LOAN AGREEMENT Dated as of April 19, 2006 Between MAGUIRE PROPERTIES-PACIFIC CENTER, LLC as Borrower And GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., as Lender

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non interest bearing discount obligations and interest bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) with maturities of not more than three hundred sixty-five (365) days and that at all times is rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities or any class thereof) in its highest short term unsecured debt rating; provided, however, that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity; and (viii) other security, obligation or investment which has been approved as a Permitted Investment in writing by (a) Lender and (b) each Rating Agency, as evidenced by a written a Rating Comfort Letter with respect to that the designation of such security, obligation or investment as a Permitted Investment; provided, however, that no obligation or security shall be a Permitted Investment if (A) such obligation or security evidences a right to receive only interest payments or (B) the right to receive principal and interest payments on such obligation or security are derived from an underlying investment that provides a yield to maturity in excess of one hundred twenty percent (120%) of the yield to maturity at par of such underlying investment. Notwithstanding anything to the contrary contained herein, the Permitted Investments (i) through (ix) above must have a ▇▇▇▇▇’▇ rating of (a) ”A2 or P-1” if such investment has a maximum maturity of one (1) month, (b) ”A1 and P-1” if such investment has a maximum maturity of three (3) months, (c) ”Aa3 and P-1” if such investment has a maximum maturity of six (6) months and (d) ”AAA and P-1” if such investment has a maximum maturity of more than six (6) months.

 

 

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liquidation prior to their maturity; (ii) Federal Housing Administration debentures; and (iii) obligations of the following United States government sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit System (consolidated system wide bonds and notes), the Federal Home Loan Banks (consolidated debt obligations) and the Federal National Mortgage Association (debt obligations); provided, however, that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity; provided, however, that no obligation or security shall be a Permitted Investment if (A) such obligation or security evidences a right to receive only interest payments or (B) the right to receive principal and interest payments on such obligation or security are derived from an underlying investment that provides a yield to maturity in excess of one hundred twenty percent (120%) of the yield to maturity at par of such underlying investment. Notwithstanding anything to the contrary contained herein, the Permitted Investments (i) through (ix) above must have a ▇▇▇▇▇’▇ rating of (a) “A2 or P-1” if such investment has a maximum maturity of one (1) month, (b) “A1 and P-1” if such investment has a maximum maturity of three (3) months, (c) “Aa3 and P-1” if such investment has a maximum maturity of six (6) months and (d) “AAA and P-1” if such investment has a maximum maturity of more than six (6) months.

 

Permitted REIT Transferee: an entity that the REIT Controls (within the sense of clause (ii) of the defined term “Control”) and directly or indirectly owns at least a 51% interest in, and that (i) qualifies as a Special Purpose Bankruptcy Remote Entity in compliance with Section 5.13 hereof, and (ii) whose counsel has delivered to Lender a non-consolidation opinion acceptable to Lender in its reasonable discretion and acceptable to the Rating Agencies.

 

 

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in an application for the appointment of a custodian, receiver, trustee, or examiner for such Person or any portion of the Property; or (e) such Person making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due.

 

Person: any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other person or entity, and any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

 

Plan: (i) an employee benefit or other plan established or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate makes or is obligated to make contributions and (ii) which is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.

 

Prescribed Laws: collectively, (i) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act), (ii) Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, (iii) the International Emergency Economic Power Act, 50 U.S.C. §1701 et seq. and (iv) all other legal requirements relating to money laundering or terrorism.

 

Property: the parcels of real property and Improvements thereon owned by Borrower and encumbered by the Mortgage; together with all rights pertaining to such real property and Improvements, and all other collateral for the Loan as more particularly described in the Granting Clauses of the Mortgage and referred to therein as the Property. The Property is known as Pacific Center and is located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ (collectively, the “Office Buildings”), and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ (the “Parking Garage”), San Diego, California.

 

 

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will be required in connection with Permitted Transfers under Section 5.26.5 and the Transfer and Assumption under Section 5.26.6 not requiring such prior written confirmation from the Rating Agencies).

 

Qualified Transferee:

 

(i) a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided that any such Person referred to in this clause (i) satisfies the Eligibility Requirements;

 

(ii) an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended, provided that any such Person referred to in this clause (ii) satisfies the Eligibility Requirements;

 

(iii) an institution substantially similar to any of the foregoing entities described in clauses (i) or (ii) that satisfies the Eligibility Requirements;

 

(iv) any entity Controlled (which for purposes of this definition means the ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial ownership interests of an entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through the ability to exercise voting power, by contract or otherwise) by any of the entities described in clauses (i) (ii) or (iii) above or (v) below;

 

(v) an investment fund, limited liability company, limited partnership or general partnership where a Permitted Fund Manager or an entity that is otherwise a Qualified Transferee under clauses (i) (ii), (iii) or (iv) of this definition investing through a fund with committed capital of at least $250,000,000 acts as the general partner, managing member or fund manager and at least 50% of the equity interests in such investment vehicle are owned, directly or indirectly, by one or more entities that are otherwise Qualified Transferees under clauses (i) (ii), (iii) or (iv) of this definition;

 

(vi) a Person (i) with a long-term unsecured debt rating from each of the Rating Agencies rating the Securities of at least "investment grade" that (ii) owns, controls or operates, with its Affiliates, office buildings totaling at least 4,000,000 square feet of gross leaseable area (exclusive of the Property), has with its Affiliates a net worth, as of a date no more than three (3) months prior to the date of such Transfer; of at least $300 million (exclusive of the Property), and immediately prior to such Transfer, controls with its Affiliates real estate equity assets of at least $750 million (exclusive of the Property); or

 

(vii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III or a Person Controlled (within the meaning of clauses (i) and (ii) of the definition of Control) by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, provided that at the time of such Transfer, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III has a net worth of at least $200 million.

 

 

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Rating Agency: each of Standard & Poor’s Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. (“S&P”), ▇▇▇▇▇’▇ Investors Service, Inc. (“▇▇▇▇▇’▇”), and Fitch, Inc. (“Fitch”) or any other nationally recognized statistical rating organization to the extent any of the foregoing have been engaged by Lender or its designee in connection with or in anticipation of any Securitization.

 

Rating Comfort Letter: a letter issued by each of the applicable Rating Agencies which confirms that the taking of the action referenced to therein will not result in any qualification, withdrawal or downgrading of any existing ratings of Securities created in a Securitization or, if a Securitization has not occurred, any ratings to be assigned in connection with a Securitization.

 

REIT: ▇▇▇▇▇▇▇ Properties, Inc., a Maryland corporation.

 

REMIC Trust: a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code that holds the Note.

 

Rents: all rents, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a Bankruptcy Proceeding) or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower, Manager or any of their agents or employees from any and all sources arising from or attributable to the Property, including, without limitation, income related to parking, and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Property or rendering of services by Borrower, Manager or any of their agents or employees and proceeds, if any, from business interruption or other loss of income insurance.

 

Restricted Party: (i) Borrower, the OP, the Guarantor, or any Affiliated Manager, and (ii) any shareholder, general partner, member, non-member manager, direct or indirect legal or beneficial owner of, Borrower, the OP, Guarantor, any Affiliated Manager or any non-member manager; provided, however, that the term "Restricted Party" shall not include any limited partner of the OP, Guarantor, or any Affiliated Manager, or any shareholders of the REIT, or any person owning direct or indirect interests in or through such limited partners or shareholders.

 

Sale or Pledge: a voluntary or involuntary sale, conveyance, assignment, transfer, encumbrance or pledge of a legal or beneficial interest.

 

Scheduled Defeasance Payments: the Monthly Debt Service Payment Amount required under the Note for all Payment Dates occurring after the Defeasance Date (including the outstanding Principal balance on the Note as of the Stated Maturity Date).

 

 

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grants Lender a perfected, first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral.

 

Servicer: a servicer selected by Lender to service the Loan, including any “master servicer” or “special servicer” appointed under the terms of any pooling and servicing agreement or similar agreement entered into as a result of a Securitization.

 

State: the state in which the Premises (as defined in the Mortgage) is located.

 

Stated Maturity Date: May 6, 2016, as such date may be changed in accordance with Section 2.2.4.

 

Taxable REIT Subsidiary: a taxable REIT subsidiary within the meaning of Section 856(1) of the Code and of which the OP owns, directly or indirectly, no less than a 51% interest.

 

Taxes: all real estate and personal property taxes, assessments, water rates or sewer rents, maintenance charges, impositions, vault charges and license fees, now or hereafter levied or assessed or imposed against all or part of the Property.

 

Term: the entire term of this Agreement, which shall expire upon repayment in full of the Debt and full performance of each and every obligation to be performed by Borrower pursuant to the Loan Documents.

 

Title Insurance Policy: the ALTA mortgagee title insurance policy in the form acceptable to Lender issued with respect to the Property and insuring the Lien of the Mortgage.

 

UCC: the Uniform Commercial Code as in effect in the state of Delaware or the state in which any of the Cash Management Accounts are located, as the case may be.

 

U.S. Obligations: (i) direct full faith and credit obligations of (or guaranteed as to timely payment by) the United States of America (or any agency or instrumentality of the United States of America, to the extent acceptable by the applicable Rating Agencies), or the obligations of which are backed by the full faith and credit of the United States of America, in each case that are not subject to prepayment, call or early redemption, (ii) obligations that are “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, and, (iii) to the extent acceptable to the applicable Rating Agencies, other non-callable government securities satisfying the REMIC Provisions (hereinafter defined), in each case to the extent such obligations are not subject to prepayment, call or early redemption. As used herein, “REMIC Provisions” mean provisions of the federal income tax law relating to real estate mortgage investment conduits, which appear at Sections 860A through 860G of Subchapter M of Chapter 1 of Subtitle A of the Code, and related provisions, and temporary and final regulations and, to the extent not inconsistent with such temporary and final regulations, proposed regulations, and published rulings, notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time.

 

 

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which, when added to the outstanding Principal, would be sufficient to purchase U.S. Obligations which provide payments (a) on or prior to, but as close as possible to, all successive scheduled Payment Dates under this Agreement through the Stated Maturity Date and (b) in amounts equal to the Monthly Debt Service Payment Amount required under this Agreement through the Stated Maturity Date together with the outstanding principal balance of the Note as of the Stated Maturity Date assuming all such Monthly Debt Service Payments are made (including any servicing costs associated therewith). In no event shall the Yield Maintenance Premium be less than zero.

 

Section 1.2 Index of Other Definitions

 

. The following terms are defined in the sections or Loan Documents indicated below:

 

“Approved Annual Budget” - 6.3.4

“Annual Budget” - 6.3.4

“Applicable Taxes” - 2.2.3

“Asbestos” - 5.8.2

“Assignment of Leases and Rents” - 4.16

“Award” - 7.3.2

“Bankruptcy Proceeding” - 4.8

“Blanket Insurance Premium Financing Arrangements” - 7.1.4

“Borrower Parties” - 10.1

“Capital Reserve Subaccount” - 3.4

“Cash Collateral Subaccount” - 3.8.1

“Cash Management Accounts” - 3.9

“Cash Management Agreement” - 1.1 (Definition of Loan Documents)

“Casualty” - 7.2.1

“Casualty/Condemnation Prepayment” - 2.3.2

“Casualty/Condemnation Subaccount” - 3.6

“Casualty Consultant” - 7.4.1(e)

“Casualty Restoration” - 7.2.1

“Casualty Retainage” - 7.4.1(b)

“Clearing Account” -- 3.1

“Clearing Account Agreement” - 1.1 (Definition of Loan Documents)

“Clearing Bank” - 3.1

“Condemnation” - 7.3.1

“Condemnation Proceeds” - 7.4.1

“Condemnation Restoration” - 7.3.1

“Defeasance Collateral Account” - 2.3.3

“Defeasance Event” - 2.3.3

“Defeasance Date” - 2.3.3

“Delinquency Date” - 5.2

“Deposit Account” - 3.1

“Disclosure Document” - 9.1.2

“DSCR Cash Management Letter of Credit Collateral” - 1.1 (Definition of Cash Management Period)

“Eligible Account” - Cash Management Agreement

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“Endorsement” - 5.26.b(c)(iv)

“Environmental Laws” - 4.21

“Equipment” - Mortgage

“Event of Default” - 8.1

“Exchange Act” - 9.1.2

“Excluded Costs” - 5.4.2

“Financing Installment” - 7.1.4

“Fitch” - 1.1 (Definition of Rating Agency)

“Full Replacement Cost” - 7.1.1(j)

“Full Coverage” - 7.1.1(a)

“Government Lists” - 5.30

“Hazardous Substances” - 4.21

“Improvements” - Mortgage

“Indemnified Liabilities” - 5.30

“Indemnified Party” - 5.30

“Indemnified Group” - 9.1.3

“Independent Director” - Schedule 5

“Initial Rollover Deposit” - 3.5.1

“Insurance Premiums” - 7.1.3

“Insurance Proceeds” - 7.4.1

“Insured Casualty” - 7.2.2

“Investor” - 9.1.1

“Late Payment Charge” - 2.5.3

“Lender’s Consultant” - 5.8.1

“Liabilities” - 9.1.3

“Licenses” - 4.11

“Loan” - 2.1

“Monthly Debt Service Payment Amount” - 2.2.1

“Moody’s” - 1.1 (Definition of Rating Agency)

“Mortgage” - 1.1 (Definition of Loan Documents)

“Net Proceeds” - 7.4(b)

“New Payment Date” - 2.2.4

“Non-Recourse Guaranty” - 1.1 (Definition of Loan Documents)

“Note” - 1.1 (Definition of Loan Documents)

“Notice” - 6.1

“OFAC” - 5.30

“Office Buildings” 1.1 (Definition of Property)

“Parent” - 9.1.1(a)

“Parking Garage” 1.1 (Definition of Property)

“Patriot Act” - 5.30

“Patriot Act Offense” - 5.30

“Permitted Indebtedness” - 5.22

“Permitted Prepayment Date” - 2.3.4

“Phase I Reports” - 4.21

“Policies” or “Policy” - 7.1.2

“Principal” - 2.1

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“Proceeds” - 7.2.2

“Provided Information” - 9.1.1

“Public Releases: - 10.16

“Registration Statement” - 9.1.3

“Related Party” or “Related Parties - 4.33(d)

“Remedial Work” - 5.8.3

“Rent Roll” - 4.16

“Restoration” - 7.3.1

“Rollover Reserve Subaccount” - 3.5.1

“S&P” - 1.1 (Definition of Rating Agency)

 “Securities” - 9.1.1

“Securities Act” - 9.1.2

“Securitization” - 9.1.1

“Securitization Information - 9.1.3(b)

“Security Deposit Account” - 3.7

“Security Deposit Subaccount” - 3.7

“Significant Casualty” - 7.2.2

“Special Purpose Bankruptcy Remote Entity” - 5.13

“Subaccounts” - 3.1

“Subordination of Management Agreement” - 5.12.1

“Successor Borrower” - 2.3.3

“Survey” - 4.31

 “Tax and Insurance Impound Fund” - 3.3

“Tax and Insurance Subaccount” - 3.3

“Tenant Estoppels” - 4.16

“Terrorism Acts” - 7.1.1(j)

“Threshold Amount” - 5.4.2

“Toxic Mold” - 4.21

“Transfer” - 5.26.3

“Transfer and Assumption” - 5.26.6(a)

“Transferee Borrower” - 5.26.6(a)

 

Section 1.3 Principles of Construction

 

. Unless otherwise specified, (i) all references to sections and schedules are to those in this Agreement, (ii) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision, (iii) all definitions are equally applicable to the singular and plural forms of the terms defined, (iv) the word “including” means “including but not limited to,” and (v) accounting terms not specifically defined herein shall be construed in accordance with GAAP. To the extent that the definition of Net Operating Income deviates from GAAP, the definitions of such terms contained herein shall govern.

 

ARTICLE 2

 

 

GENERAL LOAN TERMS

 

Section 2.1 The Loan

 

 

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. Lender is making a loan (the “Loan”) to Borrower on the date hereof, in the original principal amount (the “Principal”) of $121,200,000.00 which shall mature on the Stated Maturity Date. Borrower acknowledges receipt of the Loan, the proceeds of which are being and shall be used to (i) return capital to direct and indirect owners of Borrower used to acquire the Property, (ii) fund certain of the Subaccounts, and (iii) pay transaction costs. Any excess proceeds may be used for any lawful purpose. No amount repaid in respect of the Loan may be reborrowed.

 

Section 2.2 Interest; Monthly Payments

 

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2.2.1 Generally. From and after the date hereof, interest on the unpaid Principal shall accrue at the Interest Rate and be payable as hereinafter provided. On the date hereof, Borrower shall pay interest on the unpaid Principal from the date hereof through and including May 5, 2006. On June 6, 2006 and each Payment Date thereafter through and including the Maturity Date, the interest on the Principal at the Interest Rate shall be payable in monthly installments (each such installment, the “Monthly Debt Service Payment Amount”). The Monthly Debt Service Payment Amount due on any Payment Date shall be applied to the payment of interest accrued during the preceding Interest Period. All accrued and unpaid interest shall be due and payable on the Maturity Date. If the Loan is repaid on any date other than on a Payment Date (whether prior to or after the Stated Maturity Date), Borrower shall also pay interest that would have accrued on such repaid Principal to but not including the next Payment Date.

 

2.2.2 Default Rate. After the occurrence and during the continuance of an Event of Default, the entire unpaid Debt shall bear interest at the Default Rate, and shall be payable, to the extent permitted by applicable law, within ten (10) days after the date Lender makes written demand therefor.

 

 

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furnish to the transferor and Borrower either a United States Internal Revenue Service Form W-8BEN, United States Internal Revenue Service Form W-8ECI or United States Internal Revenue Service Form W-8IMY (wherein such transferee claims entitlement to complete exemption from United States federal withholding tax on all interest payments hereunder); provided, however, that in the event that the transferor fails to cause the transferee to furnish either such Form, Borrower shall deduct any Applicable Taxes to the extent required by law and payments shall be made net of any Applicable Taxes without regard to the provisions of clause (i) of the second sentence of this Section 2.2.3.

 

2.2.4 New Payment Date. Lender shall have the right, to be exercised not more than once during the term of the Loan, to change the Payment Date to a date later than the sixth day of each month (a “New Payment Date”), on 30 days’ written notice to Borrower; provided, however, that any such change in the Payment Date: (i) shall not modify the amount of regularly scheduled monthly principal (if any) and interest payments, except that the first payment of principal (if any) and interest payable on the New Payment Date shall be accompanied by interest at the interest rate herein provided for the period from the Payment Date in the month in which the New Payment Date first occurs to the New Payment Date, and (ii) shall extend the Stated Maturity Date to the New Payment Date occurring in the month set forth in the definition of Stated Maturity Date.

 

Section 2.3 Loan Repayment

 

.

 

2.3.1 Repayment. Borrower shall repay the entire outstanding principal balance of the Note in full on the Maturity Date, together with interest thereon to (but excluding) the date of repayment and any other amounts due and owing under the Loan Documents. Borrower shall have no right to prepay or defease all or any portion of the Principal except in accordance with Section 2.3.2, Section 2.3.3 and Section 2.4 below. Except during the continuance of an Event of Default, all proceeds of any repayment, including any prepayments of the Loan, shall be applied by Lender as follows in the following order of priority: First, accrued and unpaid interest at the Interest Rate; second, to Principal; and third, to and any other amounts then due and owing under the Loan Documents. If prior to the Stated Maturity Date the Debt is accelerated by reason of an Event of Default, then Lender shall be entitled to receive, in addition to the unpaid Principal and accrued interest and other sums due under the Loan Documents, an amount equal to the Yield Maintenance Premium applicable to such Principal so accelerated. During the continuance of an Event of Default, all proceeds of repayment, including any payment or recovery on the Property (whether through foreclosure, deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in the Loan Documents, be applied in such order and in such manner as Lender shall elect in Lender’s discretion.

 

 

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if such Casualty/Condemnation Payment is made on any date other than a Payment Date, then such Casualty/Condemnation Payment shall include interest that would have accrued on the Principal prepaid to but not including the next Payment Date. Provided that no Event of Default is continuing, any such mandatory prepayment under this Section 2.3.2 shall be without the payment of the Yield Maintenance Premium. Notwithstanding anything to the contrary contained herein, each Casualty/Condemnation Prepayment shall be applied in inverse order of maturity and shall not extend or postpone the due dates of the monthly installments due under the Note or this Agreement.

 

2.3.3 Defeasance

 

(a) Conditions to Defeasance. Provided no Event of Default shall be continuing, Borrower shall have the right on any Payment Date after the Lockout Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage and a release of Borrower’s and Guarantor’s obligations under the other Loan Documents (other than (i) those obligations which are expressly stated to survive the payment in full of the Loan and (ii) the Security Agreement) by providing Lender with the Defeasance Collateral (a “Defeasance Event”), subject to the satisfaction of the following conditions precedent:

 

(1) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the “Defeasance Date”) on which the Defeasance Event is expected to occur.

 

(2) Borrower shall pay to Lender (A) all payments of interest due on the Loan to and including the Defeasance Date and (B) all other sums then due under the Note, this Agreement and the other Loan Documents;

 

(3) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of subsections (b) and (c) of this Section 2.3.3;

 

(4) Borrower shall execute and deliver to Lender a Security Agreement in respect of the Defeasance Collateral Account and the Defeasance Collateral;

 

 

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Section 547 of the Bankruptcy Code or applicable state law and (v) a non-consolidation opinion with respect to the Successor Borrower (if any);

 

(6) Borrower shall deliver to Lender and the Rating Agencies a Rating Comfort Letter as to the Defeasance Event;

 

(7) Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.3.3 have been satisfied;

 

(8) Borrower shall deliver an agreed upon procedures letter from a “big four” or other nationally recognized public accounting firm that would be acceptable to a prudent lender (or any other accounting firm that is reputable and experienced in preparing such procedure letters and reports and would be reasonably acceptable to a prudent lender) verifying that the Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments, (ii) the revenue from the Defeasance Collateral will be applied within four months of receipt towards payments of Debt Service, (iii) the securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (iv) the interest income to Borrower (or the Successor Borrower, if applicable) from the Defeasance Collateral will not in any tax year materially exceed the interest expense associated with the defeased Loan;

 

(9) Borrower shall deliver such other certificates, opinions, documents and instruments as a prudent lender may reasonably request; and

 

(10) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and Rating Agency fees and expenses.

 

(b) Defeasance Collateral Account. On or before the date on which Borrower delivers the Defeasance Collateral, Borrower shall open at any Eligible Institution the defeasance collateral account (the “Defeasance Collateral Account”) which shall at all times be an Eligible Account. The Defeasance Collateral Account shall contain only (i) Defeasance Collateral, and (ii) cash from interest and principal paid on the Defeasance Collateral. All cash from interest and principal payments paid on the Defeasance Collateral shall be paid over to Lender on each Payment Date and applied first to accrued and unpaid interest and then to Principal. Any cash from interest and principal paid on the Defeasance Collateral not needed to pay accrued and unpaid interest or Principal shall be retained in the Defeasance Collateral Account as additional collateral for the Loan. Borrower shall cause the Eligible Institution at which the Defeasance Collateral is deposited to enter an agreement with Borrower and Lender, satisfactory to Lender in its sole discretion, pursuant to which such Eligible Institution shall agree to hold and distribute the Defeasance Collateral in accordance with this Agreement. The Borrower or the Successor Borrower shall be the owner of the Defeasance Collateral Account and shall report all income accrued on Defeasance Collateral for federal, state and local income tax purposes in its income tax return to the extent required by law. Borrower shall pay all costs and expenses associated with opening and maintaining the Defeasance Collateral Account. Neither Borrower (provided that a Successor Borrower has assumed the Loan) nor Lender shall in any way be liable by reason of any insufficiency in the Defeasance Collateral Account.

 

 

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(c) Successor Borrower. In connection with a Defeasance Event under this Section 2.3.3, Borrower shall, if required by the Rating Agencies or if Borrower elects to do so, establish or designate a successor entity (the “Successor Borrower”) which shall be a Single Purpose Bankruptcy Remote Entity and which shall be approved by the Rating Agencies. Any such Successor Borrower may, at Borrower’s option, be an Affiliate of Borrower unless the Rating Agencies shall require otherwise. Borrower shall transfer and assign all obligations, rights and duties under and to the Note, together with the Defeasance Collateral to such Successor Borrower. Such Successor Borrower shall assume the obligations under the Note and the Security Agreement and Borrower shall be relieved of its obligations under the Debt and the Loan Documents (other than those obligations which are expressly stated to survive the payment in full of the Loan). Borrower shall pay a minimum of $1,000 to any such Successor Borrower as consideration for assuming the obligations under the Note and the Security Agreement (unless such requirement shall be waived by the applicable Rating Agencies). Borrower shall pay all costs and expenses incurred by Lender, including Lender’s attorney’s fees and expenses, incurred in connection therewith.

 

2.3.4 Optional Prepayments. From and after the third Payment Date prior to the Stated Maturity Date (the “Permitted Prepayment Date”), Borrower shall have the right to prepay the Principal in whole but not in part, provided that Borrower gives Lender at least 15 days’ prior written notice thereof. If any such prepayment is not made on a Payment Date, Borrower shall also pay interest that would have accrued on such prepaid Principal to, but not including, the next Payment Date. Any such prepayment shall be made without payment of the Yield Maintenance Premium.

 

2.3.5 Prepayments After Default. If after the occurrence and during the continuance of an Event of Default, payment of all or any part of the principal of the Loan is tendered by Borrower, a purchaser at foreclosure or any other Person, such tender shall be deemed an attempt to circumvent the prohibition against prepayment set forth in Section 2.3.1 and Borrower, such purchaser at foreclosure or other Person shall pay the Yield Maintenance Premium, in addition to the outstanding principal balance, all accrued and unpaid interest and other amounts payable under the Loan Documents.

 

Section 2.4 Release of Property

 

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Requirements, and (ii) will effect such release in accordance with the terms of this Agreement. Borrower shall pay all costs, taxes and expenses associated with the release of the Lien of the Mortgage and the other Loan Documents, including Lender’s reasonable attorneys’ fees.

 

2.4.2 Release on Payment in Full. Lender shall, upon the written request and at the expense of Borrower, upon payment in full of the Debt in accordance herewith, release or, if requested by Borrower, assign to Borrower’s designee (without any representation or warranty by and without any recourse against Lender whatsoever), the Lien of the Loan Documents if not theretofore released.

 

Section 2.5 Payments and Computations

 

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account at the Clearing Bank, unless a Cash Management Period is continuing, in which event such funds shall be swept on a daily basis into an Eligible Account at the Deposit Bank controlled by Lender (the “Deposit Account”) and applied and disbursed in accordance with this Agreement. Funds in the Deposit Account shall be invested at Lender’s discretion only in Permitted Investments. Lender will also establish subaccounts of the Deposit Account which shall at all times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts) (such subaccounts are referred to herein as “Subaccounts”). The Deposit Account and any Subaccount will be under the sole control and dominion of Lender, and Borrower shall have no right of withdrawal therefrom. Borrower shall pay for all expenses of opening and maintaining all of the above accounts.

 

Section 3.2 Intentionally Omitted

 

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Section 3.3 Taxes and Insurance

 

 

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and/or expiration of the Policies, as the case may be. All earnings of interest on the Tax and Insurance Impound Fund shall become part of the Tax and Insurance Impound Fund and shall be disbursed in accordance with this Section 3.3. If Lender so elects at any time, Borrower shall provide, at Borrower’s expense, a tax service contract for the Term issued by a tax reporting agency acceptable to Lender. If Lender does not so elect, Borrower shall reimburse Lender for the cost of making annual tax searches throughout the Term.

 

Section 3.4 Capital Expense Reserves

 

. On the date hereof, Borrower shall deposit with Lender $5,000,000. Lender will transfer such amount into a Subaccount (the “Capital Reserve Subaccount”). In addition to the foregoing, Borrower shall pay to Lender on each Payment Date an amount initially equal to $9,145 (one-twelfth (1/12^th) of the product obtained by multiplying $0.25 by the aggregate number of rentable square feet of space in the Property) for deposit into the Capital Reserve Subaccount; provided, however, Borrower shall only be obligated to make such monthly payment on any Payment Date on which the aggregate amount then on deposit in the Capital Reserve Subaccount is below $500,000. Additionally, upon thirty (30) days’ prior notice to Borrower, Lender may reassess the amount of the monthly payment required under this Section 3.4 from time to time in its reasonable discretion (based upon its then current underwriting standards). Provided that no Event of Default is continuing, Lender shall disburse funds held in the Capital Reserve Subaccount to Borrower, within fifteen (15) days after the delivery by Borrower to Lender of a request therefor (but not more often than once per month), in increments of at least $5,000 provided that (i) such disbursement is for an Approved Capital Expense; (ii) with respect to disbursements in excess of $100,000, Lender shall have (if it desires) verified (by an inspection conducted at Borrower’s expense) performance of the work associated with such Approved Capital Expense; and (iii) the request for disbursement is accompanied by (A) an Officer’s Certificate certifying (1) that such funds will be used to pay or reimburse Borrower for Approved Capital Expenses and a description thereof, (2) that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting Permitted Indebtedness) have been paid in full, (3) that the same has not been the subject of a previous disbursement, and (4) that all previous disbursements have been used to pay the previously identified Approved Capital Expenses, and (B) lien waivers or other evidence of payment satisfactory to Lender, (C) at Lender’s option, a title search for the Property indicating that the Property is free from all Liens, claims and other encumbrances not previously approved by Lender and (D) such other evidence as Lender shall reasonably request that the Approved Capital Expenses at the Property to be funded by the requested disbursement have been completed and are paid for or will be paid upon such disbursement to Borrower. Any such disbursement of more than $100,000 to pay (rather than reimburse) Approved Capital Expenses may, at Lender’s option, be made by joint check payable to Borrower and the payee on such Approved Capital Expenses. 

 

Section 3.5 Rollover Reserve

 

 

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Deposit have been reduced to $1,000,000, Borrower shall pay to Lender (for deposit into the Rollover Reserve Subaccount) $45,725 (one-twelfth (1/12^th) of the product obtained by multiplying $1.25 by the aggregate number of rentable square feet of space in the Property); provided, however, Borrower shall only be obligated to make such monthly payment on any Payment Date on which the aggregate amount then on deposit in the Rollover Reserve Subaccount (excluding any Lease Termination Payments) is below $2,500,000. Borrower shall also pay to Lender (for deposit into the Rollover Reserve Subaccount) all Lease Termination Payments received by Borrower with respect to Material Leases; provided, however, once Borrower has provided to Lender evidence reasonably acceptable to Lender that the space under the Lease that was the subject of such Lease Termination Payment has been re-tenanted and all Approved Leasing Expenses in connection with such space have been paid, Lender shall (provided no Event of Default is then continuing) disburse to Borrower any remaining portion of the subject Lease Termination Payment. Provided that no Event of Default has occurred and is continuing, Lender shall disburse funds held in the Rollover Reserve Subaccount to Borrower, within fifteen (15) days after the delivery by Borrower to Lender of a request therefor (but not more often than once per month), in increments of at least $5,000, provided (i) such disbursement is for an Approved Leasing Expense; (ii) with respect to disbursements in excess of $100,000, Lender shall have (if it desires) verified (by an inspection conducted at Borrower’s expense) performance of any construction work associated with such an Approved Leasing Expense; and (iii) the request for disbursement is accompanied by (A) an Officer’s Certificate certifying (1) that such funds will be used only to pay (or reimburse Borrower for) an Approved Leasing Expense, and a description thereof, (2) that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting Permitted Indebtedness) have been paid in full, (3) that the same has not been the subject of a previous disbursement, and (4) that all previous disbursements have been used only to pay (or reimburse Borrower for) the previously identified Approved Leasing Expenses, and (B) reasonably detailed supporting documentation as to the amount, necessity and purpose therefor. Any such disbursement of more than $100,000 to pay (rather than reimburse) Approved Leasing Expenses may, at Lender’s option, be made by joint check payable to Borrower and the payee of such Approved Leasing Expenses. 

 

Section 3.6 Casualty/Condemnation Subaccount

 

. Borrower shall pay, or cause to be paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation to be transferred to a Subaccount (the “Casualty/Condemnation Subaccount”) in accordance with the provisions of Article 7. All amounts in the Casualty/Condemnation Subaccount shall be disbursed in accordance with the provisions of Article 7.

 

Section 3.7 Security Deposits

 

 

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Legal Requirements, turn over to Lender the security deposits (and any interest theretofore earned thereon) under Leases, to be held by Lender in a Subaccount (the “Security Deposit Subaccount”) subject to the terms of the Leases. Security deposits held in the Security Deposit Subaccount will be released by Lender upon notice from Borrower together with such evidence as Lender may reasonably request that such security deposit is required to be returned to a tenant pursuant to the terms of a Lease or may be applied as Rent pursuant to the rights of Borrower under the applicable Lease. Any letter of credit or other instrument that Borrower receives in lieu of a cash security deposit under any Lease entered into after the date hereof shall (i) be maintained in full force and effect in the full amount required by the applicable Lease unless replaced by a cash deposit as hereinabove described and (ii) if permitted pursuant to any Legal Requirements, name Lender as payee or mortgagee thereunder (or at Lender’s option, be fully assignable to Lender).

 

Section 3.8 Cash Collateral/DSCR Cash Management Letter of Credit Collateral

 

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3.8.1 Cash Collateral Subaccount

 

. If a Cash Management Period shall have commenced, then on the immediately succeeding Payment Date and on each Payment Date thereafter during the continuance of such Cash Management Period, all Available Cash shall be paid to Lender, which amounts shall be transferred by Lender into a Subaccount (the “Cash Collateral Subaccount”) as cash collateral for the Debt. Any funds in the Cash Collateral Account and not previously disbursed or applied shall be disbursed to Borrower upon the termination of such Cash Management Period. Lender shall have the right, but not the obligation, at any time during the continuance of an Event of Default, in its sole and absolute discretion to apply all sums then on deposit in the Cash Collateral Subaccount to the Debt, in such order and in such manner as Lender shall elect in its sole and absolute discretion, including to make a prepayment of Principal (together which the applicable Yield Maintenance Premium applicable thereto). Additionally, Lender shall have the right, but not the obligation, at any time subsequent to the second Calculation Date following the commencement of a DSCR Cash Management Period (whether or not an Event of Default is then continuing), in its sole and absolute discretion to apply all sums then on deposit in the Cash Collateral Subaccount towards a partial Defeasance of the Loan (together with any Defeasance costs associated therewith), and Borrower shall execute such documents and take such other actions necessary to satisfy the Defeasance requirements set forth in Section 2.3.3 hereof (to the extent applicable to a partial involuntary Defeasance).

 

3.8.2 DSCR Cash Management Letter of Credit Collateral

 

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or any portion of the DSCR Cash Management Letter of Credit Collateral and to apply such amount drawn to payment of the Debt in such order, proportion or priority as Lender may determine. Any such application to the Debt shall be subject to the Yield Maintenance Premium, if applicable. Borrower shall not be entitled to draw upon any such DSCR Cash Management Letter of Credit Collateral. However, if, as of any Calculation Date, the aggregate outstanding face amount of the DSCR Cash Management Letter of Credit Collateral received by Lender from Borrower in accordance with the definition of “Cash Management Period” is in an amount which is at least $350,000.00 greater than the amount necessary to (i) prevent the triggering of a DSCR Cash Management Period or (ii) end any then-continuing DSCR Cash Management Period, then, provided no Default or Event of Default then exists, Borrower may, at its option, reduce (or replace) the DSCR Cash Management Letter of Credit Collateral with DSCR Cash Management Letter of Credit Collateral which, when utilized in the calculation of the Debt Service component of the Debt Service Coverage Ratio, is in an amount equal to a portion of the then-outstanding Principal such that the Minimum DSCR Threshold would be maintained on the Loan after reduction of Principal in an amount equal to the aggregate outstanding face amount of the reduced (or replaced) DSCR Cash Management Letter of Credit Collateral.

 

(b) In addition to any other right Lender may have to draw upon DSCR Cash Management Letter of Credit Collateral pursuant to the terms and conditions of Section 3.8.2(a) above, Lender shall have the additional rights to draw in full any Letter of Credit constituting DSCR Cash Management Letter of Credit Collateral: (i) with respect to any evergreen Letter of Credit, if Lender has received a notice from the issuing bank that the applicable Letter of Credit will not be renewed and a substitute Letter of Credit is not provided at least thirty (30) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (ii) with respect to any Letter of Credit with a stated expiration date, if Lender has not received a notice from the issuing bank that it has renewed the Letter of Credit at least thirty (30) days prior to the date on which such Letter of Credit is scheduled to expire and a substitute Letter of Credit is not provided at least twenty (20) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (iii) upon receipt of notice from the issuing bank that the Letter of Credit will be terminated (except if the termination of such Letter of Credit is permitted pursuant to the terms and conditions of this Agreement or a substitute Letter of Credit is provided) or (iv) if Lender has received notice that the bank issuing the Letter of Credit shall cease to be an Approved Bank and Borrower shall not have replaced such Letter of Credit with a Letter of Credit issued by an Approved Bank within twenty (20) days after notice thereof. Notwithstanding anything to the contrary contained in the above, Lender is not obligated to draw any DSCR Cash Management Letter of Credit Collateral upon the happening of an event specified in (i), (ii), (iii) or (iv) above and shall not be liable for any losses sustained by Borrower due to the insolvency of the bank issuing the Letter of Credit if Lender has not drawn the applicable Letter of Credit.

 

Section 3.9 Grant of Security Interest; Application of Funds

 

 

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created pursuant to this Agreement (collectively, the “Cash Management Accounts”). Borrower hereby grants to Lender a continuing security interest in, and agrees to hold in trust for the benefit of Lender, all Rents in its possession prior to the (i) payment of such Rents to Lender or (ii) deposit of such Rents into the Deposit Account until such Rents are released to Borrower from the Clearing Account pursuant to this Agreement and the Cash Management Agreement. Borrower shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any Cash Management Account, or permit any Lien to attach thereto, or any levy to be made thereon, or any UCC Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto. This Agreement is, among other things, intended by the parties to be a security agreement for purposes of the UCC. Upon the occurrence and during the continuance of an Event of Default, Lender may apply any sums in any Cash Management Account in any order and in any manner as Lender shall elect in Lender’s discretion without seeking the appointment of a receiver and without adversely affecting the rights of Lender to foreclose the Lien of the Mortgage or exercise its other rights under the Loan Documents. Cash Management Accounts shall not constitute trust funds and may be commingled with other monies held by Lender. Provided no Event of Default has occurred and is continuing, at the direction of Borrower, Lender shall deposit the amounts held in the Cash Management Accounts in Permitted Investments selected by Borrower. All investment earnings which accrues on the funds in any Cash Management Account shall accrue for the benefit of Borrower and shall be taxable to Borrower and shall be added to and disbursed in the same manner and under the same conditions as the principal sum on which said interest accrued. Lender shall not be responsible for any losses resulting from the investment of the Funds or for obtaining any specific level or percentage of earnings on such investment. Upon repayment in full of the Debt or defeasance of the Loan, all remaining funds in the Cash Management Accounts, if any, shall be promptly disbursed to Borrower.

 

Section 3.10 Property Cash Flow Allocation

 

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(a) During any Cash Management Period, all Rents deposited into the Deposit Account during the immediately preceding Interest Period shall be applied on each Payment Date as follows in the following order of priority: (i) First, to make payments into the Tax and Insurance Subaccount as required under Section 3.3; (ii) Second, to pay the monthly portion of the fees charged by the Deposit Bank in accordance with the Cash Management Agreement; (iii) Third, to Lender to pay the Monthly Debt Service Payment Amount due on such Payment Date (plus, if applicable, interest at the Default Rate and all other amounts, other than those described under other clauses of this Section 3.10(a), then due to Lender under the Loan Documents); (iv) Fourth, to make payments into the Capital Reserve Subaccount as required under Section 3.4; (v) Fifth, to make payments into the Rollover Reserve Subaccount if and as required under Section 3.5.1; (vi) Sixth, to Borrower the monthly amount set forth in the Approved Budget for the following month as being necessary for payment of Approved Operating Expenses at the Property for such month, plus the amount for Budgeted Variances (as defined in the Cash Management Agreement); (vii) Seventh, after the consummation of a Securitization, to pay the pro rata portion of the expenses described in Section 9.1.4; and (viii) Lastly, to make payments in an amount equal to all remaining Available Cash on such Payment Date into the Cash Collateral Subaccount in accordance with Section 3.8.

 

 

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(b) The failure of Borrower to make all of the payments required under clauses (i) through (viii) of Section 3.10(a) in full on each Payment Date shall constitute an Event of Default under this Agreement; provided, however, if adequate funds are available in the Deposit Account for such payments, the failure by the Deposit Bank to allocate such funds into the appropriate Subaccounts shall not constitute an Event of Default.

 

(c) Notwithstanding anything to the contrary contained in this Section 3.10, after the occurrence and continuance of a Default or an Event of Default, Lender may apply all Rents deposited into the Deposit Account and other proceeds of repayment in such order and in such manner as Lender shall elect.

 

ARTICLE 4

 

 

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Lender as of the date hereof that, except to the extent (if any) disclosed on Schedule 2 with reference to a specific Section of this Article 4:

 

Section 4.1 Organization; Special Purpose

 

. Borrower has been duly organized and is validly existing and in good standing under the laws of the state of its formation, with requisite power and authority, and all rights, licenses, permits and authorizations, governmental or otherwise, necessary to own its properties and to transact the business in which it is now engaged. Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its properties, business and operations. Borrower is a Special Purpose Bankruptcy Remote Entity.

 

Section 4.2 Authorization; Valid Execution and Delivery; Enforceability

 

. Borrower has taken all necessary actions for the authorization of the borrowing on account of the Loan and for the execution and delivery of the Loan Documents, including, without limitation, that those members of Borrower whose approval is required by the terms of Borrower’s organizational documents have duly approved the transactions contemplated by the Loan Documents and have authorized execution and delivery thereof by the respective signatories. To the best of Borrower’s knowledge, no other consent by any local, state or federal agency is required in connection with the execution and delivery of the Loan Documents. All of the Loan Documents requiring execution by Borrower have been duly and validly executed and delivered by Borrower. All of the Loan Documents constitute valid, legal and binding obligations of Borrower and are fully enforceable against Borrower in accordance with their terms by Lender and its successors, transferees and assigns, subject only to bankruptcy laws, and general principles of equity, insolvency, reorganization, arrangement, moratorium, receivership or other similar laws relating to or affecting the rights of creditors. All consents, approvals, authorizations, orders or filings with any court or governmental agency or body, if any, required for the execution, delivery and performance of the Loan Documents by Borrower have been obtained or made.

 

Section 4.3 No Conflict/Violation of Law

 

 

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. The execution, delivery and performance of the Loan Documents by Borrower will not cause or constitute a default under or conflict with the organizational documents of Borrower, any Guarantor or any general partner or managing member of Borrower or any Guarantor. The execution, delivery and performance of the obligations imposed on Borrower under the Loan Documents will not cause Borrower to be in default, including after due notice or lapse of time or both, under the provisions of any agreement, judgment or order to which Borrower is a party or by which Borrower is bound.

 

Section 4.4 No Litigation

 

. Except as otherwise disclosed on Schedule 2, to the best of Borrower’s knowledge there are no pending actions, suits or proceedings, arbitrations or governmental investigations against the Property, an adverse outcome of which would materially affect Borrower’s performance under the Note, this Agreement or the other Loan Documents.

 

Section 4.5 No Defenses

 

. The Note, this Agreement, the Mortgage and the other Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense, nor would the operation of any of the terms of the Note, this Agreement, the Mortgage or any of the other Loan Documents, or the exercise of any right thereunder, render this Agreement or the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury.

 

Section 4.6 Title

 

. Borrower has good and marketable fee simple title to the Property constituting real property (other than the beneficial interests), and good title to the Equipment, subject to no liens, charges or encumbrances other than the Permitted Encumbrances and liens, charges or encumbrances otherwise expressly permitted by the Loan Documents. The possession of the Property has been peaceful and undisturbed and title thereto has not been disputed or questioned to the best of Borrower’s knowledge. The Permitted Encumbrances do not and will not materially and adversely affect (1) the ability of Borrower to pay in full the principal and interest on the Note in a timely manner or (2) the use of the Property for the use currently being made thereof, the operation of the Property as currently being operated or the value of the Property. Upon the execution by Borrower and the recording of the Mortgage, and upon the filing of UCC-1 financing statements or amendments thereto, the Lender will have a valid first lien on the Property and a valid security interest in the Equipment subject to no liens, charges or encumbrances other than the Permitted Encumbrances and liens, charges or encumbrances otherwise expressly permitted by the Loan Documents.

 

Section 4.7 No Insolvency or Judgment; No Bankruptcy Filing

 

 

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Borrower insolvent. As used herein, the term “insolvent” means that the sum total of all of an entity’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in excess of the value of all such entity’s non-exempt assets, i.e., all of the assets of the entity that are available to satisfy claims of creditors. Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency law or the liquidation of all or a major portion of its property (a “Bankruptcy Proceeding”), and Borrower has no knowledge of any Person contemplating the filing of any such petition against it. In addition, except as described on Schedule 2 attached hereto, neither Borrower nor any principal nor Affiliate of Borrower has been a party to, or the subject of a Bankruptcy Proceeding for the past ten years.

 

Section 4.8 Misstatements of Fact

 

. No statement of fact made in the Loan Documents contains any untrue statement of a material fact or omits to state any material fact known to Borrower or its Affiliates necessary to make statements contained herein or therein not misleading. There is no fact presently known to Borrower which has not been disclosed which materially adversely affects, nor as far as Borrower can reasonably foresee, might materially adversely affect the business, operations or condition (financial or otherwise) of Borrower.

 

Section 4.9 Tax Filings

 

. To the extent required, Borrower has filed (or has obtained effective extensions for filing) all federal, state and local tax returns required to be filed and, except as otherwise disclosed to Lender in writing, has paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments payable by Borrower pursuant to such returns or any notice of assessment received by Borrower. Borrower believes that its tax returns (if any) properly reflect the income and taxes of Borrower for the periods covered thereby, subject only to reasonable adjustments required by the Internal Revenue Service or other applicable tax authority upon audit. Borrower does not have any knowledge of any basis for additional assessment with respect to such taxes other than a possible reassessment of the Property for real estate tax purposes resulting from transactions occurring in connection with the acquisition of the Property on or prior to the date hereof.

 

Section 4.10 ERISA

 

. As of the date hereof and throughout the Term (i) Borrower is not and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, (ii) none of the assets of Borrower constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, (iii) Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA, and (iv) transactions by or with Borrower are not and will not be subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans. As of the date hereof, neither Borrower, nor any member of the “controlled group of corporations” (within the meaning of Section 414 of the Code) that includes Borrower maintains, sponsors or contributes to a “defined benefit plan” (within the meaning of Section 3(35) of ERISA) or a “multiemployer pension plan” (within the meaning of Section 3(37)(A) of ERISA).

 

 

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Section 4.11 Compliance with Applicable Laws and Regulations

 

. To the Borrower’s knowledge, except as set forth in the engineering reports obtained and submitted to Lender in connection with the Loan, all of the Improvements and the use of the Property comply in all material respects with, and shall remain in compliance in all material respects with, all applicable statutes, rules, regulations and private covenants now or hereafter relating to the ownership, construction, use or operation of the Property, including all applicable Prescribed Laws and all applicable statutes, rules and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, environmental protection, zoning and land use and the Improvements comply in all material respects with, and shall remain in compliance in all material respects with, applicable health, fire and building codes. Borrower is not aware of any illegal activities relating to controlled substances on the Property. To Borrower’s knowledge, all certifications, permits, licenses and approvals, including, without limitation, certificates of completion and occupancy permits required for the legal use, occupancy and operation of the Property as an office building (collectively, the “Licenses”), have been obtained and are in full force and effect. To the Borrower’s knowledge, all of the Improvements comply with all material requirements of any applicable zoning and subdivision laws and ordinances. To Borrower’s knowledge, in the event that all or any part of the Improvements are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction, and thereafter exist for the same use without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or special permits. No legal proceedings are pending or, to the knowledge of Borrower, threatened with respect to the zoning of the Property. To the Borrower’s knowledge, neither the zoning nor any other right to construct, use or operate the Property is in any way dependent upon or related to any property other than the Property. The use being made of the Property is in conformity with the certificate of occupancy issued for the Property and, to the Borrower’s knowledge, all other restrictions, covenants and conditions affecting the Property.

 

Section 4.12 Contracts

 

. Except as set forth on Schedule 2, to the Borrower’s knowledge there are no service, maintenance or repair contracts affecting the Property that are not terminable on one month’s notice or less without cause and without penalty or premium. All service, maintenance or repair contracts affecting the Property entered into by the Borrower have been entered into at arms-length in the ordinary course of Borrower’s business and provide for the payment of fees in amounts and upon terms comparable to existing market rates.

 

Section 4.13 Federal Reserve Regulations; Investment Company Act

 

 

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within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (iii) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

 

Section 4.14 Access/Utilities

 

. To Borrower’s best knowledge, the Property has adequate rights of access to public ways and is served by adequate water, sewer, sanitary sewer and storm drain facilities. Other than as disclosed on the Survey (as hereinafter defined), all public utilities necessary to the continued use and enjoyment of the Property as presently used and enjoyed are located in the public right-of-way abutting the Property, and all such utilities are connected so as to serve the Property without passing over other property. All roads necessary for the full utilization of the Property for its current purpose have been completed and dedicated to public use and accepted by all Governmental Authorities or are the subject of access easements for the benefit of the Property.

 

Section 4.15 Condition of Improvements

 

. To the Borrower’s knowledge, except as may be expressly disclosed in the engineering reports obtained and submitted to Lender, the Property, including all Improvements, parking facilities, systems, Equipment and landscaping, are in good condition, order and repair in all material respects; and there exists no structural or other material defect or damages to the Property, whether latent or otherwise. Borrower has not received notice from any insurance company or bonding company of any defect or inadequacy in the Property, or any part thereof, which would adversely affect its insurability or cause the imposition of extraordinary premiums or charges thereon or any termination of any policy of insurance or bond. No portion of the Property is located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards. The Property has not been damaged by fire, water, wind or other cause of loss which has not been fully restored in all material respects.

 

Section 4.16 Leases

 

 

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connection with the Loan (collectively, the “Tenant Estoppels”), neither Borrower nor, to Borrower’s knowledge, any tenant under any Lease is in default under any of the material terms, covenants or provisions of the Lease, and, except as disclosed to Lender in writing or in any Tenant Estoppels, Borrower knows of no event which, but for the passage of time or the giving of notice or both, would constitute an event of default under any Lease; (vi) to Borrower’s best knowledge, except as expressly set forth in the Leases, the Tenant Estoppels or on the Rent Roll, there are no offsets or defenses to the payment of any portion of the Rents; and (vii) to Borrower’s best knowledge, except as disclosed on the Rent Roll or in any Tenant Estoppel, all Rents due and payable under each Lease have been paid in full and, except for estimated payments of operating expenses and taxes made by tenants in accordance with their Leases, no Rents have been paid more than one (1) month in advance of the due dates thereof. For purposes of the preceding sentence, the term “Lease” shall exclude subleases.

 

Section 4.17 Fraudulent Transfer

 

. Borrower (1) has not entered into the Loan or any Loan Document with the actual intent to hinder, delay, or defraud any creditor and (2) received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the Loan contemplated by the Loan Documents, the fair saleable value of Borrower’s assets exceed and will, immediately following the execution and delivery of the Loan Documents, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed or contingent liabilities. The fair market value of Borrower’s assets is and will, immediately following the execution and delivery of the Loan Documents, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities or its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately following the execution and delivery of the Loan Documents will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur debts and liabilities (including, without limitation, contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower).

 

Section 4.18 Ownership of Borrower

 

. The sole member of Borrower is the OP, whose sole general partner is the REIT. The membership interests in Borrower are owned free and clear of all Liens, warrants, options and rights to purchase. Borrower does not have any obligation to any Person to purchase, repurchase or issue any ownership interest in it. The organizational chart attached hereto as Schedule 4 is complete and accurate and illustrates all Persons who have a direct ownership interest in Borrower and the OP.

 

Section 4.19 No Purchase Options

 

 

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than rights of first refusal contained in operating agreements of members of Borrower in favor of members of the members of Borrower in the event of a sale of the Property by Borrower.

 

Section 4.20 Management Agreement

 

. The Management Agreement is in full force and effect and there is no default or violation by any party thereunder. The fee due under the Management Agreement, and the terms and provisions of the Management Agreement, are subordinate to the Mortgage and Manager agrees to attorn to Lender pursuant to and in accordance with that certain Assignment and Subordination of Management Agreement dated of even date herewith by and among Borrower, Manager and Lender.

 

Section 4.21 Hazardous Substances

 

 

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supplies used by Borrower, a tenant in accordance with the terms of its Lease or in connection with the ordinary cleaning and maintenance of the Property.

 

Section 4.22 Name; Principal Place of Business

 

. Borrower does not use and will not use any trade name and has not done and will not do business under any name other than its actual name set forth herein. The principal place of business of Borrower is its primary address for notices as set forth in Section 6.1, and Borrower does not have any other place of business.

 

Section 4.23 No Other Obligations

 

 

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Borrower’s knowledge, is any proceeding pending, threatened or known to be contemplated for the partial or total condemnation or taking of the Property.

 

Section 4.29 No Labor or Materialmen Claims

 

. Except for those improvements and other work performed in the ordinary course of business with respect to which any applicable payments are not more than sixty (60) days past due, to Borrower’s knowledge, all parties furnishing labor and materials for which payment is due and payable as of the date hereof have been paid in full and, except for such liens or claims insured against by the policy of title insurance to be issued in connection with the Loan, there are no mechanics’, laborers’ or materialmens’ liens or claims outstanding for work, labor or materials affecting the Property, whether prior to, equal with or subordinate to the lien of the Mortgage.

 

Section 4.30 Boundary Lines

 

. Except as disclosed in the survey of the Property and Improvements delivered to Lender in connection with the funding of the Loan (the “Survey”), to Borrower’s knowledge, (i) all of the Improvements which were included in determining the appraised value of the Property lie wholly within the boundaries and building restriction lines of the Property, (ii) no improvements on adjoining properties encroach upon the Property, and (iii) no easements or other encumbrances upon the Property encroach upon any of the Improvements, so as to materially and adversely affect the value or marketability of the Property except those which are insured against by title insurance.

 

Section 4.31 Survey

 

. To Borrower’s knowledge, the Survey does not fail to reflect any material matter affecting the Property or the Improvements or the title thereto.

 

Section 4.32 Forfeiture

 

. There has not been and shall never be committed by Borrower or, to Borrower’s knowledge, any other person in occupancy of or involved with the operation or use of the Property any act or omission affording the federal government or any state or local government the right of forfeiture as against the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents.

 

Section 4.33 Borrower Entity Representations

 

. Borrower hereby represents, warrants, covenants, with respect to Borrower, from the date of formation of Borrower to the date of this Agreement as follows:

 

(a) Borrower’s business has been limited solely to (i) acquiring, improving, developing, owning, holding, leasing, financing, operating and managing the Property, (ii) entering into financings and refinancings of the Property and (iii) transacting any and all lawful business that was incident, necessary and appropriate to accomplish the foregoing.

 

(b) Borrower has not engaged in any business other than as set forth in (a) above.

 

 

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(c) Borrower has not owned any asset or property other than (i) the Property, and (ii) incidental personal property reasonably necessary for and used or to be used in connection with the ownership or operation of the Property.

 

(d) Borrower has not entered into any contract or agreement with any Affiliate of Borrower, any constituent party of Borrower, any owner of Borrower, any guarantors of the obligations of Borrower or any Affiliate of any such constituent party, owner or guarantor (individually, a “Related Party” and collectively, the “Related Parties”), except upon terms and conditions that are commercially reasonable.

 

(e) Borrower has not made any loans or advances to any Person and has not acquired obligations or securities of any Related Party.

 

(f) Borrower has paid its debts and liabilities from its assets as the same have become due.

 

(g) Borrower has done or caused to be done all things necessary to observe organizational formalities and preserve its existence.

 

(h) Borrower has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person and Borrower’s assets have not been listed as the assets of any other Person on the financial statement of any other Person, and without limiting the foregoing, to the extent Borrower’s financial information were required under GAAP or tax-reporting rules to be included within a consolidated set of financial statements, such statements has included a footnote to the effect that Borrower is a separate legal entity and its assets are not available to creditors of other members of the consolidated group. Borrower has maintained its books, records, resolutions and agreements as official records.

 

(i) Borrower has been, and at all times has held itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate or other Related Party), has corrected any known misunderstanding regarding its status as a separate entity, has conducted its business in its own name, has not identified itself or any of its Affiliates as a division or part of the other and has maintained and utilized separate stationery, invoices and checks.

 

(j) Borrower has not commingled its assets with those of any other Person and has held all of its assets in its own name.

 

(k) Borrower has not guaranteed or become obligated for the debts of any other Person and has not held itself out as being responsible for the debts or obligations of any other Person.

 

(l) Borrower has allocated fairly and reasonably any overhead expenses that have been shared with an Affiliate (other than the other Borrower), including paying for office space and services performed by any employee of an Affiliate or Related Party.

 

 

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(m) Borrower has not pledged its assets for the benefit of any other Person other than with respect to loans secured by the Property and no such pledge remains outstanding except in connection with the Loan.

 

(n) Borrower has maintained a sufficient number of employees in light of its contemplated business operations and has paid the salaries of its own employees from its own funds.

 

(o) Borrower has not made loans to any other Person or has bought or held evidence of indebtedness issued by any other Person.

 

(p) Except as otherwise disclosed on Schedule 2, Borrower does not have any actions, suits or proceedings at law or in equity by or before any Governmental Authority or other agency now pending or, threatened against or affecting Borrower, which actions, suits or proceedings, if determined against Borrower, would materially adversely affect the financial condition or business of Borrower.

 

(q) Borrower has not incurred any indebtedness that is still outstanding other than indebtedness that is permitted under the Loan Documents.

 

(r) Borrower is not now party to any lawsuit, arbitration, summons, or legal proceeding, except as otherwise disclosed in Schedule 2, and any prior litigation related solely to the Property or the ownership in Borrower.

 

(s) Borrower has no judgments or liens of any nature against it except for tax liens not delinquent and liens disclosed in the title report and other Permitted Encumbrances.

 

(t) To Borrower’s knowledge, Borrower is in compliance with all laws, regulations, and orders applicable to it and has received all permits necessary for it to operate.

 

(u) Borrower is not involved in any dispute with any taxing authority.

 

(v) Borrower does not have any material contingent or actual obligations not related to the Property.

 

(w) Borrower is and has since its formation been duly formed, validly existing, and in good standing in the state of its formation and in all other jurisdictions where it is qualified to do business.

 

(x) Borrower has paid all taxes which Borrower owes pursuant to Legal Requirements. 

 

 

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acquires the Property by foreclosure or deed in lieu of foreclosure, the representations, warranties and covenants set forth in Section 4.21 shall survive in perpetuity.

 

ARTICLE 5

 

 

COVENANTS

 

Until the end of the Term, Borrower hereby covenants and agrees with Lender that:

 

Section 5.1 Existence

 

. Borrower shall (i) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, and franchises, (ii) continue to engage in the business presently conducted by it, (iii) obtain and maintain all Licenses, and (iv) qualify to do business and remain in good standing under the laws of each jurisdiction, in each case as and to the extent required for the ownership, maintenance, management and operation of the Property.

 

Section 5.2 Taxes and Other Charges

 

. Borrower shall pay all Taxes on or before the last date prior to which any interest, late fees or penalties would begin to accrue thereon (the “Delinquency Date”) and Other Charges as the same become due and payable, and deliver to Lender receipts for payment or other evidence satisfactory to Lender that the Taxes and Other Charges have been so paid no later than the Delinquency Date (provided, however, that Borrower need not pay such Taxes nor furnish such receipts for payment of Taxes paid by Lender pursuant to Section 3.3). Borrower shall not suffer and shall promptly cause to be paid and discharged any Lien against the Property other than Permitted Encumbrances, and shall promptly pay for all utility services provided to the Property required to be paid by Borrower. After prior notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application of any Taxes or Other Charges, provided that (i) no Default or Event of Default has occurred and is continuing, (ii) such proceeding shall suspend the collection of the Taxes or such Other Charges, (iii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder, (iv) no part of or interest in the Property will be in danger of being sold, forfeited, terminated, canceled or lost, (v) Borrower shall have furnished such security as may be required in the proceeding, or as may be requested by Lender, to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon, which shall not be less than 125% of the Taxes and Other Charges being contested, and (vi) Borrower shall promptly upon final determination thereof pay the amount of such Taxes or Other Charges, together with all costs, interest and penalties. Lender may pay over any such security or part thereof held by Lender to the claimant entitled thereto at any time when, in the judgment of Lender, the entitlement of such claimant is established.

 

Section 5.3 Access to Property

 

 

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. Borrower shall permit agents, representatives, consultants and employees of Lender to inspect the Property or any part thereof at reasonable hours upon reasonable advance notice, subject however to the rights of tenants under their respective Leases.

 

Section 5.4 Repairs; Maintenance and Compliance; Alterations

 

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5.4.1 Repairs; Maintenance and Compliance. Borrower shall at all times maintain, preserve and protect all franchises and trade names, and Borrower shall cause the Property to be maintained in a good and safe condition and repair and shall not remove, demolish or alter the Improvements or Equipment (except for alterations performed in accordance with Section 5.4.2 and normal replacement of Equipment with Equipment of equivalent value and functionality). Borrower shall promptly comply with all Legal Requirements, including, without limitation, Prescribed Laws, and immediately cure properly any violation of a Legal Requirement, including, without limitation, Prescribed Laws; provided, however, that after prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, such Legal Requirement, provided that (i) no Event of Default has occurred and is continuing; (ii) such proceeding shall not be prohibited by the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (iii) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall promptly upon final determination thereof comply with such Legal Requirement and pay all costs, interest and penalties which may be payable in connection therewith; and (v) such proceeding shall suspend the requirement of Borrower to comply with such Legal Requirement. Borrower shall notify Lender in writing within one Business Day after Borrower first receives notice of any such non-compliance. Borrower shall promptly repair, replace or rebuild any part of the Property that becomes damaged, worn or dilapidated and shall complete and pay for any Improvements at any time in the process of construction or repair. 

 

 

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request shall have been accompanied by all information reasonably requested by Lender or reasonably necessary for Lender to evaluate such request and shall have clearly stated, in 14 point type or greater, that if Lender fails to respond to such request within ten (10) Business Days, Lender’s consent shall be deemed to have been granted. If Lender refuses to grant such consent, Lender shall specify in writing the reasons for such refusal. Any approval by Lender of the plans, specifications or working drawings for alterations of the Property shall not create responsibility or liability on behalf of Lender for their completeness, design, sufficiency or their compliance with applicable laws. Lender may condition any such approval upon receipt of a certificate of compliance with applicable laws from an independent architect, engineer, or other Person reasonably acceptable to Lender. If the total unpaid amounts due and payable with respect to alterations to the Improvements (other than such amounts to be paid or reimbursed by tenants under the Leases or paid from accounts established hereunder or Excluded Costs) shall at any time exceed the Threshold Amount, Borrower shall promptly deliver to Lender as security for the payment of such amounts and as additional security for Borrower’s obligations under the Loan Documents any of the following: (1) cash, (2) U.S. Treasury securities, (3) other securities having a rating acceptable to Lender and with respect to which the applicable Rating Agencies have delivered a Rating Comfort Letter, or (4) a Letter of Credit. Such security shall be in an amount equal to the excess of the total unpaid amounts with respect to alterations to the Improvements (other than such amounts to be paid or reimbursed by tenants under the Leases or from accounts established hereunder or Excluded Costs) over the Threshold Amount. Upon completion of the alterations to the satisfaction of Lender in its reasonable discretion Lender shall promptly return to Borrower such additional security.

 

Section 5.5 Performance of Other Agreements

 

. Borrower shall observe and perform each and every term to be observed or performed by it pursuant to the terms of any agreement or instrument affecting or pertaining to the Property, including the Loan Documents.

 

Section 5.6 Cooperate in Legal Proceedings

 

. Borrower shall cooperate fully with Lender with respect to, and permit Lender, at its option, to participate in, any proceedings before any Governmental Authority which may in any way affect the rights of Lender under any Loan Document.

 

Section 5.7 Further Assurances

 

. Borrower shall, at Borrower’s sole cost and expense, (i) execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Debt and/or for the better and more effective carrying out of the intents and purposes of the Loan Documents, as Lender may reasonably require from time to time; and (ii) upon Lender’s request therefor given from time to time after the occurrence and continuation of any Default or Event of Default pay for (a) reports of UCC, federal tax lien, state tax lien, judgment and pending litigation searches with respect to Borrower and the OP and (b) searches of title to the Property, each such search to be conducted by search firms reasonably designated by Lender in each of the locations reasonably designated by Lender.

 

 

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Section 5.8 Environmental Matters

 

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5.8.1 Environmental Covenants. So long as Borrower owns or is in possession of the Property, Borrower (i) shall keep or cause the Property to be kept free from Hazardous Substances except those in compliance with all Environmental Laws or any permits issued with respect thereto, (ii) shall promptly notify Lender if Borrower shall become aware of any release of Hazardous Substances on the Property and/or if Borrower shall become aware that the Property is in violation of any Environmental Laws and/or if Borrower shall become aware of any condition on the Property which shall pose a threat to the health, safety or welfare of humans, and (iii) shall remove or remediate such Hazardous Substances and/or cure such violations and/or remove or remediate such threats, as applicable, as required by law (or as shall be reasonably required by Lender in the case of removal or remediation which is not required by law, but in response to the opinion of a licensed hydrogeologist, licensed environmental engineer or other qualified consultant engaged by Lender (“Lender’s Consultant”) provided that such removal, remediation or cure is reasonably necessary to eliminate imminent danger to the health, safety or welfare of humans and would customarily be performed by prudent owners of properties similar to the Property in similar circumstances), promptly after Borrower becomes aware of same, at Borrower’s sole expense, without prejudice to any rights Borrower may have against any responsible parties. Notwithstanding anything to the contrary in this Section, Borrower, Manager and/or tenants on the Property may use and store ordinary amounts of Hazardous Substances at the Property if such use or storage is in connection with business supplies used by Borrower, a tenant in accordance with the terms of its Lease or by Manager pursuant to the Management Agreement or is in connection with the ordinary cleaning and maintenance of the Property so long as such use and storage (A) does not violate any applicable Environmental Laws and (B) is not the subject of any specific recommendations in the Phase I Reports that would prohibit such use or storage. Nothing herein shall prevent Borrower from recovering such expenses from any other party that may be liable for such removal or cure. The obligations and liabilities of Borrower under this Section 5.8.1 shall survive any termination, satisfaction, or assignment of the Mortgage and the exercise by Lender of any of its rights or remedies hereunder, including, without limitation, the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure; provided that such obligations and liabilities of Borrower shall not survive after the date Lender or its Affiliates take title to the Property pursuant to foreclosure or a conveyance in lieu of foreclosure.

 

 

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any governmental agency or any source whatsoever with respect to Asbestos on, affecting or installed on the Property, Borrower shall promptly notify Lender. 

 

 

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Mold, Borrower shall take all action necessary to clean and disinfect any portions of the Improvements affected by Toxic Mold in or about the Improvements, including providing any necessary moisture control systems at the Property. In the event that any investigation, site monitoring, containment cleanup, removal, restoration, or other work of any kind is reasonably necessary under an applicable Environmental Law (the “Remedial Work”), Borrower shall promptly commence and thereafter diligently prosecute to completion all such Remedial Work, provided that in any event Borrower shall complete such Remedial Work within the time required by applicable Environmental Law, and provided, further, that Borrower’s obligation to perform Remedial Work shall be without prejudice to any rights Borrower may have against responsible parties. All Remedial Work shall be performed by contractors approved in advance by Lender, and under the supervision of a consulting engineer approved by Lender. All costs and expenses of such Remedial Work shall be paid by Borrower including, without limitation, Lender’s reasonable attorneys’ fees and disbursements incurred in connection with monitoring or review of such Remedial Work. Nothing herein shall prevent Borrower from recovering such expenses from any other party that may be liable for such Remedial Work. In the event Borrower shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, Lender may, but shall not be required to, cause such Remedial Work to be performed, and all costs and expenses thereof, or incurred in connection therewith, shall bear interest from the date such costs are incurred by Lender until paid at the Default Rate and shall be due and payable by Borrower to Lender within ten (10) days after the date Lender makes written demand therefor, and if not so paid, may be added to the Debt.

 

5.8.4 Underground Storage Tanks. Borrower shall not install or permit to be installed on the Property any underground storage tank.

 

Section 5.9 Title to the Property

 

. Borrower will warrant and defend the title to the Property, and the validity and priority of all Liens granted or otherwise given to Lender under the Loan Documents, subject only to Permitted Encumbrances, against the claims of all Persons.

 

Section 5.10 Leases

 

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Property covered by its Lease. Upon request, Borrower shall furnish Lender with executed copies of all Leases.

 

5.10.2 Borrower shall not, without the prior consent of Lender, which consent shall not be unreasonably withheld or conditioned (i) enter into any Material Lease of all or any part of the Property, (ii) cancel, terminate (other than as a result of a tenant default thereunder), abridge or otherwise modify in any material respect the terms of any Material Lease unless such action is required by the terms thereof, or accept a surrender thereof, (iii) consent to any assignment of or subletting under any Material Lease not in accordance with its terms, (iv) cancel, terminate, abridge or otherwise modify any guaranty of any Material Lease or the terms thereof, (v) accept prepayments of installments of Rents for a period of more than one (1) month in advance (other than estimated payments of taxes and reimbursable expenses paid by tenants pursuant to their Leases) or (vi) further assign the whole or any part of the Leases or the Rents other than in connection with a Transfer and Assumption. If Lender fails to respond to a request for consent under this Section 5.10.2 within ten (10) Business Days of receipt thereof, such consent shall be deemed granted, provided that such request shall have been accompanied by all information requested by Lender or reasonably necessary for Lender to evaluate such request and shall have clearly stated, in 14 point type or greater, that if Lender fails to respond to such request within ten (10) Business Days, Lender’s consent shall be deemed to have been granted. In the event that Lender refuses to grant any such consent, Lender shall specify in writing the reasons for such refusal. In addition, Borrower shall not (A) lease all or any part of the Property, (B) cancel, terminate (other than as a result of a tenant default thereunder), abridge or otherwise modify the terms of any Lease in any material respect, or accept a surrender thereof, (C) consent to any assignment of or subletting under any Lease not in accordance with its terms or (D) cancel, terminate, abridge or otherwise modify in any material respect any guaranty of any Lease or the terms thereof, unless such actions are exercised for a commercially reasonable purpose in arms-length transactions for market rate terms. The foregoing shall not apply to any Lease or license entered into with a Taxable REIT Subsidiary.

 

 

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execution of the Lease. With respect to any Lease or proposed renewal, extension or modification of an existing Lease that requires Lender’s consent under this Section 5.10.3, provided that no Event of Default is continuing, if Borrower provides Lender with a written request for approval (which written request shall specifically refer to this Section 5.10.3 and shall explicitly state that failure by Lender to approve or disapprove within ten (10) Business Days will constitute a deemed approval) and Lender fails to reject the request in writing delivered to Borrower within ten (10) Business Days after receipt by Lender of the request, the proposed Lease or proposed renewal, extension or modification of an existing Lease shall be deemed approved by Lender, and Borrower shall be entitled to enter into such proposed Lease or proposed renewal, extension or modification of an existing Lease.

 

5.10.4 Borrower (i) shall observe and perform all the material obligations imposed upon the lessor, grantor or licensor, as applicable, under the Leases and shall not do or permit to be done anything to impair the value of the Leases as security for the Debt; (ii) shall promptly send copies to Lender of all notices of default which Borrower shall send or receive thereunder; (iii) shall enforce all the material terms, covenants and conditions contained in the Leases upon the part of the lessee, grantee or licensee, as applicable, thereunder to be observed or performed, short of termination thereof (unless by reason of default thereunder); (iv) shall not collect any of the Rents (other than estimated payments of taxes and reimbursable expenses paid by tenants pursuant to their Leases) more than one (1) month in advance; (v) shall not execute any other assignment of the lessor’s interest in the Leases or the Rents except in connection with a Transfer and Assumption; (vi) shall, upon request of Lender, request and use commercially reasonable efforts to obtain and deliver to Lender tenant estoppel certificates from each commercial tenant at the Property in form and substance reasonably satisfactory to Lender, provided that Borrower shall not be required to deliver such certificates more frequently than two (2) times in any calendar year; and (vii) shall execute and deliver at the request of Lender all such further assurances, confirmations and assignments in connection with the Property as Lender shall from time to time reasonably require.

 

5.10.5 All security deposits of tenants, whether held in cash or any other form, if cash, shall be deposited by Borrower at such commercial or savings bank or banks and shall be held in compliance with applicable Legal Requirements, as may be reasonably satisfactory to Lender. Any bond or other instrument which Borrower is permitted to hold in lieu of cash security deposits under any applicable legal requirements shall be maintained in full force and effect in the full amount of such deposits unless replaced by cash deposits as hereinabove described, shall (if issued after the date hereof) be fully assignable to Lender and shall, in all respects, comply with any applicable legal requirements and otherwise be reasonably satisfactory to Lender. Borrower shall, upon request, provide Lender with evidence reasonably satisfactory to Lender of Borrower’s compliance with the foregoing. Following the occurrence and during the continuance of any Event of Default, Borrower shall, upon Lender’s request, if permitted by any applicable legal requirements, turn over to Lender the security deposits (and any interest theretofore earned thereon) with respect to all or any portion of the Property, to be held by Lender subject to the terms of the Leases.

 

Section 5.11 Estoppel Statement

 

 

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. After request by Lender, Borrower shall within ten days furnish Lender with a statement addressed to Lender, its successors and assigns, duly acknowledged and certified, setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the date installments of interest and/or Principal were last paid, (iv) any offsets or defenses to the payment of the Debt, and (v) that the Loan Documents are valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification.

 

Section 5.12 Property Management

 

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5.12.1 Management Agreement. Borrower shall maintain, or cause to be maintained, the Management Agreement in full force and effect and timely perform all of Borrower’s obligations thereunder and enforce performance in all material respects of all obligations of the Manager thereunder, and except as otherwise permitted by the Loan Documents, not permit the termination or amendment of the Management Agreement unless the prior written consent of Lender is first obtained, which consent shall not be unreasonably withheld, conditioned or delayed. Borrower shall cause the Manager to enter into an assignment and subordination of the management agreement in form satisfactory to Lender (the “Subordination of Management Agreement”). The Subordination of Management Agreement shall assign and subordinate the Manager’s interests in the Property and all fees and other rights of the Manager pursuant to the Management Agreement to the rights of Lender. Upon an Event of Default, Borrower shall, at Lender’s request made at any time while such Event of Default continues, terminate, or cause the termination of, the Management Agreement. After the date hereof, Borrower shall not enter into any agreement relating to the management of the Property with any party without the express written consent of Lender (which consent shall not be unreasonably withheld to the extent that such manager is an affiliate of Borrower); provided, however, with respect to a new manager of the Property (but not a leasing agent or subcontractor appointed in accordance with the Management Agreement) such consent may also be conditioned upon Borrower delivering (i) a Rating Comfort Letter with respect to such new manager and management agreement (other than a Qualified Manager that is Controlled (in the sense of clause (ii) of the defined term “Control”) by the REIT), and (ii) evidence satisfactory to Lender (which shall include, at the request of Lender, a legal non-consolidation opinion acceptable to Lender) that the single purpose nature and bankruptcy remoteness of Borrower, its shareholders, partners or members, as the case may be, after the engagement of the new manager are in accordance with the requirements of the Rating Agencies. If at any time Lender consents to the appointment of a new manager, such new manager and Borrower shall, as a condition of Lender’s consent, execute an assignment and subordination of such management agreement in the form then used by Lender.

 

 

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may be removed pursuant to and in accordance with the terms and provisions of the Loan Documents, a replacement manager and management agreement acceptable to Lender and the applicable Rating Agencies in their sole discretion shall assume management of the Property and shall receive a property management fee not to exceed the then current market rates.

 

Section 5.13 Special Purpose Bankruptcy Remote Entity

 

. Borrower shall at all times be a Special Purpose Bankruptcy Remote Entity. Borrower shall not, directly or indirectly, make any change, amendment or modification to its organizational documents, or otherwise take any action which could result in Borrower not being a Special Purpose Bankruptcy Remote Entity. A “Special Purpose Bankruptcy Remote Entity” shall have the meaning set forth on Schedule 5 hereto.

 

Section 5.14 Assumption in Non-Consolidation Opinion

 

. Borrower and the OP shall each conduct its business so that the assumptions (with respect to each Person) made in that certain substantive non-consolidation opinion letter dated the date hereof delivered by Borrower’s counsel in connection with the Loan, shall be true and correct in all respects.

 

Section 5.15 Change in Business or Operation of Property

 

. Borrower shall not purchase or own any real property other than the Property and shall not enter into any line of business other than the ownership and operation of the Property, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business or otherwise cease to operate the Property as an office property or terminate such business for any reason whatsoever (other than temporary cessation in connection with renovations to the Property).

 

Section 5.16 Debt Cancellation

 

. Borrower shall not cancel or otherwise forgive or release any claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.

 

Section 5.17 Affiliate Transactions

 

. Borrower shall not enter into, or be a party to, any transaction with an Affiliate of Borrower or any of the members of Borrower except in the ordinary course of business and on terms which are fully disclosed to Lender in advance and are no less favorable to Borrower than would be obtained in a comparable arm’s length transaction with an unrelated third party.

 

Section 5.18 Zoning

 

 

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conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior consent of Lender.

 

Section 5.19 No Joint Assessment

 

. Borrower shall not suffer, permit or initiate the joint assessment of the Property (i) with any other real property constituting a tax lot separate from the Property, and (ii) with any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to the Property.

 

Section 5.20 Principal Place of Business

 

. Borrower shall not change its principal place of business or chief executive office without first giving Lender 30 days’ prior notice.

 

Section 5.21 Change of Name, Identity or Structure

 

. Borrower shall not change its name, identity (including its trade name or names) or Borrower’s corporate, partnership or other structure without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in Borrower’s structure, without first obtaining the prior written consent of Lender. Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein. At the request of Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.

 

Section 5.22 Indebtedness

 

. Borrower shall not directly or indirectly create, incur or assume any indebtedness other than (i) the Debt and (ii) unsecured trade payables incurred in the ordinary course of business relating to the ownership and operation of the Property and (iii) Permitted Equipment Financing (hereinafter defined), (A), which in the case of such unsecured trade payables, are not evidenced by a note, (B) such trade payables and Permitted Equipment Financing do not exceed, at any time, a maximum aggregate amount of two percent (2%) of the original amount of the Principal and (C) all such unsecured trade payables are paid within sixty (60) days of the date incurred (collectively, “Permitted Indebtedness”). As used herein, “Permitted Equipment Financing” means equipment financing that is (i) entered into in the ordinary course of Borrower’s business, (ii) for equipment related to the ownership and operation of the Property whose removal would not materially damage or impair the value of the Property, and (iii) which is secured only by the financed equipment and proceeds thereof.

 

Section 5.23 Licenses

 

. Borrower shall not Transfer any License required for the operation of the Property.

 

 

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Section 5.24 Compliance with Restrictive Covenants, etc.

 

Borrower will not amend, modify, supplement, waive in any material respect, cancel, terminate or release any Operating Agreement, easements, restrictive covenants or other Permitted Encumbrances, or suffer, consent to or permit any of the foregoing, without Lender’s prior written consent, which consent may be granted or denied in Lender’s sole discretion.

 

Section 5.25 ERISA

 

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(1) Borrower shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Lender of any of its rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA.

 

(2) Borrower shall not maintain, sponsor, contribute to or become obligated to contribute to, or suffer or permit any ERISA Affiliate of Borrower to, maintain, sponsor, contribute to or become obligated to contribute to, any Plan or permit the assets of Borrower to become “plan assets,” whether by operation of law or under regulations promulgated under ERISA.

 

(3) Borrower shall deliver to Lender such certifications or other evidence from time to time throughout the Term, as requested by Lender in its sole discretion, that (A) Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (B) Borrower is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true:

 

(i) Equity interests in Borrower are publicly offered securities, within the meaning of 29 C.F.R. § 2510.3-101(b)(2);

 

(ii) Less than twenty-five percent (25%) of each outstanding class of equity interests in Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R. § 2510.3-101(f)(2); or

 

(iii) Borrower qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. § 2510.3-101(c) or (e).

 

Section 5.26 Transfers

 

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5.26.1 Transfers Prohibited. Borrower shall not directly or indirectly make, suffer or permit the occurrence of any Transfer except as expressly permitted pursuant to Section 5.26.5 and Section 5.26.6.

 

 

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5.26.2 Lender’s Reliance. Borrower acknowledges that Lender has examined and relied on the creditworthiness and experience of Borrower in owning and operating properties such as the Property in agreeing to make the Loan, and that Lender will continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the Property as security for repayment of the Debt. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt, Lender can recover the Debt by a sale of the Property.

 

5.26.3 Transfer Defined. “Transfer” shall mean a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, lease, grant of options with respect to, or other transfer or disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) the Property or any part thereof or any legal or beneficial interest therein, or a Sale or Pledge of an interest in any Restricted Party, other than pursuant to Leases of space in the Improvements to tenants in accordance with the provisions of Section 5.10, licenses of rights to a Taxable REIT Subsidiary to operate any fitness center, provide concierge services or in connection with parking agreements and Permitted Encumbrances. A Transfer shall include, but not be limited to, (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge of such corporation’s stock or the creation or issuance of new stock such that more than ten percent (10%) of such corporation’s stock shall be vested in a party or parties who are not stockholders as of the date hereof; (iv) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation of such Restricted Party or the change, removal, resignation or addition of a general partner thereof or the Sale or Pledge of the partnership interest of any general partner of such Restricted Party or any profits or proceeds relating to such partnership interest, or the Sale or Pledge of limited partnership interests of such Restricted Party or any profits or proceeds relating to such limited partnership interests or the creation or issuance of new limited partnership interests of such Restricted Party; (v) if a Restricted Party is a limited liability company, any merger or consolidation of such Restricted Party or the change, removal, resignation or addition of a managing member or non member manager (or if no managing member, any member) of such Restricted Party or the Sale or Pledge of the membership interest of a managing member (or if no managing member, any member) of such Restricted Party or any profits or proceeds relating to such membership interest, or the Sale or Pledge of non managing membership interests of such Restricted Party or the creation or issuance of new non managing membership interests of such Restricted Party such that more than ten percent (10%) of such limited liability company’s non-managing membership interest shall be vested in a party or parties who are not members as of the date hereof; (vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation or the Sale or Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance of new legal or beneficial interests; or (vii) the removal or the resignation of the managing agent (including, without limitation, an Affiliated Manager) without Lender’s consent other than in accordance with Section 5.12.

 

 

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Debt immediately due and payable upon any Transfer in violation of this Section 5.26 without Lender’s consent. This provision shall apply to every Transfer regardless of whether voluntary or not, or whether or not Lender has consented to any previous Transfer. Lender’s consent to one Transfer shall not be deemed to be a waiver of Lender’s right to require such consent to any future Transfer. Any Transfer made in contravention of this Section 5.26 shall be null and void and of no force and effect. Borrower agree to bear and shall pay or reimburse Lender on demand for all reasonable expenses (including, without limitation, reasonable attorneys’ fees and disbursements, title search costs and title insurance endorsement premiums) incurred by Lender in connection with the review, approval and documentation of any such Transfer, except as provided herein.

 

5.26.5 Permitted Transfers. Notwithstanding anything to the contrary contained in this Section 5.26, the following Transfers (“Permitted Transfers”) shall not require the prior written consent of Lender:

 

(a) Transfers of direct or indirect interests in any Restricted Party provided that the following conditions are satisfied:

 

(i) after taking into account any prior Transfers pursuant to this subsection, whether to the proposed transferee or otherwise, no such Transfer (or series of Transfers) shall result in (1) the proposed transferee, together with all members of his/her immediate family or any Affiliates thereof, owning in the aggregate (directly, indirectly or beneficially) more than forty-nine percent (49%) of the interests in Borrower (or any entity directly or indirectly holding an interest in Borrower that is a Restricted Party), or (2) a Transfer in the aggregate of more than forty-nine percent (49%) of the interests in Borrower as of the date hereof, except in either case for Transfers to a direct or indirect interest holder of Borrower as of the date hereof, or any Affiliate thereof, including any Taxable REIT Subsidiary, provided that if reasonably requested by Lender or if requested by any Rating Agency, Borrower shall deliver a non-consolidation opinion acceptable to Lender and the Rating Agencies with respect to such transferee which may be relied upon by Lender, the Rating Agencies and their successors and assigns;

 

(ii) after giving effect to such Transfer, the REIT shall continue to own not less than a fifty-one percent (51%) direct general and/or limited partnership interest in the OP and the REIT shall continue to Control (in the sense of clause (ii) of the defined term “Control”) Borrower and, subject to the rights of Manager under the Management Agreement (or any replacement manager under a replacement management agreement with respect to the Property, each as approved by Lender in accordance with Section 5.12 of this Agreement), the day-to-day operations of the Property;

 

(iii) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such transfer not less than ten (10) days prior to the date of such Transfer;

 

(iv) no Event of Default or event which with the giving of notice or the passage of time would constitute an Event of Default shall have occurred and remain uncured or unwaived;

 

 

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(v) the single purpose nature and bankruptcy remoteness of Borrower and its shareholders, partners or members after such transfer, shall satisfy Lender’s then current applicable underwriting criteria and requirements; and

 

(vi) Lender shall have received payment of, or reimbursement for, all costs and expenses incurred by Lender in connection with such Transfer (including, but not limited to, reasonable attorneys’ fees and costs and expenses of the Rating Agencies).

 

Notwithstanding the foregoing, in the event that such Transfer is (A) by a limited partner of the OP of such limited partner’s limited partnership interest in the OP, then Borrower shall not be required to satisfy subsections (a)(iii), (a)(iv) or (a)(vi) above so long as Borrower has satisfied subsections (a)(i), (a)(ii) and (a)(v) above or (B) is to a Taxable REIT Subsidiary, then Borrower shall not be required to satisfy subsections (a)(iii) or (a)(v) (provided, that in any such case, Borrower shall continue to be a Special Purpose Bankruptcy Remote Entity after giving effect to such Transfer) so long as Borrower has satisfied subsections (a)(i), (a)(ii), (a)(iv) and (a)(vi) above.

 

(b) Intentionally omitted.

 

 

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then Borrower shall deliver a non-consolidation opinion acceptable to Lender and the Rating Agencies with respect to such entity which may be relied upon by Lender, the Rating Agencies and their successors and assigns;

 

(iv) In the event that such restructuring requires a new non-consolidation opinion pursuant to subsection (iii) above, Borrower shall give Lender notice of such restructuring together with copies of all instruments effecting such restructuring not less than ten (10) days prior to the date of such restructuring;

 

(v) In the event that such restructuring requires a new non-consolidation opinion pursuant to subsection (iii) above, Lender shall have received payment of, or reimbursement for, all costs and expenses incurred by Lender in connection with such restructuring (including, but not limited to, reasonable attorneys’ fees and costs and expenses of the Rating Agencies).

 

(g) notwithstanding anything to the contrary contained herein (including the provisions of Section 5.27 below), pledges (but not the foreclosure thereon) by the REIT, the OP or any entity holding any direct or indirect interests in the REIT, the OP or the Borrower of their direct or indirect ownership interest in Borrower or any entity holding any direct or indirect interests in the Borrower to any institutional lender (including investors in syndicated loan facilities or the agent for such investors) providing a corporate line of credit or other financing to the REIT, the OP or any entity holding any direct or indirect interests in the REIT or the OP or the Borrower, provided that the value of the Property which is indirectly pledged as collateral under such corporate line of credit or other financing constitutes no more than thirty-three percent (33%) of the total value of all assets directly or indirectly securing such line of credit or other financing, and provided that the following conditions are met:

 

(i) no Event of Default or event which with the giving of notice or the passage of time would constitute an Event of Default shall have occurred and remain uncured or unwaived; and

 

(ii) Lender shall have received payment of, or reimbursement for, all costs and expenses incurred by Lender in connection with such pledges (including, but not limited to, reasonable attorneys’ fees and costs and expenses of the Rating Agencies).

 

Lender shall respond to any requests made by Borrower pursuant to this Section 5.26.5 in a prompt manner. In the event that Lender claims that Borrower has not satisfied any of the requirements of this Section 5.26.5, Lender shall specify in writing the reason why any conditions are deemed not satisfied.

 

Any provisions of this Section 5.26.5 which require more conditions to be satisfied in connection with any particular Permitted Transfer than other provisions under this Section 5.26.5 (relating to other Permitted Transfers) which require fewer conditions to be satisfied shall not be deemed to be a limitation or modification on the Transfer rights provided hereunder containing such fewer conditions.

 

 

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Notwithstanding anything to the contrary contained herein, and without limiting any of the Transfers or rights contained in this Section 5.26.5, Lender agrees that, provided no Event of Default has occurred and is continuing, a Transfer of an interest in Borrower shall not require the consent of Lender and no transfer fee shall be payable in connection therewith, provided that (i) such Transfer is of an interest in the OP or any direct or indirect owner of the OP that occurs by gift, devise or bequest or by operation of law upon the death or incapacity of a natural person that was the holder of such interest to a member of the immediate family of such interest holder or a trust established for the benefit of such immediate family member, provided that (A) no such Transfer shall result in a change of the day to day operations of the Property, (B) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not more than ten (10) days after the date of such Transfer, (C) such Transfer shall not cause a default by Borrower of the single purpose bankruptcy remote provisions set forth in Section 5.13 hereof, (D) if any such Transfer would result in a change of Control of Borrower or the OP Borrower, at Borrower’s sole cost and expense, shall, within thirty (30) days after any such Transfer, (a) deliver (or cause to be delivered) a substantive non-consolidation opinion to Lender and the Rating Agencies with respect to Borrower and the OP and such transferee in form and substance satisfactory to Lender and the Rating Agencies, and (b) reimburse Lender for all reasonable expenses incurred by Lender in connection with such Transfer, (E) if any such Transfer would result in a change of Control of Borrower or the OP and occurs prior to the occurrence of a Secondary Market Transaction, such Transfer is approved by Lender in writing within thirty (30) days after any such Transfer, which approval shall not be unreasonably withheld, (F) if any such Transfer would result in a change of Control of Borrower or the OP and occurs after the occurrence of a Secondary Market Transaction, Borrower, at Borrower’s sole cost and expense, shall, within thirty (30) days after any such Transfer, (a) deliver (or cause to be delivered) a Rating Comfort Letter to Lender, and (b) obtain the prior written consent of Lender which shall not be unreasonably withheld or delayed, or (ii) such Transfer is of a direct or indirect interest in the OP related to or in connection with the estate and/or gift planning of such transferor to (A) the immediate family members of such transferor or Key Principal(s), including without limitation, the spouse, children or grandchildren of such transferor (B) a trust established for the benefit of the transferor, a Key Principal(s) and/or any of the parties described in the preceding clause (A) provided that (a) after giving effect to such Transfer, Key Principal(s) and/or family trusts or other entities Controlled by Key Principal(s) shall continue to Control (in the sense of clause (ii) of the defined term “Control”) Borrower, (b) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not more than ten (10) days after the date of such Transfer and (c) such Transfer shall not cause a default by Borrower of the single purpose bankruptcy remote provisions set forth in Section 5.13 hereof.

 

 

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released solely with respect to obligations arising and accruing from and after the date of such Transfer and (ii) such replacement guarantor(s) shall become liable for all obligations arising or accruing from and after the date of such Transfer and (iii) from and after the date of such Transfer, such replacement guarantor(s) shall be the “Guarantor” for all purposes set forth in this Agreement and the other Loan Documents (it being agreed and understood that the previous guarantor shall remain the “Guarantor” with respect to any and all obligations accruing prior to the date of such Transfer)).

 

Notwithstanding anything to the contrary contained herein, the terms and provisions of this Section 5.26.5 are mutually exclusive from the term of the provisions contained in Section 5.26.6.

 

5.26.6 Transfer and Assumption. (a)  Notwithstanding the foregoing, Borrower shall have the right to Transfer the Property to another party (the “Transferee Borrower”) and have the Transferee Borrower assume all of Borrower’s obligations under the Loan Documents, and have replacement guarantors and indemnitors assume all of the obligations of the indemnitors and guarantors of the Loan Documents (collectively, a “Transfer and Assumption”). Borrower may make a written application to Lender for Lender’s consent to the Transfer and Assumption, subject to the conditions set forth in paragraphs (b) and (c) of this Section 5.26.6. Together with such written application, Borrower will pay to Lender the reasonable review fee then required by Lender. Borrower also shall pay on demand all of the reasonable costs and expenses incurred by Lender, including reasonable attorneys’ fees and expenses, and including the fees and expenses of Rating Agencies and other outside entities, in connection with considering any proposed Transfer and Assumption, whether or not the same is permitted or occurs.

 

(b) Lender’s consent to a Transfer and Assumption, shall be subject to the following conditions (and if all such conditions have been satisfied, Lender shall not withhold its consent to the subject Transfer and Assumption):

 

(i) No Default or Event of Default has occurred and is continuing;

 

(ii) Borrower has submitted to Lender true, correct and complete copies of any and all information and documents reasonably requested by Lender concerning the Property, Transferee Borrower, replacement guarantors and indemnitors and Borrower;

 

(iii) Evidence satisfactory to Lender has been provided showing that the Transferee Borrower and such of its Affiliates as shall be designated by Lender comply and will comply with Section 5.13 hereof, as those provisions may be modified by Lender taking into account the ownership structure of Transferee Borrower and its Affiliates;

 

(iv) If the Loan, by itself or together with other loans, has been the subject of a Securitization, then Lender shall have received a Rating Comfort Letter from the applicable Rating Agencies; provided that the requirements contained in this clause (iv) shall not apply in connection with a Transfer and Assumption to a Transferee Borrower that is a Permitted REIT Transferee;

 

 

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(v) If the Loan has not been the subject of a Securitization, then Lender shall have determined in its reasonable discretion (taking into consideration such factors as Lender may determine, including the attributes of the loan pool in which the Loan might reasonably be expected to be securitized) that no rating for any securities that would be issued in connection with such securitization will be diminished, qualified, or withheld by reason of the Transfer and Assumption; provided that the requirements contained in this clause (v) shall not apply in connection with a Transfer and Assumption to a Transferee Borrower that is a Permitted REIT Transferee;

 

(vi) Borrower shall have paid all of Lender’s reasonable costs and expenses in connection with considering the Transfer and Assumption, and shall have paid the amount requested by Lender as a deposit against Lender’s costs and expenses in connection with effecting the Transfer and Assumption;

 

(vii) Borrower, the Transferee Borrower, and the replacement guarantors and indemnitors shall have indicated in writing in form and substance reasonably satisfactory to Lender their readiness and ability to satisfy the conditions set forth in subsection (c) below (other than clause (i) with respect to a Permitted REIT Transferee); and

 

(viii) The identity, experience, and financial condition of the Transferee Borrower and the replacement guarantors and indemnitors shall be reasonably satisfactory to Lender; provided that the requirements contained in this clause (viii) shall not apply in connection with a Transfer and Assumption to a Transferee Borrower that is a Permitted REIT Transferee.

 

(c) If Lender consents to the Transfer and Assumption, the Transferee Borrower and/or Borrower as the case may be, shall immediately deliver the following to Lender concurrently with the consummation of such Transfer and Assumption:

 

(i) Borrower shall deliver to Lender an assumption fee in the amount of (x) with respect to the first Transfer and Assumption, 0.25% of the then unpaid Principal and (ii) with respect to any subsequent Transfer and Assumption, 0.50% of the then unpaid Principal, less any review fees, costs and expenses previously paid by Borrower pursuant to the provision of Section 5.26.6(a) and (b)(vi); provided that, no assumption fee shall apply in connection with a Transfer and Assumption to a Transferee Borrower that is a Permitted REIT Transferee;

 

(ii) Borrower, Transferee Borrower and the original and replacement guarantors and indemnitors shall execute and deliver to Lender any and all documents reasonably required by Lender, in form and substance reasonably required by Lender;

 

(iii) Counsel to the Transferee Borrower and replacement guarantors and indemnitors shall deliver to Lender opinions in form and substance reasonably satisfactory to Lender as to such matters as Lender shall reasonably require, which may include opinions as to substantially the same matters and were required in connection with the origination of the Loan;

 

 

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(iv) Borrower or the Transferee Borrower shall cause to be delivered to Lender, an endorsement (relating to the change in the identity of the vestee and execution and delivery of the Transfer and Assumption documents) to the Title Insurance Policy in form and substance acceptable to Lender, in Lender’s reasonable discretion (the “Endorsement”); and

 

(v) Borrower or the Transferee Borrower shall deliver to Lender a payment in the amount of all remaining unpaid costs incurred by Lender in connection with the Transfer and Assumption, including but not limited to, Lender’s reasonable attorneys fees and expenses, all recording fees, and all fees payable to the title company for the delivery to Lender of the Endorsement.

 

(d) Notwithstanding anything to the contrary contained in this Section 5.26.6, with respect to a one-time only Transfer and Assumption, Lender’s prior consent shall not be required in connection with a Transfer and Assumption where either (i) the Transferee Borrower is a Permitted Transferee; provided that the conditions set forth in subsection (b) above (other than clause (viii) therein) and subsection (c) above have been satisfied or (ii) the Transferee Borrower is a Permitted REIT Transferee; provided that the conditions set forth in subsection (b) above (other than clauses (iv), (v) and (viii) therein) and subsection (c) above (other than clause (i) therein) have been satisfied.

 

(e) Upon the closing of a Transfer and Assumption, Lender shall release Borrower, the OP and Guarantor from all obligations under the Loan Documents arising prior to and after the date of the Transfer and Assumption (but only to the extent that such obligations of Borrower, the OP and Guarantor are expressly assumed by the Transferee Borrower or replacement guarantor, as the case may be, in connection with the Transfer and Assumption).

 

Section 5.27 Liens

 

. Without Lender’s prior written consent, Borrower shall not create, incur, assume, permit or suffer to exist any Lien on all or any portion of the Property or any direct or indirect legal or beneficial ownership interest in Borrower, except Liens in favor of Lender, Permitted Encumbrances and Liens encumbering Traded Equity, unless such Lien is bonded or discharged within 30 days after Borrower first receives notice of such Lien.

 

Section 5.28 Dissolution

 

. Borrower shall not (i) engage in any dissolution (to the fullest extent such prohibition is permitted by law), liquidation or consolidation or merger with or into any other business entity, (ii) engage in any business activity not related to the ownership and operation of the Property or (iii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the property or assets of Borrower except to the extent expressly permitted by the Loan Documents.

 

Section 5.29 Expenses

 

 

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incurred by Lender in connection with the Loan, including (i) the preparation, negotiation, execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby and all the costs of furnishing all opinions by counsel for Borrower; (ii) Borrower’s and Lender’s ongoing performance under and compliance with the Loan Documents, including confirming compliance with environmental and insurance requirements; (iii) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications of or under any Loan Document and any other documents or matters requested by Lender; (iv) filing and recording of any Loan Documents; (v) title insurance, surveys, inspections and appraisals; (vi) the creation, perfection or protection of Lender’s Liens in the Property and the Cash Management Accounts (including fees and expenses for title and lien searches, intangibles taxes, personal property taxes, Mortgage, recording taxes, due diligence expenses, travel expenses, accounting firm fees, costs of appraisals, environmental reports and Lender’s Consultant, surveys and engineering reports); (vii) enforcing or preserving any rights in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, the Loan Documents, the Property, or any other security given for the Loan; (viii) fees charged by Rating Agencies in connection with the Loan or any modification thereof; and (ix) enforcing any obligations of or collecting any payments due from Borrower under any Loan Document or with respect to the Property or in connection with any refinancing or restructuring of the Loan in the nature of a “work-out,” or any insolvency or bankruptcy proceedings. Any costs and expenses due and payable to Lender hereunder which are not paid by Borrower within ten (10) days after demand therefor may be paid from any amounts in the Deposit Account, with notice thereof to Borrower. The obligations and liabilities of Borrower under this Section 5.29 shall survive the Term and the exercise by Lender of any of its rights or remedies under the Loan Documents, including the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure.

 

Section 5.30 Indemnity

 

 

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in, on or about the Property or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (vi) any use, nonuse or condition in, on or about the Property or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (vii) performance of any labor or services or the furnishing of any materials or other property in respect of the Property; (viii) the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release, or threatened release of any Hazardous Substance on, from or affecting the Property; (ix) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Substance; (x) any lawsuit brought or threatened, settlement reached, or government order relating to such Hazardous Substance; (xi) any violation of the Environmental Laws which is based upon or in any way related to such Hazardous Substance, including the costs and expenses of any Remedial Work; (xii) any failure of the Property to comply with any Legal Requirement; (xiii) any claim by brokers, finders or similar persons claiming to be entitled to a commission in connection with any Lease or other transaction involving the Property or any part thereof, or any liability asserted against Lender with respect thereto; and (xiv) the claims of any lessee of any portion of the Property or any Person acting through or under any lessee or otherwise arising under or as a consequence of any Lease; provided, however, that Borrower shall not have any obligation to any Indemnified Party hereunder (A) to the extent that it is finally judicially determined that such Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or willful misconduct of such Indemnified Party or (B) for any event or condition that first arises on or after the date on which Lender or any Affiliate of Lender acquires title to the Property (whether at foreclosure sale, a transfer in lieu of foreclosure or any other transfer); provided that Borrower’s obligation to indemnify the Indemnified Parties with respect to an event or condition specified in clauses (viii) through (xi) above (relating to Hazardous Substances) shall continue in perpetuity after Lender or its Affiliates acquires title or control of the Property unless such specified event or condition occurs during or after Lender’s (or its Affiliate’s) period of ownership and provided that Borrower shall bear the burden of proving that such specified event or condition occurred during Lender’s (or such Affiliate’s) period of ownership.. Any amounts payable to any Indemnified Party by reason of the application of this Section 5.30 shall be payable on demand and shall bear interest at the Default Rate from the date loss or damage is sustained by any Indemnified Party until paid. The obligations and liabilities of Borrower under this Section 5.30 shall survive the Term and the exercise by Lender of any of its rights or remedies under the Loan Documents, including the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure.

 

Section 5.31 Patriot Act Compliance

 

 

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Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.

 

(b) Neither Borrower, OP nor REIT nor to Borrower’s knowledge, any Affiliate that owns more than a 20% interest in either the OP or REIT (a) is listed on any Government Lists (as defined below), (b) is a person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC (as defined below) or in any enabling legislation or other Presidential Executive Orders in respect thereof, (c) has been previously indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense (as defined below), or (d) is currently under investigation by any governmental authority for alleged criminal activity. For purposes hereof, the term “Patriot Act Offense” means any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under (a) the criminal laws against terrorism; (b) the criminal laws against money laundering, (c) the Bank Secrecy Act, as amended, (d) the Money Laundering Control Act of 1986, as amended, or the (e) Patriot Act. “Patriot Act Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes hereof, the term “Government Lists” means (i) the Specially Designated Nationals and Blocked Persons Lists maintained by Office of Foreign Assets Control (“OFAC”), (ii) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Lender notified Borrower in writing is now included in “Governmental Lists”, or (iii) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other government authority or pursuant to any Executive Order of the President of the United States of America that Lender notified Borrower in writing is now included in “Governmental Lists”.

 

ARTICLE 6

 

 

NOTICES AND REPORTING

 

Section 6.1 Notices

 

. All notices, consents, approvals and requests required or permitted hereunder or under any other Loan Document (a “Notice”) shall be given in writing and shall be effective for all purposes if either hand delivered with receipt acknowledged, or by a nationally recognized overnight delivery service (such as Federal Express), or by certified or registered United States mail, return receipt requested, postage prepaid, or by facsimile and confirmed by facsimile answer back, in each case addressed as follows (or to such other address or Person as a party shall designate from time to time by notice to the other party):

 

 

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If to Lender:

 

Greenwich Capital Financial Products, Inc.

▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attention: Mortgage Loan Department

Telecopier (▇▇▇) ▇▇▇-▇▇▇▇

 

With a copy to:

 

▇▇▇▇ ▇▇▇▇▇▇▇ LLP

▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.

Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇

 

If to Borrower:

 

▇▇▇▇▇▇▇ Properties-Pacific Center, LLC

▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇

▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III and ▇▇▇▇ ▇. Lammas, Esq.

Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇

 

With a copy to:

 

▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP

▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.

Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇

 

A notice shall be deemed to have been given: (i) in the case of hand delivery, at the time of delivery; (ii) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; (iii) in the case of overnight delivery, upon the first attempted delivery on a Business Day; or (iv) in the case of facsimile, upon the confirmation of such facsimile transmission. Any party may change the address to which any such Notice is delivered, by furnishing ten (10) days’ written notice of such change to the other parties in accordance with the provisions of this Section 6.1. Notice for either party may be given by its respective counsel.

 

Section 6.2 Borrower Notices and Deliveries

 

 

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Borrower’s or the OP’s or the REIT’s condition, financial or otherwise, or of the occurrence of any Default or Event of Default of which Borrower has knowledge; and (b) furnish and provide to Lender: (i) if requested by Lender, any Securities and Exchange Commission or other public filings, if any, of Borrower, the OP, the REIT, Manager, or any Affiliate of any of the foregoing within two (2) Business Days of such filing and (ii) all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, appraisals, title and other insurance reports and agreements, reasonably requested, from time to time, by Lender. In addition, after request by Lender (but no more frequently than twice in any year), Borrower shall(x) furnish to Lender within ten days, a certificate addressed to Lender, its successors and assigns reaffirming all representations and warranties of Borrower set forth in the Loan Documents as of the date requested by Lender or, to the extent of any changes to any such representations and warranties, so stating such changes, and (y) within 30 days, use commercially reasonable efforts to obtain tenant estoppel certificates addressed to Lender, its successors and assigns from each commercial tenant at the Property in form and substance reasonably satisfactory to Lender.

 

Section 6.3 Financial Reporting

 

.

 

6.3.1 Financial Statements. The financial statements heretofore furnished to Lender with respect to Borrower, the OP and the REIT are, as of the dates specified therein, complete and correct in all material respects and fairly present in all material respects the financial condition of Borrower, the OP and the REIT and are prepared in accordance with GAAP. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operation or business of Borrower, the OP and the REIT from that set forth in said financial statements.

 

6.3.2 Quarterly Reports. Borrower will maintain full and accurate books of accounts and other records reflecting the results of the operations of the Property and will furnish to Lender on or before forty-five (45) days after the end of each calendar quarter the following items, each certified by Borrower as being true and correct in all material respects: (i) a written statement (rent roll) dated as of the last day of each such calendar quarter identifying each of the Leases (excluding subleases) by the term, space occupied, rental required to be paid, security deposit paid, any rental concessions, and a report identifying any defaults or payment delinquencies thereunder; (ii) monthly and year to date operating statements prepared for each calendar month during each such calendar quarter, noting Net Operating Income, and operating expenses, and including an itemization of actual (not pro forma) capital expenditures and other information necessary and sufficient under generally accepted accounting practices to fairly represent the financial position and results of operation of the Property during such calendar month, all in form satisfactory to Lender; (iii) a property balance sheet for each such calendar quarter; (iv) a comparison of the budgeted income and expenses and the actual income and expenses for year to date together with a detailed explanation of any variances of five percent (5%) or more between budgeted and actual amounts for such year to date period; and (v) a calculation reflecting the Debt Service Coverage Ratio as of the last day of each such calendar quarter. Until a Securitization has occurred, Borrower shall furnish monthly each of the items listed in the immediately preceding sentence within thirty (30) days after the end of such month.

 

 

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6.3.3 Annual Reports. Within one hundred twenty (120) days following the end of each calendar year (provided, however, if requested by Lender, Borrower shall use commercially reasonable efforts to provide Lender with any unaudited annual statements prior to such date), Borrower shall furnish statements of its financial affairs and condition including a balance sheet and a statement of profit and loss for Borrower in such detail as Lender may reasonably request, and setting forth the financial condition and the income and expenses for the Property for the immediately preceding calendar year, which statements shall be prepared by Borrower. Borrower’s annual financial statements shall include (x) a list of the tenants, if any, occupying more than twenty (20%) percent of the total floor area of the Improvements, and (y) a breakdown showing the year in which each Lease then in effect expires and the percentage of total floor area of the Improvements and the percentage of base rent with respect to which Leases shall expire in each such year, each such percentage to be expressed on both a per year and a cumulative basis. Borrower’s annual financial statements shall be accompanied by a certificate executed by a financial officer of Borrower or the REIT stating that each such annual financial statement presents fairly the financial condition of the Property being reported upon and shall be audited by a “Big Four” accounting firm or other independent certified public accountant reasonably acceptable to Lender, which audited financial statements may be in the form of schedules to the audited consolidated financial statements of the REIT. Each such annual financial statement shall be prepared in accordance with GAAP. At any time and from time to time Borrower shall deliver to Lender or its agents such other financial data as Lender or its agents shall reasonably request with respect to the ownership, maintenance, use and operation of the Property.

 

6.3.4 Annual Budget. Within 30 days after the commencement of a Cash Management Period, and not later than each December 15 during the Term of the Loan until such Cash Management Period has ended, Borrower shall submit to Lender a detailed budget (an “Annual Budget”) for the Property covering the calendar year commencing on the following January 1, each of which budgets shall be subject to Lender’s approval, not to be unreasonably withheld, (provided that Borrower shall have the option to submit to Lender a revised budget not later than June 30 of each year during the Term of the Loan to adjust such budget on the basis of the actual results of Borrower to such point in such calendar year) (each such budget, when so approved, is referred to as an “Approved Annual Budget”). Until such time that Lender approves a proposed Annual Budget, Borrower may operate under the most recently Approved Annual Budget (adjusted to reflect actual increases in real estate taxes, insurance premiums, utilities expenses, labor costs, interest and other fixed costs with respect to the ownership, operation and financing of the Property).

 

ARTICLE 7

 

 

INSURANCE; CASUALTY; AND CONDEMNATION

 

Section 7.1 Insurance

 

.

 

 

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7.1.1 Coverage. Borrower shall maintain insurance for Borrower and the Property providing at least the following coverages:

 

(a) comprehensive all risk insurance on the Improvements and the Equipment, in each case (A) in an amount equal to one hundred percent (100%) of the “Full Replacement Cost,” which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (B) containing an agreed amount endorsement with respect to the Improvements and Equipment waiving all co insurance provisions; (C) providing for no “all risk” deductible in excess of $100,000; and (D) containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the Improvements or the use of the Property shall at any time constitute legal non conforming structures or uses. In addition, Borrower shall obtain: (x) Flood Insurance in an amount of not less than $25,000,000 each occurrence; (y) earthquake insurance in an amount at least equal to one multiplied by a “Probable Maximum Loss” of total replacement value less a deductible of 5% of the Total Insured Value (which includes annual rental value) at the Property, and otherwise in form and substance reasonably satisfactory to Lender; and (z) coastal windstorm insurance in amounts and in form and substance satisfactory to Lender, provided that the insurance pursuant to clauses (x), (y) and (z) hereof shall be on terms consistent with the comprehensive all risk insurance policy required under this subsection (a) and rental interruption insurance under subsection (c). Notwithstanding anything to the contrary contained herein, provided that Borrower maintains a minimum blanket Policy limit of $1,250,000,000 per occurrence and the entire blanket Policy limit is available for any one loss, Lender shall accept Borrower’s stated value of insurance for the Property, which is $76,149,250 as of the date hereof. If at any time during the Term, Borrower either (x) losses its blanket Policy coverage, (y) reduces its overall blanket Policy limit or (z) elects to insure the Property separately, Borrower shall increase the stated value for the Property to the then 100% replacement cost of the improvements, as reasonably determined by Lender;

 

(b) commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the so-called “occurrence” form with a combined limit of not less than Two Million and No/100 Dollars ($2,000,000) in the aggregate and One Million and No/100 Dollars ($1,000,000) per occurrence; (B) to continue at not less than the aforesaid limit until required to be changed by Lender in writing by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) independent contractors; (4) blanket contractual liability for all legal contracts; and (5) liability that may arise from acts of terrorism, if commercially available. The self-insured retention or deductible for general liability coverage is not to exceed $100,000 per occurrence subject to a $750,000 maximum. This deductible is to be initially funded with a letter of credit in the amount of $200,000, held and administrated by the carrier. Once the first $200,000 is exhausted additional Letters of Credit must be continually posted until the $750,000 maximum deductible is exhausted.

 

 

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(C) containing an unlimited period of restoration and extended period of indemnity endorsement which provides that after the physical loss to the Improvements and Equipment has been repaired, the continued loss of rental income will be insured until such rental income either returns to the same level it was at prior to the loss, or the expiration of twelve (12) months from the date that the Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period, provided that the unlimited period of restoration endorsement may be limited to the length of time required with the exercise of due diligence and dispatch to rebuild, repair or replace the damaged or destroyed property; and (D) in an amount equal to one hundred percent (100%) of the projected gross income from the Property for a period of eighteen (18) months from the date that the Property is repaired or replaced and operations are resumed. The amount of such rental interruption insurance shall be determined prior to the date hereof and at least once each year thereafter based on Borrower’s reasonable estimate of the gross income from the Property for the succeeding eighteen (18) month period. Subject to the rights of Lender and subject to the provisions of Section 7.4.1(j) below, all proceeds payable to Lender pursuant to this subsection shall be held by Lender and shall be applied to the obligations secured by the Loan Documents from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower of its obligations to pay the obligations secured by the Loan Documents on the respective dates of payment provided for in the Note and the other Loan Documents except to the extent such amounts are actually paid out of the proceeds of such rental interruption insurance. Notwithstanding anything to the contrary contained herein, provided that Borrower maintains a minimum blanket Policy limit of $1,250,000,000 per occurrence and the entire blanket Policy limit is available for any one loss, Lender shall accept Borrower’s loss of rents calculation in lieu of the amount set forth in sub-clause (D) hereof, which such calculation currently deducts for “variable expenses.” If at any time during the Term, Borrower either (x) losses its blanket Policy coverage, (y) reduces its overall blanket Policy limit or (z) elects to insure the Property separately, Borrower shall provide rental interruption insurance in the amount set forth in sub-clause (D) hereof without any deductions;

 

(d) at all times during which structural construction, repairs or alterations are being made with respect to the Improvements, and only if the property coverage form does not otherwise apply, (A) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above mentioned commercial general liability insurance policy; and (B) the insurance provided for in subsection (a) above written in a so called builder’s risk completed value form (1) on a non reporting basis, (2) against all risks insured against pursuant to subsections (a) and (c) above, (3) including permission to occupy the Property, and (4) with an agreed amount endorsement waiving co insurance provisions;

 

(e) Workers’ Compensation insurance, as required by any governmental authority or any Legal Requirements and Employer’s Liability Insurance of not less than One Million and No/100 Dollars ($1,000,000) for each occurrence;

 

(f) comprehensive boiler and machinery insurance in an amount of not less than Fifty Million and No/100 Dollars ($50,000,000) each occurrence on terms consistent with the commercial property insurance policy required under subsections (a) and (c) above;

 

 

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(g) umbrella liability insurance in an amount not less than Twenty-Five Million and No/100 Dollars ($25,000,000) per occurrence, on terms consistent with the commercial general liability insurance policy and motor liability insurance policy required under subsection (b) above and (h) below, on a portfolio basis naming the Property and all other properties owned by the OP and/or its Affiliates; provided, that such insurance may be provided under a blanket insurance Policy so long as the coverage required pursuant to this clause is not reduced below the per occurrence limit set forth in this clause;

 

(h) motor vehicle liability coverage for all owned and non owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, of Twenty Six Million and No/100 Dollars ($26,000,000);

 

(i) if the Property is or becomes a legal "non conforming" use, ordinance and law coverage is required based on the following minimum limits: Coverage A (value of the undamaged portion) to be included with the insured building limit; Coverage B (demolition/debris removal) at 10% of insured building value; and Coverage C (increased cost of construction) at 10% of insured building value;

 

 

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of the annual initial deposit necessary to accumulate such allocable share for such Policy at least thirty (30) days prior to its due date, each, a “Financing Installment”).

 

Section 7.2 Casualty

 

.

 

7.2.1 Notice; Restoration. If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower shall give prompt notice thereof to Lender. Following the occurrence of a Casualty, Borrower, regardless of whether insurance proceeds are available (unless Lender has breached its obligation (if any) to make such insurance proceeds available pursuant to Section 7.4.1), shall promptly proceed to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction (a “Casualty Restoration”), all to be effected in accordance with applicable law

 

7.2.2 Settlement of Proceeds. If a Casualty covered by any of the Policies (an “Insured Casualty”) occurs where the loss does not exceed $1,500,000, provided no Default or Event of Default has occurred and is continuing, Borrower may settle and adjust any claim without the prior consent of Lender; provided such adjustment is carried out in a competent and timely manner, and Borrower is hereby authorized to collect and receipt for the Insurance Proceeds (as hereinafter defined). In the event of an Insured Casualty where the loss exceeds $1,500,000 (a “Significant Casualty”), Lender may, in its sole discretion, settle and adjust any claim without the consent of Borrower and agree with the insurer(s) in a commercially reasonable manner on the amount to be paid on the loss, and the Proceeds shall be due and payable solely to Lender and held by Lender in the Casualty/Condemnation Subaccount and disbursed in accordance herewith. If Borrower or any party other than Lender is a payee on any check representing Proceeds with respect to a Significant Casualty, Borrower shall immediately endorse, and cause all such third parties to endorse, such check payable to the order of Lender. Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an interest, to endorse such check payable to the order of Lender. The expenses incurred by Lender in the settlement, adjustment and collection of the Proceeds shall become part of the Debt and shall be reimbursed by Borrower to Lender within ten (10) days following demand. Notwithstanding anything to the contrary contained herein, if in connection with a Casualty any insurance carrier makes a payment under a property insurance Policy that Borrower proposes be treated as business or rental interruption insurance, then, notwithstanding any designation (or lack of designation) by the insurance carrier as to the purpose of such payment, as between Lender and Borrower, such payment shall not be treated as business or rental interruption insurance proceeds unless Borrower has demonstrated to Lender’s reasonable satisfaction that the remaining net Proceeds that will be received from the property insurance carriers are sufficient to pay 100% of the cost of fully restoring the Improvements or, if such net Proceeds are to be applied to repay the Debt in accordance with the terms hereof, that such remaining net Proceeds, together with any portion of the amount treated as business or rental interruption insurance that will be paid to Lender, will be sufficient to pay the Debt in full.

 

 

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Section 7.3 Condemnation

 

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7.3.1 Notice; Restoration. Borrower shall promptly give Lender written notice of the actual or threatened commencement of any condemnation or eminent domain proceeding (a “Condemnation”) and shall deliver to Lender copies of any and all papers served in connection with such Condemnation. Following the occurrence of a Condemnation, Borrower, regardless of whether an Award (hereinafter defined) is available (unless Lender has breached its obligation (if any) to make such Award available pursuant to Section 7.4.1), shall promptly proceed to restore, repair, replace or rebuild the same to the extent practicable to be of at least equal value and of substantially the same character as prior to such Condemnation (a “Condemnation Restoration”, together with a Casualty Restoration, collectively a “Restoration”), all to be effected in accordance with applicable law.

 

7.3.2 Collection of Award. Lender is hereby irrevocably appointed as Borrower’s attorney-in-fact, coupled with an interest, with exclusive power to collect, receive and retain any award or payment (“Award”) for any taking accomplished through a Condemnation (a “Taking”) and to make any commercially reasonable compromise or settlement in connection with any such Condemnation, subject to the provisions of this Agreement. Notwithstanding the foregoing, Borrower shall have the right, provided no Default or Event of Default has occurred and is continuing, to compromise and collect or receive any award that does not exceed $1,500,000. Notwithstanding any Taking by any public or quasi-public authority (including, without limitation, any transfer made in lieu of or in anticipation of such a Taking), Borrower shall continue to pay the Debt at the time and in the manner provided for in the Note, in this Agreement and the other Loan Documents and the Debt shall not be reduced unless and until any Award shall have been actually received and applied by Lender to expenses of collecting the Award and to discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the condemning authority but shall be entitled to receive out of the Award interest at the rate or rates provided in the Note. Borrower shall cause any Award that is payable to Borrower to be paid directly to Lender. The expenses incurred by Lender in the adjustment and collection of the Award shall become part of the Debt and be secured hereby and shall be reimbursed by Borrower to Lender within ten (10) days after the date Lender makes written demand therefor.

 

Section 7.4 Application of Proceeds or Award

 

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7.4.1 Application to Restoration. The following provisions shall apply in connection with the Restoration of the Property and Improvements:

 

 

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satisfactorily complete with due diligence the Restoration in accordance with the terms of this Agreement.

 

(b) If the Net Proceeds are equal to or greater than $1,500,000 or the costs of completing the Restoration is equal to or greater than $1,500,000 Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 7.4. The term “Net Proceeds” shall mean: (A) the net amount of all insurance proceeds received by Lender pursuant to Section 7.1.1(a), (d), (f), (i) and (j) (and any similar or comparable types of insurance obtained pursuant to Section 7.1.1(i) as a result of such damage or destruction, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”), or (B) the net amount of the Award, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, actually incurred in collecting same (“Condemnation Proceeds”), whichever the case may be.

 

(c) The Net Proceeds shall be made available to Borrower for Restoration provided that each of the following conditions are met:

 

(i) no Event of Default shall have occurred and be continuing;

 

(ii) (1) in the event the Net Proceeds are Insurance Proceeds, less than thirty percent (30%) of the total floor area of the Improvements has been damaged, destroyed or rendered unusable as a result of such fire or other casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than fifteen percent (15%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property, and no portion of the Improvements is located in such land;

 

(iii) Leases demising in the aggregate at least sixty-five percent (65%) of the total rentable space in the Property and in effect as of the date of the occurrence of such Insured Casualty or Condemnation remain in full force and effect during and after the completion of the Restoration;

 

(iv) Borrower shall commence the Restoration as soon as reasonably practicable (but in no event later than ninety (90) days after such damage or destruction or taking, whichever the case may be, occurs) and shall diligently pursue the same to satisfactory completion;

 

(v) Lender shall be reasonably satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note, which will be incurred with respect to the Property as a result of the occurrence of any such fire or other casualty or taking, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 7.1.1(c), if applicable, or (3) by other funds of Borrower;

 

 

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regulation in order to repair and restore the Property to the condition it was in immediately prior to such fire or other casualty or to as nearly as possible the condition it was in immediately prior to such taking, as applicable or (4) the expiration of the insurance coverage referred to in Section 7.1.1(c);

 

(vii) the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable zoning laws, ordinances, rules and regulations and all necessary operating or reciprocal easement agreements for the operation and maintenance of the Property are, or remain, in effect;

 

(viii) the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance with all applicable governmental laws, rules and regulations (including, without limitation, all applicable environmental laws); and

 

(ix) such fire or other casualty or taking, as applicable, does not result in a material loss of access to the Property.

 

(d) Unless such amounts are payable to Borrower pursuant to Section 7.2 or 7.3, the Net Proceeds shall be held by Lender in an interest-bearing account for the benefit of Borrower (which interest shall be added to and become a part of the Net Proceeds) and, until disbursed in accordance with the provisions of this Section 7.4, shall constitute additional security for the Debt and other obligations under the Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property arising out of the Restoration which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the reasonable satisfaction of Lender by the title company issuing the title insurance policy.

 

 

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materialmen engaged in any Restoration following a Casualty or Condemnation resulting in Net Proceeds of $3,000,000 or more, as well as the contracts under which they have been engaged, shall be subject to prior review and acceptance by Lender and the Casualty Consultant, which acceptance shall not be unreasonably withheld, conditioned or delayed. All costs and expenses incurred by Lender in connection with making the Net Proceeds available for the Restoration including, without limitation, reasonable counsel fees and disbursements and the Casualty Consultant’s fees, shall be paid by Borrower.

 

(f) In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, minus the Casualty Retainage. The term “Casualty Retainage” shall mean an amount equal to ten percent (10%) of the hard costs actually incurred for work in place as part of the Restoration, as certified by the Casualty Consultant, until the Restoration has been completed. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this clause (f), be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 7.4.1 and that all approvals necessary for the re-occupancy and use of the Property have been obtained from all appropriate governmental and quasi governmental authorities, and Lender receives evidence satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage; provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which the Casualty Consultant certifies to Lender that the contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or materialman’s contract, the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company issuing the title insurance policy, and Lender receives an endorsement to the title insurance policy insuring the continued priority of the lien of the Mortgage and evidence of payment of any premium payable for such endorsement. If required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.

 

(g) Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

 

 

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this Section 7.4 shall constitute additional security for the Debt and other obligations under the Loan Documents.

 

(i) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 7.4.1, and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing under the Note, this Agreement or any of the other Loan Documents.

 

(j) Notwithstanding the last sentence of Section 7.1.1(c) and provided no Event of Default exists hereunder, proceeds received by Lender on account of the rental or business interruption insurance specified in Section 7.1.1(c) above with respect to any Casualty shall either (x) at any time other than during the continuance of a Cash Management Period, be released to Borrower for Borrower’s deposit with the Clearing Bank or (y) during a Cash Management Period, be deposited by Lender directly into the Deposit Account and allocated as Rents in accordance with Section 3.10(i) through (viii) but (a) only to the extent it reflects a replacement for (i) lost Rents that would have been due under Leases existing on the date of such Casualty, and/or (ii) lost Rents under Leases that had not yet been executed and delivered at the time of such Casualty which Borrower has proven to the insurer under the related Policy would have been due under such Leases (and then only to the extent such proceeds disbursed by such insurer reflect a replacement for such past due Rents) and (b) with respect to clause (y) above, only to the extent necessary to fully make the disbursements required by Section 3.10(i) through (viii). All other such proceeds shall be held by Lender and disbursed in accordance with this Section 7.4.

 

7.4.2 Application to Debt. All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant to Section 7.4.1(i) may be retained and applied by Lender toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its sole discretion shall deem proper, or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower for such purposes as Lender shall designate, in its discretion. So long as no Event of Default has occurred and is continuing, any application of Net Proceeds to the Debt shall not require any payment of the Yield Maintenance Premium or any other premium or penalty.

 

ARTICLE 8

 

 

DEFAULTS

 

Section 8.1 Events of Default

 

. An “Event of Default” shall exist with respect to the Loan if any of the following shall occur:

 

 

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before the related Payment Date or, for any payment other than payments due on a Payment Date, the date on which such payment is due;

 

(b) subject to Borrower’s right to contest as provided herein, if any of the Taxes are not paid prior to the date that any interest, late fees or other penalties would accrue thereon or any of the Other Charges are not paid when the same are due and payable (unless sums equaling the amount of Taxes and Other Charges then due and payable have been delivered to Lender in accordance with Section 3.3 hereof);

 

(c) if the Policies are not kept in full force and effect, or if the Policies or certificates evidencing such Policies are not delivered to Lender within fifteen (15) days after request;

 

(d) except as expressly permitted by the terms of this Agreement or the other Loan Documents, a Transfer occurs without Lender’s prior written consent;

 

(e) if any representation or warranty of Borrower, or of any Guarantor, made herein or in any other Loan Document or in any certificate, report, financial statement or other instrument or document furnished to Lender in connection with the Loan shall have been false or misleading in any material respect when made, provided that if such misrepresentation was not intentional, is susceptible to cure and Lender will not be adversely affected by a delay in enforcing its remedy under the Loan Documents, Borrower shall have thirty (30) days after notice thereof to cure such default;

 

(f) if Borrower or any Guarantor shall make an assignment for the benefit of creditors or if Borrower shall generally not be paying its debts as they become due;

 

(g) if a receiver (other than a receiver appointed by Lender), liquidator or trustee of Borrower or of any Guarantor shall be appointed or if Borrower or any Guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Borrower or any Guarantor or if any proceeding for the dissolution or liquidation of Borrower or of any Guarantor shall be instituted; however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower or such Guarantor, upon the same not being discharged, stayed or dismissed within ninety (90) days;

 

(h) Borrower breaches any covenant contained in Section 5.12.1, 5.13, 5.15, 5.22, 5.25 or 5.28;

 

(i) if Borrower shall be in default under any other deed of trust or security agreement covering any part of the Property whether it be superior or junior in lien to the Mortgage;

 

 

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filing or recording of such lien (except a lien for local real estate taxes and assessments or special taxes not then due and payable);

 

(k) if Borrower fails to cure properly any violations of laws or ordinances affecting or which may be interpreted to affect the Property within thirty (30) days after Borrower first receives notice of any such violations; provided, however, that if such violation is reasonably susceptible of cure, but not within such thirty (30) day period and the applicable law or ordinance permits such longer period within which to cure such violation, then Borrower shall be permitted up to an additional sixty (60) days to cure such violation provided that Borrower diligently and continuously pursues such cure;

 

(l) except as permitted in this Agreement, the alteration, improvement, demolition or removal of any of the Improvements without the prior consent of Lender;

 

(m) if Borrower shall continue to be in default under any term, covenant, or provision of the Note or any of the other Loan Documents, beyond applicable notice and/or cure periods contained in those documents;

 

(n) if Borrower fails to cure a default under any other term, covenant or provision of this Agreement within thirty (30) days after Borrower first receives notice of any such default; provided, however, if such default is reasonably susceptible of cure, but not within such thirty (30) day period, then Borrower may be permitted up to an additional sixty (60) days to cure such default provided that Borrower diligently and continuously pursues such cure;

 

(o) if without Lender’s prior written consent, except as otherwise expressly permitted by the Loan Documents, (i) the Management Agreement is terminated, (ii) the ownership, management or control of Manager is transferred, (iii) there is a material change in the Management Agreement, or (iv) there shall be a material default by Borrower under the Management Agreement that is not cured within any applicable notice or cure period provided under the Management Agreement;

 

(p) if Borrower ceases to continuously operate the Property or any material portion thereof as office space for any reason whatsoever (other than temporary cessation in connection with any repair or renovation thereof undertaken with the consent of Lender or otherwise permitted under this Agreement);

 

(q) if any of the assumptions contained in the “non-consolidation” opinion delivered to Lender in connection with the Loan, or in any other “non-consolidation” opinion delivered subsequent to the closing of the Loan, is or shall become untrue in any respect; or

 

(r) if Borrower fails to comply with the covenants as to Prescribed Laws set forth in Section 5.4.1 hereof.

 

Section 8.2 Remedies

 

.

 

 

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8.2.1 Acceleration. Upon the occurrence of an Event of Default (other than an Event of Default described in paragraph (f) or (g) of Section 8.1) and at any time and from time to time thereafter, in addition to any other rights or remedies available to it pursuant to the Loan Documents or at law or in equity, Lender may take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and in and to the Property including declaring the Debt to be immediately due and payable (including unpaid interest, Default Rate interest, Late Payment Charges, Yield Maintenance Premium and any other amounts owing by Borrower), without notice or demand; and upon any Event of Default described in paragraph (f) or (g) of Section 8.1, the Debt (including unpaid interest, Default Rate interest, Late Payment Charges, Yield Maintenance Premium and any other amounts owing by Borrower) shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained in any Loan Document to the contrary notwithstanding.

 

8.2.2 Remedies Cumulative. Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under the Loan Documents or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Debt shall be declared, or be automatically, due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth in the Loan Documents. Without limiting the generality of the foregoing, Borrower agrees that if an Event of Default is continuing, (i) to the extent permitted by applicable law, Lender is not subject to any “one action” or “election of remedies” law or rule, and (ii) all Liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Property, the Mortgage has been foreclosed, the Property has been sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full. To the extent permitted by applicable law, nothing contained in any Loan Document shall be construed as requiring Lender to resort to any portion of the Property for the satisfaction of any of the Debt in preference or priority to any other portion, and Lender may seek satisfaction out of the entire Property or any part thereof, in its discretion.

 

8.2.3 Severance. Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, mortgages and other security documents in such denominations and priorities of payment and liens as Lender shall determine in its discretion for purposes of evidencing and enforcing its rights and remedies. Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect such severance, Borrower ratifying all that such attorney shall do by virtue thereof.

 

 

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8.2.4 Delay. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default, or the granting of any indulgence or compromise by Lender shall impair any such remedy, right or power hereunder or be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default shall not be construed to be a waiver of any subsequent Default or Event of Default or to impair any remedy, right or power consequent thereon. Notwithstanding any other provision of this Agreement, Lender reserves the right to seek a deficiency judgment or preserve a deficiency claim in connection with the foreclosure of the Mortgage to the extent necessary to foreclose on all or any portion of the Property, the Rents, the Cash Management Accounts or any other collateral.

 

8.2.5 Lender’s Right to Perform. If Borrower fails to perform any covenant or obligation contained herein (including the covenant set forth in the last sentence of Section 5.4.1) and such failure shall continue for a period of five Business Days after Borrower’s receipt of written notice thereof from Lender, without in any way limiting Lender’s right to exercise any of its rights, powers or remedies as provided hereunder, or under any of the other Loan Documents, Lender may, but shall have no obligation to, perform, or cause performance of, such covenant or obligation, and all costs, expenses, liabilities, penalties and fines of Lender incurred or paid in connection therewith shall be payable by Borrower to Lender within ten (10) days after the date Lender makes written demand therefor and, if not paid, shall be added to the Debt (and to the extent permitted under applicable laws, secured by the Mortgage and other Loan Documents) and shall bear interest thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to send notice to Borrower of any such failure.

 

ARTICLE 9

 

 

SPECIAL PROVISIONS

 

Section 9.1 Sale of Note and Securitization

 

.

 

 

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examined in each such memorandum or prospectus, as applicable, all sections containing information relating to the Property, Parent, Borrower, any Affiliates of Parent, Borrower, or the Loan, and that such information included therein (collectively, the “Securitization Information”), does not contain any untrue statement of a material fact or omit to state a material fact known to Borrower that is necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, (B) indemnifying Lender (and for purposes of this Section 9.1.3, Lender hereunder shall include its officers, directors and employees), the Person who acts as depositor, issuer and/or registrant who may have filed a registration statement relating to the Securitization, each underwriter or placement agent involved in the Securitization, each of their respective directors and officers and each Person who controls such Person within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Indemnified Group”), for any losses, claims, damages or liabilities (collectively, the “Liabilities”) to which any of the Indemnified Group may become subject insofar as the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Securitization Information which untrue or alleged untrue statement is not expressly disclosed to Lender by Borrower after Borrower has been given an opportunity to review the Securitization Information, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (C) agreeing to reimburse each Person in the Indemnified Group for any legal or other expenses incurred by each such Person in connection with investigating or defending the Liabilities for which an indemnity is owed hereunder; provided, however, that Borrower will be liable in any such case under clauses (B) or (C) above only to the extent that any such Liability arises out of or is based upon any Provided Information or upon the omission or alleged omission to state therein a material fact known to Borrower that is required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or any other information furnished to Lender or any other Person in the Indemnified Group by Borrower or an affiliate in connection with the preparation of any Disclosure Document or in connection with the underwriting of the Debt, including, without limitation, financial statements of Borrower, operating statements, rent rolls, environmental site assessment reports and Property condition reports with respect to the Property. This indemnity agreement will be in addition to any liability which Borrower may otherwise have.

 

(c) In the case of each Securitization, in connection with filings under the Exchange Act, Borrower agrees to indemnify (i) each Person in the Indemnified Group for Liabilities to which each such Person may become subject insofar as the Liabilities arise out of or are based upon an untrue statement or an alleged untrue statement in the Provided Information or an omission or alleged omission to state in the Provided Information a material fact known to Borrower that is necessary in order to make the statements in the Provided Information, in light of the circumstances under which they were made, not misleading, which untrue or alleged untrue statement or omission or alleged omission is not expressly disclosed to Lender by Borrower after Borrower has been given an opportunity to review such filings under the Exchange Act and (ii) each Person in the Indemnified Group for any reasonable legal or other expenses incurred by each such Person in connection with defending or investigating the Liabilities for which an indemnity is owed hereunder.

 

 

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(d) Promptly after receipt by a party seeking indemnification hereunder of notice of the commencement of any action, suit or proceeding against such party in respect of which a claim is to be made under this Section 9.1.3, such party will notify Borrower in writing of the commencement thereof, but the omission to so notify Borrower will not relieve Borrower from any liability which Borrower may have to any indemnified party hereunder except to the extent that failure to notify causes prejudice to Borrower. In the event that any action is brought against any indemnified party, and it notifies Borrower of the commencement thereof, Borrower will be entitled to participate therein and, to the extent that Borrower may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. After notice from Borrower to such indemnified party hereunder, Borrower shall be responsible for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, if the defendants in any such action include both the indemnified party and Borrower and the indemnified party shall have reasonably concluded that there are any legal defenses available to it and/or other indemnified parties that are different from or in addition to those available to Borrower, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Borrower shall not be liable for the expenses of more than one separate counsel unless an indemnified party shall have reasonably concluded that there may be legal defenses available to Borrower that are different from or additional to those available to another indemnified party.

 

(e) In order to provide for just and equitable contribution in circumstances in which any indemnification provided for under this Section 9.1.3 is for any reason held to be unenforceable, unavailable or insufficient to hold harmless an indemnified party in respect of any Liabilities which would otherwise be indemnifiable hereunder, Borrower shall contribute to the amount paid or payable by the indemnified party as a result of such Liabilities; provided, however, that if any indemnified party is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) it shall not be entitled to contribution from Borrower if Borrower was not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties are entitled, the following factors shall be considered: (i) the relative knowledge and access to information concerning the matter with respect to which a claim was asserted; (ii) the opportunity to correct and prevent any statement or omission; and (iii) any other equitable considerations appropriate in the circumstances. Lender and Borrower hereby agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation.

 

(f) The liabilities and obligations of Borrower and its Affiliates hereunder shall survive the termination of the Note, Loan Agreement and other Loan Documents and the satisfaction and discharge of the Debt.

 

(g) Each Person in the Indemnified Group is an intended third party beneficiary of the obligations of Borrower herein.

 

 

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paid for by Borrower based on the applicable percentage of such expenses determined by dividing the then outstanding Principal by the then aggregate outstanding amount of the pool created in the Securitization which includes the Loan.

 

9.1.5 Severance of Loan. Lender shall have the right, at any time (whether prior to, in connection with, or after any Securitization), with respect to all or any portion of the Loan, to modify, split and/or sever all or any portion of the Loan as hereinafter provided. Without limiting the foregoing, Lender may (i) cause the Note and the Mortgage to be split into a first and second mortgage loan, (ii) create one more senior and subordinate notes (i.e., an A/B or A/B/C structure), (iii) create multiple components of the Note or Notes (and allocate or reallocate the Principal balance of the Loan among such components) or (iv) otherwise sever the Loan into two or more loans secured by mortgages, in each such case, in whatever proportion and whatever priority Lender determines; provided, however, in each such instance the outstanding Principal balance of all the Notes evidencing the Loan (or components of such Notes) immediately after the effective date of such modification equals the outstanding Principal balance of the Loan immediately prior to such modification and the weighted average of the interest rates for all such Notes (or components of such Notes) immediately after the effective date of such modification equals the interest rate of the original Note immediately prior to such modification and such action shall not result in additional costs to Borrower except as expressly provided above. If requested by Lender, Borrower (and Borrower’s constituent members, if applicable, and Guarantor) shall execute within five (5) Business Days after such request, such documentation as Lender may reasonably request to evidence and/or effectuate any such modification or severance.

 

ARTICLE 10

 

 

MISCELLANEOUS

 

Section 10.1 Exculpation

 

 

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any obligation evidenced or secured by this Agreement, the Note or any of the other Loan Documents; (ii) impair the right of Lender to name any of the Borrower Parties, as a party defendant in any action or suit for foreclosure and sale under the Mortgage; (iii) affect the validity or enforceability of any guaranty made in connection with the Loan or any rights and remedies of Lender thereunder; (iv) impair the right of Lender to obtain the appointment of a receiver; (v) impair the enforcement of the Assignment of Leases and Rents executed in connection herewith; or (vi) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower (but not against any members of Borrower (other than Guarantor to the extent provided in the Non-Recourse Guaranty) or their direct or indirect constituent members or partners or any other Person), by money judgment or otherwise, to the extent of any loss, damage, cost, expense, liability, claim or other obligation (but excluding any punitive, consequential or speculative damages) incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with the following:

 

(a) fraud or intentional misrepresentation by Borrower or any Guarantor in connection with the Loan;

 

(b) intentional physical waste of the Property (including, but not limited to, waste due to gross negligence) by Borrower or any affiliate thereof; provided, however, such physical waste shall exclude wear and tear to the Property that occurs in the ordinary course of business of the Property by Borrower or any affiliate thereof;

 

(c) the material breach of any representation, warranty, covenant or indemnification provision in that certain Environmental and Hazardous Substance Indemnification Agreement of even date herewith given by Borrower to Lender or in this Agreement concerning Environmental Laws, Hazardous Substances and Asbestos;

 

(d) the removal or disposal by Borrower or any affiliate thereof of any portion of the Property after an Event of Default has occurred and while it is continuing, unless such portion of the Property is replaced by an item of equal or greater value as determined by Lender in its reasonable discretion;

 

(e) the misapplication or conversion by Borrower or any affiliate thereof of (i) any insurance proceeds paid by reason of any loss, damage or destruction to the Property, (ii) any awards or other amounts received in connection with the condemnation of all or a portion of the Property, (iii) any Rents following an Event of Default or (iv) any Rents paid more than one month in advance;

 

(f) failure to pay charges for labor or materials or taxes or other charges that can create liens superior to the lien of the Mortgage on any portion of the Property unless such taxes or other charges are being contested in accordance herewith or such taxes or charges have been delivered to Lender in accordance with Section 3.3 or Borrower has complied with Section 5.2; and

 

 

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with the terms and conditions of any of the Leases prior to the occurrence of the Event of Default that gave rise to such foreclosure or action in lieu thereof.

 

Notwithstanding anything to the contrary in any of the Loan Documents (i) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents, and (ii) the Debt shall become fully recourse to Borrower (but not its members (other than Guarantor solely to the extent provided in the Non-Recourse Guaranty) or other direct or indirect constituent members or partners or any other Person) in the event that: (A) the first full Monthly Payment Amount (as defined in the Note) under the Note is not paid when due; (B) other than in connection with a default under subsection (x) of the definition of Special Purpose Bankruptcy Remote Entity set forth in Schedule 5 hereof, Borrower fails to maintain its status as a Special Purpose Bankruptcy Remote Entity in accordance with the provisions of this Agreement and such failure results in the substantive consolidation of Borrower with another Person; (C) except as otherwise permitted pursuant to the Loan Documents, Borrower fails to obtain Lender’s prior written consent to any subordinate financing or other voluntary lien encumbering the Property; (D) except as otherwise permitted pursuant to the Loan Documents, Borrower fails to obtain Lender’s prior written consent to any assignment, transfer, or conveyance of the Property or any interest therein as and to the extent required by this Agreement or the Mortgage; or (E) (1) if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by Borrower or Guarantor, or (2) if Borrower or Guarantor files an answer consenting to, or otherwise joining in, any involuntary petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law filed against it by any other Person, or is found pursuant to a final, unappealable order of a court of competent jurisdiction to have solicited or caused to be solicited creditors to file any involuntary petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law against Borrower or Guarantor, or (3) if Borrower or Guarantor are found, pursuant to a final unappealable order of a court of competent jurisdiction, to have been in collusion with creditors that initiate a bankruptcy action or proceeding against Borrower or Guarantor.

 

Section 10.2 Brokers and Financial Advisors

 

. Borrower hereby represents that, with the exception of Secured Capital Corp., it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the Loan. Borrower shall indemnify and hold Lender harmless from and against any and all claims, liabilities, costs and expenses (including attorneys’ fees, whether incurred in connection with enforcing this indemnity or defending claims of third parties) of any kind in any way relating to or arising from a claim by any Person that such Person acted on behalf of Borrower in connection with the transactions contemplated herein. The provisions of this Section 10.2 shall survive the expiration and termination of this Agreement and the repayment of the Debt.

 

Section 10.3 Retention of Servicer

 

 

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. Lender reserves the right to retain the Servicer to act as its agent hereunder with such powers as are specifically delegated to the Servicer by Lender, whether pursuant to the terms of this Agreement, any pooling and servicing agreement or similar agreement entered into as a result of a Securitization, the Cash Management Agreement or otherwise, together with such other powers as are reasonably incidental thereto. Borrower shall pay any reasonable fees and expenses of the Servicer in connection with a release of the Property, assumption or modification of the Loan, enforcement of the Loan Documents or any other action taken by Servicer hereunder on behalf of Lender.

 

Section 10.4 Survival

 

. This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as any of the Debt is unpaid or such longer period if expressly set forth in this Agreement. All Borrower’s covenants and agreements in this Agreement shall inure to the benefit of the respective legal representatives, successors and assigns of Lender.

 

Section 10.5 Lender’s Discretion

 

. Whenever pursuant to this Agreement or any other Loan Document, Lender exercises any right given to it to approve or disapprove, or consent or withhold consent, or any arrangement or term is to be satisfactory to Lender or is to be in Lender’s discretion, the decision of Lender to approve or disapprove, to consent or withhold consent, or to decide whether arrangements or terms are satisfactory or not satisfactory, or acceptable or unacceptable or in Lender’s discretion shall (except as is otherwise specifically herein provided) be in the sole discretion of Lender and shall be final and conclusive.

 

Section 10.6 Governing Law

 

.

 

 

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EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT CORPORATION TRUST COMPANY AT ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (i) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

Section 10.7 Modification, Waiver in Writing

 

 

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any other Loan Document, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under any Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under the Loan Documents, or to declare an Event of Default for failure to effect prompt payment of any such other amount.

 

Section 10.8 Trial by Jury

 

. BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER.

 

Section 10.9 Headings/Exhibits

 

. The Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. The Exhibits attached hereto, are hereby incorporated by reference as a part of the Agreement with the same force and effect as if set forth in the body hereof.

 

Section 10.10 Severability

 

. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

Section 10.11 Preferences

 

 

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been received by Lender. This provision shall survive the expiration or termination of this Agreement and the repayment of the Debt.

 

Section 10.12 Waiver of Notice

 

. Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or any other Loan Document specifically and expressly requires the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which no Loan Document specifically and expressly requires the giving of notice by Lender to Borrower.

 

Section 10.13 Remedies of Borrower

 

. If a claim or adjudication is made that Lender or any of its agents, including Servicer, has acted unreasonably or unreasonably delayed acting in any case where by law or under any Loan Document, Lender or any such agent, as the case may be, has an obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its agents, including Servicer, shall be liable for any monetary damages, and Borrower’s sole remedy shall be to commence an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment. Borrower specifically waives any claim against Lender and its agents, including Servicer, with respect to actions taken by Lender or its agents on Borrower’s behalf.

 

Section 10.14 Prior Agreements

 

. This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements, understandings and negotiations among or between such parties, whether oral or written, are superseded by the terms of this Agreement and the other Loan Documents.

 

Section 10.15 Offsets, Counterclaims and Defenses

 

. Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents, including Servicer, or otherwise offset any obligations to make payments required under the Loan Documents. Any assignee of Lender’s interest in and to the Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which Borrower may otherwise have against any assignor of such documents, and no such offset, counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents, and any such right to interpose or assert any such offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

 

Section 10.16 Publicity

 

 

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Loan Documents, the Loan, Lender or any member of the Indemnified Group, a Loan purchaser, the Servicer or the trustee in a Securitization shall be subject to the prior written approval of Lender. Lender shall have the right to issue any Public Releases without Borrower’s approval.

 

Section 10.17 No Usury

 

. Borrower and Lender intend at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under state law) and that this Section 10.17 shall control every other agreement in the Loan Documents. If the applicable law (state or federal) is ever judicially interpreted so as to render usurious any amount called for under the Note or any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Debt, or if Lender’s exercise of the option to accelerate the maturity of the Loan or any prepayment by Borrower results in Borrower having paid any interest in excess of that permitted by applicable law, then it is Borrower’s and Lender’s express intent that all excess amounts theretofore collected by Lender shall be credited against the unpaid Principal and all other Debt (or, if the Debt has been or would thereby be paid in full, refunded to Borrower), and the provisions of the Loan Documents immediately be deemed reformed and the amounts thereafter collectible thereunder reduced, without the necessity of the execution of any new document, so as to comply with applicable law, but so as to permit the recovery of the fullest amount otherwise called for thereunder. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the Loan shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate from time to time in effect and applicable to the Debt for so long as the Debt is outstanding. Notwithstanding anything to the contrary contained in any Loan Document, it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

 

Section 10.18 Conflict; Construction of Documents

 

. In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that each is represented by separate counsel in connection with the negotiation and drafting of the Loan Documents and that the Loan Documents shall not be subject to the principle of construing their meaning against the party that drafted them.

 

Section 10.19 No Third Party Beneficiaries

 

. The Loan Documents are solely for the benefit of Lender and Borrower and nothing contained in any Loan Document shall be deemed to confer upon anyone other than the Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained therein.

 

Section 10.20 Yield Maintenance Premium

 

 

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(b) if payments of Principal are made to Lender prior to the Stated Maturity Date, for any reason whatsoever, whether voluntary, as a result of Lender’s acceleration of the Loan after an Event of Default, by operation of law or otherwise, Lender will not receive all such interest and other benefits and may, in addition, incur costs. For these reasons, and to induce Lender to make the Loan, Borrower agrees that, except as expressly provided in this Agreement, all prepayments, if any, whether voluntary or involuntary, will be accompanied by the Yield Maintenance Premium. Such Yield Maintenance Premium shall be required whether payment is made by Borrower, by a Person on behalf of Borrower, or by the purchaser at any foreclosure sale, and may be included in any bid by Lender at such sale. Borrower further acknowledges that (A) it is a knowledgeable real estate developer and/or investor; (B) it fully understands the effect of the provisions of this Section 10.20, as well as the other provisions of the Loan Documents; (C) the making of the Loan by Lender at the Interest Rate and other terms set forth in the Loan Documents are sufficient consideration for Borrower’s obligation to pay a Yield Maintenance Premium (if required); and (D) Lender would not make the Loan on the terms set forth herein without the inclusion of such provisions. Borrower also acknowledges that the provisions of this Agreement limiting the right of prepayment and providing for the payment of the Yield Maintenance Premium and other charges specified herein were independently negotiated and bargained for, and constitute a specific material part of the consideration given by Borrower to Lender for the making of the Loan except as expressly permitted hereunder. BORROWER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT, PURSUANT TO THE TERMS OF THIS AGREEMENT, BORROWER HAS AGREED THAT IT DOES NOT HAVE THE RIGHT TO PREPAY THE LOAN IN WHOLE OR IN PART WITHOUT PREMIUM EXCEPT AS OTHERWISE PROVIDED HEREIN, AND THAT BORROWER SHALL BE LIABLE FOR THE PAYMENT OF THE PREPAYMENT PREMIUM OR YIELD MAINTENANCE PREMIUM, AS APPLICABLE AND TO THE EXTENT PROVIDED HEREIN IF BORROWER PREPAYS THE LOAN FOLLOWING THE OCCURRENCE OF AN ACCELERATION OF THE LOAN. FURTHERMORE, BORROWER WAIVES ANY RIGHTS THEY MAY HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR STATUTE, AND BORROWER AGREES THAT IF A PREPAYMENT OF ANY OR ALL OF THIS AGREEMENT IS MADE FOLLOWING ANY ACCELERATION OF THE MATURITY DATE BY LENDER ON ACCOUNT OF ANY TRANSFER OR DISPOSITION PROHIBITED OR RESTRICTED HEREIN OR BY THE MORTGAGE, BORROWER SHALL BE OBLIGATED TO PAY CONCURRENTLY THEREWITH THE PREPAYMENT PREMIUM OR YIELD MAINTENANCE PREMIUM, IF ANY. BORROWER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT LENDER HAS MADE THE LOAN EVIDENCED HEREBY IN RELIANCE ON THE FOREGOING AGREEMENTS AND WAIVERS OF BORROWER, THAT LENDER WOULD NOT HAVE MADE THIS LOAN WITHOUT SUCH AGREEMENTS AND WAIVERS OF BORROWER, AND THAT THE MAKING OF THE LOAN AT THE INTEREST RATE AND FOR THE TERMS SET FORTH HEREIN CONSTITUTES ADEQUATE CONSIDERATION, GIVEN WEIGHT BY THE UNDERSIGNED, FOR SUCH AGREEMENTS AND WAIVER.

 

Section 10.21 Assignment

 

 

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. The Loan, the Note, the Loan Documents and/or Lender’s rights, title, obligations and interests therein may be assigned by Lender and any of its successors and assigns to any Person at any time in its discretion, in whole or in part, whether by operation of law (pursuant to a merger or other successor in interest) or otherwise. Upon such assignment, all references to Lender in this Agreement and in any Loan Document shall be deemed to refer to such assignee or successor in interest and such assignee or successor in interest shall thereafter stand in the place of Lender. Borrower may not assign its rights, title, interests or obligations under this Agreement or under any of the Loan Documents except as specifically provided in Sections 5.26.5 and 5.26.6 of this Agreement. In connection with any assignment, the new Lender shall provide notice to Borrower of the identity, address and other pertinent information pertaining to the new Lender.

 

Section 10.22 Certain Additional Rights of Lender

 

. Notwithstanding anything to the contrary which may be contained in this Agreement, Lender shall have:

 

(1) the right to routinely consult with Borrower’s management regarding the significant business activities and business and financial developments of Borrower, provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of hazardous substances. Consultation meetings should occur on a regular basis (no less frequently than quarterly) with Lender having the right to call special meetings at any reasonable times;

 

(2) the right, in accordance with the terms of this Agreement, to examine the books and records of Borrower at any time upon reasonable notice;

 

(3) the right, in accordance with the terms of this Agreement, to receive financial reports, including balance sheets, statements of income, shareholder’s equity and cash flow, a management report and schedules of outstanding indebtedness;

 

(4) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to restrict financing to be obtained with respect to the Property so long as any portion of the Debt remains outstanding;

 

(5) the right, without restricting any other right of Lender under this Agreement or the other Loan Documents (including any similar right), to restrict, upon the occurrence of an Event of Default, Borrower’s payments of management, consulting, director or similar fees to Affiliates of Borrower from the Rents;

 

(6) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to approve any operating budget and/or capital budget of Borrower;

 

(7) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to approve any acquisition by Borrower of any other significant property (other than personal property required for the day to day operation of the Property); and

 

 

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and the right to restrict the transfer of interests in such member, except for any transfer that is a Permitted Transfer.

 

The rights described above may be exercised directly or indirectly by any Person that owns substantially all of the ownership interests in Lender. The provisions of this Section are intended to satisfy the requirement of management rights for purposes of the Department of Labor “plan assets” regulation 29 C.F.R., Section 2510.3-101.

 

Section 10.23 Set-Off

 

. In addition to any rights and remedies of Lender provided by this Loan Agreement and by law, Lender shall have the right, without prior notice to Borrower, any such notice being expressly waived by Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Lender or any Affiliate thereof to or for the credit or the account of Borrower. Lender agrees promptly to notify Borrower after any such set-off and application made by Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

 

Section 10.24 Counterparts

 

. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

 

 

BORROWER:
▇▇▇▇▇▇▇ PROPERTIES - PACIFIC CENTER, LLC,
a Delaware limited liability company
By:	/s/ ▇▇▇▇ Lammas
	Name: ▇▇▇▇ Lammas
	Its: Vice President and Secretary

 

 

 

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

 

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LENDER:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
a Delaware corporation
By:	/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
	Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
	Title: Managing Director