Section 580(d) of
the California Code of Civil Procedure or any similar law of California or of
any other State or of the United Sates); and
(c) Any rights or defenses Borrower Principal may have because its
obligations under this Agreement (the "BORROWER PRINCIPAL OBLIGATIONS") are
secured by the Collateral. These rights or defenses include, but are not limited
to, any rights or defenses that are based upon, directly or indirectly, the
application of Section 580a, Section 580b, Section 580d or Section 726 of the
California Code of Civil Procedure to the Borrower Principal Obligations.
The provisions of this subsection (c) mean, among other things:
(y) Lender may collect from Borrower Principal without first
foreclosing on the Collateral; and
(z) If Lender forecloses on the Collateral:
(1) The Borrower Principal Obligations shall not be
reduced by the price for which the Collateral is sold at the
foreclosure sale or the value of the Collateral at the time of the
sale.
(2) Lender may collect from Borrower Principal even if
Lender, by foreclosing on the Collateral, has destroyed any right of
Borrower Principal to collect from Borrower. Further, the provisions
of this Agreement constitute an unconditional and irrevocable waiver
of any rights and defenses Borrower Principal may have because
Borrower's obligations are secured by the Collateral. These rights
and defenses, include, but are not limited to, any rights or
defenses based upon Section
- 96 -
580a, Section 580b, Section 580d or Section 726 of the California
Code of Civil Procedure.
ARTICLE XIX
GOVERNING LAW
Section 19.1. CHOICE OF LAW
This Agreement shall be deemed to be a contract entered into pursuant to
the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York.
ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER OR THE BORROWER
PRINCIPAL ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS (OTHER THAN ANY ACTION IN RESPECT OF THE CREATION, PERFECTION OR
ENFORCEMENT OF A LIEN OR SECURITY INTEREST CREATED PURSUANT TO ANY LOAN
DOCUMENTS NOT GOVERNED BY THE LAWS OF THE STATE OF NEW YORK) MAY BE INSTITUTED
IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK. BORROWER AND BORROWER
PRINCIPAL HEREBY (i) IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, AND (ii) IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
Section 19.2. SEVERABILITY
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 19.3. PREFERENCES
Lender shall have the continuing and exclusive right to apply or reverse
and reapply any and all payments by Borrower to any portion of the obligations
of Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any Creditors Rights
Laws, state or federal law, common law or equitable cause, then, to the extent
of such payment or proceeds received, the obligations hereunder or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender.
- 97 -
ARTICLE XX
MISCELLANEOUS
Section 20.1. SURVIVAL
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
Section 20.2. LENDER'S DISCRETION
Whenever pursuant to this Agreement, Lender exercises any right given to
it to approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.
Section 20.3. HEADINGS
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 20.4. COST OF ENFORCEMENT
In the event (a) that the Pledge Agreement is foreclosed in whole or in
part, (b) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Mortgage Borrower or Borrower or any of its constituent
Persons or an assignment by Mortgage Borrower or Borrower or any of its
constituent Persons for the benefit of its creditors, or (c) Lender exercises
any of its other remedies under this Agreement or any of the other Loan
Documents, Borrower shall be chargeable with and agrees to pay all costs of
collection and defense, including attorneys' fees and costs, incurred by Lender
or Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.
Section 20.5. SCHEDULES INCORPORATED
The Schedules annexed hereto are hereby incorporated herein as a part of
this Agreement with the same effect as if set forth in the body hereof.
- 98 -
Section 20.6. OFFSETS, COUNTERCLAIMS AND DEFENSES
Any assignee of Lender's interest in and to this Agreement, the Note and
the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 20.7. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES
(a) Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Collateral other than that of secured party,
pledgee or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
(c) The general partners, members, principals and (if Borrower is a trust)
beneficial owners of Borrower are experienced in the ownership and operation of
properties similar to the Property and the Collateral, and Borrower and Lender
are relying solely upon such expertise and business plan in connection with the
ownership and operation of the Property and the Collateral. Borrower is not
relying on Lender's expertise, business acumen or advice in connection with the
Property or the Collateral.
(d) Notwithstanding anything to the contrary contained herein, Lender is
not undertaking the performance of (i) any obligations under the Leases; or (ii)
any obligations with respect to such agreements, contracts, certificates,
instruments, franchises, permits, trademarks, licenses and other documents.
(e) By accepting or approving anything required to be observed, performed
or fulfilled or to be given to Lender pursuant to this Agreement, the Pledge
Agreement, the Note or the other Loan Documents, including, without limitation,
any officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
- 99 -
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
(f) Borrower recognizes and acknowledges that in accepting this Agreement,
the Note, the Pledge Agreement and the other Loan Documents, Lender is expressly
and primarily relying on the truth and accuracy of the representations and
warranties set forth in Article 4 of this Agreement without any obligation to
investigate the Property or the Collateral and notwithstanding any investigation
of the Property or the Collateral by Lender; that such reliance existed on the
part of Lender prior to the date hereof, that the warranties and representations
are a material inducement to Lender in making the Loan; and that Lender would
not be willing to make the Loan and accept this Agreement, the Note, the Pledge
Agreement and the other Loan Documents in the absence of the warranties and
representations as set forth in Article 4 of this Agreement.
Section 20.8. PUBLICITY
All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan,
Lender, Banc of America Securities LLC, or any of their Affiliates shall be
subject to the prior written approval of Lender, not to be unreasonably
withheld. After the closing of the Loan, Lender shall be permitted to make any
news, releases, publicity or advertising by Lender or its Affiliates through any
media intended to reach the general public which refers to the Loan, the
Property, the Collateral, Mortgage Borrower, Borrower, Borrower Principal and
their respective Affiliates without the approval of Borrower or any such
Persons. Borrower also agrees that Lender may share any information pertaining
to the Loan with Bank of America Corporation, including its bank subsidiaries,
Banc of America Securities LLC and any other Affiliates of the foregoing, in
connection with the sale or transfer of the Loan or any Participations and/or
Securities created.
Section 20.9. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE
In the event of any conflict between the provisions of this Agreement and
any of the other Loan Documents, the provisions of this Agreement shall control.
The parties hereto acknowledge that they were represented by competent counsel
in connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
- 100 -
Section 20.10. ENTIRE AGREEMENT
This Agreement and the other Loan Documents contain the entire agreement
of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties,
whether oral or written between Borrower and Lender are superseded by the terms
of this Agreement and the other Loan Documents.
Section 20.11. CERTAIN ADDITIONAL RIGHTS OF LENDER (VCOC)
(a) Notwithstanding anything which may be contained in this Agreement to
the contrary, so long as the Loan is outstanding, Lender shall have:
(i) the right to designate any party to receive payment of all fees,
costs and expenses otherwise payable to Lender under this Agreement or the
other Loan Documents;
(ii) the right to consult with and advise Borrower's management
regarding the significant business activities and business and financial
developments of Borrower, provided, however, that such consultations shall
not include discussions of environmental compliance programs or disposal
of hazardous substances. Consultation meetings should occur on a regular
basis (no less frequently than quarterly) with Lender having the right to
call special meetings at any reasonable times;
(iii) the right to examine the books and records of Borrower, at any
time upon reasonable notice;
(iv) the right to receive the financial reports as provided in
Section 5.11 of this Agreement;
(v) the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to restrict financing to be
obtained in connection with future property transactions, refinancing of
any acquisition financings, and unsecured debt;
(vi) the right, without restricting any other right of Lender under
this Agreement (including any similar right), to restrict, upon the
occurrence of an Event of Default, Borrower's payments of management
consulting or similar fees to affiliates of Borrower (or their personnel),
other than in accordance with the express terms of the Management
Agreement;
(vii) the right, without restricting any other rights of Lender
under this Agreement (including any similar right), to approve any
operating budget and/or capital expenditures of Borrower that (A) vary by
more than 15% from the expenses set forth in the related approved Annual
Budget and/or approved capital plan for the immediately preceding fiscal
year or (B) when added to all prior operating and capital expenditures for
the year, exceed 15% of aggregate budgeted operating and capital
expenditures set forth in the related approved Annual Budget and/or
approved capital plan for the immediately preceding fiscal year;
- 101 -
(viii) the right, without restricting any other rights of Lender
under this Agreement (including any similar right), upon the occurrence
and during the continuance of an Event of Default, to vote the owners'
interests in Borrower pursuant to irrevocable proxies granted, at the
request of Borrower in advance for this purpose; and
(ix) the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to restrict the transfer to
voting interests in Borrower held by its members or partners (as the case
may be), and the right to restrict the transfer of interests in such
member or partner (as the case may be), except for any transfer that is
expressly permitted hereunder.
(b) The rights granted in this Section 20.11 may be exercised by any
entity which owns and controls directly or indirectly substantially all of the
interests in Lender.
Section 20.12. LIABILITY. If Borrower consists of more than one Person,
the obligations and liabilities of each such Person hereunder shall be joint and
several. This Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns forever.
Section 20.13. CONTRIBUTION
(a) As a result of the transactions contemplated by this Agreement, each
Borrower will benefit, directly and indirectly, from each Borrower's obligation
to pay the Debt and perform its obligations hereunder and under the other Loan
Documents (collectively, the "OBLIGATIONS") and in consideration therefore each
Borrower desires to enter into an allocation and contribution agreement among
themselves as set forth in this Section 20.13 to allocate such benefits among
themselves and to provide a fair and equitable agreement to make contributions
among each of Borrowers in the event any payment is made by any individual
Borrower hereunder to Lender (such payment being referred to herein as a
"CONTRIBUTION," and for purposes of this Section 20.13 , includes any exercise
of recourse by Lender against any Collateral of a Borrower and application of
proceeds of such Collateral in satisfaction of such Borrower's obligations, to
Lender under the Loan Documents).
(b) Each Borrower shall be liable hereunder with respect to the
Obligations only for such total maximum amount (if any) that would not render
its Obligations hereunder or under any of the Loan Documents subject to
avoidance under Section 548 of the U.S. Bankruptcy Code or any comparable
provisions of any State law.
(c) In order to provide for a fair and equitable contribution among
Borrowers in the event that any Contribution is made by an individual Borrower
(a "FUNDING BORROWER"), such Funding Borrower shall be entitled to a
Reimbursement Contribution ("REIMBURSEMENT CONTRIBUTION") from all other
Borrowers for all payments, damages and expenses incurred by that Funding
Borrower in discharging any of the Obligations, in the manner and to the extent
set forth in this Section 20.13 .
(d) For purposes hereof, the "BENEFIT AMOUNT" of any individual Borrower
as of any date of determination shall be the net value of the benefits to such
Borrower and its Affiliates from extensions of credit made by Lender to (i) such
Borrower and (ii) to the other Borrowers
- 102 -
hereunder and the Loan Documents to the extent such other Borrowers have
guaranteed or mortgaged their property to secure the Obligations of such
Borrower to Lender.
(e) Each Borrower shall be liable to a Funding Borrower in an amount equal
to the greater of (i) the (A) ratio of the Benefit Amount of such Borrower to
the total amount of Obligations, multiplied by (B) the amount of Obligations
paid by such Funding Borrower, or (ii) ninety-five percent (95%) of the excess
of the fair saleable value of the property of such Borrower over the total
liabilities of such Borrower (including the maximum amount reasonably expected
to become due in respect of contingent liabilities) determined as of the date on
which the payment made by a Funding Borrower is deemed made for purposes hereof
(giving effect to all payments made by other Funding Borrowers as of such date
in a manner to maximize the amount of such Contributions).
(f) In the event that at any time there exists more than one Funding
Borrower with respect to any Contribution (in any such case, the "APPLICABLE
CONTRIBUTION"), then Reimbursement Contributions from other Borrowers pursuant
hereto shall be allocated among such Funding Borrowers in proportion to the
total amount of the Contribution made for or on account of the other Borrowers
by each such Funding Borrower pursuant to the Applicable Contribution. In the
event that at any time any Borrower pays an amount hereunder in excess of the
amount calculated pursuant to this Section 20.13 above, that Borrower shall be
deemed to be a Funding Borrower to the extent of such excess and shall be
entitled to a Reimbursement Contribution from the other Borrowers in accordance
with the provisions of this Section.
(g) Each Borrower acknowledges that the right to Reimbursement
Contribution hereunder shall constitute an asset in favor of Borrower to which
such Reimbursement Contribution is owing.
(h) No Reimbursement Contribution payments payable by a Borrower pursuant
to the terms of this Section 20.13 shall be paid until all amounts then due and
payable by all of Borrowers to Lender, pursuant to the terms of the Loan
Documents, are paid in full in cash. Nothing contained in this Section 20.13
shall limit or affect in any way the Obligations of any Borrower to Lender under
this Note or any other Loan Documents.
(i) Each Borrower waives:
(i) any right to require Lender to proceed against any other
Borrower or any other person or to proceed against or exhaust any security
held by Lender at any time or to pursue any other remedy in Lender's power
before proceeding against Borrower;
(ii) any defense based upon any legal disability or other defense of
any other Borrower, any guarantor of any other person or by reason of the
cessation or limitation of the liability of any other Borrower or any
guarantor from any cause other than full payment of all sums payable under
the Note, this Agreement and any of the other Loan Documents;
(iii) any defense based upon any lack of authority of the officers,
directors, partners or agents acting or purporting to act on behalf of any
other Borrower or any
- 103 -
principal of any other Borrower or any defect in the formation of any
other Borrower or any principal of any other Borrower;
(iv) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount
nor in any other respects more burdensome than that of a principal;
(v) any defense based upon any failure by Lender to obtain
collateral for the indebtedness or failure by Lender to perfect a lien on
any collateral;
(vi) presentment, demand, protest and notice of any kind;
(vii) any defense based upon any failure of Lender to give notice of
sale or other disposition of any collateral to any other Borrower or to
any other person or entity or any defect in any notice that may be given
in connection with any sale or disposition of any collateral;
(viii) any defense based upon any failure of Lender to comply with
Applicable Laws in connection with the sale or other disposition of any
collateral, including, without limitation, any failure of Lender to
conduct a commercially reasonable sale or other disposition of any
collateral;
(ix) any defense based upon any use of cash collateral under
Section 363 of the U.S. Bankruptcy Code;
(x) any defense based upon any agreement or stipulation entered
into by Lender with respect to the provision of adequate protection in any
bankruptcy proceeding;
(xi) any defense based upon any borrowing or any grant of a security
interest under Section 364 of the U.S. Bankruptcy Code;
(xii) any defense based upon the avoidance of any security interest
in favor of Lender for any reason;
(xiii) any defense based upon any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding, including any discharge of, or bar or stay against
collecting, all or any of the obligations evidenced by the Note or owing
under any of the Loan Documents; and
(xiv) any defense or benefit based upon Borrower's, or any other
party's, resignation of the portion of any obligation secured by the
Mortgage or the Pledge Agreement to be satisfied by any payment from any
other Borrower or any such party.
(j) Each Borrower waives:
(i) all rights and defenses arising out of an election of remedies
by Lender even though the election of remedies, such as non-judicial
foreclosure with respect to
- 104 -
security for the Loan or any other amounts owing under the Loan Documents,
has destroyed Borrower's rights of subrogation and reimbursement against
any other Borrower;
(ii) all rights and defenses that Borrower may have because any of
Debt is secured by real property. This means, among other things: (i)
Lender may collect from Borrower without first foreclosing on any real or
personal property collateral pledged by any other Borrower, (ii) if Lender
forecloses on any real property collateral pledged by any other Borrower,
(a) the amount of the Debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price, (b) Lender may collect from Borrower even
if any other Borrower, by foreclosing on the real property collateral, has
destroyed any right Borrower may have to collect from any other Borrower.
This is an unconditional and irrevocable waiver of any rights and defenses
Borrower may have because any of the Debt is secured by real property; and
(iii) except as may be expressly and specifically permitted herein,
any claim or other right which Borrower might now have or hereafter
acquire against any other Borrower or any other person that arises from
the existence or performance of any obligations under the Note, this
Agreement, the Pledge Agreement or the other Loan Documents, including,
without limitation, any of the following: (i) any right of subrogation,
reimbursement, exoneration, contribution, or indemnification; or (ii) any
right to participate in any claim or remedy of Lender against any other
Borrower or any collateral security therefor, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law.
[NO FURTHER TEXT ON THIS PAGE]
- 105 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
▇▇▇▇▇▇▇ PROPERTIES - 555 W. FIFTH JUNIOR
MEZZANINE, LLC,
a Delaware limited liability company
By: ▇▇▇▇▇▇▇ Properties, L.P., a Maryland
limited partnership, its sole member
By: ▇▇▇▇▇▇▇ Properties, Inc., a
Maryland corporation, its general
partner
By:
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ PROPERTIES - 808 S. OLIVE JUNIOR
MEZZANINE, LLC,
a Delaware limited liability company
By: ▇▇▇▇▇▇▇ Properties, L.P., a Maryland
limited partnership, its sole member
By: ▇▇▇▇▇▇▇ Properties, Inc., a
Maryland corporation, its general
partner
By:
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
BORROWER PRINCIPAL:
Acknowledged and agreed to with respect to
its obligations and waivers set forth in
Article 4, Article 13, Article 15 and
Article 18 hereof:
▇▇▇▇▇▇▇ PROPERTIES, L.P., a Maryland
limited partnership
By: ▇▇▇▇▇▇▇ Properties, Inc., a Maryland
corporation, its general partner
By:
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
LENDER:
BANK OF AMERICA, N.A., a national banking
association
By:
------------------------------
Name:
Title: