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EXHIBIT 10.72
Loan No.: 300071-8
Servicing No.: ________
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WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.,
as Lender
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LOAN AGREEMENT
dated as of October 30th, 1997
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THE GAUNTLET AT ▇▇▇▇▇▇ ▇▇▇▇, INC.
as Borrower
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TABLE OF CONTENTS
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RECITALS...................................................................................................... 1
ARTICLE I - DEFINITIONS...................................................................................... 1
Section 1.1 Definitions................................................................................... 1
Section 1.2 Other Definitional Provisions................................................................. 13
Section 1.3 Incorporation by Reference of Commitment...................................................... 14
ARTICLE II - THE LOAN........................................................................................ 14
Section 2.1 Loan Terms.................................................................................... 14
Section 2.2 Interest...................................................................................... 14
Section 2.3 Term.......................................................................................... 14
Section 2.4 Payments...................................................................................... 14
ARTICLE III - CONDITIONS PRECEDENT TO LOAN.................................................................... 14
Section 3.1 Loan Documents................................................................................ 14
Section 3.2 Brokerage Commissions......................................................................... 15
Section 3.3 Title Evidence................................................................................ 15
Section 3.4 Survey........................................................................................ 15
Section 3.5 Insurance..................................................................................... 15
Section 3.6 Authority Documents........................................................................... 15
Section 3.7 Financial Statements and Operating Statements................................................. 16
Section 3.8 Opinion....................................................................................... 16
Section 3.9 Compliance with Laws.......................................................................... 16
Section 3.10 Agreements.................................................................................... 16
Section 3.11 Taxes......................................................................................... 16
Section 3.12 Utilities..................................................................................... 16
Section 3.13 Reserve Accounts.............................................................................. 16
Section 3.14 Engineer's Report............................................................................. 17
Section 3.15 Certificate of Occupancy and-Other Permits.................................................... 17
Section 3.16 Environmental Assessment and O&M Program...................................................... 17
Section 3.17 Appraisal..................................................................................... 17
Section 3.18 Equity........................................................................................ 17
Section 3.19 Management Agreement.......................................................................... 17
Section 3.20 Special Purpose Entity........................................................................ 17
Section 3.21 Miscellaneous................................................................................. 17
ARTICLE IV - REPRESENTATIONS AND WARRANTIES................................................................... 18
Section 4.1 Existence; Compliance with Law................................................................ 18
Section 4.2 Equity Interests.............................................................................. 18
Section 4.3 Power; Authorization; Enforceable Obligations................................................. 18
Section 4.4 No Legal Bar.................................................................................. 19
Section 4.5 No Material Litigation........................................................................ 19
Section 4.6 No Default.................................................................................... 19
Section 4.7 Solvency; Fraudulent Conveyance............................................................... 19
Section 4.8 Special Purpose Entity........................................................................ 19
Section 4.9 Taxes......................................................................................... 20
Section 4.10 No Burdensome Restrictions.................................................................... 20
Section 4.11 Investment Company Act; Other Regulations..................................................... 20
Section 4.12 Subsidiaries.................................................................................. 20
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Section 4.13 Title to Premises............................................................................. 20
Section 4.14 Ownership of Personalty....................................................................... 21
Section 4.15 Financial Statements.......................................................................... 21
Section 4.16 No Change..................................................................................... 21
Section 4.17 Accuracy of Information....................................................................... 21
Section 4.18 Principal Place of Business................................................................... 21
Section 4.19 Taxpayer Identification Number................................................................ 22
Section 4.20 Insurance..................................................................................... 22
Section 4.21 Mechanic's Liens, etc......................................................................... 22
Section 4.22 Litigation.................................................................................... 22
Section 4.23 No Violation.................................................................................. 22
Section 4.24 ERISA......................................................................................... 22
Section 4.25 O&M Program................................................................................... 23
ARTICLE V - COVENANTS AND AGREEMENTS...................................................................... 23
Section 5.1 Affirmative Covenants of the Borrower......................................................... 23
Section 5.2 Negative Covenants of the Borrower............................................................ 29
Section 5.3 Environmental Covenants....................................................................... 30
Section 5.4 Recourse Covenants............................................................................ 32
Section 5.5 Insurance..................................................................................... 32
ARTICLE VI - RESERVE ACCOUNTS.............................................................................. 34
Section 6.1 Establishment of Reserve Accounts............................................................. 34
Section 6.2 Initial Reserve Deposits...................................................................... 34
Section 6.3 Monthly Reserve Deposits...................................................................... 34
Section 6.4 Adjustments to Monthly Reserve Deposit to the Replacement Reserve Account..................... 34
Section 6.5 Permitted Investments, Earnings, Charges and Annual Accounting................................ 35
Section 6.6 Assignment to the Lender of Reserve Accounts and Rights and Claims............................ 36
Section 6.7 Application of Reserve Accounts Upon an Event of Default...................................... 36
Section 6.8 Disbursements from Tax and Insurance Reserve Account.......................................... 37
Section 6.9 Disbursements from Repair Escrow Account and Replacement Reserve Account...................... 37
Section 6.10 Indemnification............................................................................... 40
ARTICLE VII - EVENTS OF DEFAULT; REMEDIES................................................................... 40
Section 7.1 Events of Default............................................................................. 40
Section 7.2 Remedies...................................................................................... 41
ARTICLE VIII - CASUALTY LOSSES; EMINENT DOMAIN............................................................... 42
Section 8.1 Repairs and Casualty Losses................................................................... 42
Section 8.2 Eminent Domain................................................................................ 42
Section 8.3 Application of Insurance Proceeds and Condemnation Awards..................................... 43
ARTICLE IX - GENERAL PROVISIONS............................................................................ 45
Section 9.1 Remedies Cumulative; Waivers.................................................................. 45
Section 9.2 Benefit....................................................................................... 45
Section 9.3 Assignment and Assumption..................................................................... 45
Section 9.4 Information................................................................................... 46
Section 9.5 Nonrecourse Loan; Exceptions.................................................................. 47
Section 9.6 Amendments.................................................................................... 47
Section 9.7 Governing Law and Jurisdiction................................................................ 47
Section 9.8 Savings Clause................................................................................ 47
Section 9.9 Execution in Counterparts..................................................................... 47
Section 9.10 Notices....................................................................................... 47
Section 9.11 Right of Set-Off.............................................................................. 48
Section 9.12 Written Agreement............................................................................. 48
Section 9.13 Waiver of Jury Trial.......................................................................... 49
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LOAN AGREEMENT
LOAN AGREEMENT, dated as of October, ____ 1997 (together with all
exhibits, schedules., riders and addenda hereto, which are hereby incorporated
herein, the "Loan Agreement" or "Agreement"), by and between THE GAUNTLET AT
▇▇▇▇▇▇ ▇▇▇▇, INC., a Virginia corporation (the "Borrower"), with its principal
place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; BRASSIE
GOLF CORPORATION, a Delaware corporation (the "Borrower Principals", whether
one or more); and WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware
corporation, with its principal offices in Vienna, Virginia (together with its
successors and assigns, the "Lender").
RECITALS:
The Borrower has applied to the Lender for a loan in the original
principal amount of $3,280.000.00 (the "Loan") to be made by the Lender pursuant
to the terms hereof.
The Loan will be secured by, among other things, a first priority lien
on Borrower's leasehold interest in the Land and in the Improvements, Personalty
and Rents and Profits.
The Lender is willing to make the Loan based on the terms and
conditions set forth in this Loan Agreement and subject to the execution and
delivery of each of the Loan Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Borrower
Principals and the Lender hereby agree as follows:
ARTICLE I - DEFINITIONS
SECTION 1.1 DEFINITIONS.
As used in this Agreement, the other Loan Documents, or any certificate
or other document made or delivered pursuant hereto, the capitalized terms used
herein shall, unless otherwise defined herein or therein, have the following
meanings:
Additional Repair(s) or Replacement(s). Any repairs, replacements or
improvements (other than Immediate Repairs or Replacements) (i) which are
advisable to keep the Premises in good order and repair and in good marketable
condition, or to prevent deterioration of the Premises, or (ii) for an Immediate
Repair or Replacement to the extent such Immediate Repair or Replacement exceeds
125% of the estimated cost of such Immediate Repair or Replacement as set forth
in Exhibit B hereto.
Affiliate(s). As to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control"
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when used with respect to any specified Person means the power to direct the
management and policies of such Person. directly or indirectly. whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" or "controlled" have meanings correlative to the foregoing.
Appraisal. An appraisal of the Premises prepared at the Borrower's
expense by a qualified appraiser designated by and satisfactory to the Lender,
in accordance with written instructions from the Lender, dated as of a date
acceptable to the Lender and otherwise satisfactory in form and substance to the
Lender.
Approved Insurer. An insurer previously approved by the
Lender with an A.M. Best Company, Inc. rating of A- or better, and
which is authorized to issue insurance in the State.
Assignment of Management Agreement. The Assignment and Subordination of
Management Agreement, dated as of even date herewith, executed by the Borrower,
the Lender and the property manager for the Premises.
Bankruptcy Event. As to any Person, the occurrence of any of the
following with respect to such Person: (i) a court or governmental agency having
jurisdiction over the Premises shall enter a decree or order for relief in
respect of such Person in an involuntary case under any applicable bankruptcy,
insolvency, reorganization, moratorium, sequestration, liquidation,
consolidation or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, conservator, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its property
or order the winding up or liquidation of its affairs; (ii) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect is commenced against a Person and such petition remains
unstayed and in effect for a period of sixty (60) consecutive days; (iii) such
Person shall commence a voluntary case under any applicable bankruptcy,
insolvency or similar law or make any general assignment for the benefit of
creditors; (iv) such Person shall admit in writing its inability to pay its
debts generally as they become due (otherwise than on a purely temporary basis),
or (v) such Person shall take any action in furtherance of any of the aforesaid
purposes.
Business Day. Any day other than a Saturday, a Sunday, a legal holiday
in Charlotte, North Carolina. or a day on which banking institutions located in
Charlotte, North Carolina are authorized by law or other governmental action to
close.
Certification. As to any specified report, Financial Statement,
Operating Statement, Rent Roll or other document, a written certification by a
Responsible Officer of the Person providing such report, Financial Statement,
Operating Statement, Rent Roll or other document that such report, Financial
Statement, Operating Statement, Rent Roll or other document, as at the date
thereof, (i) contains all of the information and statements required to be set
forth therein, (ii) that such information and statements are true and correct in
all material respects, (iii) that there is no untrue statement of a material
fact required to be stated therein, (iv) that there is no failure to state
therein any information or fact that is necessary to make the information or
statements contained therein, in light of the circumstances under which they are
made, not misleading, and
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(v) that there is no fact known to such Responsible Officer that materially
adversely affects any of the information or statements set forth therein.
Closing Date. The date set forth in the first paragraph of
this Loan Agreement.
Commitment. The Lender's commitment letter with respect to the Loan as
accepted by the Borrower and the Borrower Principals in accordance with the
terms thereof.
Default Condition. The occurrence or existence of an event or condition
which, upon the giving of notice or the passage of time, or both, would
constitute an Event of Default.
Eligible Account. An account that is either (i) maintained with a
depository institution whose commercial or finance paper or other similar
obligations are rated A-1 or better by Standard & Poor's or P-1 or better by
▇▇▇▇▇'▇, (ii) an account or accounts maintained with a depository institution
with a minimum long-term unsecured debt rating of BBB- or better by Standard &
Poor's or Baa3 or better by ▇▇▇▇▇'▇, provided that the deposits in such account
or accounts are fully insured by the Federal Deposit Insurance Corporation,
(iii) a segregated trust account maintained with the corporate trust department
of an institution with capital and surplus of not less than $50,000,000 and with
a minimum long-term unsecured debt rating of BBB- or better by Standard & Poor's
or Baa3 or better by ▇▇▇▇▇'▇, or (iv) an account otherwise acceptable to the
Lender.
Environmental Assessment. A report (including all drafts thereof) of an
environmental assessment of the Premises of such scope (including but not
limited to the taking of soil borings and air and groundwater samples and other
above and below ground testing) as the Lender may request, by a consulting firm
acceptable to the Lender, which shall, among other things, be dated as of a date
acceptable to the Lender and conform to (i) the current minimum standards for
the American Society of Testing and Materials, and (ii) the Lender's then
current requirements.
Environmental Covenant(s). Each of the covenants, agreements
and/or indemnities set forth in Section 5.3 of this Loan Agreement.
Equity Interests. Any and all shares, interests, participations and
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person not a corporation (including,
without limitation, general and limited partnership interests in a limited
partnership), and any and all warrants and options to purchase any of the
foregoing.
ERISA. The Employee Retirement Income Security Act of 1974.
Event of Default. The occurrence of any event or condition specified in
Section 7.1 of this Loan Agreement.
Financial Statement. As to any indicated Person, for any specified
period, financial statements of such Person, including, at a minimum, a current
balance sheet, a current income and expense statement, a statement showing
contingent liabilities and any other supporting
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schedules or documentation that the Lender may from time to time require, and,
in the case of the Borrower, a detailed cash flow statement for each property
and/or entity in which the Borrower has an interest, prepared in accordance with
GAAP (as defined herein). The cash flow statements provided shall include, as
applicable, the property and entity name, location, size (including the number
of rooms with respect to hotels and the number of licensed beds with respect to
healthcare facilities), and the percentage of ownership therein, its leasing and
occupancy status, its Operating Income (including the sources of Operating
Income), its Operating Expenses, its Net Operating Income, any loan balance
currently outstanding, the amount and beneficiary of any cash distributions, the
amount invested in and/or received from such property or entity; and detailed
cash flow projections for the next twelve (12) month period therefor. Each
Financial Statement shall include a Certification thereto.
Financing Statements. The UCC financing statements filed in order to
perfect the Lender's lien on certain personal property and fixtures as more
particularly described therein. The Financing Statements shall be on forms
approved for filing in the State and local filing offices of the State in which
any filings are necessary or, in the Lender's opinion desirable, to be made to
perfect the interests of the Lender granted under the Loan Documents, together
with the search results for such filing offices, including copies of all
reported financing statements.
GAAP. Generally accepted accounting principles, as from time-to-time in
effect in the United States of America, or such alternative accounting standard
as may be acceptable to the Lender, consistently applied.
Governmental Action. The issuance or probable or threatened issuance of
any claim, citation, notice of any pending or threatened suit, proceeding, order
or governmental inquiry or opinion involving the Premises that alleges the
violation of any Requirement of Law or Hazardous Materials Law.
Governmental Authorities. Any governmental (including health and
environmental) agency, office, officer or official whose consent or approval is
required as a prerequisite to the commencement of the construction, renovation
or expansion of the Improvements or to the operation and occupancy of the
Improvements or the Premises or to the performance of any act or obligation or
the observance of any agreement, provision or condition of whatsoever nature
herein contained.
Ground Lease. Each ground lease, if any, pursuant to which the Borrower
acquires an interest as ground lessee of any portion of the Premises.
Hazardous Materials. Includes petroleum and petroleum products,
flammable explosives, radioactive materials (excluding radioactive materials in
smoke detectors), polychlorinated biphenyls, lead, asbestos or asbestos
containing materials in any form that is or could become friable, hazardous
waste, toxic or hazardous substances or other related materials whether in the
form of a chemical, element, compound, solution, mixture or otherwise including,
but not limited to, those materials defined as "hazardous substances,"
"extremely hazardous substances," "hazardous chemicals," "hazardous materials,"
"toxic substances," "solid waste," "toxic chemicals." "air pollutants," "toxic
pollutants," "hazardous wastes," "extremely hazardous
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waste," or "restricted hazardous waste" by Hazardous Materials Law or regulated
by Hazardous Materials Law in any manner whatsoever, and all other "Hazardous
Materials", if any, identified in the Program Rider.
Hazardous Materials Law. All federal, state, and local laws, ordinances
and regulations and standards, rules, policies and other governmental
requirements and any court judgments applicable to the Borrower or to the
Premises relating to industrial hygiene or to environmental or unsafe conditions
or to human health including, but not limited to, those relating to the
generation, manufacture, storage. handling, transportation, disposal, release,
emission or discharge of Hazardous Materials, those in connection with the
construction, fuel supply, power generation and transmission, waste disposal or
any other operations or processes relating to the Premises, and those relating
to the atmosphere, soil, surface and ground water, wetlands, stream sediments
and vegetation on, under, in or about the Premises. "Hazardous Materials Law"
also shall include, but not be limited to, the following laws, as amended as set
forth herein and as subsequently amended: (1) the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USCA 9601 et seq.; (2) the Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of
1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 USCA
6901 et seq.; (3) the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 USCA 1251 et seq.; (4) the Toxic Substances Control
Act, 15 USCA 2601 et seq.; (5) the Emergency Planning and Community
Right-to-Know Act of 1986, 42 ▇▇▇▇ ▇▇▇▇▇ et seq.; (6) the Clean Air Act, as
amended by the Clean Air Act Amendments, 42 USCA 7401 et seq.; (7) the National
Environmental Policy Act of 1969, 42 USCA 4321 et seq.; (8) the River and Harbor
Act of 1899, 33 USCA 401 et seq.; (9) the Endangered Species Act of 1973, 16
USCA 1531 et seq.; (10) the Occupational Safety and Health Act of 1970, 29 USCA
651 et seq.; (11) the Safe Drinking ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇ (▇) et seq.; and (12)
the Hazardous Materials Transportation Act, 49 USCA 1801 et seq., and all
regulations from time to time adopted in respect to the foregoing laws.
Immediate Repair(s). Those repairs, replacements and improvements
listed as "Immediate Repairs" on Exhibit B hereto.
Improvements. As defined in the Security Instrument.
Initial Reserve Deposit(s). Any amount required to be deposited into
any Reserve Account on or before the Closing Date in accordance with the terms
of this Loan Agreement, including without limitation, any initial deposit to any
Reserve Account identified on Exhibit B hereto or in the Program Rider.
Insurance. All of the following insurance coverages:
(i) Property Insurance. Insurance with respect to the
Improvements against any peril included within the classification "All
Risks of Physical Loss" with extended coverage in amounts at all times
sufficient to prevent it from becoming a co-insurer within the terms of
the applicable policies, but in any event such insurance shall be
maintained in an amount equal to the full insurable value of the
Premises and with
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deductibles acceptable to the Lender. The term "full insurable value"
as used herein shall mean the actual replacement cost of the Premises
(without taking into account any depreciation, and exclusive of
excavations, footings and foundations, landscaping and paving). The
policy must include an agreed value clause, which must be updated
annually.
(ii) Liability Insurance. Comprehensive general liability
insurance, including bodily injury, death and property damage
liability, dram shop coverage and umbrella liability insurance against
any and all claims, including all legal liability to the extent
insurable imposed upon the Lender and all court costs and attorneys'
fees and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Premises in
such amounts as the Lender may require but in no event for a combined
single limit of less than a $1,000,000.00 minimum (or a $3,000,000.00
000 minimum if the Premises contains one or more elevators) with a
$2,000, .00 minimum (or a $6,000,000-00 minimum if the Premises
contains one or more elevators) general aggregate limit. In the event
that any payment of proceeds is made under any umbrella liability
insurance policy, the Borrower shall immediately purchase additional
liability insurance coverage so that at all times there shall be no
less than a $1,000,000.00 minimum (or a $3,000,000.00 minimum if the
Premises contains one or more elevators) of liability insurance
coverage per occurrence with a $2,000,000.00 minimum (or a
$6,000,000.00 minimum if the Premises contains one or more elevators)
general aggregate limit.
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance (to the extent the risks to be covered thereby
are not already covered by other policies of insurance maintained by
it), with respect to any work on, about or regarding the Premises.
(iv) Business Interruption. Business interruption insurance
and/or insurance for loss of rental value (as determined by the Lender)
in an amount sufficient to avoid any co-insurance penalty and to
provide proceeds which will cover a period acceptable to the Lender in
its reasonable discretion.
(v) Boiler and Machinery Insurance. Broad form boiler and
machinery insurance covering all boilers and other pressure vessels,
machinery and equipment located in, on or about the Premises and
insurance against loss of occupancy or use arising from any such
breakdown in an amount equal to 100% of the actual replacement cost of
such machinery (without taking into account any depreciation) and
containing such deductibles as are acceptable to the Lender.
(vi) Flood Insurance. If all or any portion of the Premises
is located within a federally designated flood hazard zone, flood
insurance as is generally available and in such amounts and with such
deductibles as the Lender may reasonably require.
(vii) Other Insurance. Such other insurance (including,
without limitation, earthquake insurance, sinkhole insurance and
malpractice insurance) with respect to
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the Premises against loss or damage of the kinds from time to time
reasonably required by the Lender in connection with loans secured by
properties comparable to the Premises.
Intangible Personalty. As defined in the Security Instrument.
Land. As defined in the Security Instrument.
Lien. Any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance. lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
Loan Amount. The original principal amount of the Note.
Loan Document(s). This Loan Agreement, the Commitment, the Note, the
Security Instrument, the Financing Statements, the Assignment of Management
Agreement, and all other documents evidencing, securing or relating to the Loan.
Local Tenant Lease(s). Any lease representing (i) an interest in 20% or
less of the aggregate net rental square footage of the Premises or (ii) any
lease representing 5,000 sq. ft. or less; provided however, as to one or more
tenants that are Affiliates, all leases of such affiliated tenant shall be
aggregated and treated as one lease for purposes of determining whether such
leases are individually Local Tenant Leases, and if such leases, as aggregated,
exceed either limitation set forth above, then each lease shall be deemed not to
be a Local Tenant Lease.
Management Agreement. The written management agreement for the
Premises, in form and substance satisfactory to the Lender, by and between the
Borrower, as owner, and a management company acceptable to the Lender, as
manager.
Material Adverse Change. As to the specified Person, a material adverse
change in the business, operations, property, condition (financial or otherwise)
or prospects of such Person and. in addition. as to the Borrower, any material
adverse change in (i) the ability of the Borrower to perform its obligations
under this Loan Agreement or any of the other Loan Documents or (ii) the
validity or enforceability of this Loan Agreement or any of the other Loan
Documents or the rights or remedies of the Lender hereunder or thereunder.
Monthly Reserve Deposits. Any other monthly payment or deposit required
in connection with any Reserve Account, including without limitation, any
monthly payments or deposits to any Reserve Account identified in Exhibit B
hereto or in the Program Rider.
Net Operating Income. With respect to any specified period, (i)
Operating Income, minus (ii) Operating Expenses, each as calculated for such
period.
Note. The promissory note or notes of the Borrower in connection with
the Loan in favor of the Lender, as acknowledged and agreed to by the Borrower
Principals, together with all prior
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notes amended, modified, renewed, extended. restated, supplemented, replaced or
substituted thereby.
Note Payment Amount. For any Payment Date, the total amount
due and owing under the Note on such Payment Date.
O&M Program. An operations and maintenance program (in form and
substance satisfactory to the Lender) relating to the use, handling and/or
abatement of one or more Hazardous Materials and which is accepted in writing by
the Borrower.
Obligations. As to any stated Person, the unpaid principal of and
interest on any promissory note or other indebtedness of such Person (including,
without limitation, interest accruing after the maturity of any such promissory
note or indebtedness and interest accruing thereon after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to such Person, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) and all other
obligations and liabilities of such Person, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter incurred, whether
on account of principal, interest, reimbursement obligations, fees. indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel) or otherwise.
Operating Expenses. Any expense paid or to be paid by the Borrower (or
any of its agents or by the Lender on account or on behalf of the Borrower) at
any time in connection with the operation of the Premises, determined on an
accrual basis, in accordance with GAAP, including, without limitation, (i) fees,
costs and expenses related to tenant improvements required to be paid or
reimbursed under any lease or other agreement, (ii) all payments required to be
made pursuant to any management, franchise or other agreement, (iii)
undistributed expenses, including without limitation, general and
administrative, marketing, utilities, operations and maintenance and other
expenses, as appropriate, (iv) legal, accounting, appraisal and other
professional fees, costs and disbursements, including annual fees and other
amounts (including indemnity payments) payable annually or otherwise, (v) taxes,
insurance premiums and impositions of any type, (vi) replacement reserves, (vii)
fees, costs and expenses of the Lender (if any) paid by the Borrower, (viii) any
amount paid in connection with any interest rate contract or similar hedge, cap,
collar, floor or currency swap, and (ix) all items, if any, defined as an
Operating Expense in the Program Rider. Notwithstanding the foregoing, Operating
Expenses will not include (A) depreciation or amortization, (B) any expenses
that in accordance with GAAP should be capitalized (other than current charges
for any such expenses included in the preceding sentence), (C) the principal of
and interest on the Note and (D) any item of expense that would otherwise be
considered within Operating Expenses pursuant to the provisions above but which
is actually paid directly by any tenant or other Person as required by such
tenant's or Person's lease and/or other agreement.
Operating Income. All rents (net of concessions), charges, expense
recovery, revenues and other income (including interest income) paid or to be
paid (other than security deposits from tenants or other Persons under valid
leases or other agreements and insurance, eminent domain or similar proceeds and
rewards paid directly to the Lender pursuant to the provisions of
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the Loan Agreement) at any time to the Borrower (or to any of its agents for the
account of the Borrower) by any Person in connection with the operation of the
Premises, determined on a cash basis. in accordance with GAAP, and all items, if
any, defined as Operating Income in the Program Rider.
Operating Statement. As to the Premises, for any period indicated, a
statement of the Borrower. as reflecting, truly and accurately, the items set
forth therein as at the date thereof, showing the Operation, Income and
Operating Expenses for the indicated period and including a statement as to the
amounts and sources of rent or other income collected and any other information
required by the Lender. Each Operating Statement shall include a Certification.
Payment Date. Each date any payment of principal or interest
on the Note is due and payable thereunder.
Permitted Encumbrances. As defined in the Security Instrument, together
with any Liens which have been bonded over (i) within thirty (30) days after the
date of filing thereof, (ii) with a bonding company satisfactory to the Lender,
(iii) in an amount satisfactory to the Lender, and (iv) otherwise in form and
substance satisfactory to the Lender, in each case, in the Lender's reasonable
discretion.
Permitted Investments. Any (i) direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
full faith and credit of the United States of America (including obligations
issued or held in book-entry form on the books of the Department of the Treasury
of the United States of America); (ii) commercial or finance paper or other
similar obligations rated at the time of purchase A- I or better by Standard &
Poor's or P- I or better by Moody's-, (iii) interest-bearing demand or time
deposits (including certificates of deposit) in any issuing bank or trust
company secured at all times, in the manner and to the extent provided by law,
by collateral security (described in clause (i) of this definition) of a market
value (valued at least quarterly) of no less than the amount of money so
invested; (iv) negotiable or non-negotiable certificates of deposit, time
deposits or other similar banking arrangements issued by any bank or trust
company with combined equity and surplus of no less than $1OO,000,000, having a
rating in either of the two highest rating categories by either Moody's or
Standard & Poor's or fully insured by the Federal Deposit Insurance Corporation;
(v) Eligible Account; and (vi) account or fund that is invested only in any of
the above; provided that such Permitted Investments shall mature on the Business
Day after the date of acquisition.
Person. An individual, a general or limited partnership, a limited
liability company, a limited liability partnership, a corporation, a business
trust, a joint stock company, a trust, an unincorporated association, a joint
venture, a Governmental Authority or other entity of whatever nature.
Personalty. The Tangible Personalty and the Intangible Personalty.
Premises. The collective reference to the Land, the Improvements and
the Tangible Personalty.
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Program Rider. The Program Rider attached as Exhibit D to
this Loan Agreement.
Prohibited Activities or Conditions. Causing or permitting, whether
directly or indirectly, (1) the presence, use, generation, manufacture,
production, processing, installation, release, discharge. storage (including
storage in above ground and underground storage tanks for petroleum or petroleum
products), treatment, handling, or disposal of any Hazardous Materials
(excluding the safe and lawful use and storage of quantities of Hazardous
Materials or petroleum products, customarily used in the ordinary operations of
the Borrower or customarily used in the ordinary operations of any tenant
previously approved by the Lender) on or under the Premises, or in any way
affecting the Premises or its value or which may form the basis for any present
or future claim. demand or action seeking cleanup of the Premises, (ii) the
transportation of any Hazardous Materials to or from the Premises (excluding the
safe and lawful use and storage of quantities of Hazardous Materials or
petroleum products, customarily used in the ordinary operations of the Borrower
or customarily used in the ordinary operations of any tenant previously approved
by the Lender), or (iii) any occurrence or condition on the Premises (or
exacerbation of the same) that is or may be in violation of Hazardous Materials
Law.
Recourse Covenant(s). Each of those covenants and/or agreements set
forth in Section 5.4 of this Loan Agreement.
Rent Roll. As to the Premises, a rent schedule in a form acceptable to
the Lender, certified by a Responsible Officer of the Borrower, showing the
legal and trade name of each tenant, and for each tenant, the gross and net
square feet occupied, the lease expiration date, the rent payable (both base
rent and additional rent), right of first refusal, options, rights to move
tenants, security deposits and any other information requested by the Lender
and, as to any annual Rent Roll, copies of paid tax receipts for the related
fiscal year. Each Rent Roll shall include a Certification.
Rents and Profits. As defined in the Security Instrument.
Repair Escrow Account. An Eligible Account established and maintained
pursuant to the terms of this Loan Agreement.
Replacement Reserve Account. An Eligible Account established and
maintained pursuant to the terms of this Loan Agreement.
Replacements. Those repairs, replacements or improvements listed as
"Replacements" on Exhibit B hereto.
Requirement(s) of Law. As to any Person, the organizational or
governing documents of such Person. and any statute, law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority (including, without limitation, all requirements relating to zoning,
parking, ingress and egress, building setbacks, or use of the Premises, all
Hazardous Materials Laws, the Architectural Barriers Act of 1968, the
Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, erosion
control ordinances, storm drainage control laws
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and doing business and/or licensing laws). in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
Reserve Account(s). The Repair Escrow Account, the Tax and Insurance
Reserve Account, the Replacement Reserve Account, and all other reserve and/or
escrow accounts established or required pursuant to the provisions of the Loan
Documents. including, without limitation, pursuant to the Program Rider.
Responsible Officer. As to any Person, the general partner (if the
general partner is not an individual, then the chief executive officer, the
chief financial officer or the president or similar individual of the general
partner), the chief executive officer, the chief financial officer or the
president or similar individual of such Person.
Security Instrument. The deed of trust, mortgage, deed to secure debt
or other instrument, dated as of even date herewith, executed by the Borrower
granting to the Lender a first priority lien or title priority on the Borrower's
leasehold estate in the land, the Improvements, the Tangible Personalty, the
Intangible Personalty and the Rents and Profits to secure the obligations of the
Borrower under the Loan Documents, together with all prior instruments amended.
modified, renewed, extended, restated, supplemented, replaced or substituted
thereby.
Significant Ownership Interest. Any of the following:
(i) if the entity is a general partnership or a joint
venture, (A) any partnership interest in the general partnership, or
(B) any interest of a joint venturer in the joint venture;
(ii) if the entity is a limited partnership, (A) any limited
partnership interest in the entity which, together with all other
limited partnership interests in the entity sold, assigned,
transferred, pledged, encumbered or otherwise disposed of since the
Closing Date exceeds 49% of all of the limited partnership interests in
the entity, or (B) any general partnership interest in the entity;
(iii) if the entity is a limited liability company or limited
liability partnership, any membership interest which, together with all
other membership interests in the limited liability company or limited
liability partnership sold, assigned, transferred, pledged, encumbered
or otherwise disposed of since the Closing Date exceeds 49% of all of
the membership interests in the limited liability company or limited
liability partnership;
(iv) if the entity is a corporation, any voting stock in the
corporation which, together with all other voting stock of the
corporation sold, assigned, transferred, pledged, encumbered or
otherwise disposed of since the Closing Date exceeds 49% of all of the
voting stock of the corporation; and/or
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(v) if the entity is a trust, any beneficial interest in
such trust which, together with all other beneficial interests
in the trust sold, assigned, transferred, pledged, encumbered or
otherwise disposed of since the Closing Date exceeds 49% of all of the
beneficial interests in the trust.
Special Purpose Entity. An entity whose structure and organizational
and governing documents are in form and substance acceptable to the Lender and
which satisfies all of the following requirements:
(i) it conducts its business solely in its own name through
its duly authorized officers or agents so as not to mislead others as
to the identity of the entity with which those others are concerned,
and particularly uses its best efforts to avoid the appearance of
conducting business on behalf of any Affiliate or that its assets are
available to pay the creditors of any Affiliate. Without limiting the
generality of the foregoing, all oral and written communications,
including, without limitation, letters, invoices, purchase orders,
contracts. statements and loan applications, are made solely in its
name;
(ii) it maintains its records and books of account separate
from those of its Affiliates;
(iii) it obtains proper authorization required by any
Requirement of Law of all action requiring such authorization;
(iv) it obtains proper authorization from its shareholders,
partners or members, as the case may be of all action requiring such
approval;
(v) it pays its Operating Expenses and liabilities from its
own funds;
(vi) its Financial Statements disclose the effects of its
transactions in accordance with GAAP, and disclose that its assets are
not available to pay creditors of any Affiliate,
(vii) its resolutions, agreements and other instruments
authorizing and underlying the transactions described in this Agreement
and in the other Loan Documents are maintained by it as its official
records, separately identified and held apart from the records of any
Affiliate;
(viii) it maintains an arm's-length relationship with its
Affiliates and does not hold itself out as being liable for the debts
of any Affiliate;
(ix) it keeps its assets and its liabilities wholly separate
from those of all other entities, including, but not limited to its
Affiliates except, in each case, as contemplated by the Loan Documents;
and
(x) its sole assets are the Premises, the Intangible
Personalty and the Rents and Profits.
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State. The state in which the Premises is located.
Subordination Agreement. A subordination, non-disturbance and
attornment agreement in form and substance acceptable to the Lender.
Survey . A survey of the Land and Improvements (as-built) made by a
civil engineer or surveyor, duly licensed or registered in the State, dated as
of a date acceptable to the Lender, containing a surveyor's certification
acceptable to the Lender for the benefit of the Borrower and the Lender (which
certification shall, among other things, indicate whether or not any of the Land
or Improvements are located within an area identified as having "special flood
hazards" as such term is used in the Flood Disaster Protection Act of 1973),
together with its successors and assigns. as their interests may appear, and
otherwise in form and substance acceptable to the Lender.
Tangible Personalty. As defined in the Security Instrument.
Tax and Insurance Reserve Account. An Eligible Account established and
maintained pursuant to the terms of this Loan Agreement.
Tenant Estoppel Certificate. A tenant estoppel certificate in form and
substance acceptable to the Lender.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) 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. The word "including" when used in this Agreement is intended
to be illustrative and not exclusive. Section, subsection, paragraph,
clause, exhibit, schedule, addendum and rider references contained in
this Agreement are references to sections, subsections, paragraphs,
clauses, exhibits, schedules, addenda and riders in or to this
Agreement unless otherwise specified. The captions herein are inserted
only as a matter of convenience and for reference and in no way define,
limit or describe the scope of this Loan Agreement nor the intent of
any provision hereof. The terms set forth herein are applicable to the
singular as well as the plural forms of such terms and to the masculine
as well as the feminine and neuter genders of such terms.
(b) All references in this Loan Agreement or any other Loan
Document to any Loan Document, agreement, contract, license, document
or instrument shall mean such Loan Document, agreement, contract,
license, document or instrument as amended, modified, renewed,
extended, restated, supplemented, reissued, and/or substituted from
time to time.
(c) All references or citations in this Loan Agreement or any
other Loan Document to any statute, law, treaty, rule, regulation or
other Requirement of Law shall mean such
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statute, law, treaty, rule. regulation or other Requirement of
Law as amended, modified, supplemented, replaced or substituted from
time to time.
SECTION 1.3 INCORPORATION B-Y REFERENCE OF COMMITMENT.
All of the terms and conditions of the Commitment are hereby
incorporated herein by reference. as if such terms and conditions were set forth
herein in their entirety, but in the event of any conflict or discrepancy
between the terms and/or conditions of this Loan Agreement and those of the
Commitment, the terms and conditions of this Loan Agreement shall control.
ARTICLE II - THE LOAN
SECTION 2.1 LOAN TERMS.
Subject to the terms and conditions of this Loan Agreement and the
other Loan Documents. the Lender agrees to make the Loan to the Borrower in the
principal sum of the Loan Amount, such borrowing to be evidenced by the Note and
the other Loan Documents.
SECTION 2.2 INTEREST.
The outstanding principal balance of the Loan shall bear interest, and
principal and interest shall be repayable, in accordance with the terms of the
Note.
SECTION 2.3 TERM.
The Loan shall be due and payable in full, unless accelerated sooner
pursuant to the terms of this Loan Agreement, on the maturity date set forth in
the Note.
SECTION 2.4 PAYMENTS.
All payments by the Borrower under the Loan shall be made in accordance
with the terms of the Note.
ARTICLE III - CONDITIONS PRECEDENT TO LOAN
The obligation of the Lender to make the Loan is subject to the
Lender's satisfaction, by proper evidence, execution and/or delivery to the
Lender of each of the following items, each in form and substance satisfactory
to the Lender and the Lender's counsel:
SECTION 3.1 LOAN DOCUMENTS.
Each of the Loan Documents.
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SECTION 3.2 BROKERAGE COMMISSIONS.
All brokerage commissions, finder's fees or similar compensation in
connection with the purchase of the Premises (if all or any portion of the
Premises is being purchased with Loan proceeds), the making of the Loan, or the
transactions contemplated by the Loan Documents have been paid in full.
SECTION 3.3 TITLE EVIDENCE.
An original signed title commitment in form and substance satisfactory
to the Lender, for a standard ALTA mortgagee policy as to the Borrower's
leasehold estate in the Land from a company or from companies approved by the
Lender (including any reinsurance agreements and endorsements required by the
Lender), providing coverage for the full principal amount of the Loan.
containing such coverages and endorsements as may be required by the Lender,
together with copies of all recorded documents creating exceptions to such
policy.
SECTION 3.4 SURVEY.
Two (2) originals of the Survey.
SECTION 3.5 INSURANCE.
Each policy of insurance required by this Loan Agreement is in full
force and effect on the Closing Date.
SECTION 3.6 AUTHORITY DOCUMENTS.
(a) Organizational Documents. As applicable, a certified copy
of each limited partnership agreement, limited partnership certificate,
partnership agreement, articles of incorporation, bylaws, shareholder
agreements, articles of organization and operating agreement of the
Borrower and each Borrower Principal (when not an individual), and each
general partner, member or shareholder of the Borrower and each
Borrower Principal (when not an individual), with all amendments,
modifications, supplements and restatements thereto.
(b) Assumed Name Certificate. A certified copy of each assumed
name certificate, if any, of the Borrower and each Borrower Principal
(when not an individual).
(c) Good Standing Certificates. Good standing certificates, or
their equivalent, issued by the Secretary of State and all other
appropriate offices of the state organization of the Borrower and each
Borrower Principal (when not an individual) and evidence satisfactory
to the Lender of the Borrower's and each such Borrower Principal's
authorization to do business in the State if the state of the
Borrower's and each such Borrower Principal's organization is other
than the State.
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(d) Resolutions and Consents. Certified resolutions and/or
consents authorizing the Borrower and each Borrower Principal (when not
an individual) to enter into the Loan Documents.
SECTION 3.7 FINANCIAL STATEMENTS AND OPERATING STATEMENTS.
Financial Statements of the Borrower and each Borrower Principal as of
the end of the most recent fiscal year, together with Operating Statements for
the period from the beginning of the current fiscal year and ending on a date
not more than thirty (30) days prior to the Closing Date.
SECTION 3.8 OPINION.
An opinion of independent counsel to the Borrower in form and substance
acceptable to the Lender, dated as of the Closing Date.
SECTION 3.9 COMPLIANCE WITH LAWS.
The Premises and the Intangible Personalty, and the intended uses
thereof, are in compliance with all Requirements of Law.
SECTION 3.10 AGREEMENTS.
Certified copies of all operating agreements, ground leases, franchise
agreements, service contracts. purchase contracts, management agreements, labor
contracts, license agreements and equipment leases, if any, relating to the
Borrower's ownership and/or use and operation of the Premises.
SECTION 3.11 TAXES.
The Land and the Improvements are separately assessed for tax purposes,
together with tax parcel identification numbers, tax rates, estimated tax values
and the identities of the taxing authorities.
SECTION 3.12 UTILITIES.
The availability and suitability of the water, storm water, electric,
oil, natural gas, sewer and telephone utilities needed to properly service the
Premises in its intended use.
SECTION 3.13 RESERVE ACCOUNTS.
The establishment of each Reserve Account with balances equal to any
Initial Reserve Deposit thereto required by this Loan Agreement (including the
Program Rider) or any of the other Loan Documents.
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SECTION 3.14 ENGINEER'S REPORT.
An engineer's report from an engineer approved by the Lender and dated
as of a date acceptable to the Lender, which report shall, among other things,
(a) conform to all requirements of the Lender and (b) certify that the Premises
is in compliance with all applicable requirements of the Americans with
Disabilities Act of 1990.
SECTION 3.15 CERTIFICATE OF OCCUPANCY AND-OTHER PERMITS.
Such certificates of occupancy, permits and licenses as the Lender may
require to evidence that the Premises is suitable for occupancy and use.
SECTION 3.16 ENVIRONMENTAL ASSESSMENT AND O&M PROGRAM.
An Environmental Assessment of the Premises. The Borrower shall furnish
and adopt an O&M Program with respect to all Hazardous Materials, if any,
identified in such Environmental Assessment or as otherwise required by the
Lender.
SECTION 3.17 APPRAISAL.
An Appraisal.
SECTION 3.18 EQUITY.
The Borrower's equity as of the Closing Date is acceptable to the
Lender.
SECTION 3.19 MANAGEMENT AGREEMENT.
A certified copy of the Management Agreement for the Premises in form
and substance satisfactory to the Lender. The Management Agreement and all
management fees thereunder shall be subordinate to the Loan.
SECTION 3.20 SPECIAL PURPOSE ENTITY.
The Borrower is a Special Purpose Entity.
SECTION 3.21 MISCELLANEOUS.
All other documents or items set forth in the Commitment (including all
supplemental and special conditions included in the Commitment) or otherwise
required by the Lender.
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loan,
the Borrower and. where specifically indicated, each Borrower Principal hereby
represents and warrants to the Lender (for itself, but not otherwise) on the
Closing Date as follows:
SECTION 4.1 EXISTENCE; COMPLIANCE WITH LAW.
The Borrower and each Borrower Principal (when not an individual) (a)
is duly organized. validly existing and in good standing under the laws of the
Jurisdiction of its organization. (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessor and to conduct the business IN which it is currently engaged. (c) is duly
qualified to do business in and is in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law.
SECTION 4.2 EQUITY INTERESTS.
The owners (beneficial and otherwise) of all of the Equity Interests in
the Borrower and each Borrower Principal (when not an individual) are as set
forth in Exhibit A and have been duly authorized, are validly issued and
outstanding, fully paid and non-assessable. There are no outstanding options or
other rights pertaining to the Equity Interests in the Borrower and each
Borrower Principal (when not an individual), and no voting trust or similar
agreement affecting either ownership of or the right to vote such Equity
Interests (except for those items detailed in the Borrower's or such Borrower
Principal's partnership or operating agreement or certificate of incorporation).
SECTION 4.3 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
The Borrower and each Borrower Principal (when not an individual) has
all requisite legal power and authority, and the legal fight, to make, deliver
and perform each Loan Document to which it is. or is to be, a party and to
borrow hereunder, and has taken all necessary corporate, partnership or company
action (as the case may be) to authorize the execution, delivery and performance
of each Loan Document to which it is, or is to be, a party and TO authorize the
borrowings on the terms and conditions of this Agreement and THE Note. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of any Loan Document, except to the
extent specified in any such Loan Document. Each Loan Document has been (or will
be) duly executed by, and delivered on behalf of the Borrower and the Borrower
Principals, as the case may be. Each Loan Document constitutes (or when executed
and delivered will constitute) the legal, valid and binding obligation,
enforceable against the Borrower and the Borrower Principals. as the case may
be, in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, sequestration,
liquidation. consolidation or similar laws affecting the enforcement of
creditors' rights generally
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and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
SECTION 4.4 NO LEGAL BAR.
The execution. delivery and performance of the Loan Documents will not
violate any Requirement of Law applicable to the Borrower and the Borrower
Principals or any contractual obligation, security, agreement, instrument,
license or other undertaking by which the Borrower or any Borrower Principal is
bound and will not result in, or require, the creation or imposition of any Lien
on any of their properties or revenues pursuant to any such Requirement of Law
or contractual obligation, security, agreement, instrument, license or other
undertaking.
SECTION 4.5 NO MATERIAL LITIGATION.
No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending, to the knowledge of the Borrower and the
Borrower Principals, threatened against any of them or any of their properties
or revenues or with respect to any Loan Document or any of the transactions
contemplated thereby, or which could reasonably be expected to have a Material
Adverse Change.
SECTION 4.6 NO DEFAULT.
Neither the Borrower nor any Borrower Principal is in default, under or
with respect to any contractual obligation, security, agreement, instrument,
license or other undertaking by which the Borrower or such Borrower Principal is
bound which is in excess of $10,000. No Default Condition or Event of Default
has occurred and is continuing.
SECTION 4.7 SOLVENCY; FRAUDULENT CONVEYANCE.
The Borrower and each Borrower Principal is solvent and will not be
rendered insolvent by the transactions contemplated hereby and, after giving
effect to such transactions, will not be left with an unreasonably small amount
of capital with which to engage in its business. Neither the Borrower nor any
Borrower Principal intends to incur, or believes that it has incurred, debts
beyond its ability to pay such debts as they mature. Neither the Borrower nor
any Borrower Principal has commenced or filed nor contemplates the commencement
or filing of any bankruptcy, insolvency, reorganization, moratorium,
sequestration, liquidation, consolidation or similar proceedings or the
appointment of a receiver, liquidator, assignee, conservator, trustee,
sequestrator or similar official in respect of it or any of its assets. The
amount of the Loan constitutes reasonably equivalent value and fair
consideration for the transfer to the Lender of the interest in the Premises
represented by the Security Instrument. Neither the Borrower nor any Borrower
Principal is transferring any interest in the Premises with any intent to
hinder, delay or defraud any of its creditors.
SECTION 4.8 SPECIAL PURPOSE ENTITY.
The Borrower is a Special Purpose Entity.
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SECTION 4.9 TAXES.
The Borrower and each Borrower Principal, respectively, has filed or
caused to be filed all tax returns which are required to be filed and has paid
all taxes shown to be due and payable on said returns and on any assessments
made against it and any of its property and, to its knowledge all other taxes,
fees and other charges imposed on it and any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on its books). No tax Lien
has been filed, and, to its knowledge, no claim is being asserted, with respect
to any such tax, fee or other charge which, in either case, could reasonably be
expected to have a Material Adverse Change.
SECTION 4.10 NO BURDENSOME RESTRICTIONS.
Neither the Borrower nor any Borrower Principal is a party to or
subject to any contractual obligation. security, agreement, instrument, license
or other undertaking by which the Borrower or such Borrower Principal is bound
(other than the Loan Documents) which could have a Material Adverse Change on
the business, properties, assets, operations or condition, financial or
otherwise, of it. or on the ability of it to carry out its obligations hereunder
or under the other Loan Documents.
SECTION 4.11 INVESTMENT COMPANY ACT; OTHER REGULATIONS.
Neither the Borrower nor any Borrower Principal is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended. Neither the Borrower
nor any Borrower Principal is subject to regulation under any Requirement of Law
which limits its ability to incur Obligations, other than as set forth herein or
in the other Loan Documents.
SECTION 4.12 SUBSIDIARIES.
The Borrower has no Subsidiaries.
SECTION 4.13 TITLE TO PREMISES.
The Borrower is seized of the Land and Improvements (and any fixtures)
in fee, or is the owner of a leasehold interest in the Land and Improvements
(and any fixtures) pursuant to a Ground Lease, and has marketable title to any
appurtenant easements and has the right to convey the same, that title to such
property is free and clear of all encumbrances except for the Permitted
Encumbrances, and that it will warrant and defend the title to such property
(except for the Permitted Encumbrances) against the claims of all Persons. As to
the balance of the Premises, the Rents and Profits and the Intangible
Personalty, the Borrower represents and warrants that it has marketable title to
such property, that it has the right to convey such property and that it will
warrant and defend such property against the claims of all persons or parties.
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SECTION 4.14 OWNERSHIP OF PERSONALTY.
The Borrower owns, subject to no Lien other than the Lien of the
Security Instrument and the other Loan Documents, as appropriate, all of the
Personalty.
SECTION 4.15 FINANCIAL STATEMENTS.
As of the date of the most recent Financial Statement furnished to the
Lender, neither the Borrower nor any Borrower Principal had any material (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services, as evidenced by bonds, notes or other similar instruments or
agreements, (b) obligations as a lessee under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases, (c) obligations
under direct or indirect guaranties in respect of, or any obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or any obligations of
another of the kind referred to in clause (a) or (b) above, (d) contingent
liability or liability for taxes, or (e) long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not, to the extent
required by GAAP, reflected in the foregoing statements or in the notes thereto.
No sale, transfer or other disposition by the Borrower or any Borrower Principal
of any material part of its business or property has occurred since the date of
such party's most recent Financial Statement furnished to the Lender.
SECTION 4.16 NO CHANGE.
There has been no development or event which has had or could
reasonably be expected to have a Material Adverse Change (a) with respect to the
Borrower or any Borrower Principal since the date of such party's most recent
Financial Statement furnished to the Lender, or (b) with respect to Borrower's
leasehold interest in the Land, the Premises or any portion of the Intangible
Personalty since the date of the most recent Operating Statements furnished to
the Lender.
SECTION 4.17 ACCURACY OF INFORMATION.
(a) Each exhibit, Financial Statement, Operating Statement, Rent Roll,
document, book, record, report and other item of written information furnished
by the Borrower or the Borrower Principals, as the case may be, to the Lender in
connection with the Loan Documents is accurate as of its date and as of the date
so furnished and (b) all financial projections contained therein are based on
reasonable and stated assumptions, and no such document contains any material
misstatement of fact or omits to state a material fact.
SECTION 4.18 PRINCIPAL PLACE OF BUSINESS.
The Borrower's principal place of business and chief executive office
is at the location get forth in the first paragraph of this Loan Agreement and
it has not operated under any name other than its own name at any time from the
date of its formation.
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SECTION 4.19 TAXPAYER IDENTIFICATION NUMBER.
The Borrower's taxpayer identification number is as set forth in the
Note.
SECTION 4.20 INSURANCE.
The Borrower does not know of and has not received any written notice
of any violation of any insurance policy term that remains uncured and, to its
best knowledge, it and the Premises and the use thereof materially comply with
all insurance policy terms.
SECTION 4.21 MECHANIC'S LIENS, ETC.
Except as have been paid for in full by the Borrower on or before the
Closing Date or as shall be paid prior to delinquency in the ordinary course of
the Borrower's business, no improvements or repairs have been made to the
Premises during the one hundred twenty (120) days preceding the date hereof;
there are no contracts not fully performed, and no outstanding bills incurred,
for labor or materials used in making improvements or repairs on the Premises,
or for services of architects, surveyors or engineers incurred in connection
therewith. The Borrower has made no contract or arrangement of any kind
whatsoever, the performance of which by the other party thereto could give rise
to a Lien on the Premises superior to that of the Security Instrument.
SECTION 4.22 LITIGATION.
There are no pending or threatened actions, proceedings, suits,
judgments, bankruptcies or executions that in any way involve the Borrower, the
Loan Documents or any Borrower Principal, and the Borrower is not a surety on
any bond through which a Lien might be created superior to any conveyance
executed by the Borrower.
SECTION 4.23 NO VIOLATION.
The Borrower is not in violation of any Requirement of Law or any
Hazardous Materials Law and has not received notice of and has no knowledge of
any Governmental Action.
SECTION 4.24 ERISA.
(a) The Borrower is not an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, (b) the assets of
the Borrower do not constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. ss.2510.3-101, (c) neither the Borrower nor any of its
general partners, members or shareholders, as the case may be, have any trust or
custodial relationship with the Lender or any affiliate of the Lender with
respect to any ERISA plan. and (d) neither the Borrower nor any general partner,
member or shareholder of the Borrower is a participant in any governmental plan
that has a trust or custodial relationship with the Lender or any affiliate of
the Lender. The Borrower (i) is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (ii) transactions by or with the Borrower are not
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subject to Requirements of Law regulating investments of and fiduciary
obligations with respect to government plans.
SECTION 4.25 O&M PROGRAM.
The Borrower has adopted an O&M Program with respect to all Hazardous
Materials, if any. identified in the Environmental Assessment furnished to the
Lender prior to the Closing Date or as otherwise required by the Lender.
ARTICLE V - COVENANTS AND AGREEMENTS
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE BORROWER.
During any period in which the Loan is outstanding, the Borrower agrees
that it will:
(a) Use of Loan Funds. Cause all Loan proceeds to be used for
the purposes set forth in a loan closing statement approved by the
Lender and use all excess Loan proceeds disbursed to the Borrower only
for lawful business purposes permitted under the Borrower's
organizational documents. No part of the proceeds of the Loan will be
used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of such Board of Governors. If requested
by the Lender, the Borrower will furnish to the Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U. No part of the proceeds of the Loan
has been used in any manner that could result in a violation of
Regulations G, T, V or X of the Board of Governors of the Federal
Reserve System.
(b) Payment. Pay when due all sums owing to the Lender and
others in accordance with the terms of the Loan Documents.
(c) Fees, Costs and Expenses. Pay when due all fees, costs and
expenses required to be paid by the Borrower pursuant to the terms of
the Commitment or any of the other Loan Documents, including without
limitation, reasonable attorneys fees and other fees, costs and
expenses of the Lender in connection with the enforcement of the
Lender's rights under the Loan Documents. Any such amounts paid by the
Lender shall be due and payable upon demand.
(d) Condition of Premises. Keep and maintain the Premises in
good order, condition and repair and shall make, as and when the same
shall become necessary, all repairs and maintenance necessary or
appropriate in order to keep the Premises from deteriorating.
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(e) Compliance. Comply with all (i) building, zoning, fire,
health, environmental, disability and use laws (including, but not
limited, to all state and local handicapped access laws, the
Architectural Barriers Act of 1968, the Fair Housing, Amendments Act of
1988, the Rehabilitation Act of 1973, the Americans with Disabilities
Act of 1990 and similar laws and ordinances), codes, ordinances, rules
and regulations, (ii) covenants and restrictions of record and (iii)
easements which are in any way applicable to the Premises or any part
thereof and the use or enjoyment thereof.
(f) Inspection. Subject to the rights of any tenants of the
Premises under their leases, permit the Lender and/or its authorized
agents to enter upon the Premises during normal working hours and as
often as the Lender desires, for the purpose of inspecting the
Improvements specifically and the condition and operation of the
Premises generally. In connection therewith, the Borrower shall permit
the Lender and the Lender's representatives (including an independent
Person such as an engineer, architect, or inspector) or third parties
making Immediate Repairs, Replacements or Additional Repairs or
Replacements to enter onto the Premises during normal business hours
(subject to the rights of any tenants of the Premises under their
leases) to inspect the progress of any Immediate Repairs, Replacements
or Additional Repairs or Replacements and all materials being used in
connection therewith, to examine all plans, specifications and shop
drawings relating to such Immediate Repairs, Replacements or Additional
Repairs or Replacements which are or may be kept at the Premises, and
to complete any Immediate Repairs, Replacements or Additional Repairs
or Replacements. The Borrower agrees to cause all contractors,
subcontractors, agents, architects and inspectors reasonably to
cooperate with the Lender and the Lender's representatives or such
other Persons described above in connection with inspections or the
completion of Immediate Repairs, Replacements or Additional Repairs or
Replacements.
(g) Reimbursement. The Borrower agrees that if it shall fail
to pay when due any tax, assessment or charge levied or assessed
against the Premises, the Borrower's leasehold interest in the Land or
otherwise with respect to the Ground Lease or any utility charge,
whether public or private, or any insurance premium or if it shall fail
to procure the Insurance required hereunder and cause the delivery of
the insurance certificates as required herein, or if it shall fail to
pay any other charge or fee described herein, then the Lender, at its
option, may pay, procure or cause the delivery of the same. The
Borrower will reimburse the Lender upon demand for any sums of money
paid by the Lender pursuant to this Section, together with interest on
each such payment at the default rate set forth in the Note and all
such sums and interest thereon shall be secured hereby.
(h) Environmental Assessment. Provide to the Lender from
time-to-time, at the Borrower's sole fee, cost and expense, if the
Lender shall ever have reason to believe that any Hazardous Material
affects the Premises, or if any Governmental Action is made or
threatened, or if an Event of Default shall have occurred, an
Environmental Assessment, which Environmental Assessment shall have
been ordered by the Borrower within ten (10) days after the Lender's
request and which shall be delivered to the Lender promptly after the
date of the Lender's request. At all other times, the Lender may
request an Environmental Assessment to be provided by the Borrower at
the Lender's
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expense. The Borrower will cooperate with each consulting firm making
any Environmental Assessment and will promptly supply to the consulting
firm, from time to time upon request. all information available to the
Borrower to facilitate the completion of the Environmental Assessment.
If the Borrower falls to furnish the Lender within ten (10) days after
the Lender's request with a copy of an agreement with an acceptable
environmental consulting firm to provide such Environmental Assessment,
or if the Borrower fails to order such Environmental Assessment within
ten (10) days after the Lender's request, the Lender may cause any such
Environmental Assessment to be made at the Borrower's fee, cost,
expense and risk. The Lender may disclose to interested parties any
information the Lender ever has about the environmental condition or
compliance of the PremiSes, but shall be under no duty to disclose any
such information except as may be required by law. The Lender shall be
under no duty to make any Environmental Assessment of the Premises, and
in no event shall any such Environmental Assessment by the Lender be or
give rise to a representation that any Hazardous Material is or is not
present on the Premises, or that there has been or shall be compliance
with any Hazardous Materials Law, nor shall the Borrower or any other
Person be entitled to rely on any Environmental Assessment made by the
Lender or at the Lender's request. The Lender owes no duty of care to
protect the Borrower or any other Person against or to inform them of.
any Hazardous Material or other adverse condition affecting the
Premises.
(i) Appraisal. At all times during the term of the Loan,
cooperate with the Lender and use its best efforts to assist the Lender
in obtaining an Appraisal of the Premises, and will promptly supply to
the Lender, from time to time upon request, all information available
to the Borrower to facilitate the completion of the Appraisal. If any
Event of Default occurs, or if a casualty loss or governmental taking
occurs and results in insurance or eminent domain proceeds in excess of
$50,000.00, the Lender may, in its reasonable discretion, choose the
appraiser, but the Borrower shall be responsible for any fees payable
to said appraiser in connection with an Appraisal of the Premises.
Under all other circumstances, the appraiser performing any such
Appraisal shall be engaged by the Lender, and the Lender shall be
responsible for any fees payable to said appraiser in connection with
an Appraisal of the Premises.
(j) Surveys. Following any change in the exterior
configuration of the Premises or any rezoning affecting the Premises,
provide the Lender with such additional Surveys as requested by the
Lender.
(k) Other Tests. Promptly submit to the Lender copies of
reports of all physical tests at any time made on the Land, the
Improvements or the materials to be incorporated into the Improvements
and shall, at the Borrower's expense, cause to be made such additional
tests from time to time as the Lender may reasonably require after any
change in the Premises or receipt by the Lender of any such report.
(l) Taxes and Fees. Except as otherwise provided herein, pay
as they become due all taxes, general and special assessments, permit
fees, inspection fees, license fees, water and sewer charges, franchise
fees and equipment rents against it or the Premises,
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and the Borrower, upon request of the Lender, will submit to the Lender
receipts evidencing said payments.
(m) Financial Statements and Operating Statements. Furnish, or
cause to be furnished to the Lender. annual Financial Statements for
itself. Monthly Operating Statements shall be submitted to the Lender
when requested by the Lender and for any period during which any Event
of Default is continuing. Operating Statements shall be delivered to
the Lender within forty-five (45) days of the end of each of the
Borrower's fiscal quarters, and an annual Financial Statements shall be
submitted to the Lender within ninety (90) days of the Borrower's
fiscal year end in lieu of an Operating Statement for the Borrower's
fourth fiscal quarter. Without limiting any other rights available to
the Lender under this Loan Agreement or any of the other Loan
Documents, in the event the Borrower shall fail to timely furnish the
Lender any Financial Statement in accordance with this subsection, the
Borrower shall promptly pay to the Lender a penalty in the amount of $
1,000.00 for each such failure.
(n) Books and Records. Keep and maintain at all times at the
Premises, at the Borrower's address set forth herein, or at such other
place as the Lender may approve in writing, complete and accurate books
of accounts and records adequate to reflect correctly the results of
the operation of the Premises and copies of all written contracts,
leases and other instruments which affect the Premises (including, but
not limited to, all bills, invoices and contracts for utilities, waste
management service, telephone service and management services, rent
registrations and all materials filed with any Governmental Authority
where applicable). Such books, records, contracts, leases and other
instruments shall be subject to examination and inspection at any time
by the Lender upon reasonable prior notice.
(o) Further Assurances. The Borrower shall furnish or cause to
be furnished such further documentation or information (including
without limitation, amendments, replacements, corrections, deletions or
additions to the Loan Documents or any other materials furnished to the
Lender in connection with the Loan) which is (i) reasonably required to
enable the Lender to sell the Loan, or (ii) deemed necessary or
appropriate by the Lender in the exercise of its rights under any of
the Loan Documents or to perfect, protect. maintain, preserve, continue
and/or extend any Lien granted to the Lender under the Security
Instrument or any other Loan Document, provided, however, that the
Borrower shall not be required to do anything that (A) has the effect
of (I) changing the essential economic terms of the Loan set forth in
the Loan Documents or (II) imposing greater liability under the Loan
Documents, or (B) results in any substantial fee, cost or expense to
the Borrower. In addition, the Borrower shall furnish or cause to be
furnished such further documentation and information (including without
limitation, amendments, replacements, corrections, deletions and
additions to the Loan Documents and other materials furnished to the
Lender in connection with the Loan) deemed necessary or appropriate by
the Lender to correct patent mistakes in the Loan Documents, materials
relating- to title insurance policies and other insurance required
hereunder, and the funding- of the Loan, provided that any such further
documentation or information shall be at the sole fee, cost and expense
of the Lender.
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(p) Payment of Operating Expenses. Pay all Operating Expenses,
except to the extent that the Lender is obligated to pay any Operating
Expense on behalf of the Borrower from the Tax and Insurance Reserve
Account.
(q) Payment of Recurring, Capital Expenditures. Pay all
expenditures with respect to the Premises related to capital repairs,
replacements and improvements (other than Replacements) performed from
time to time.
(r) ERISA. Deliver to the Lender such certifications or other
evidence from time to time throughout the term of the Loan, as
requested by the Lender in its reasonable discretion, that (i) the
Borrower is not an "employee benefit plan," a "governmental plan"
and/or subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (ii) one or more of
the following circumstances is true:
(A) Less than twenty-five percent (25%) of all Equity
Interests in the Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. ss.2510.3- 101(f)(2); and/or
(B) The Borrower qualifies as an "operating company"
or a .,real estate operating company" within the meaning of 29
C.F.R. ss.2510.3-101(c) or (e).
(s) Actions and Proceedings. Promptly notify the Lender in
writing of any action or proceeding relating to any condemnation or
other taking, whether direct or indirect, of the Premises or any
portion thereof, or purporting to affect the Premises or the Borrower's
leasehold interests under any ground lease, any Loan Document or any
right of the Lender hereunder or thereunder. In each such action or
proceeding, the Borrower shall, unless otherwise directed by the Lender
in writing, appear in and prosecute or defend any such action or
proceeding. The Borrower hereby further authorizes the Lender, in the
Lender's reasonable discretion following notice to the Borrower, as
attorney-in-fact for the Borrower, to commence, appear in and
prosecute, in the Lender's or the Borrower's name, any action or
proceeding relating to any condemnation or other taking of the
Premises, whether direct or indirect, and to settle or compromise any
claim in connection with such condemnation or other taking.
(t) Completion of Immediate Repairs, Replacements and
Additional Repairs or Replacements.
(i) The Borrower shall commence the Immediate Repairs
immediately following the execution of this Agreement (or as
soon thereafter as weather reasonably shall permit) and shall
at all times thereafter diligently pursue the completion of
all Immediate Repairs. The Borrower shall complete all
Immediate Repairs no later than twelve (12) months after the
date of this Agreement. The Borrower covenants and agrees that
each of the Immediate Repairs, Replacements and Additional
Repairs or Replacements and all materials,
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equipment, fixtures, and any other item comprising a part of
any Immediate Repair, Replacement or Additional Repair or
Replacement shall be constructed, installed or completed, as
applicable, free and clear of all mechanic's, materialman's or
other liens (except for those liens existing on the date of
this Agreement which have been approved in writing by the
Lender).
(ii) If the Lender determines, in its reasonable
discretion, that Additional Repairs or Replacements are
advisable in order to keep the Premises in good order and
repair, the Lender may send the Borrower written notice of the
need for making such Additional Repairs or Replacements. The
Borrower shall promptly commence making such Additional
Repairs or Replacements. If the Borrower fails to commence
such Additional Repairs or Replacements within thirty (30)
days after such notice and diligently pursue completion of
such Additional Repairs or Replacements, such failure shall be
an Event of Default under this Loan Agreement, and, in
addition to all other rights the Lender may have under the
Loan Documents upon an Event of Default, the Lender may
contract with third parties to make such Additional Repairs or
Replacements and may in its sole discretion (A) apply the
funds in the Repair Escrow Account and/or Replacement Reserve
Account toward the labor and materials necessary to complete
such Additional Repairs or Replacements, and/or (B) demand
payment for such Additional Repairs or Replacements from the
Borrower.
(iii) In the event the Lender determines in its
reasonable discretion that any Immediate Repair, Replacement
or Additional Repair or Replacement has not been completed in
a workmanlike and timely manner, the Lender shall have the
option to withhold disbursement for such unsatisfactory
Immediate Repair, Replacement or Additional Repair or
Replacement and to proceed under existing contracts or to
contract with third parties to complete such Immediate Repair,
Replacement or Additional Repair or Replacement and to apply
the Repair Escrow Account or the Replacement Reserve Account
toward the labor and materials necessary to complete such
Immediate Repair, Replacement or Additional Repair or
Replacement to the reasonable satisfaction of the Lender,
without providing any prior notice to the Borrower.
(iv) In order to facilitate the Lender's completion
or making of the Immediate Repairs, Replacements or Additional
Repairs or Replacements, the Lender is granted the irrevocable
right to enter onto the Premises and perform any and all work
and labor necessary to complete or make the Immediate Repairs,
Replacements or Additional Repairs or Replacements and employ
watchmen to protect the Premises from damage, loss and/or
theft. All sums so expended by the Lender shall be deemed to
have been advanced to the Borrower and secured by the Security
Instrument and the other Loan Documents.
(v) All Immediate Repairs, Replacements and
Additional Repairs or Replacements shall comply with all
Requirements of Law and applicable insurance requirements
including, without limitation, applicable
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building codes, special use permits, environmental
regulations, and requirements of insurance underwriters.
(u) Program Rider. Comply with all covenants and agreements set forth
in the Program Rider.
SECTION 5.2 NEGATIVE COVENANTS OF THE BORROWER.
During any period in which the Loan is outstanding, the Borrower agrees
that it will not:
(a) Sale or Encumbrance of Personalty. Sell, encumber or otherwise
dispose of any of the Personalty except (i) to incorporate Tangible Personalty
into the Improvements or replace Tangible Personalty with goods of quality and
value at least equal to that replaced, or (ii) for the sale, disposal or use of
inventory, if any, in the ordinary course of the Borrower's business at the
Premises; provided, however, in the event the Borrower sells or otherwise
disposes of any of the Personalty, the Lender's security interest in the
proceeds of the Personalty shall continue pursuant to the Security Instrument
and the other Loan Documents, as appropriate.
(b) Construction. Construct or permit the construction of any
improvements on the Premises other than Immediate Repairs or Replacements or as
otherwise required hereunder or previously consented to in writing by the
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed.
(c) Change in Ownership; Identity of the Borrower. Permit any sale,
transfer, assignment or other disposition of, or grant or create any Lien on, a
Significant Ownership Interest in the Borrower, except by inheritance, devise,
bequest or by operation of law upon the death of a natural person. The Borrower
hereby acknowledges to the Lender that (i) the identity of the Borrower and the
expertise available to the Borrower were and continue to be material
circumstances upon which the Lender has relied in connection with, and which
constitute valuable consideration to the Lender for, the extending to the
Borrower of the indebtedness evidenced by the Note and (ii) any chanc,e in such
identity or expertise could materially impair or jeopardize the security for the
payment of the Note granted to the Lender by the Security Instrument and the
other Loan Documents, as appropriate.
(d) Prepayment of Rent. Accept any prepayment of rent or installments
of rent for more than two (2) months in advance without the prior written
consent of the Lender.
(e) No Other Name. Change its name or operate under any name other than
its name as set forth herein.
(f) No Restricted Payments. Make any payment or take any other action
constituting (i) any direct or indirect purchase or other acquisition by the
Borrower of Equity Interests of any other Person, or any direct or indirect
loan, advance (other than
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advances to employees for moving and travel expenses, drawing accounts
and expenditures in the ordinary course of business) or capital
contribution by the Borrower to any other Person, including all debt
and any Obligation of any sort, and/or (ii) a payment or prepayment on
account of, or the setting apart of assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of subordinated debt, either directly or indirectly,
whether in cash or in property or in obligations of any Person.
(g) No Waste or Abandonment. Suffer, permit or commit waste,
permit impairment or deterioration of, or abandon, the Premises or any
portion thereof. The Borrower will not itself, or pen-nit any tenant or
other Person to, remove, demolish or alter any improvement now existing
or hereafter erected on the Premises or any fixture, equipment or
machinery in or on the Premises except in connection with any Repair or
Replacement.
(h) Use of Premises. Except as required by applicable law, or
as otherwise permitted in writing by the Lender, allow any change in
the business use of all or any portion of Premises from the use thereof
as of the Closing Date.
SECTION 5.3 ENVIRONMENTAL COVENANTS.
(a) Not cause, permit or exacerbate any Prohibited Activities
or Conditions. The Borrower represents and warrants that it has not at
any time caused or permitted any Prohibited Activities or Conditions
except as set forth in the Environmental Assessment and that no
Prohibited Activities or Conditions exist or have existed on or under
the Premises. The Borrower shall take all appropriate steps to prevent
its employees, agents, and contractors, and any tenants from causing,
permitting, or exacerbating any Prohibited Activities or Conditions.
The Borrower shall not lease or allow the sublease or use of all or any
portion of the Premises to any tenant, subtenant or user that, in the
ordinary course of its business, would cause, permit, or exacerbate any
Prohibited Activities or Conditions, and all leases, subleases and use
agreements relating to the Premises shall contain provisions sufficient
to ensure that tenants, subtenants and users shall not cause, permit or
exacerbate any Prohibited Activities or Conditions.
(b) Comply in a timely manner with, and cause all employees,
agents, and contractors of the Borrower and any other persons present
on the Premises to so comply with, (i) any O&M Program now or hereafter
in effect during the term of the Loan, and (11) Hazardous Materials
Law, so as to minimize any economic loss to the Premises and the Loan.
The Borrower shall adopt an O&M Program with respect to any Hazardous
Materials identified in any Environmental Assessment or any
Governmental Action relating to the Premises, or as otherwise required
by the Lender with respect to the Premises. Any O&M Program shall be
performed by qualified contractors under the supervision of a
consulting engineer hired by the Borrower with the prior written
approval of the Lender which approval shall not be unreasonably
withheld, conditioned or delayed. All costs and expenses of any O&M
Program shall be paid by the Borrower, including without limitation the
charges of such contractors and consulting engineer and
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the Lender's fees, costs and expenses incurred in connection with the
monitoring and review of the O&M Program and the Borrower's performance
thereunder.
(c) Promptly notify the Lender in writing of: (i) any
Governmental Action it becomes aware of (ii) any claim made or
threatened by any third party against the Borrower. The Lender, or the
Premises relating to loss or injury resulting from any occurrence or
condition on the Premises or any other real property that could require
the removal from the Premises of any Hazardous Materials or cause any
restrictions on the ownership, occupancy, transferability or use of the
Premises under Hazardous Materials Law or (111) the occurrence of any
Prohibited Activities or Conditions. The Borrower shall cooperate with
any governmental inquiry, and shall comply with any governmental or
judicial order, request or directive which arises from any alleged
Prohibited Activities or Conditions; provided that with respect to
governmental requests or directives only, the Borrower may contest or
object to a good faith dispute regarding said request or directive if
the Borrower notifies the Lender in advance of said contest or
objection and as long as said contest or objection does not result in a
violation of law or fines assessed against the Premises.
(d) Pay promptly all costs and expenses incurred by the Lender
in connection with any Governmental Action, including but not limited
to costs of any environmental audits, studies, investigations or
remedial activities including but not limited to the removal of any
Hazardous Materials from the Premises. The Borrower also shall pay
promptly the costs of any environmental audits, studies, investigations
or the removal of any Hazardous Materials from the Premises required by
the Lender as a condition of its consent to any sale or transfer of all
or any part of the Premises or any interest therein or required by the
Lender following a reasonable determination by the Lender that there
may be Prohibited Activities or Conditions on or under the Premises.
Any such costs or expenses incurred by the Lender (including but not
limited to reasonable fees and expenses of attorneys and consultants,
whether incurred in connection with any judicial or administrative
process or otherwise) which the Borrower fails to pay promptly shall
become additional indebtedness secured by the Security Instrument.
(e) HOLD HARMLESS, DEFEND AND INDEMNIFY THE LENDER AND ITS
OFFICERS, DIRECTORS, TRUSTEES, EMPLOYEES, AGENTS, AFFILIATES (INCLUDING
ANY PARENT CORPORATION), SUCCESSORS AND ASSIGNS, FROM AND AGAINST ALL
PROCEEDINGS, CLAMS, DAMAGES, PENALTIES, FEES, COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION REASONABLE FEES AND EXPENSES OF ATTORNEYS
AND EXPERT WITNESSES, INVESTIGATORY FEES, AND CLEANUP AND REMEDIATION
EXPENSES, WHETHER INCURRED IN CONNECTION WITH ANY JUDICIAL OR
ADMINISTRATIVE PROCESS OR OTHERWISE), ARISING DIRECTLY OR INDIRECTLY
FROM (i) ANY BREACH OF ANY REPRESENTATION, WARRANTY, OR OBLIGATION OF
THE BORROWER CONTAINED IN THIS SECTION 5.3 OR (ii) THE PRESENCE OF
HAZARDOUS MATERIALS ON OR UNDER THE PREMISES OR ANY PROPERTY PROXIMATE
TO THE PREMISES OR ANY GOVERNMENTAL ACTION ALLEGING ANY SUCH PRESENCE,
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EXCEPT TO THE EXTENT THAT THE BORROWER CAN CONCLUSIVELY PROVE
BOTH THAT SUCH PRESENCE OR GOVERNMENTAL ACTION ALLEGING SUCH PRESENCE
WAS CAUSED SOLELY BY ACTIONS, CONDITIONS, OR EVENTS THAT OCCURRED AFTER
THE DATE THAT THE LENDER (OR ANY PURCHASER AT A FORECLOSURE SALE)
ACTUALLY ACQUIRED TITLE TO THE PREMISES AND THAT SUCH PRESENCE OR
GOVERNMENTAL ACTION ALLEGING SUCH PRESENCE WAS NOT CAUSED BY THE DIRECT
OR INDIRECT ACTIONS OF THE BORROWER OR ANY BORROWER PRINCIPAL, OR ANY
PARTNER, MEMBER, PRINCIPAL, OFFICER, DIRECTOR, TRUSTEE OR MANAGER OF
THE BORROWER OR ANY EMPLOYEE, AGENT, CONTRACTOR OR AFFILIATE OF THE
BORROWER OR ANY BORROWER PRINCIPAL. THE OBLIGATIONS AND LIABILITIES OF
THE BORROWER UNDER THIS SECTION 5.3(e) SHALL SURVIVE ANY TERMINATION,
SATISFACTION, ASSIGNMENT, ENTRY OF A JUDGMENT OF FORECLOSURE OR
DELIVERY OF A DEED IN LIEU OF FORECLOSURE OF THE SECURITY INSTRUMENT.
SECTION 5.4 RECOURSE COVENANTS.
Except as otherwise expressly permitted by the Loan Documents, during
any period in which the Loan is outstanding, the Borrower agrees that it will
not, without the prior written consent of the Lender:
(a) Sale, Transfer, Conveyance or Disposal. Permit any sale,
transfer, conveyance or other disposal of the Borrower's leasehold
interests under any ground lease, the Premises, the Rents and Profits
or the Intangible Personalty.
(b) Subordinate Financing and Liens. Engage in any subordinate
financing with respect to the Premises, the Rents and Profits or THE
Intangible Personalty or grant any consensual Liens against the
Borrower's leasehold interest under any ground lease the Premises, the
Rents and Profits or the Intangible Personalty.
(c) Special Purpose Entity. Fail to be a Special Purpose
Entity.
SECTION 5.5 INSURANCE.
(a) Maintenance of Insurance. The Borrower shall, at its sole
cost and expense, keeping full force and effect all Insurance. If the
Borrower fails to maintain any Insurance required by this Agreement,
the Lender may, at its option, procure such Insurance, and the Borrower
shall reimburse the Lender for the amount of all premiums paid by the
Lender thereon promptly upon demand by the Lender, with interest
thereon at the rate then provided by the Note from the date paid by the
Lender to the date of repayment, and such sum shall be a part of the
indebtedness secured by the Security Instrument. The Lender shall not
by the fact of approving, disapproving, accepting, preventing,
obtaining or failing, to obtain any Insurance, incur any liability for
or with respect to the amount of Insurance carried, the form or legal
sufficiency of insurance
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contracts, solvency of insurance companies, or payment or defense of
lawsuits, and the Borrower, for itself, hereby expressly assumes full
responsibility therefor and all liability, if any, with respect
thereto.
(b) Insurance with Respect to Immediate Repairs, Replacements
and Additional Repairs or Replacements. In addition to and to the
extent not covered by any Insurance required under the Loan Documents,
the Borrower shall provide or cause to be provided worker's
compensation insurance, builder's risk, and public liability insurance
and other insurance to the extent required under applicable law in
connection with a particular Immediate Repair, Replacement or
Additional Repair or Replacement reasonably required by the Lender.
(c) Approved Insurers. Each of the Borrower's insurers shall
be an Approved Insurer. If any of the Borrower's insurers shall at any
time cease to be an Approved Insurer, then within thirty (30) days
after notice from the Lender to the Borrower, the Borrower will obtain
replacement Insurance or additional Insurance issued by one or more
other Approved Insurers.
(d) Form of Insurance Policies; Endorsements. All policies for
Insurance shall be in such form and with such endorsements as are
comparable to the forms of and endorsements to the Borrower's insurance
policies in effect on the date hereof or otherwise in accordance with
commercially reasonable standards applied by prudent owners of similar
businesses in the general vicinity of the Premises and generally
acceptable to institutional lenders for comparable properties and
risks. All such policies shall name the Lender, and its successors and
assigns, as additional insureds, mortgagees and/or loss payees, as
deemed appropriate by the Lender, and shall provide that all proceeds
are payable to the Lender and shall contain: (i) a standard
"non-contributory mortgagee" endorsement or its equivalent relating,
inter alia, to recovery by the Lender notwithstanding the negligent or
willful acts or omissions of the named Borrower; (ii) to the extent
available at commercially reasonable rates, a waiver of subrogation
endorsement as to the Lender; (iii) an endorsement providing that no
policy shall be impaired or invalidated by virtue of any act, failure
to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by the Borrower, the Lender or any
other named insured, additional insured, mortgagee or loss payee,
except for the willful misconduct of the Lender knowingly in violation
of the conditions of such policy; (iv) an endorsement providing for a
deductible per loss of an amount not more than that which is
customarily maintained by prudent owners of similar businesses in the
general vicinity of the Premises; (v) a provision that such policies
shall not be canceled or amended, including, without limitation, any
amendment reducing the scope or limits of coverage, without at least
thirty (30) days prior written notice to the Lender in each instance,
and (vi) effective waivers by the insurer of all claims for insurance
premiums against any loss payees, additional insureds, mortgagees and
named insureds (other than the Borrower). Any insurance coverage
relating to the, Premises that is carried by the Borrower in excess of
the Insurance required hereunder shall name the Lender, and its
successors and assigns. as additional insureds, mortgagees and/or loss
payees, as appropriate, as provided herein. A certificate executed by
the Borrower's insurance
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consultant and other evidence of Insurance required by the Lender shall
be delivered to the Lender not less than ten (10) days prior to the
expiration date of any of the policies for Insurance required to be
maintained hereunder which certificate and other evidence shall certify
payment of applicable premiums for renewal and replacement policies.
The Borrower may effect any Insurance required hereunder through
blanket insurance policies. The Borrower shall deliver to the Lender
certified copies of all policies for Insurance which shall be taken out
upon the Premises while any part of the Loan shall remain unpaid.
(e) Compliance with Insurance Policy Terms. The Borrower shall
comply with all terms of policies for Insurance and shall not bring or
keep or permit to be brought or kept any article upon the Premises or
cause or permit any condition to exist thereon which would be
prohibited by or could invalidate any Insurance required hereunder.
ARTICLE VI - RESERVE ACCOUNTS
SECTION 6.1 ESTABLISHMENT OF RESERVE ACCOUNTS.
On or before the Closing Date, the Lender shall establish each Reserve
Account. Each Reserve Account shall be under the sole dominion and control of
the Lender.
SECTION 6.2 INITIAL RESERVE DEPOSITS.
On the Closing Date, the Borrower shall pay to the Lender for deposit
into each Reserve Account any Initial Reserve Deposit applicable to such Reserve
Account.
SECTION 6.3 MONTHLY RESERVE DEPOSITS.
On each Payment Date, the Borrower shall pay to the Lender for deposit
into each Reserve Account any Monthly Reserve Deposit applicable to such Reserve
Account. The Lender may, upon written request from the Borrower, waive any
requirement for the payment of a Monthly Reserve Deposit, provided however, that
any such waiver by the Lender of a requirement that the Borrower pay such
Monthly Reserve Deposit may be revoked by the Lender, in the Lender's sole
discretion, at any time upon notice in writing to the Borrower.
SECTION 6.4 ADJUSTMENTS TO MONTHLY RESERVE DEPOSIT TO THE REPLACEMENT
RESERVE ACCOUNT.
The Lender may, in the Lender's reasonable discretion, adjust the
Monthly Reserve Deposit to the Replacement Reserve Account from time to time to
an amount sufficient, in the Lender's reasonable judgment, to maintain adequate
balances necessary for Replacements, including, without limitation, Additional
Repairs or Replacements made pursuant to the terms of the Loan Agreement.
Notwithstanding the foregoing, in the event the Lender shall at any time
increase the Monthly Reserve Deposit to the Replacement Reserve Account over the
Monthly Reserve Deposit to the Replacement Reserve Account then required
pursuant to Exhibit B
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hereto, the Borrower, may at its election, request that the Lender obtain, at
the sole cost, fee and expense of the Borrower, an engineering report from an
engineer to be selected by the Lender in its reasonable discretion, in which
case the Monthly Reserve Deposit to the Replacement Reserve Account shall be
adjusted by the Lender based on such engineering report, provided that in no
event shall the Monthly Reserve Deposit to the Replacement Reserve Account be
decreased below the applicable amount set forth on Exhibit B hereto.
SECTION 6.5 PERMITTED INVESTMENTS, EARNINGS, CHARGES AND ANNUAL
ACCOUNTING.
(a) Permitted Investments. The Lender may invest and reinvest,
or cause to be invested or reinvested, all or any portion of any funds
on deposit in any Reserve Account in Permitted Investments. The
maturities of the Permitted Investments on deposit in any Reserve
Account shall be selected and coordinated to become due not later than
the day before any disbursements from any Reserve Account must be made.
All such Permitted Investments shall be held in the name and be under
the sole dominion and control of the Lender, to the extent permitted by
applicable laws, and no Permitted Investment shall be made unless the
Lender shall perfect its first priority Lien in such Permitted
Investment and, to the extent permitted by applicable laws, the Lender
shall have sole possession and control over each such Permitted
Investment and the income thereon, and any certificate or other
instrument or document evidencing any such investment shall be
delivered directly to the Lender, together with any document of
transfer necessary to transfer title to such investment to the Lender.
The Lender shall not have any liability (other than for the Lender's
gross negligence or willful misconduct) for any loss in investments of
funds in any Reserve Account that are invested in Permitted Investments
and no such loss shall affect the Borrower's obligation to (i) make any
payment hereunder, under the Security Instrument, the Note or any other
Loan Document, or (ii) fund, or have liability for funding, any Reserve
Account. The Borrower agrees that it shall include all interest,
earnings or profits on Permitted Investments of funds on deposit in any
Reserve Account as its income (and, if the Borrower is a partnership or
other pass-through entity, the partners, members or beneficiaries of
the Borrower, as the case may be), and shall be the owner of such
accounts for federal and applicable state and local tax purposes,
except to the extent the Lender retains such interest, earnings or
profits for its own account in accordance with the provisions of
Section 6.5(b) of this Loan Agreement. The Borrower shall have no right
whatsoever to direct the investment of the proceeds in any Reserve
Account.
(b) Earnings. All interest, earnings or profits on the
Permitted Investments of funds in any of the Reserve Accounts shall be
deposited into the applicable Reserve Account, provided that the Lender
may, at its election, retain for its own account any such interest,
earnings or profits (i) on the Tax and Insurance Reserve Account, and
(ii) on any or all of the Reserve Accounts during the occurrence and
continuance of an Event of Default.
(c) Charges. Except as prohibited by applicable laws, the
Lender may charge the Borrower for holding, maintaining and applying
funds in any of the Reserve Accounts to the extent funds on deposit in
such Reserve Account are invested or reinvested in
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Permitted Investments and the Lender does not retain for its own
account any interest. earnings or profits on such Reserve Account in
accordance with the provisions of Section 6.5(b) of this Loan
Agreement.
(d) Annual Accounting. The Lender shall furnish or cause to be
furnished to the Borrower, without charge, an annual accounting of each
Reserve Account in the normal format of the Lender or its agent,
showing credits and debits to such Reserve Account and the purpose for
which each debit to such Reserve Account was made.
SECTION 6.6 ASSIGNMENT TO THE LENDER OF RESERVE ACCOUNTS AND RIGHTS AND
CLAIMS.
(a) The Borrower hereby assigns to the Lender the Reserve
Accounts as additional security for all of the Borrower's Obligations
to the Lender, under the Note and under the other Loan Documents;
provided, however, the Lender shall make disbursements from the Reserve
Accounts in accordance with the terms of this Agreement. including
without limitation, the Program Rider.
(b) The Borrower assigns to the Lender all rights and claims
the Borrower may have against(i) all persons or entities claiming
amounts due for taxes, utilities, rent or insurance, or(ii) all persons
or entities supplying labor or materials in connection with the
Immediate Repairs, Replacements or Additional Repairs or Replacements;
provided, however, that the Lender may not pursue any such right or
claim unless an Event of Default exists under this Agreement or the
Loan Documents.
SECTION 6.7 APPLICATION OF RESERVE ACCOUNTS UPON AN EVENT OF DEFAULT.
If any Event of Default occurs, then the Borrower shall
immediately lose all of its rights to receive disbursements from the
Reserve Accounts unless and until the earlier to occur of or
concurrently with (a) the date on which such Event of Default is fully
cured, and (b) the date on which all amounts secured by the Security
Instrument and the other Loan Documents have been paid in full and the
lien of the Security Instrument and the other Loan Documents, as
appropriate, have been released by the Lender. Upon any Event of
Default, the Lender may in its sole discretion, use the Reserve
Accounts (or any portion thereof) for any purpose, including but not
limited to (i) repayment of any indebtedness secured by the Security
Instrument and the other Loan Documents, including but not limited to
principal prepayments and the prepayment premium applicable to such
full or partial prepayment (as applicable); provided, however, that
such application of funds shall not cure or be deemed to cure any Event
of Default, (ii) reimbursement of the Lender for all losses, fees,
costs and expenses (including, without limitation, reasonable legal
fees) suffered or incurred by the Lender as a result of such Event of
Default, (iii) payment of any amount expended in exercising all rights
and remedies available to the Lender at law or in equity or under this
Agreement or under any of the other Loan Documents, or (iv) to the
payment of any item for which payment is required or permitted from any
of the Reserve Accounts pursuant to the terms of this Loan Agreement.
Nothing in this Loan Agreement shall obligate the Lender to apply all
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or any portion of the Reserve Accounts on account of any Event of
Default by the Borrower or to pay the indebtedness secured by the
Security Instrument or any of the other Loan Documents or in any
specific order of priority.
SECTION 6.8 DISBURSEMENTS FROM TAX AND INSURANCE RESERVE ACCOUNT.
(a) The Lender shall disburse, to the extent of amounts on
deposit in the Tax and Insurance Reserve Account, directly to each
Person owed any portion of the water and sewer assessments and frontage
charges, taxes, assessments and insurance premiums, the total sum owed
to such Person. Such disbursements shall be made by the Lender (i) so
as to coincide in frequency with the regular billing cycle of such
Person, and (ii) on or before the date that each such payment is due.
(b) The Lender may require the Borrower to pay to the Lender
in advance, additional amounts for taxes, charges, premiums,
assessments, and impositions in connection with the Borrower or the
Premises which the Lender shall reasonably deem necessary. Unless
otherwise provided by applicable law, the Lender may require payments
for such other amounts to be paid by the Borrower in a lump sum or
periodic installments, at the Lender's option.
(c) If the amount held in the Tax and Insurance Reserve
Account at the time of the annual accounting thereof shall exceed the
amount deemed necessary by the Lender to provide for the payment of
water and sewer assessments and frontage charges, taxes, assessments,
impositions and insurance premiums, as they fall due, such excess shall
be credited against future Monthly Reserve Deposits to the Tax and
Insurance Reserve Account. If at any time the amount held in the Tax
and Insurance Reserve Account shall be less than the amount deemed
necessary by the Lender to pay water and sewer assessments and frontage
charges, taxes, assessments, impositions and insurance premiums. the
Borrower shall pay to the Lender any amount necessary to make up the
deficiency within thirty (30) days after notice from the Lender to the
Borrower requesting payment thereof.
(d) Upon payment in full of all amounts owed by the Borrower
under or otherwise secured by any of the Loan Documents, all remaining
amounts on deposit, if any. in the Tax and Insurance Reserve Account
shall be distributed to the Borrower.
SECTION 6.9 DISBURSEMENTS FROM REPAIR ESCROW ACCOUNT AND
REPLACEMENT RESERVE ACCOUNT.
(a) Upon written request from the Borrower and satisfaction of
the requirements set forth in this Loan Agreement, the Lender shall
disburse to the Borrower amounts from the Repair Escrow Account
necessary to reimburse the Borrower for the actual costs of Immediate
Repairs and shall disburse amounts from the Replacement Reserve Account
necessary to reimburse the Borrower for the actual costs of
Replacements (but, as to any Immediate Repair or Replacement, such
amount shall not exceed 125% of the original estimated cost of such
Immediate Repair and/or
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Replacement set forth on Exhibit B to this Loan Agreement, unless the
Lender agrees to such reimbursement).
(b) Upon written request from the Borrower, the Lender may, in
its discretion, disburse amounts from the Repair Escrow Account and/or
Replacement Reserve Account to reimburse the Borrower for the actual
cost of labor and materials associated with an Additional Repair or
Replacement. Each such request from the Borrower shall include a
statement regarding why such disbursement should be made. If the Under
determines that (i) such Additional Repair or Replacement is of the
type intended to be covered by this Agreement, (11) the costs for such
Additional Repair or Replacement are reasonable, (iii) the amount of
funds in the Repair Escrow Account and/or the Replacement Reserve
Account. as applicable, is sufficient to pay the Additional Repair or
Replacement and 125% of the then current estimated cost of completing
all remaining Immediate Repairs and Replacements, as applicable, and
(iv) all other conditions for disbursement under this Loan Agreement
have been met, then the Lender shall disburse funds from the Repair
Escrow Account and/or the Replacement Reserve Account, as applicable,
for such Additional Repair or Replacement in accordance with the
requirements of this Loan Agreement for Immediate Repairs and/or
Replacements.
(c) Each request for disbursement from the Repair Escrow
Account or Replacement Reserve Account shall be in a form specified or
approved by the Lender and shall set forth (i) the specific Immediate
Repairs, Replacements or Additional Repair or Replacement, as the case
may be, for which the disbursement is requested, (ii) the quantity and
price of each item purchased, if the Immediate Repair, Replacement or
Additional Repair or Replacement, as the case may be, includes the
purchase or replacement of specific items, (iii) the price of all
materials (grouped by type or category) used IN any Immediate Repair,
Replacement or Additional Repair or Replacement, as the case may be,
other than the purchase or replacement of specific items, and (iv) the
cost of all contracted labor or other services applicable to each
Immediate Repair, Replacement or Additional Repair or Replacement, as
the case may be, for which such request for disbursement is made. With
each request the Borrower shall certify that all Immediate Repairs,
Replacements or Additional Repairs or Replacements, as the case may be,
have been made in accordance with the requirements of this Loan
Agreement and all Requirements of Laws. Each request for disbursement
shall include (A) copies of invoices for all items or materials
purchased and all contracted labor or services provided, and (B) such
acknowledgements of payment, lien waivers and/or releases with respect
to the Immediate Repairs, Replacements and Additional Repairs or
Replacements for which disbursement is requested as the Lender may
require. In connection with each disbursement from the Repair Escrow
Account or the Replacement Reserve Account, as the case may be, the
Lender may require the Borrower to provide the Lender with an
endorsement to the Lender's title insurance policy showing that no
Liens have been placed against the Premises since the date of
recordation of the Security Instrument (other than Permitted
Encumbrances and any other Liens previously approved in writing by the
Lender, if any).
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(d) Except as provided in the following sentence, each request
for disbursement from the Repair Escrow Account or the Replacement
Reserve Account shall be made only after completion (as reasonably
determined by the Lender) of the Immediate Repair, Replacement or
Additional Repair or Replacement for which disbursement is requested.
If (1) the cost of the Immediate Repair, Replacement or Additional
Repair or Replacement exceeds the lesser of (A) 1% of the original Loan
Amount. or (B) $50,000.00, (ii) the written contract with respect to
such Immediate Repair, Replacement or Additional Repair or Replacement
requires periodic payment for such work pursuant to the terms thereof,
and (111) the Lender has approved in writing in advance such periodic
payments, then a request for reimbursement from the Repair Escrow
Account and/or Replacement Reserve Account may be made after completion
of a portion of the work under such contract, provided (1) the
materials for which the request is made are on site at the Premises and
are properly secured or have been installed in the Premises, (2) all
other conditions in this Loan Agreement for disbursement have been
satisfied, and (3) funds remaining in the Repair Escrow Account or the
Replacement Reserve Account, as the case may be, are, in the Lender's
reasonable judgment, sufficient to complete such Immediate Repair,
Replacement or Additional Repair or Replacement and all the other
Immediate Repairs and/or Replacements when required. The Lender, at its
option, may issue joint checks, payable to the Borrower and the
supplier, materialman, mechanic, contractor, subcontractor or other
party to whom payment is due in connection with any such periodic
payment for an Immediate Repair, Replacement or Additional Repair or
Replacement to be paid from the Repair Escrow Account or Replacement
Reserve Account, as the case may be.
(e) The Lender shall have no obligation to make any
disbursement from the Repair Escrow Account or the Replacement Reserve
Account more frequently than once in any month and (except in
connection with the final disbursement) in any amount less than the
lesser of (i) I% of the original Loan Amount or (ii) $5,000.00.
(f) Prior to any disbursement from the Repair Escrow Account
or the Replacement Reserve Account, the Lender may, at the Borrower's
expense, require an inspection by an appropriate independent qualified
professional reasonably selected by the Lender and a copy of a
certificate of completion by an independent qualified professional
reasonably acceptable to the Lender prior to the disbursement of any
amounts from the Repair Escrow Account or the Replacement Reserve
Account exceeding $25,000.00. The Borrower shall pay the Lender a
reasonable inspection fee not exceeding $ 1,000.00 for each such
inspection.
(g) The Lender shall not be obligated to make disbursements
from the Repair Escrow Account or the Replacement Reserve Account to
reimburse the Borrower for the costs of routine maintenance to the
Premises, tenant improvements or leasing commissions.
(h) Upon the earlier to occur of (i) the timely completion of
all Immediate Repairs in accordance with the requirements of this Loan
Agreement, as verified by the Lender in its reasonable discretion, or
(ii) the payment in full of all amounts owed by the
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Borrower under or otherwise secured by any of the Loan Documents, all
amounts remaining on deposit, if any, in the Escrow Repair Account
shall be distributed to the Borrower.
(i) Upon payment in full of all amounts owed by the Borrower
under or otherwise secured by any of the Loan Documents, all amounts
remaining on deposit, if any, in the Replacement Reserve Account shall
be distributed to the Borrower.
SECTION 6.10 INDEMNIFICATION.
The Borrower agrees to indemnify the Lender and to hold the Lender
harmless from and against any and all actions, suits, claims, demands,
counterclaims, cross-claims, liabilities, losses, damages, obligations, fees and
costs and expenses (including litigation costs, reasonable attorneys' fees and
expenses) arising from or in any way connected with (a) the performance of the
Immediate Repairs, Replacements or Additional Repairs or Replacements, (b)
unpaid taxes, utility bills, rent or insurance premiums owed by the Borrower,
and/or (c) the holding or investment of the Reserve Accounts, except to the
extent any of the foregoing is the direct result of the gross negligence or
willful misconduct of the Lender.
ARTICLE VII - EVENTS OF DEFAULT; REMEDIES
SECTION 7.1 EVENTS OF DEFAULT.
An Event of Default shall occur if any of the following has occurred
and is continuing:
(a) Payments. The Borrower fails to make any payment
hereunder, under the Note or under any other Loan Document, when due
and payable, and such payment is not to be received prior to the 10th
day after the same is due (or such greater period, if any, required by
applicable law) following the date such payment becomes due and
payable.
(b) Bankruptcy, etc. The occurrence of any Bankruptcy Event
with respect to the Borrower or any general partner or member thereof.
(c) Judgments. One or more judgments or decrees shall be
entered against the Borrower (not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage), and any such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded (through appeal or otherwise) within thirty (30) calendar days
from the entry thereof.
(d) Recourse Covenants. The Borrower violates any of the
Recourse Covenants.
(e) Compliance with Sections 5.1(o) an@. The Borrower fails to
comply with any or all of the provisions of either Section 5.1(o) or
5.1(p) and such failure continues for a period of thirty (30) calendar
days following (i) in the case of Section
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5.1(o), the date demand by the Lender is made upon the Borrower for the
execution of any agreement or document in accordance with the
provisions of Section 5.1(o) or (ii) in the case of Section 5.1(p), the
date on which any Operating Expense becomes due and payable in
accordance with the terms thereof, without regard to any extension,
modification or waiver relating thereto; provided that if any Operating
Expense is the subject of a bona fide dispute and is less than I% of
the outstanding balance of the Loan as of the date on which the
particular Operating Expense in dispute became due and payable. then
the Borrower shall have ninety (90) days from the date the same becomes
due and payable to pay such Operating Expense or to furnish the Lender
a bond or other collateral acceptable to the Lender in the Lender's
reasonable discretion.
(f) Representations and Warranties. Any representation,
warranty, acknowledgment or statement made by the Borrower or any
Borrower Principal herein, in any other Loan Document or in any written
statement or certificate delivered or required to be delivered pursuant
hereto shall prove untrue in any material respect on the date as of
which it was deemed to have been made or any representation, warranty
acknowledgment or statement submitted to the Lender concerning the
financial condition or credit standing of the Borrower, any general
partner or member thereof or any Borrower Principal proves to be false
or misleading.
(g) Compliance with Covenants and Agreements. The Borrower
shall fall to comply with, observe or perform any covenant or agreement
made by it herein or in any other Loan Document, which failure
continues for thirty (30) days following written notice thereof to the
Borrower; provided that if such failure is of a type which can not
feasibly be cured within such thirty (30) day period and the Borrower
is diligently and in good faith pursuing such cure, then the Borrower
shall have a reasonable period of time (but in no event more than
ninety (90) days following such written notice) to cure such failure
without the same becoming an Event of Default hereunder. Nothing in
this Section 7. 1 (g) shall be deemed or construed to entitle the
Borrower to any notice and opportunity to cure with respect to any
failure to comply with, observe or perform any covenant or agreement
which constitutes an Event of Default under any other subsection of
this Section 7.1 or to extend any notice and/or opportunity to cure
otherwise provided for in any other subsection of this Section 7. 1.
(h) Material Adverse Change. In the Lender's reasonable
opinion, any event occurs that could have a Material Adverse Change
upon the Borrower.
(i) Events of Default under the Program Rider or other Loan
Documents. The occurrence of any Event of Default or similar event
under any of the Program Rider or the other Loan Documents, after
giving effect to any period of time provided for the cure of any such
event or occurrence in the Program Rider or any such Loan Document.
SECTION 7.2 REMEDIES.
Upon the occurrence of an Event of Default, the Lender may, at its
option:
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(a) Acceleration. Accelerate the entire unpaid principal
balance of the Loan and all accrued interest thereon without advance
notice to the Borrower, the same becoming immediately due and payable.
In addition, upon acceleration, any and all other Obligations of the
Borrower to the Lender shall be immediately due and payable.
(b) Replacement of Property Manager. Upon written notice to
the Borrower, require the replacement of any property manager or
managing agent for the Premises with a property manager or managing
agent reasonably acceptable to the Lender.
(c) Other Remedies. Invoke any other remedies set forth herein
or in any of the other Loan Documents, including without limitation,
foreclosure of the Lien granted in ▇▇▇.▇▇▇▇▇▇▇▇ Instrument and
enforcement of the assignment to the Lender of the Rents and Profits in
accordance with the terms of the Security Instrument.
ARTICLE VIII - CASUALTY LOSSES; EMINENT DOMAIN
SECTION 8.1 REPAIRS AND CASUALTY LOSSES.
(a) Restoration of Premises. Except as otherwise provided in
this Section 8.1, the Borrower shall, at its expense, promptly repair,
restore, replace or rebuild any part of the Premises which is damaged
or destroyed by any casualty or as the result of any taking under the
power of eminent domain, provided the Lender has made available
insurance proceeds or eminent domain proceeds or awards available to
the Borrower for such repair, restoration, replacement or rebuilding.
The Borrower shall cause all repairs, rebuilding, replacements or
restorations to be (in the reasonable opinion of the Lender) of
substantially equivalent quality to the Premises as of the date hereof,
ordinary wear and tear excepted.
(b) Proof of Loss; Claims Settlement. In the event of loss, the
Borrower shall give prompt written notice thereof to the insurance
carrier and the Lender, and the Lender may make proof of loss if not
made promptly by the Borrower. During the existence of any Event of
Default, the Lender is hereby authorized, in its reasonable discretion,
to adjust, compromise and collect the proceeds of any insurance claims.
(c) Application of Insurance Proceeds. The Borrower hereby
assigns the proceeds of any such insurance policies to the Lender and
hereby directs and authorizes each insurance company to make payment
for such loss directly to the Lender. The proceeds of any insurance or
any part thereof shall be applied by the Lender in accordance with the
provisions of Section 8.3 of this Loan Agreement.
SECTION 8.2 EMINENT DOMAIN.
(a) Participation in Proceedings. The Borrower shall promptly
notify the Lender of any actual or threatened initiation of any eminent
domain proceeding or other taking for public use as to the whole or any
pan of the Premises and/or any rights
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incident or appurtenant thereto and shall deliver to the Lender copies
of any and all papers served or received in connection with such
proceedings, and the Lender shall have the right, at its option, to
participate in such proceedings at the expense of the Borrower
(including, without limitation, the Lender's reasonable attorneys'
fees) and the Borrower will execute such documents and take such other
steps as required to permit such participation.
(b) Right to Settle Claims. During the existence of any Event
of Default, the Lender is hereby authorized to adjust, compromise and
collect the proceeds of any eminent domain or similar award or settle a
claim for damages and to apply the same (or any part thereof) to the
then outstanding balance of the Loan.
(c) Use of Proceeds. The Borrower assigns to the Lender any
proceeds or awards which may become due by reason of any condemnation
or other taking for public use of the whole or any part of the Premises
and any rights incident or appurtenant thereto including, without
limitation, the rights of the Borrower under any ground lease. The
proceeds of any such condemnation award or proceeds of any part thereof
shall be applied by the Lender in accordance with the provisions of
Section 8.3 of this Loan Agreement.
(d) Further Assignments; Acceleration. The Borrower agrees to
execute such further assignments and agreements as may be reasonably
required by the Lender to assure the effectiveness of this Section 8.2.
In the event any governmental agency or authority shall require or
commence any proceedings for the seizing or demolishing of any part of
the Premises, or shall commence any proceedings to condemn or otherwise
take pursuant to the power of eminent domain (or other power) a
material portion of the Premises, the Lender may, at its option,
declare the Loan to be immediately due and payable in full and apply
all or any portion of the eminent domain (or similar) awards or
proceeds to the then outstanding balance of the Loan.
SECTION 8.3 APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION AWARDS.
(a) All proceeds of insurance assigned to the Lender pursuant
to Section 8.1 of this Loan Agreement, and all proceeds or awards which
may become due by reason of any condemnation or other taking for public
use of the whole or any part of the Premises or any rights incident or
appurtenant thereto, including, without limitation, the rights of the
Borrower under any ground lease, and that have been assigned to the
Lender pursuant to Section 8.2 of this Loan Agreement shall be eligible
to be applied by the Lender in its sole discretion to the repayment of
the Loan; provided, however, that subject to the provisions of this
Section 8.3, such proceeds shall be held in an Eligible Account and
applied to the repair or restoration of the Premises if all of the
following conditions are met:
(i) there exists no Default Condition or Event of Default;
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47
(ii) the Borrower presents sufficient evidence to the Lender
that (A) with respect to any casualty loss, there are sufficient funds
from the insurance proceeds and from equity funds, if needed, to
completely restore or repair the damaged Premises, or (B) with respect
to any condemnation award, there are sufficient funds from the
condemnation award or proceeds and from equity funds, if needed. to
completely restore the Premises to an architectural whole and to pay
Operating, Expenses. and (C) the insurance proceeds or condemnation
award is less than 20% of the original Loan Amount,
(iii) as applicable, all affected non-Local Tenants and 75% of
all affected Local Tenants (as determined by square footage) agree in a
manner reasonably satisfactory to the Lender that they will continue or
extend their interests and arrangements for the contract terms then in
effect following the repair, restoration, replacement or rebuilding;
(iv) all parties having material operating, management and/or
franchise interests in, and arrangements concerning, the Premises agree
that they wi 'II continue their interests and arrangements for the
contract terms then in effect following the repair, restoration,
replacement or rebuilding;
(v) the Borrower presents sufficient evidence to the Lender
that the Premises will be repaired or restored to an architectural
whole two (2) years prior to the maturity date of the Loan;
(vi) the Lender will not incur any liability to any other
Person as a result of such use or release of proceeds; and
(vii) (A) as to any casualty loss, the insurance proceeds
shall be held by the Lender and disbursed as repair, restoration,
replacement or rebuilding progresses substantially in accordance with
the procedures set forth in this Loan Agreement for disbursement from
the Replacement Reserve Account; provided, however that insurance
proceeds of $50,000.00 or less will be disbursed directly to the
Borrower for repair, restoration, replacement or rebuilding and (B) as
to any condemnation award, the condemnation award or proceeds shall be
held by the Lender and disbursed as repair, restoration, replacement or
rebuilding progresses substantially in accordance with the procedures
set forth in this Loan Agreement for disbursement from the Replacement
Reserve Account.
(b) If the above-stated conditions are not satisfied within ninety (90)
days of loss, then the Lender may, at its option. apply any proceeds in
repayment of the amount then outstanding under the Note.
(c) Upon the completion of any repair, restoration, replacement or
rebuilding any remaining proceeds shall be paid to the Lender in repayment of
the amount then outstanding under the Note in accordance with the provisions of
the Note.
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ARTICLE IX - GENERAL PROVISIONS
SECTION 9.1 REMEDIES CUMULATIVE; WAIVERS.
All remedies of the Lender provided for herein and/or in the other Loan
Documents are cumulative and shall be in addition to any and all other rights
and remedies provided for or available under the other Loan Documents, at law
and/or in equity. The exercise of any right or remedy by the Lender hereunder
shall not in any way constitute a cure or waiver of any Default Condition or
Event of Default hereunder or under any other Loan Document, or invalidate any
act done pursuant to any notice of the occurrence of any Default Condition or
Event of Default, or prejudice the Lender in the exercise of any of its rights
hereunder or under or any other Loan Document, unless, in the exercise of said
rights, the Lender realizes all amounts owed to it under the Loan Documents. No
waiver of any Default Condition or Event of Default. hereunder shall be implied
from any delay or omission by the Lender to take action on account of such
Default Condition or Event of Default, and no express waiver shall affect any
Default Condition or Event of Default other than the Default Condition or Event
of Default specified in the waiver and it shall be operative only for the time
and to the extent therein stated. Waivers of any covenants, terms or conditions
contained herein must be in writing and shall not be construed as a waiver of
any subsequent failure to observe or comply with the same covenant, term or
condition. The consent or approval by the Lender to or of any act by the
Borrower requiring further consent or approval shall not be deemed to waive or
render unnecessary the consent or approval to or of any subsequent or similar
act.
SECTION 9.2 BENEFIT.
This Loan Agreement is made and entered into for the sole protection
and benefit of the Lender and the Borrower, their successors and permitted
assigns, and no other Person or Persons shall have any right to action hereon or
rights to the Loan proceeds at any time, nor shall the Lender owe any duty
whatsoever to any claimant for labor performed or material furnished in
connection with the construction of the Improvements, or to apply any
undisbursed portion of the Loan to the payment of any such claim, or to exercise
any right or power of the Lender hereunder or arising from any Default Condition
or Event of Default by the Borrower.
SECTION 9.3 ASSIGNMENT AND ASSUMPTION.
(a) The terms hereof shall be binding upon and inure to the
benefit of the heirs, successors, assigns, and personal representatives
of the parties hereto.
(b) The Borrower shall not assign or permit any assumption of
this Loan Agreement, any of the other Loan Documents or any of its
rights, interests, duties or obligations hereunder or thereunder or any
Loan proceeds or other sums to be advanced hereunder in whole or in
part without the prior written consent of the Lender (which consent
shall not be unreasonably withheld or delayed) and the payment to the
Lender of all reasonable and customary expenses incurred by the Lender
in connection with any such assignment and/or assumption and of a
processing fee (i) with respect to any assignment and/or assumption
during the first twelve (12) months of the term of the
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49
Loan, in an amount equal to 1% of the then outstanding principal amount
of the Loan as of the date the Borrower requests the Lender to consent
to such assignment or assumption, and (11) with respect to any such
assignment and/or assumption thereafter, in an amount equal to
$10,000.00; any assignment or assumption (whether voluntary or by
operation of law) without said consent shall be void. Without in any
way limiting the foregoing, in no event shall
the Lender consent to any assignment or assumption during the first
twelve (12) months following the date of this Loan Agreement if the
consideration paid or to be paid by the assignee or purchaser of the
Premises in connection therewith, as determined by the Lender in its
reasonable judgment, is less than the appraised value of the Premises
used by the Lender in underwriting the Loan. The Borrower shall furnish
the Lender at the Borrower's sole cost and expense such information as
the Lender shall request in connection with any assignment or
assumption, including without limitation, an Appraisal or other
evidence satisfactory to the Lender in its reasonable discretion of the
value of the Premises as of the date of the assignment and/or
assumption. In addition, the assignee or purchaser of the Premises
shall be required to assume the Borrower's duties and obligations under
this Loan Agreement and shall be required to execute and deliver to the
Lender such documents, opinions, certificates and information as the
Lender reasonably requires to effectuate such assumption of duties and
obligations. No sale, assignment or assumption shall relieve the
Borrower of its Obligations under this Loan Agreement or any of the
other Loan Documents, unless the Borrower has obtained the prior
written consent of the Lender, which consent shall not be unreasonably
withheld or delayed.
(c) It is expressly recognized and agreed that the Lender may,
in its sole discretion, sell, assign, transfer, participate or
otherwise convey this Loan Agreement, the Note, the Security Instrument
and any other Loan Documents, in whole or in part, to any other Person
provided that all of the provisions hereof shall continue in full force
and effect and, in the event of such assignment, the Lender shall
thereafter be relieved of all liability hereunder and any Loan
disbursements made by any assignee shall be deemed made IN pursuance
and not in modification hereof and shall be evidenced by the Note and
secured by the Security Instrument and any other Loan Documents. It is
further expressly recognized that the Lender intends to sell, transfer,
deliver and assign the Loan in the secondary mortgage market. By its
execution of this Loan Agreement and the other Loan Documents, the
Borrower and each Borrower Principal understands and agrees that any
Financial Statement, Operating Statement, Rent Roll and other
information delivered to the Lender may be delivered to any secondary
mortgage market participant in connection with the sale or assignment
of the Loan or any security backed by the Loan. In the event of such
assignment, the Lender shall thereafter be relieved of all liability
hereunder and any Loan disbursements made by any assignee shall be
deemed made in pursuance and not in modification hereof and shall be
evidenced by the Note and secured by the Security Instrument and the
other Loan Documents.
SECTION 9.4 INFORMATION.
It is expressly recognized and agreed that the Lender may share any
information pertaining to the Loan Documents, the transactions contemplated
thereby and the records
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50
maintained by the Lender in connection therewith with Washington Mortgage
Financial Group, Ltd., including its subsidiaries and any of the other
Affiliates of the foregoing and any other Persons which require such information
in connection with the sale in the secondary mortgage market of the Loan.
SECTION 9.5 NONRECOURSE LOAN; EXCEPTIONS.
The Note provides that the Loan is nonrecourse to the Borrower and each
Borrower Principal. except for (a) the lien of the Security Instrument and the
other Loan Documents and (b) the exceptions provided for in the Note.
SECTION 9.6 AMENDMENTS.
This Loan Agreement shall not be amended except by a written instrument
signed by all parties hereto.
SECTION 9.7 GOVERNING LAW AND JURISDICTION.
This Loan Agreement and the other Loan Documents and all matters
relating thereto shall be governed by and construed and interpreted in
accordance with the laws of the State. The Borrower and all of its general
partners/members and each Borrower Principal hereby submit to the jurisdiction
of the state and federal courts located in the State and agree that the Lender
may, at its option. enforce its rights under the Loan Documents in such courts.
SECTION 9.8 SAVINGS CLAUSE.
Invalidation of any one or more of the provisions of this Loan
Agreement shall in no way affect any of the other provisions hereof, which shall
remain in full force and effect.
SECTION 9.9 EXECUTION IN COUNTERPARTS.
This Loan Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument, and in making proof of this Loan
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
SECTION 9.10 NOTICES.
All notices and other communications shall have been duly given and
shall be effective (a) when delivered, (b) when transmitted via telecopy (or
other facsimile device) to the number set forth in Exhibit C hereto, (c) the day
following the day on which the same has been delivered prepaid to a reputable
national overnight air courier service, or (d) the third Business Day following
the day on which the same is sent by certified or registered mail, postage
prepaid, in each case to the respective party at the address set forth in
Exhibit C hereto, or at such other address as such party may specify by written
notice to the other party hereto. No notice of change of address shall be
effective except upon actual receipt. This Section 9.10 shall not be
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51
construed in any way to affect or impair any waiver of notice or demand provided
in any Loan Document or to require giving of notice or demand to or upon any
Person in any situation or for any reason. In addition to the foregoing, the
Lender may, from time to time, specify to the Borrower additional notice parties
by providing to the Borrower written notice of the name, address, telephone
number and telecopy number of any such additional notice party. Each such
additional notice party shall be entitled to receive and/or give any notice
required or permitted to be given under this Loan Agreement or any other Loan
Document.
SECTION 9.11 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held by or owing to the Lender (including, without
limitation branches, agencies or Affiliates of the Lender wherever located) to
or for the credit or the account of the Borrower against the obligations and
liabilities of the Borrower to the Lender hereunder, under the Note or
otherwise. irrespective of whether the Lender shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of the Lender subsequent thereto.
The Lender agrees to notify the Borrower subsequent to any such set-off or
application.
SECTION 9.12 WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF THE BORROWER, EACH BORROWER PRINCIPAL
AND THE LENDER, AS APPROPRIATE, SHALL BE DETERMINED SOLELY FROM THIS WRITTEN
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND ANY PRIOR OR CONTEMPORANEOUS
ORAL OR WRITTEN AGREEMENTS BETWEEN THE LENDER, THE BORROWER AND EACH BORROWER
PRINCIPAL CONCERNING THE SUBJECT MATTER HEREOF AND OF THE OTHER LOAN DOCUMENTS
ARE SUPERSEDED BY AND MERGED INTO THIS LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE VARIED
BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR BEFORE, CONTEMPORANEOUSLY WITH,
OR SUBSEQUENT TO THE EXECUTION OF THIS LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR,
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52
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 9.13 WAIVER OF JURY TRIAL.
THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL HEREBY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
LOAN AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY
THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL, AND THE LENDER, THE
BORROWER AND EACH BORROWER PRINCIPAL ACKNOWLEDGE THAT NO PERSON ACTING ON BEHALF
OF ANOTHER PARTY TO THIS LOAN AGREEMENT HAS MADE ANY REPRESENTATIONS OF FACT TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS
EFFECT. THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL FURTHER ACKNOWLEDGE
THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED)
IN THE SIGNING OF THIS LOAN AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
(SIGNATURES APPEAR ON FOLLOWING PAGE)
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53
IN WITNESS WHEREOF, the Borrower, each Borrower Principal and the
Lender have executed this Loan Agreement as of the above- written date.
THE GAUNTLET AT ▇▇▇▇▇▇ ▇▇▇▇, INC., a
Virginia corporation
By: /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
BORROWER PRINCIPALS:
Brassie Golf Corporation,
A Delaware Corporation
/S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
its Chief Operating Officer
(SEAL)
------------------------------------
Name:
(SEAL)
------------------------------------
Name:
LENDER:
WASHINGTON MORTGAGE FINANCIAL
GROUP, LTD., a Virginia corporation
By: /S/ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (SEAL)
---------------------------------
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Assistant Vice President
54
EXHIBIT A
EQUITY INTERESTS
Borrower: The Gauntlet at ▇▇▇▇▇▇ ▇▇▇▇, Inc., a Virginia corporation
Sole Shareholder: Brassie Golf Corporation, a Delaware
corporation
Each Borrower Principal which is not an Individual:
Brassie Golf Corporation, a Delaware corporation
EXHIBIT A
55
EXHIBIT B
IMMEDIATE REPAIRS, REPLACEMENTS, INITIAL RESERVE DEPOSITS
AND MONTHLY RESERVE DEPOSITS
Immediate Repairs Estimated Cost
---------------- --------------
$19,750.00
Replacements Estimated Cost
------------ --------------
See attached Schedule 1
Initial Reserve Deposits
------------------------
Initial Reserve Deposit to the Repair Escrow
Account 125% of the aggregate estimated cost
of Immediate Repairs shown above): $24,688.00.
Initial Reserve Deposit to the Replacement
Reserve Account: $
---------.
Initial Reserve Deposit to the Tax and
Insurance Reserve Account: $
---------.
Monthly Reserve Deposits
------------------------
Monthly Reserve Deposits to the Replacement Reserve Account shall be in
an amount equal to $5,331.03 per month, as such amount may be adjusted
from time to time in accordance with the terms of this Loan Agreement,
including without limitation, the Program Rider.
Monthly Reserve Deposits to the Tax and Insurance Reserve Account shall
be in an amount equal to (a) the sum of (i) the aggregate anticipated
annual premiums for all
EXHIBIT B
56
insurance policies required to be maintained pursuant to this Loan
Agreement due in the coming year. (11) the sum of the anticipated
annual real property taxes, personal property taxes, intangibles taxes
and assessment for the Premises due in the coming year, (111) the sum
of anticipated annual water and sewer assessments and frontage charges
for the Premises due in the coming year, and (iv) the sum of all other
anticipated assessments and charges against the Premises due in the
coming year, divided by (b) twelve (12).
EXHIBIT B
57
EXHIBIT C
ADDRESSES FOR NOTICE
if to the Borrower: The Gauntlet at ▇▇▇▇▇▇ ▇▇▇▇, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
if to the Lender: Washington Mortgage Financial Group, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: 703/▇▇▇-▇▇▇▇
Telecopy: 703/610-1401
with copies to: Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: 202/▇▇▇-▇▇▇▇
Telecopy: 202/624-7222
EXHIBIT C
58
EXHIBIT D
PROGRAM RIDER
1. Definitions. The following capitalized terms shall
supplement any definition of such capitalized terms set forth in
the Loan Agreement:
(a) Operating Expenses. In addition to all operating expenses
included in the definition to the Loan Agreement, the term "Operating
Expenses" shall also include, without limitation, all fees, costs and
expenses related to golf course ownership, ground rent. management and
operations, including, without limitation, expenses incurred IN
connection with the production of income at the Premises, including
without limitation, improvements, food, beverages, telephones and other
income.
(b) Operating Income. In addition to all Operating Income
described in the definitions to the Loan Agreement, Operating Income
shall also include, without limitation, all revenues from concessions,
sale of merchandise, golf carts, golf club and other personal property
rental, all rents and revenues, and all departmental and ancillary
services revenues, including without limitation, food and beverage
revenues, telephone revenues, television revenues, vending machine
sales, rents and other income from all sources.
2. Representations and Warranties of the Borrower. To induce the
Lender to enter into this Loan Agreement and to make the Loan, the Borrower
hereby represents and warrants to the Lender on the Closing Date as follows:
(a) The Premises. All facilities and amenities relating to the
operation of the golf course as presently constructed and operated are
located on the Premises.
(b) Licenses. The Borrower has all licenses, permits,
certificates and/or privileges necessary for the ownership or operation
of the Premises as presently constructed and operated and has delivered
certified copies of all of the foregoing to Lender.
3. Affirmative Covenants of the Borrower. During any period in
which the Loan is outstanding, the Borrower agrees that it will:
(a) Lessee Information. Submit to the Lender when requested by
the Lender, all information on monthly operation of the Premises, which
information shall include a Certification thereof.
(C) Management Company Estoppel Certificates. Furnish to the
Lender when requested by the Lender, Estoppel Certificates executed by
the manager for such tenants of any portion of the Premises as the
Lender may require.
EXHIBIT D
59
4. Negative Covenants of the Borrower. During any period in
which the Loan is outstanding, the Borrower agrees that it will
not:
(a) Agreements, Licenses and Permits. Allow any default under
or a breach, withdrawal, cancellation, rescission, termination,
alteration or modification of any rental agreement, sales contract,
management contract, construction contract, technical service agreement
or other contract or agreement, or any license, permit, certificate or
privilege affecting the Premises.
(b) Management Fees. Pay or allow to be paid incentive
management fees.
(c) Leases. The Borrower shall not enter into, default under,
breach, withdraw, cancel, rescind, terminate, alter or modify any lease
of, or other agreement regarding, any portion of the Premises without
the Lender's prior written approval, unless such lease (i) is on a form
previously approved by the Lender, (ii) provides for terms in
conformity with local conditions, (iii) together with the tenant's
proposed use of the space leased, conforms with applicable laws and the
covenants and agreements set forth in the Loan Documents, including but
not limited to those relating to Hazardous Materials and specifically
references such covenants relating to Hazardous Materials, and (iv)
does not for any purchase option, right of first offer or refusal or
similar right relating to all or any portion of the Premises.
5. Event of Default. In addition to any Events of Default set
forth in the Loan Agreement or any of the other Loan Documents, any default
under, breach of or failure by the Borrower to perform its obligations under the
ground lease (as defined in the Security Instrument, the "Ground Lease") or any
termination, cancellation, rescission or revocation of the Ground Lease shall be
an Event of Default under the Loan Agreement and the other Loan Documents.
6. Operating Agreements and Management Contracts. The Borrower
has furnished to the Lender photocopies of all material Operating Agreements and
Management Contracts entered into with the Borrower, and all amendments,
supplements and modifications thereto. With respect to each such Operating
Agreement and Management Contract, (i) such Operating Agreement and Management
Contract is or will be at the time of execution and delivery thereof valid and
binding on the parties thereto and in full force and effect, (ii) no default has
occurred or is continuing under the terms thereof, and no event has occurred
which, with the giving of notice or the lapse of time. or both, would constitute
a default thereunder, and no party thereto has attempted or threatened to
terminate any such Operating Agreement and Management Contracts, (iii) the
Borrower has not made any previous assignment of the Operating Agreements and
Management Contracts to any Person, except as security for loans and other
financial accommodations, if any, which are to be paid with the proceeds of the
Loan and are to be terminated promptly following the Closing Date, and (iv) no
financing statement covering any of the Operating Agreements and Management
Contracts is on file in any public office, except for those financing statements
relating to loans and other financial accommodations which are to be pal 'd with
the proceeds of the Loan and are to be terminated promptly following the Closing
Date.
EXHIBIT D
60
7. Conduct of Business and Compliance with Laws. The Borrower
shall do or cause to be done all things necessary to obtain. enter into,
preserve and keep in full force and effect its existence and material rights
and, if appropriate, construction permits and all material Licenses,
Participation Agreements, and Operating Agreements and Management Contracts
which are necessary for its business and the operation of the Premises as a golf
course, and (ii) engage in and continue to engage only in the business of owning
and operating a golf course and related services
8. Compliance with the Ground Lease. The Borrower shall promptly
and faithfully keep and perform, or cause to be kept and performed in all
respects, all the terms, covenants and conditions required to be performed and
observed by the Borrower lessee under the Ground Lease within the period
(exclusive of any grace or cure periods) provided in the Ground Lease, and will
not do or permit anything to be done which will impair or tend to impair the
security of the Security Instrument or the Borrower's rights under the Ground
Lease which would be grounds for declaring a default, forfeiture, cancellation
or termination of the Ground Lease.
9. Default or Notice of Default Under the Lease. The Borrower
shall give prompt written notice to the Lender of any default by the Borrower in
its performance of its obligations under the Ground Lease and shall promptly
forward to the Lender copies of any notices which the Borrower receives from the
lessor claiming any default by the Borrower in complying with the obligations
under the Ground Lease.
10. Estoppel Certificates of the Lessor. If requested by the
Lender, the Borrower will use all reasonable efforts to obtain estoppel
certificates from the lessor stating (a) that the Ground Lease is unmodified and
in full force and effect, or, in the event the Ground Lease has been modified,
the nature of such modification, (b) that the Borrower is not in default in its
performance of its obligations under the Ground Lease, or, in the event the
Borrower is in default, the nature of such default, and (c) the last date on
which the rent was paid and the amount of such payment.
11. Proof of Payments Required to be Made Under the Lease. When
requested by the Lender, the Borrower will promptly furnish proof of payment of
all items which the Borrower is obligated to pay pursuant to the terms of the
Ground Lease.
12. Cure of Defaults. In the event the Borrower shall fail to pay
any installment of rent or additional rent reserved under the Ground Lease, or
TO make any other payment required to be paid by the Borrower, as lessee under
the Ground Lease, at the time and in the manner provided in the Ground Lease. or
if the Borrower shall fail to perform or observe any other term, covenant.
condition, or obligation required to be performed or observed by the Borrower
under the Ground Lease, without waiving or releasing the Borrower from any of
its obligations, the Lender shall have the right, but shall be under no
obligation, to pay any such installment of rent or additional rent, or other
payment, and may perform any other act or take such action as may be appropriate
to cause such other term, covenant, condition, or obligation to be promptly
performed or observed on behalf of the Borrower, to the end that the Borrower's
rights, in, to and under the Ground Lease shall be kept unimpaired and free from
default. The Borrower shall permit the Lender to enter upon the Premises with or
without notice and to do anything thereon
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or thereto which the Lender shall deem necessary or prudent for such purpose.
13. Execution of Documents; Power of Attorney. The Borrower shall
execute and deliver on request of the Beneficiary such instruments as the
Beneficiary may deem useful or required to permit the Beneficiary to cure any
defaults under the Ground Lease, or permit the Beneficiary to take such other
action as the Lender considers desirable to cure or remedy the default and
preserve the interest of the Borrower in the Premises. If the Borrower falls to
execute and deliver to the Lender, any such instruments within five (5) calendar
days after written request from the Lender the Borrower shall, and hereby does,
irrevocably constitute and appoint the Lender, or any officer of the Lender, as
the Borrower's true and lawful attorney IN fact. with full power of
substitution, to effect the execution and deliverance of any and all such
instruments on behalf of the Borrower and in the Borrower's name.
14. Amendments and Modifications. The Borrower shall not, and
hereby releases, relinquishes and surrenders unto the Lender all of its rights,
power and authority to, cancel, surrender, amend, modify or alter the Ground
Lease, without prior written authority and consent of the Lender. The Borrower
further shall not cancel the automatic renewals of the Ground Lease, if any,
without the prior written approval of the Lender (b) if the Ground Lease so
allows, shall promptly renew the Ground Lease in accordance with the provisions
set forth therein, (c) shall exercise all renewal options and options to
purchase, if any, contained in the Ground Lease, and (d) shall, if a voluntary
or involuntary petition under the United States Bankruptcy Code, as amended, is
filed by or against the lessor, under Section 365(h) of the United States
Bankruptcy Code, as amended, elect to remain in possession of the Premises and
not treat the Ground lease as terminated. The Borrower hereby irrevocably
constitutes and appoints the Lender, or any officer of the Lender, as the
Borrower's true and lawful attorney in fact, with full power of substitution, to
exercise of the aforementioned options and rights on behalf of the Borrower and
in the Borrower's name.
15. Sublease; Assignment. The Borrower will not sublease,
assign or grant licenses with respect to any of the property subject to the
Ground Lease without the prior written consent of the Lender.
16. Notice of Remedial Proceeding. The Borrower shall give
immediate written notice to the Lender of the commencement of any remedial
proceedings under the Ground Lease by any party thereto and, if required by the
Lender, shall permit the Lender, as the Borrower's attorney-in-fact, to control
and act for the Borrower in any such remedial proceedings and shall within
thirty (30) calendar days after request by the Lender obtain from the lessor and
deliver to the Lender the lessor's estoppel certificate required thereunder, if
any.
17. Non-Merger of Estates. The Borrower covenants and agrees that
there shall not be a merger of the Ground Lease, or of the leasehold estate
created thereby, with the fee estate or another leasehold estate covered by the
Ground Lease by reason of said leasehold estate or said fee estate, or any part
of either, coming into common ownership, unless the Lender shall consent in
writing to such merger, if the Borrower shall acquire such fee or other
leasehold estate, then the Security Instrument shall simultaneously and without
further action be spread so as to become a lien on such, fee or other leasehold
estate.
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18. Warranties and Representations. The Borrower represents and
warrants that: (1) the Ground Lease is in full force and effect and a true and
complete copy of the Ground Lease (including any amendments or side letters
relating thereto) has been deposited with the Lender; (11) there are no existing
defaults under the provisions of the Ground Lease or in the performance of any
of the terms, covenants or conditions and warranties thereof; and (iii) all
rents (including additional rents) and other charges reserved in the Ground
Lease have been paid to the extent they were payable prior to the date hereof.
19. Warranty of Title. The Borrower is lawfully seized of a
leasehold estate in the Premises, free and clear of all liens and encumbrances,
and subject only to those liens and encumbrances, easements, rights-of-way,
covenants, agreements, restrictions and conditions of record described on the
title insurance policy issued on the date hereof. The Borrower has the right and
power to convey the Premises, hereby warrants generally the same, and covenants
to execute such further assurances thereof as may be requisite. The Borrower
covenants that the lien created hereby is and will be maintained as a first
leasehold lien upon the Premises and every part thereof.
20. Covenants Binding on the Leasehold Estate. All covenants
hereof shall run with the leasehold estate until payment in full of all amounts
owed by the Borrower under or otherwise secured by any of the Loan Documents.
21. Notice of Lessor's Default. The Borrower shall promptly notify
the Lender in writing of any default by the lessor in the performance or
observance of any of the terms, covenants or conditions of the Ground Lease to
be performed by the lessor.
22. Option of Beneficiary. If there shall be filed by or against
the Borrower a petition under the United States Bankruptcy Code, as amended, and
the Borrower, as lessee under the Ground Lease, shall determine to reject the
Ground Lease pursuant to Section 365(a) of the United States Bankruptcy Code, as
amended the Borrower shall give the Lender not less than ten (10) banking days'
prior written notice of the date on which the Borrower shall apply to the
Bankruptcy Court for authority to reject the Ground Lease. The Lender shall have
the right, but not the obligation, to serve upon the Borrower within such ten
(10) banking day period a notice stating that (a) the Lender demands that the
Borrower, as debtor- in-possession, or the Borrower's trustee assume and then
assign the Ground Lease to the Lender pursuant to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Bankruptcy Code, as amended, and (b) the Lender covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide adequate
assurance of future performance under the Ground Lease. If the Lender serves
upon the Borrower the notice described in the preceding sentence, the Borrower
shall not seek to reject the Ground Lease but shall instead comply with the
demand provided for in clause (a) of the preceding sentence within thirty (30)
calendar days after the notice shall have been given, subject to the performance
by the Lender of the covenant provided for in clause (b) of the preceding
sentence.
23. Default under the Ground Lease. A default in the payment of
any rent, additional rent or any payment due under the Ground Lease, when and as
the same are due and payable or a failure or default in the performance or
observance of any of the terms, conditions, covenants or
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63
agreements set forth in the Ground Lease, or the occurrence of any event which
with the giving, of notice, the passage of time or both would constitute a
default under the Ground Lease, or the receipt of notice by the Borrower that
the Ground Lease will be or has been terminated, or any assignment, subletting
or termination of the Ground Lease, without the prior written consent of the
Lender.
EXHIBIT D