EXHIBIT 10.10
=================================================================
LOAN AND SECURITY AGREEMENT
Dated as of December 15, 2000
between
FRANKLIN PLAZA PROPERTY TRUST
as Borrower
and
MERRILL LYNCH MORTGAGE LENDING, INC.
as Lender
One Franklin Plaza
Philadelphia, Pennsylvania
=================================================================
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "Loan Agreement") is
dated as of December 15, 2000 and entered into by and between FRANKLIN PLAZA
PROPERTY TRUST, a Maryland real estate investment trust ("Borrower"); and
MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation (together with its
successors and assigns, "Lender").
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrower Parties and
Lender agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. The terms defined below are used in this Loan
Agreement as so defined. Terms defined in the preamble to this Loan Agreement
are used in this Loan Agreement as so defined.
"Accounts" means, collectively, the Central Account, the Sub-Accounts
thereof, any Loss Proceeds Account and any other accounts pledged to Lender
pursuant to this Loan Agreement or any other Loan Document.
"Account Collateral" means all of Borrower's right, title and interest
in and to the Accounts, the Reserves, all monies and amounts which may from time
to time be on deposit therein, all monies, checks, notes, instruments,
documents, deposits, and credits from time to time in the possession of Lender
representing or evidencing such Accounts and Reserves and all earnings and
investments held therein and proceeds thereof.
"Accrued Interest" has the meaning set forth in Section 2.4(A)(ii).
"Adjusted Interest Rate" has the meaning set forth in Section 2.2(A).
"Affiliate" means in relation to any Person, any other Person: (i)
directly or indirectly controlling, controlled by, or under common control with,
the first Person; (ii) directly or indirectly owning or holding fifty percent
(50%) or more of any equity interest in the first Person; or (iii) fifty percent
(50%) or more of whose voting stock or other equity interest is directly or
indirectly owned or held by the first Person. In addition, the Affiliates of
each Borrower Party include, without limitation, all other Borrower Parties,
irrespective of whether they now or hereafter satisfy the foregoing criteria.
For purposes of this definition, "control" (including with correlative meanings,
the terms "controlling", "controlled by" and "under common control with") means
the possession directly or indirectly of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Where expressions such
as "[name of party] or any Affiliate" are used, the same shall refer to the
named party and any Affiliate of the named party.
-1-
"Assignment of Leases" means the Assignment of Leases and Rents of even
date herewith from Borrower to Lender, constituting an assignment of the Leases
and proceeds therefrom as Collateral for the Loan, as same may be amended or
modified from time to time.
"Assignment of Management Agreement" means that certain Assignment of
Management Agreement of even date herewith executed by Borrower and current
Manager, constituting an assignment of the Management Agreement as Collateral
for the Loan, as same may be amended or modified from time to time.
"Bankruptcy Code" means Title 11 of the United States Code, as amended
from time to time, and all rules and regulations promulgated thereunder.
"Borrower" has the meaning set forth in the preamble.
"Borrower Party" and "Borrower Parties" mean, individually or
collectively, Borrower, Member and Guarantor.
"Borrower Party Secretary" has the meaning set forth in Section 3.1.
"Business Day" means any day excluding (i) Saturday, (ii) Sunday, (iii)
any day which is a legal holiday under the laws of the State of New York, and
(iv) any day on which banking institutions located in such state are generally
not open for the conduct of regular business.
"Capital Expenditures" means expenditures for capital improvements,
furnishings, fixtures and equipment (whether paid in cash or property or accrued
as liabilities) made by Borrower that, in conformity with GAAP, are required to
be included in the property, plant, or equipment, or similar fixed asset account
or otherwise capitalized.
"Capital Expenditure Budget" means Borrower's budget for Capital
Expenditures for the Property, the costs of which are to be paid from the
Replacement Reserve, which budget has been approved by Lender as and to the
extent required hereunder.
"Cash Management Agreement" means the Cash Management Agreement of even
date herewith among Borrower, Lender, Manager, and Central Account Bank, as same
may be amended or modified from time to time.
"Central Account" and "Central Account Bank" are defined in Section
7.1.
"Claims" has the meaning set forth in Section 5.3.
"Closing" means the funding of the Loan contemplated by this Loan
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Collateral" means rights, interests, and property of every kind, real
and personal, tangible and intangible, which is granted, pledged, liened, or
encumbered as security for the Loan or any of the other Obligations under this
Loan Agreement, the Mortgage, the Cash
-2-
Management Agreement or other Loan Documents, including without limitation the
Property and the Accounts.
"Compliance Certificate" has the meaning set forth in Section 5.1.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (A) with respect to
any indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto; (B) with respect to any
letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings; (C) under any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement designed to protect against
fluctuations in interest rates; or (D) under any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect that Person against fluctuations in currency values. Contingent
Obligations shall include (i) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (ii) the obligation to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement, and (iii) any liability of such Person for the obligations of
another through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. For
purposes of this definition, the amount of any Contingent Obligation at any time
shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Contractual Obligation", as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject
including, without limitation, the Loan Documents.
"Debt Service Coverage Ratio" shall mean, for any period, the ratio of
(i) Underwritable Cash Flow for such period immediately preceding the date of
calculation to (ii) the amount of principal and interest due under the Loan for
such period.
"Debt Service Sub-Account" has the meaning set forth in Section 7.1.
"Default" means any breach or default under any of the Loan Documents,
whether or not the same is an Event of Default, and also any condition or event
that, after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within any
applicable grace or cure period.
"Default Rate" has the meaning set forth in Section 2.2.
-3-
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Eligible Account" shall mean a separate and identifiable account from
all other funds held by the holding institution, which account is either (i) an
account maintained with an Eligible Bank or (ii) a segregated trust account
maintained by a corporate trust department of a federal depository institution
or a state chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations ss. 9.10(B), which has corporate trust powers and is acting in its
fiduciary capacity.
"Eligible Bank" shall mean a bank that (i) satisfies the Rating
Criteria and (ii) insures the deposits hereunder through the Federal Deposit
Insurance Corporation.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA (including any Multiemployer Plan) (i) which is
maintained for employees of Borrower or any Affiliate, (ii) which has at any
time within the preceding six (6) years been maintained for the employees of
Borrower or any current or former Affiliate or (iii) for which Borrower or any
Affiliate has any liability, including contingent liability.
"Environmental Claims" has the meaning set forth in Section 4.16.
"Environmental Indemnity" means the Environmental Indemnity Agreement
of even date herewith from Borrower and Guarantor to Lender, as same may be
amended or modified from time to time.
"Environmental Laws" means any federal, state, or local law, ordinance
or regulation or any court judgment or order of any federal, state or local
agency or regulatory body applicable to Borrower or to the Property relating to
industrial hygiene or to environmental or unsafe conditions including, but not
limited to, those relating to the generation, manufacture, storage, handling,
transportation, disposal, release, emission or discharge of Hazardous Material,
those in connection with the construction, fuel supply, power generation and
transmission, waste disposal or any other operations or processes relating to
the Property, and those relating to the atmosphere, soil, surface and ground
water, wetlands, stream sediments and vegetation on, under, in or about the
Property. "Environmental Laws" also shall include, but not be limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the
Toxic Substance Control Act, the Safe Drinking Water Act and the Occupational
Safety and Health Act, and all regulations adopted in respect to the foregoing
laws.
"Environmental Report" means the environmental report, dated October
10, 2000, prepared by AquaTerra Assessment Services Corp. with respect to the
Property.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
all rules and regulations promulgated thereunder.
"Event of Default" has the meaning set forth in Section 8.1.
"Excess Interest" has the meaning set forth in Section 2.2.
-4-
"Extraordinary Expense" has the meaning set forth in Section 5.1(D).
"Financial Statements" means (i) statements of operations and retained
earnings, statements of cash flow, and balance sheets and (ii) such other
financial reports as the subject entity shall routinely and regularly prepare.
"Financing Statements" means the Uniform Commercial Code Financing
Statements naming the applicable Borrower Parties as debtor, and Lender as
secured party, required under applicable state law to perfect the security
interests created hereunder or under the other Loan Documents.
"First Payment Date" has the meaning set forth in Section 2.4(A).
"GAAP" means generally accepted accounting principles as in effect in
the United States of America from time to time.
"Gross Revenues" means, without duplication, all revenue derived from
the ownership and operation of the Property by Borrower from whatever source
determined on a GAAP basis, including, but not limited to, Rents, but excluding
sales, use and occupancy or other taxes on receipts required to be accounted for
by Borrower to any governmental authority, non-recurring revenues as reasonably
determined by Lender (e.g. proceeds from a sale of assets or refinancing),
security deposits (except to the extent determined by Lender to be properly
utilized to offset a loss of Rent), refunds and uncollectible accounts, proceeds
of casualty insurance and condemnation awards (other than business interruption
or other loss of income insurance related to business interruption or loss of
income for the period in question), and any disbursements to Borrower from the
Reserve Sub-Accounts or any other fund established by the Loan Documents or any
proceeds from the sale, refinancing of the Property or recapitalization of the
Borrower. In addition, if required by Lender, income accrued but not paid in
cash during an accounting period shall be discounted for an allowance for
doubtful accounts in a manner consistent with historical net realizable value.
"Ground Lease" means that certain Ground Lease, of even date herewith,
between Ground Lessor, as lessor, and Borrower, as lessee, pursuant to which
Borrower holds the ground lessee's interest in and to the Property.
"Ground Lessor" means HUB Properties Trust, a Maryland real estate
investment trust, which is the fee owner of the Property.
"Guaranty" means the Guaranty of Non-Recourse Exceptions of even date
herewith executed by Guarantor in favor of Lender, as same may be amended or
modified from time to time.
"Guarantor" means HUB Realty College Park I, LLC, a Maryland limited
liability company.
"Hazardous Material" means all or any of the following: (i) substances,
materials, compounds, wastes, products, emissions and vapors that are defined or
listed in, regulated by, or otherwise classified pursuant to, any applicable
Environmental Laws, including any so defined,
-5-
listed, regulated or classified as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances", "pollutants",
"contaminants", or any other formulation intended to regulate, define, list or
classify substances by reason of deleterious, harmful or dangerous properties;
(ii) waste oil, oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iii) any flammable substances or
explosives or any radioactive materials; (iv) asbestos in any form; (v)
electrical or hydraulic equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (vi) radon; or (vii) urea formaldehyde.
"Hazardous Materials Remediation Reserve" means the Reserve established
pursuant to Section 6.5.
"HRPT" means HRPT Properties Trust, a Maryland real estate investment
trust.
"Impositions" means (A) all real estate and personal property taxes,
and vault charges and all other taxes, levies, assessments and other similar
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every kind and nature whatsoever (including any payments in lieu
of taxes), which at any time prior to, at or after the execution hereof may be
assessed, levied or imposed by, in each case, a governmental authority upon the
Property or the rents relating thereto or upon the ownership, use, occupancy or
enjoyment thereof, and any interest, cost or penalties imposed by such
governmental authority with respect to any of the foregoing and (B) all rents
payable under the Ground Lease (excluding any such rents prepaid under the
Ground Lease on the date hereof).. Impositions shall not include any sales or
use taxes payable by Borrower.
"Impositions and Insurance Reserve" means the reserve established
pursuant to Section 6.3.
"Improvements" means all buildings, structures and improvements of
every kind and nature existing and to be constructed upon the land which
comprises any portion of the Property.
"Indebtedness" or "indebtedness", as applied to any Person, means: (A)
all indebtedness for borrowed money; (B) that portion of obligations with
respect to leases that is properly classified as a liability on a balance sheet
in conformity with GAAP (excluding any prepaid rents under Leases); (C) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money; (D) any obligation owed for all or
any part of the deferred purchase price of property or services if the purchase
price is due more than six months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; and (E) all indebtedness
secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person.
"Indemnified Liabilities" has the meaning set forth in Section 14.2.
"Initial Interest Rate" has the meaning set forth in Section 2.2(A).
-6-
"Insurance Premiums" means the annual insurance premiums for the
insurance policies required to be maintained by Borrower with respect to the
Property under Section 5.4.
"Interest Rate" has the meaning set forth in Section 2.2.
"Involuntary Borrower Party Bankruptcy" means any involuntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, in which any Borrower Party is a debtor
or all or any portion of the Property is property of the estate therein.
"IRC" means the Internal Revenue Code of 1986, and any rule or
regulation promulgated thereunder from time to time, in each case as amended.
"IRS" means the Internal Revenue Service or any successor thereto.
"Knowledge": Whenever in this Loan Agreement or any of the Loan
Documents, or in any document or certificate executed on behalf of any Borrower
Party pursuant to this Loan Agreement or any of the Loan Documents, reference is
made to the knowledge of Borrower or any other Borrower Party (whether by use of
the words "knowledge" or "known", or other words of similar meaning, and whether
or not the same are capitalized), such shall be deemed to refer to the actual
knowledge, without duty of independent inquiry or investigation (except that the
persons described in clause (i) shall make reasonable inquiry of the persons
described in clause (ii) below), of (i) John A. Mannix, John C. Popeo, David M.
Lepore and Jennifer B. Clark; and (ii) the individuals owning interests in or
employed by any Borrower Party with whom the persons mentioned in clause (i)
above would reasonably be expected to consult for information on the subject
matter, including without limitation, the property manager, maintenance
supervisor, or other individuals with responsibility for management of the
Property and/or the applicable entity.
"Lease" means any lease, tenancy, license, sublease, assignment and/or
other rental or occupancy agreement (including, without limitation, any and all
guarantees of any of the foregoing) heretofore or hereafter entered into
affecting the use, enjoyment or occupancy of the Property or any portion
thereof, including any extensions, renewals, modifications or amendments
thereof.
"Lender" is defined in the preamble.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" has the meaning set forth in Section 2.1.
"Loan Agreement" means this Loan and Security Agreement, as same may be
amended or modified from time to time (including all schedules, exhibits,
annexes and appendices hereto).
"Loan Documents" means this Loan Agreement, the Note, the Mortgage, the
Assignment of Leases, the Assignment of Management Agreement, the Guaranty, the
-7-
Environmental Indemnity, the Financing Statements, the Cash Management Agreement
and any and all other documents and agreements accepted by Lender for the
purposes of evidencing and/or securing the Loan.
"Loss Proceeds Account" has the meaning given thereto in the Cash
Management Agreement.
"Major Lease" means any Lease demising (together with all other Leases
to the same tenant or any Affiliate thereof) 26,000 square feet or more.
"Management Agreement" means the management agreement for the Property
in effect on the date hereof between Borrower and the current Manager and any
management agreement which may hereafter be entered into in accordance with the
terms and conditions hereof, pursuant to which any subsequent Manager may
hereafter manage the Property.
"Management Fee" means the fee earned by Manager pursuant to the terms
of the Management Agreement.
"Manager" means REIT Management & Research, Inc., the current manager
of the Property, or such other Person as may hereafter be charged with
management of the Property pursuant to a Management Agreement in accordance with
the terms and conditions hereof.
"Material Alteration" means any improvement or alteration affecting
structural elements of the Property the cost of which exceeds $2,200,000;
provided, however, that in no event shall (i) any tenant improvement work
performed pursuant to any Lease existing on the date hereof or entered into
hereafter in accordance with the provisions of this Loan Agreement or (iii)
alterations performed as part of a Restoration, constitute a Material
Alteration.
"Material Adverse Effect" means (A) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of Borrower or any other Borrower Party taken as a whole, or (B) the material
impairment of the ability of Borrower or any other Borrower Party to perform its
material obligations under any Loan Documents, or (C) the impairment of the
ability of Lender to enforce or collect any of the Obligations. In determining
whether any individual event would result in a Material Adverse Effect,
notwithstanding that such event does not of itself have such effect, a Material
Adverse Effect shall be deemed to have occurred if the cumulative effect of such
event and all other then occurring events and existing conditions would result
in a Material Adverse Effect.
"Maturity Date" shall mean January 1, 2029, or such other date on which
the final payment of principal of the Note becomes due an payable as therein or
herein provided, whether at such stated maturity date, by acceleration, or
otherwise.
"Maximum Rate" has the meaning set forth in Section 2.2(D).
"Member" means SP Holding Property Trust, a Maryland real estate
investment trust, which is the sole shareholder of Borrower.
"Monthly Debt Service Payment Amount" has the meaning set forth in
Section 2.4(A).
-8-
"Mortgage" means that certain Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Filing of even date herewith from Borrower to
Lender, constituting a Lien on the Ground Lease as Collateral for the Loan as
same may be modified or amended from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of ERISA to which Borrower or any Affiliate is
making, or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) years, or for
which Borrower or any Affiliate has any liability, including contingent
liability.
"Note" has the meaning set forth in Section 2.1.
"O&M Plan" has the meaning set forth in Section 5.7(D).
"Obligations" means all obligations, liabilities and indebtedness of
every nature of Borrower from time to time owed to Lender under the Loan
Documents, including the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable under the Loan Documents whether
before or after the filing of a proceeding under the Bankruptcy Code by or
against Borrower.
"Operating Budget" means Borrower's budget setting forth Borrower's
best estimate, after due consideration, of all revenue, costs, and expenses,
Gross Revenues and Operating Expenses, for the Property which budget has been
reasonably approved by Lender if and to the extent required hereunder.
"Operating Expenses" means all costs and expenses accrued in accordance
with GAAP relating to the operation, maintenance, repair, use and management of
the Property, including, without limitation, utilities, repairs and maintenance,
insurance, property taxes and assessments, advertising expenses, payroll and
related taxes, equipment lease payments, actual management fees and all amounts
paid into Reserves but excluding (i) principal, interest and other payments made
by Borrower under the Loan Documents, (ii) depreciation, amortization and other
non-cash expenses of the Property; provided, however such costs and expenses
shall be subject to reasonable adjustment by Lender to normalize such costs and
expenses, (iii) capital expenditures and other costs and expenses to the extent
paid from Reserves and (iv) any rents prepaid under the Ground Lease on the date
hereof (to the extent such prepaid rents or amortization thereof would otherwise
be included in operating expenses in accordance with GAAP).
"Optional Prepayment Date" shall mean January 31, 2011.
"Outside Director" is defined in Section 9.2.
"Payment Date" has the meaning set forth in Section 2.4(A).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
-9-
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Part 3 of Title I of
ERISA, Title IV of ERISA or Section 412 of the IRC and (i) which is maintained
for employees of Borrower, or any of its ERISA Affiliates, (ii) which has at any
time within the preceding six (6) years been maintained for the employees of
Borrower or any of its current or former ERISA Affiliates, or (iii) for which
Borrower or any ERISA Affiliate has any liability, including contingent
liability.
"Permitted Encumbrances" means (i) the Mortgage and the other Liens of
the Loan Documents in favor of Lender; (ii) the items shown in Schedule B to the
Title Policy as of Closing; (iii) future liens for property taxes and
assessments not then delinquent; (iv) Liens for Impositions not yet due and
payable or Liens arising after the date hereof which are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted in
accordance with Section 5.3(B) hereof; (v) in the case of Liens arising after
the date hereof, statutory Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens arising by operation of law, which are
incurred in the ordinary course of business and discharged by Borrower by
payment, bonding or otherwise within thirty (30) days after the filing thereof
or which are being contested in good faith in accordance with Section 5.3(B)
hereof; (vi) Liens arising from reasonable and customary purchase money
financing of personal property and equipment leasing to the extent the same are
created in the ordinary course of business in accordance with Section 5.17(B)
hereof; (vii) all easements, rights-of-way, restrictions and other similar
charges or non-monetary encumbrances against real property which do not
materially and adversely affect (A) the ability of Borrower to pay any of its
obligations to any Person as and when due, (B) the marketability of title to the
Property, (C) the fair market value of the Property, or (D) the use or operation
of the Property as of the Closing Date and thereafter; (viii) rights of existing
and future tenants, as tenants only, pursuant to the Leases; and (ix) any other
Lien to which Lender may expressly consent in writing.
"Permitted Investments" has the meaning set forth in the Cash
Management Agreement.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof
and their respective permitted successors and assigns (or in the case of a
governmental Person, the successor functional equivalent of such Person).
"Pre-Existing Condition" has the meaning set forth in Section 5.5.
"Prepayment Consideration" has the meaning set forth in Section 2.6.
"Primary Borrower Parties" means, collectively, Borrower and Member.
"Property" means the real property commonly known as One Franklin
Plaza, 200 North 16th Street, Philadelphia, Pennsylvania which serves as
Collateral for the Loan and which shall be encumbered by (and is more
particularly described in) the Mortgage.
-10-
"Rating Agency" shall mean any of S&P, Moody's Investors Service,
Fitch, Inc., or any other nationally-recognized statistical rating organization
designated by Lender in its sole discretion.
"Rating Confirmation" with respect to the transaction or matter in
question, shall mean: (i) if all or any portion of the Loan, by itself or
together with other loans, has been the subject of a Securitization, then each
applicable Rating Agency shall have confirmed in writing that such transaction
or matter shall not result in a downgrade, qualification, or withdrawal of any
rating then in effect for any class of certificates or other securities issued
in connection with such Securitization; and (ii) if the 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 certificate or other
securities that would be issued in connection with Securitization of such
portion of the Loan would be downgraded, qualified, or withheld by reason of
such transaction or matter.
"Rating Criteria" with respect to any Person, shall mean that (i) the
short-term unsecured debt obligations of such Person are rated at least "A-1" by
S&P "P-1" by Moody's and "F-l+" by Fitch, if deposits are held by such Person
for a period of less than one year, or (ii) the long-term unsecured debt
obligations of such Person are rated at least "AA-" by S&P, "Aa2" by Moody's and
"AA" by Fitch, if deposits are held by such Person for a period of one year or
more.
"Receipts" means all revenues, receipts and other payments of every
kind arising from ownership or operation of the Property and received by
Borrower or an Affiliate of Borrower, including without limitation, all
warrants, stock options, or equity interests in any tenant, licensee or other
Person occupying space at, or providing services related to or for the benefit
of, the Property received by Borrower or any Affiliate of Borrower in lieu of
rent or other payment.
"Related Person" means in relation to any Person, any other Person that
is (i) an Affiliate of the first Person; (ii) the sibling of the first Person or
of the Affiliate; (iii) the then-current and former spouses of the first Person
or of the Affiliate; (iv) a Person that shares or has shared a residence with
the first Person or with the Affiliate; (v) the ancestor or descendant of the
first Person or of any other Person described in this items (i) through (iv)
above; or (vi) any other Person that, by reason of familial, economic, social or
other relationship, would reasonably be expected to favor the first Person or to
act as requested by the first Person. Where expressions such as "[name of party]
or any Related Person" are used, the same shall refer to the named party and any
Related Person of the named party.
"Rent Roll" has the meaning set forth in Section 3.1.
"Rents" has the meaning set forth in the Granting Clauses of the
Mortgage.
"Replacement Reserve" means the reserve established pursuant to Section
6.4.
"Reserves" means the reserves held by or on behalf of Lender pursuant
to this Loan Agreement or other Loan Documents, including without limitation,
the reserves established pursuant to Article VI.
-11-
"Reserve Sub-Accounts" has the meaning set forth in Section 7.1.
"Restoration" has the meaning set forth in Section 5.5(B).
"Restoration Threshold" means $2,200,000.
"S&P" shall mean Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc.
"Secondary Market Transaction" has the meaning set forth in Section
10.1.
"Securities" (whether or not capitalized) means any stock, shares,
voting trust certificates, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securitization" means a public or private rated offering of securities
representing direct or indirect interests in one or more mortgage loans or the
right to receive income therefrom.
"Servicer" means a servicer selected by Lender from time to time in its
sole discretion to service the Loan.
"Sub-Accounts" has the meaning set forth in Section 7.1.
"Survey" has the meaning set forth in Section 3.1(H).
"Tax Liabilities" has the meaning given to such term in Section 2.8.
"Title Company" means Lawyers Title Insurance Company, or such other
national title insurance company as may be reasonably acceptable to Lender.
"Title Policy" means a mortgagee's policy or policies of title
insurance pertaining to the Mortgage issued to Lender in connection with the
Closing.
"Transfer and Assumption" and "Transferee Borrower" have the meaning
set forth in Section 11.3.
"Underwritable Cash Flow" means for any period the excess of Gross
Revenues over Operating Expenses for such period as determined by Lender.
Underwritable Cash Flow (including determination of any necessary adjustments to
Gross Revenues or Operating Expenses) shall be calculated by Lender based upon
Lender's sole good faith determination of Rating Agency criteria.
"Waiving Party" has the meaning set forth in Article XIII.
"Yield Maintenance Amount" has the meaning set forth in Section 2.6(C).
-12-
Section 1.2 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP.
Section 1.3 Other Definitional Provisions.
References to "Articles", "Sections", "Subsections", "Exhibits" and
"Schedules" shall be to Articles, Sections, Subsections, Exhibits and Schedules,
respectively, of this Loan Agreement unless otherwise specifically provided. Any
of the terms defined in Section 1.1 may, unless the context otherwise requires,
be used in the singular or the plural depending on the reference. In this Loan
Agreement, "hereof", "herein", "hereto", "hereunder" and the like mean and refer
to this Loan Agreement as a whole and not merely to the specific article,
section, subsection, paragraph or clause in which the respective word appears;
words importing any gender include the other genders; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including", "includes" and "include" shall be
deemed to be followed by the words "without limitation"; and any reference to
any statute or regulation may include any amendments of same and any successor
statutes and regulations. Further, (i) any reference to any agreement or other
document shall include subsequent amendments, assignments, and other
modifications thereto, and (ii) any reference to any Person may include such
Person's respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons.
ARTICLE II
TERMS OF THE LOAN
Section 2.1 Loan.
(A) Loan. Subject to the terms and conditions of this Loan Agreement
and in reliance upon the representations and warranties of Borrower contained
herein, Lender agrees to lend to Borrower, and Borrower agrees to borrow from
Lender, a loan in the amount of $44,000,000 (such loan and the obligation of
Borrower to repay the same together with all interest and other amounts from
time to time owing hereunder may be referred to as the "Loan").
(B) Note. On the Closing Date, Borrower shall execute and deliver to
Lender a Promissory Note, dated of even date herewith (as amended, modified or
restated, and any replacement notes therefor, the "Note"), made by Borrower to
the order of Lender, in the original principal amount of $44,000,000.
(C) Use of Proceeds. The proceeds of the Loan funded at Closing shall
be used to (i) repay any existing indebtedness secured by any mortgage
encumbering all or any part of the Property; (ii) pay all recording fees and
taxes, title insurance premiums, the reasonable costs and expenses incurred by
Lender, including the legal fees and expenses of counsel to Lender, and other
costs and expenses approved by Lender (which approval will not be unreasonably
withheld) related to the Loan; (iii) establish the Reserves required hereunder;
and (iv) to prepay ground rent under the Ground Lease in accordance with the
terms thereof. The remaining proceeds of the Loan, if any, shall be disbursed to
Borrower; provided, however, that any and all
-13-
such remaining proceeds of the Loan will be used for commercial purposes only
and will not be used for personal, family, agricultural or household use.
Section 2.2 Interest.
(A) Rate of Interest. The outstanding principal balance of the Loan
shall bear interest at a rate per annum equal to: (i) six and seven hundred
ninety-four one thousandths percent (6.794%) (the "Initial Interest Rate")
during the period from the Closing Date through but not including the Optional
Prepayment Date and (ii) the sum of (a) two percent (2%) plus (b) the Initial
Interest Rate (such sum, the "Adjusted Interest Rate") during the period from
and including the Optional Prepayment Date to and including the Maturity Date
(the Initial Interest Rate or the Adjusted Interest Rate as shall be in effect
from time to time hereunder, the "Interest Rate").
(B) Default Rate. Notwithstanding the foregoing, upon the occurrence
and during the continuance of an Event of Default and in any event from and
after the Maturity Date of the Loan, the outstanding principal balance of the
Loan and all other Obligations shall bear interest until paid in full at a rate
per annum that is five percent (5.0%) in excess of the Interest Rate otherwise
applicable under this Loan Agreement and the Note (the "Default Rate").
(C) Computation of Interest. Interest on the Loan and all other
Obligations owing to Lender shall be computed on the basis of a 360-day year,
and shall be charged for the actual number of days elapsed during any month or
other accrual period. Interest shall be payable in arrears.
(D) Interest Laws. Notwithstanding any provision to the contrary
contained in this Loan Agreement or the other Loan Documents, Borrower shall not
be required to pay, and Lender shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law ("Excess
Interest"). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Loan Agreement or in
any of the other Loan Documents, then in such event: (1) the provisions of this
subsection shall govern and control; (2) Borrower shall not be obligated to pay
any Excess Interest; (3) any Excess Interest that Lender may have received
hereunder shall be, at Lender's option, (a) applied as a credit against either
or both of the outstanding principal balance of the Loan or accrued and unpaid
interest thereunder (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any combination of the foregoing; (4) the
interest rate(s) provided for herein shall be automatically reduced to the
maximum lawful rate allowed from time to time under applicable law (the "Maximum
Rate"), and this Loan Agreement and the other Loan Documents shall be deemed to
have been and shall be, reformed and modified to reflect such reduction; and (5)
Borrower shall not have any action against Lender for any damages arising out of
the payment or collection of any Excess Interest. Notwithstanding the foregoing,
if for any period of time interest on any Obligation is calculated at the
Maximum Rate rather than the applicable rate under this Loan Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on such Obligations shall, to the extent permitted by law,
remain at the Maximum Rate until Lender shall have received or accrued the
amount of interest which Lender would have received or accrued during such
period on Obligations had the rate of interest not been limited to the Maximum
Rate
-14-
during such period. If the Default Rate shall be finally determined to be
unlawful, then the applicable Interest Rate shall be applicable during any time
when the Default Rate would have been applicable hereunder, provided however
that if the Maximum Rate is greater or lesser than the applicable Interest Rate,
then the foregoing provisions of this paragraph shall apply.
(E) Late Charges. If an Event of Default relating to non-payment of
principal, interest or other sums due hereunder or under any of the other Loan
Documents shall occur, then Borrower shall pay to Lender, in addition to all
sums otherwise due and payable, a late fee in an amount equal to five percent
(5.0%) of such principal, interest or other sums due hereunder or under any
other Loan Document (or, in the case of a partial payment, the unpaid portion
thereof), such late charge to be immediately due and payable without demand by
Lender.
(F) Additional Administrative Fee. In addition to the Default Rate
provided for above, upon failure of any Borrower Party to deliver any of the
financial statements, reports or other information required to be delivered to
Lender as provided in Section 5.1 hereof upon their due dates, if any such
failure shall continue for fifteen (15) Business Days following notice thereof
from Lender, Borrower shall pay to Lender together with the scheduled monthly
payments of principal and interest on the Note, for each month or portion
thereof that any such financial statement, report or other information remains
undelivered, an administrative fee in the amount of Two Thousand Dollars
($2,000). Borrower agrees that such administrative fee (i) is a fair and
reasonable fee necessary to compensate Lender for its additional administrative
costs under the circumstances, (ii) is not a penalty and (iii) is necessary to
compensate Lender for increased costs and obligations to third parties in
connection with the planned Securitization of the Loan.
Section 2.3 Reserved.
Section 2.4 Payments.
(A) Payments of Interest and Principal.
(i) Payments Prior to Optional Prepayment Date. Borrower shall
make a payment to Lender of interest only on the Closing Date for the period
from the Closing Date through the last day of the calendar month in which the
Closing Date occurs. Commencing on the first day of the second calendar month
following the Closing (the "First Payment Date") and continuing on the first day
of each calendar month thereafter (each, a "Payment Date") through and including
January 1, 2004, Borrower shall make payments to Lender of interest only at the
Initial Interest Rate. Thereafter, commencing on the third (3rd) anniversary of
the First Payment Date and continuing on each Payment Date thereafter through
and including the Optional Prepayment Date, Borrower shall make equal monthly
payments of principal and interest in the amount of $305.224.69 (the "Monthly
Debt Service Payment Amount"). Each payment shall be applied first to accrued
and unpaid interest and the balance to principal. The Monthly Debt Service
Payment Amount was calculated using a twenty-five (25) year amortization
schedule based upon a 360 day year comprised of twelve-30 day months.
(ii) Payments After Optional Prepayment Date. On the first day of
each calendar month after the Optional Prepayment Date and until the Obligations
are paid in full
-15-
Borrower shall (a) make a payment to Lender of principal and interest in the
amount of the Monthly Debt Service Payment Amount, such payment to be applied to
interest in an amount equal to interest that would have accrued on the
outstanding principal balance of the Loan at the Initial Interest Rate and the
balance applied to principal and (b) pay to Lender amounts to be applied to
principal and Accrued Interest (as hereinafter defined) as set forth in Sections
3.3(b)(vi) and (vii) of the Cash Management Agreement. Interest accrued at the
Adjusted Interest Rate and not paid pursuant to the preceding sentence shall be
paid on the Maturity Date (such accrued interest, "Accrued Interest").
(B) Date and Time of Payment. Borrower shall receive credit for
payments on the Loan which are transferred to the account of Lender as provided
below (i) on the day that such funds are received by Lender if such receipt
occurs by 1:00 p.m. (New York time) on such day, or (ii) on the next succeeding
Business Day after such funds are received by Lender if such receipt occurs
after 1:00 p.m. (New York time). Whenever any payment to be made hereunder shall
be stated to be due on a day that is not a Business Day, the payment may be made
on the next succeeding Business Day.
(C) Manner of Payment. Borrower promises to pay all of the Obligations
relating to the Loan as such amounts become due or are declared due pursuant to
the terms of this Loan Agreement. All payments by Borrower on the Loan shall be
made without deduction, defense, set off or counterclaim and in immediately
available funds delivered to Lender by wire transfer to such accounts at such
banks as Lender may from time to time designate.
Section 2.5 Maturity. To the extent not sooner due and payable in accordance
with the Loan Documents, the then outstanding principal balance of the Loan, all
accrued and unpaid interest thereon (including, without limitation, the Accrued
Interest), the applicable Prepayment Consideration (if any), and all other sums
then owing to Lender hereunder and under the Note, the Mortgage and the other
Loan Documents, shall be due and payable on the Maturity Date.
Section 2.6 Prepayment.
(A) Limitation on Prepayment; Prepayment Consideration Due on
Acceleration. Borrower shall have no right to prepay the Loan in whole or part
at any time, except as expressly set forth in this provision. On and after
August 1, 2010, Borrower may prepay the Loan in whole, but not in part, without
payment of Prepayment Consideration, provided that (i) Borrower shall provide to
Lender not less than 30 days prior written notice of such prepayment, (ii)
together with such prepayment Borrower also shall pay all accrued and unpaid
interest and all other Obligations and (iii) if such prepayment occurs on any
day other than the first day of a calendar month, then together therewith
Borrower also shall pay to Lender the amount of interest that would have accrued
on the amount being prepaid from and including the date of such prepayment to
the first day of the following calendar month. Notwithstanding the foregoing,
Borrower shall have the right to obtain the release of the Property from the
lien of the Mortgage by defeasance in accordance with the terms and conditions
of the Note.
(B) Prepayment Consideration Due. If any prepayment of all or any
portion of the Loan shall occur prior to August 1, 2010, whether such prepayment
is voluntary, involuntary, on account of acceleration of the Loan (whether or
not due to an Event of Default), or otherwise,
-16-
then except only as expressly provided herein to the contrary, Borrower shall be
required to pay the Prepayment Consideration to Lender together with such
prepayment, as liquidated damages and compensation for costs incurred, and in
addition to all other amounts due and owing to Lender. Notwithstanding the
foregoing, no Prepayment Consideration will be due as to a prepayment of
insurance or condemnation proceeds required by Lender pursuant to this Loan
Agreement or the Mortgage in the absence of an Event of Default. The foregoing
designation of any amount of Prepayment Consideration in this Agreement shall
not create a right to prepay at any time or in any circumstances where this
Agreement does not expressly state that such a right exists.
(C) Definitions. The following terms shall have the meanings indicated:
"Prepayment Consideration" shall mean an amount equal to the
greater of (i) one percent (1%) of the Loan balance at the time of prepayment
and (ii) the Yield Maintenance Amount.
"Yield Maintenance Amount" shall mean the positive difference,
if any, between (i) the present value on the date of prepayment (by acceleration
or otherwise) of all future installments of principal and interest which
Borrower would otherwise be required to pay under the Note from the date of such
prepayment until the Optional Prepayment Date absent such prepayment, including
the unpaid principal amount which might otherwise be due upon the Optional
Prepayment Date absent such prepayment, with such present value being determined
by the use of a discount rate equal to the yield to maturity (adjusted to a
"Mortgage Equivalent Basis" pursuant to the standards and practices of the
Securities Industry Association), on the date of such prepayment of the United
States Treasury Security having the term to maturity closest to what otherwise
would have been the remaining term hereof absent such prepayment and (ii) the
principal balance of the Loan on the date of such prepayment.
Section 2.7 Outstanding Balance. The balance on Lender's books and records shall
be presumptive evidence (absent manifest error) of the amounts owing to Lender
by Borrower; provided that any failure to record any transaction affecting such
balance or any error in so recording shall not limit or otherwise affect
Borrower's obligation to pay the Obligations.
Section 2.8 Taxes. Any and all payments or reimbursements made hereunder or
under the Note shall be made free and clear of and without deduction for any and
all taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto arising out of or in connection with the
transactions contemplated by the Loan Documents (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto [excluding taxes imposed on net income in accordance with the following
sentence] herein "Tax Liabilities"). Notwithstanding the foregoing, Borrower
shall not be liable for taxes imposed on the net income of Lender by the
jurisdiction under the laws of which Lender is organized or doing business or
any political subdivision thereof and taxes imposed on its net income by the
jurisdiction of Lender's applicable lending office or any political subdivision
thereof. If Borrower shall be required by law to deduct any such Tax Liabilities
(or amounts in estimation or reimbursement for the same) from or in respect of
any sum payable hereunder to Lender, then the sum payable hereunder shall be
increased as may be necessary so that, after making all
-17-
required deductions, Lender receives an amount equal to the sum it would have
received had no such deductions been made.
Section 2.9 Reasonableness of Charges. Borrower Parties agree that (i) the
actual costs and damages that Lender would suffer by reason of an Event of
Default (exclusive of the attorneys' fees and other costs incurred in connection
with enforcement of Lender's rights under the Loan Documents) or a prepayment
would be difficult and needlessly expensive to calculate and establish, and (ii)
the amounts of the Default Rate, the late charges, and the Prepayment
Consideration are reasonable, taking into consideration the circumstances known
to the parties at this time, and (iii) such Default Rate and late charges and
Lender's reasonable attorneys' fees and other costs and expenses incurred in
connection with enforcement of Lender's rights under the Loan Documents shall be
due and payable as provided herein, and (iv) such Default Interest, late
charges, Prepayment Consideration, and the obligation to pay Lender's reasonable
attorneys' fees and other enforcement costs do not, individually or
collectively, constitute a penalty.
ARTICLE III
CONDITIONS TO LOAN
Section 3.1 Conditions to Funding of the Loan on the Closing Date. The
obligations of Lender to fund the Loan are subject to the prior or concurrent
satisfaction or waiver of the conditions set forth below, and to satisfaction of
any other conditions specified herein or elsewhere in the Loan Documents. Where
in this Section any documents, instruments or information are to be delivered to
Lender, then the condition shall not be satisfied unless (i) the same shall be
in form and substance satisfactory to Lender, and (ii) if so required by Lender,
Borrower shall deliver to Lender a certificate duly executed by Borrower stating
that the applicable document, instrument or information is true and complete and
does not omit to state any information without which the same might reasonably
be deemed materially misleading.
(A) Loan Documents. On or before the Closing Date, Borrower shall
execute and deliver and cause to be executed and delivered to Lender all of the
Loan Documents specified in Schedule 3.1(A), together with such other Loan
Documents as may be reasonably required by Lender, each, unless otherwise noted,
of even date herewith, duly executed, in form and substance satisfactory to
Lender and in quantities designated by Lender (except for the Note, of which
only one shall be signed), which Loan Documents shall become effective upon the
Closing.
(B) Origination Fees. At the Closing and retained from the proceeds of
the Loan, Lender shall have received its origination fee of $220,000. The
amount, if any, by which the application fee and expense deposit previously paid
to Lender on Borrower's behalf exceeds Lender's reasonable costs and expenses
incurred in connection with the Loan, shall be credited against the origination
fee.
(C) Deposits. The deposits required herein, including without
limitation, the initial deposits into the Reserves and Accounts, shall have been
made (and at Borrower's option, the same may be made from the proceeds of the
Loan).
-18-
(D) Performance of Agreements, Truth of Representations and Warranties.
Each Borrower Party and all other Persons executing any agreement on behalf of
any Borrower Party shall have performed in all material respects all agreements
which this Loan Agreement provides shall be performed on or before the Closing
Date. The representations and warranties contained herein and in the other Loan
Documents shall be true, correct and complete in all material respects on and as
of the Closing Date.
(E) Closing Certificate. On or before the Closing Date, Lender shall
have received certificates of even date herewith executed on behalf of Borrower
by the chief financial officer (or similar officer of Borrower) truly and
correctly stating that: (i) on such date, no Default or Event of Default has
occurred and is continuing; (ii) no material adverse change in the financial
condition or operations of the business of Borrower or the projected cash flow
of Borrower or the Property has occurred since the delivery to Lender of any
financial statements, budgets, proformas, or similar materials (or if there has
been any change, specifying such change in detail), and that, to Borrower's
knowledge, such materials delivered to Lender are true and materially complete
and fairly represent the financial condition of Borrower and the cash flow of
the Property; and (iii) the representations and warranties set forth in this
Loan Agreement are true and correct in all material respects on and as of such
date with the same effect as though made on and as of such date (or if any such
representations or warranties require qualification, specifying such
qualification in detail) and (iv) to Borrower's knowledge, there are no material
adverse facts or conditions concerning the Property or any Borrower Party that
have not been disclosed to Lender.
(F) Opinions of Counsel. On or before the Closing Date, Lender shall
have received from Skadden, Arps, Slate, Meagher & Flom LLP ("SASMF") or other
legal counsel for Borrower reasonably satisfactory to Lender, such counsel's
written opinion as to such matters as Lender shall reasonably request, including
opinions to the effect that (i) each of the Borrower Parties is duly formed,
validly existing, and in good standing in its state of organization and, in the
case of Borrower, in the state where the Property is located, (ii) this Loan
Agreement and the Loan Documents have been duly authorized, executed and
delivered and are enforceable in accordance with their terms subject to
customary qualifications for bankruptcy and general equitable principles; and
(iii) Borrower would not be consolidated in bankruptcies of its Member, HRPT,
Ground Lessor, Manager or certain other Affiliates of Borrower specified by
Lender. Also on or before the Closing Date, Lender shall have received (a) an
opinion of Borrower's local counsel in the state where the Property is located
as to the enforceability of the Mortgage and Assignment of Leases and such other
matters as Lender may reasonably request and (b) opinions of SASMF or other
legal counsel for Borrower in the State of Delaware reasonably satisfactory to
Lender that, among other matters, (1) under Delaware law the prior unanimous
written consent of Member and the board of directors or managers (including the
Outside Director) would be required for a voluntary bankruptcy filing by
Borrower and such unanimous consent requirement is enforceable against Member in
accordance with its terms; (2) under Delaware law the bankruptcy or dissolution
of Member would not cause the dissolution of Borrower; (3) under Delaware law,
creditors of Member shall have no legal or equitable remedies with respect to
the assets of Borrower; and (4) a federal bankruptcy court would hold that
Delaware law governs the determination of what Persons have authority to file a
voluntary bankruptcy petition on behalf of Borrower.
-19-
(G) Title Policy. Lender shall have received a preliminary title report
or title commitment for the Property. On or before the Closing Date, Lender
shall have received and approved a pro forma Title Policy for the Mortgage, and
as of the Closing, Title Company shall be irrevocably committed and prepared
immediately to issue the Title Policy. The Title Policy shall be in form and
substance satisfactory to Lender. Without limitation, Lender may reasonably
require that the Title Policy be issued on the 1970 ALTA form by the Title
Company, together with such reinsurance and direct access agreements as Lender
may require, insuring that the Mortgage is a valid first and prior enforceable
lien on the Borrower's leasehold interest in the Property (including any
easements appurtenant thereto) subject only to such exceptions to coverage as
are acceptable to Lender. The Title Policy shall contain such endorsements as
Lender may require (to the extent available in the state where the Property is
located) in form reasonably acceptable to Lender, including deletion of the
creditors' rights exception and affirmative endorsement coverage for creditors'
rights risks.
(H) Survey. Lender shall have received a survey of the Property,
certified to Lender and its successors, assigns and designees and to Title
Company by a surveyor reasonably satisfactory to Lender (the "Survey"). All
surveys shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, shall substantially comply with Lender's survey
requirements and shall contain Lender's standard form certification. Said
surveys shall show no state of facts or conditions reasonably objectionable to
Lender.
(I) Zoning. On or before the Closing Date, Lender shall have received
evidence reasonably satisfactory to Lender as to the zoning and subdivision
compliance of the Property.
(J) Certificates of Formation and Good Standing. On or before the
Closing Date, Lender shall have received copies of the organizational documents
and filings of each Borrower Party, together with good standing certificates (or
similar documentation) (including verification of tax status if available) from
the state of its formation, from the state in which its principal place of
business is located, and from all states in which the laws thereof require such
Person to be qualified and/or licensed to do business (including without
limitation, the state in which the Property is located for Borrower). Each such
certificate shall be dated not more than 30 days prior to the Closing Date, as
applicable, and certified by the applicable Secretary of State or other
authorized governmental entity. In addition, on or before the Closing Date the
secretary or corresponding officer of each Borrower Party, or the secretary or
corresponding officer of the partner, trustee, or other Person as required by
such Borrower Party's organizational documents (as the case may be, the
"Borrower Party Secretary") shall have delivered to Lender a certificate stating
that the copies of the organizational documents as delivered to Lender are true
and complete and are in full force and effect, and that the same have not been
amended except by such amendments as have been so delivered to Lender.
(K) Certificates of Incumbency and Resolutions. On or before the
Closing Date, Lender shall have received certificates of incumbency and
resolutions of each Borrower Party and its constituents as requested by Lender,
approving and authorizing the Loan and the execution, delivery and performance
of the Loan Documents, certified as of the Closing Date by the Borrower Party
Secretary as being in full force and effect without modification or amendment.
-20-
(L) Financial Statements. On or before the Closing Date, Lender shall
have received such financial statements and other financial information as shall
be satisfactory to Lender for each Borrower Party and for the Property. All such
financial statements shall be certified to Lender by the applicable Borrower
Party (through its chief financial officer), which certification shall be in
form and substance reasonably satisfactory to Lender.
(M) Intentionally Omitted.
(N) Agreements. On or before the Closing Date, Lender shall have
received copies of all material operating agreements, service contracts and
equipment leases, if any, relating to Borrower's ownership and operation of the
Property.
(O) Management Agreement. On or before the Closing Date, Lender shall
have received copies of the existing Management Agreement and any leasing
brokerage agreements pertaining to the Property and the Assignment of Management
Agreement, duly executed by current Manager and Borrower.
(P) Rent Roll, Leases, Estoppels. Prior to the Closing, Lender shall
have received from Borrower a rent roll (the "Rent Roll") for the Property,
certified by Borrower, and in form and substance satisfactory to Lender. The
Rent Roll shall constitute a true, correct, and complete list of each and every
Lease, together with all extensions and amendments thereof, and shall accurately
and completely disclose all annual and monthly rents payable by all tenants,
including all percentage rents, if any, expiration dates of the Leases, and the
amount of security deposit being held by Borrower under each Lease, if any. Also
prior to the Closing, Lender shall have received copies of the Leases, and
tenant estoppel certificates and subordination, non-disturbance and attornment
agreements on Lenders form duly executed by Borrower and tenants (including all
tenants under Major Leases) occupying, in the aggregate, at least eighty percent
(80%) of the rentable space at the Property.
(Q) Licenses, Permits and Approvals. On or before Closing Date, Lender
shall have received copies of the final, unconditional certificates of occupancy
issued with respect to the Property, together with all other applicable
licenses, permits and approvals required for the Borrower to own, use, occupy,
operate and maintain the Property.
(R) Insurance Policies and Endorsements. On or before the Closing Date,
Lender shall have received copies of insurance policies required to be
maintained under this Loan Agreement and the other Loan Documents and
certificates of insurance (dated not more than 20 days prior to the Closing
Date) evidencing such insurance coverages, together with endorsements reasonably
satisfactory to Lender naming Lender as an additional insured and loss payee, as
required by Lender, under such policies. In addition, as to any insurance
matters arising under Environmental Laws or pertaining to any environmental
insurance that Borrower has as to the Property, the same shall be endorsed to
Lender as required by Lender.
(S) Environmental Assessment. Lender shall have received and approved
an Environmental Report prepared or updated not later than sixty (60) days prior
to the Closing, relating to the Property, together with a letter from the
preparer thereof entitling Lender and its
-21-
successors and assigns to rely upon said Environmental Report (if same is not
addressed to Lender).
(T) Property Condition Report. On or before the Closing Date, Lender
shall have received a property condition report for the Property, which shall be
prepared by an engineer or other consultant reasonably satisfactory to Lender
and otherwise shall be in form and substance satisfactory to Lender in its sole
discretion. Such report shall set forth any items of deferred maintenance at the
Property.
(U) Appraisal. On or before the Closing Date, Lender shall have
received an independent appraisal, dated not more than sixty (60) days prior to
the Closing Date, of the Property from a state certified appraiser engaged by
Lender, which indicates a fair market value of the Property which would reflect
a loan-to-value ratio for the Loan of not more than 65%, and is otherwise
satisfactory to Lender in its sole discretion in all respects. Each such
appraisal shall conform in all respects to the criteria for appraisals set forth
in the Financial Institutions Reform and Recovery Act of 1989 and the
regulations promulgated thereunder (as if Lender were an institution under the
jurisdiction thereof) and the Uniform Standards of Professional Appraisal
Practices of the Appraisal Foundation.
(V) Searches. Prior to the Closing Date Lender shall have received
certified copies of Uniform Commercial Code, judgment, tax lien, bankruptcy and
litigation search reports with respect to all Borrower Parties, all dated not
more than thirty (30) days prior to the Closing Date.
(W) Documentation Regarding Application of Proceeds. Prior to the
Closing Date, Lender shall have received payoff demand letters and wiring
instructions from each lender or other obligee of any existing indebtedness
which is required to be repaid pursuant to this Loan Agreement and by Borrower
regarding the application of any remaining available proceeds of the Loan.
(X) Ground Lease; Ground Lessor Estoppel. On or before the Closing
Date, Lender shall have received (i) a certified copy of the Ground Lease duly
executed by Ground Lessor and Borrower and same shall be in full force and
effect and (ii) an estoppel and agreement duly executed by Ground Lessor in form
and substance reasonably acceptable to Lender.
(Y) Legal Fees; Closing Expenses. Borrower shall have paid any and all
reasonable legal fees and expenses of counsel to Lender, together with all
recording fees and taxes, title insurance premiums, and other reasonable costs
and expenses related to the Closing.
(Z) Other Review. Lender shall have completed all other review of
Borrower Parties, the Property, and such other items as it reasonably determines
relevant, and shall have determined based upon such review to fund the Loan.
Borrower Parties shall have satisfied such other reasonable criteria as Lender
may reasonably specify.
-22-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Loan Agreement and to make
the Loan, Borrower represents and warrants to Lender that the statements set
forth in this Article IV, after giving effect to the Closing, will be, true,
correct and complete in all material respects as of the Closing Date. Further,
each of the other Borrower Parties represents and warrants to Lender that the
statements set forth in this Article IV pertaining to such party, after giving
effect to the Closing, will be, true, correct and complete in all material
respects as of the Closing Date.
Section 4.1 Organization, Powers, Capitalization, Good Standing, Business.
(A) Organization and Powers. Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Guarantor is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each Borrower Party has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to be
conducted, and to enter into each Loan Document to which it is a party and to
perform the terms thereof.
(B) Qualification. Each Borrower Party is duly qualified and in good
standing in the state of its formation. Borrower and, to the extent required by
law, Member are also duly qualified and in good standing in the state where the
Property is located. In addition, each Borrower Party is duly qualified and in
good standing in each state where necessary to carry on its present business and
operations, except in jurisdictions in which the failure to be qualified and in
good standing could not reasonably be expected to have a Material Adverse
Effect.
(C) Organization. The organizational chart set forth as Schedule 4.1(C)
accurately sets forth the direct and indirect ownership structure of the
Borrower Parties.
Section 4.2 Authorization of Borrowing, etc.
(A) Authorization of Borrowing. Borrower has the power and authority to
incur the Indebtedness evidenced by the Note. The execution, delivery and
performance by each Borrower Party of each of the Loan Documents to which it is
a party and the consummation of the transactions contemplated thereby have been
duly authorized by all necessary partnership, trustee, corporate or other
action, as the case may be.
(B) No Conflict. The execution, delivery and performance by each
Borrower Party of the Loan Documents to which it is a party and the consummation
of the transactions contemplated thereby do not and will not: (1) violate (x)
any provision of law applicable to any Borrower Party; (y) the partnership
agreement, certificate of limited partnership, certificate of incorporation,
bylaws, declaration of trust, operating agreement or other organizational
documents, as the case may be, of each Borrower Party; or (z) any order,
judgment or decree of any court or other agency of government binding on any
Borrower Party or any of its Affiliates; (2) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Borrower Party or any of its Affiliates except to
the extent that such conflict, breach or default could not reasonably be
expected to have a
-23-
Material Adverse Effect; (3) result in or require the creation or imposition of
any material Lien (other than the Lien of the Loan Documents) upon the Property
or assets of any Borrower Party or any of its Affiliates; or (4) except as set
forth on Schedule 4.2 and except for any approvals or consents the failure to
obtain which could not reasonably be expected to have a Material Adverse Effect,
require any approval or consent of any Person under any Contractual Obligation
of any Borrower Party, which approvals or consents have been obtained on or
before the dates required under such Contractual Obligation, but in no event
later than the Closing Date.
(C) Governmental Consents. The execution, delivery and performance by
each Borrower Party of the Loan Documents to which it is a party, and the
consummation of the transactions contemplated thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body except for the recording of the Mortgage and filings and
recordings required in connection with the creation or perfection of any other
security interests with respect to the Collateral granted under this Loan
Agreement or any of the other Loan Documents.
(D) Binding Obligations. This Loan Agreement is, and the Loan
Documents, including the Note, when executed and delivered will be, the legally
valid and binding obligations of each Borrower Party, as applicable, each
enforceable against Borrower Parties, as applicable, in accordance with their
respective terms, subject to bankruptcy, insolvency, moratorium, reorganization
and other similar laws affecting creditor's rights generally or by equitable
principles relating to enforceability. No Borrower Party has any defense or
offset to any of its obligations under the Loan Documents. No Borrower Party has
any claim against Lender or any Affiliate of Lender.
Section 4.3 Financial Statements. All financial statements concerning any of
Borrower, its Affiliates and the Property which have been or will hereafter be
furnished by or on behalf of Borrower to Lender pursuant to this Loan Agreement
have been or will be prepared in accordance with GAAP consistently applied
(except as disclosed therein) and do (or will, as to those statements that are
not yet due) present fairly the financial condition of the Persons covered
thereby as at the dates thereof and the results of their operations for the
periods then ended. Since the date of the financial statements delivered to
Lender, there has been no material adverse change in the financial condition,
operations or business of the Borrower Parties or the Property from that set
forth in said financial statements.
Section 4.4 Indebtedness and Contingent Obligations. As of the Closing, Primary
Borrower Parties shall have no Indebtedness or Contingent Obligations other than
the Obligations or any other Indebtedness expressly permitted under this Loan
Agreement or the other Loan Documents.
Section 4.5 Title to Property. Borrower has good marketable and insurable
leasehold title to the Property, free and clear of all Liens except for any
liens described in clauses (i)-(iii) of the definition of "Permitted
Encumbrances". Borrower owns and will own at all times all personal property
relating to the Property (other than personal property which is (a) leased by
Borrower (as to which Borrower has valid leasehold title), (b) owned by Manager
or (c) is both owned by tenants of the Property and not used or necessary for
the operation of the Property), subject only to Permitted Encumbrances. There
are no pending proceedings in condemnation or eminent
-24-
domain affecting the Property, and to the knowledge of Borrower Parties, none is
threatened. No Person has any option or other right to purchase all or any
portion of the Property or any interest therein. To the knowledge of Borrower,
there are no mechanic's, materialman's or other similar liens or claims which
have been filed for work, labor or materials affecting the Property which are or
may be liens prior to, or equal or coordinate with, the lien of the Mortgage.
None of the Permitted Encumbrances, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by the
Mortgage and this Loan Agreement, materially and adversely affect the value of
the Property, impair the use or operations of the Property or impair Borrower's
ability to pay its obligations in a timely manner.
Section 4.6 Zoning; Compliance with Laws. The Property is zoned for commercial
use, which zoning designation is unconditional, in full force and effect, and is
beyond all applicable appeal periods. To the knowledge of Borrower, Borrower,
the Property and the use thereof comply in all material respects with all
applicable zoning, subdivision and land use laws, regulations and ordinances,
all applicable health, fire, building codes, parking laws and all other laws,
statutes, codes, ordinances, rules and regulations applicable to the Property,
including without limitation the Americans with Disabilities Act. To the
knowledge of Borrower, there are no illegal activities relating to controlled
substances on the Property. All certificates of occupancy or the equivalent,
and, to the knowledge of Borrower, all other required permits, licenses and
certificates for the lawful use and operation of the Property have been obtained
and are current and in full force and effect. To the knowledge of Borrower, in
the event that all or any part of the Improvements located on the Property 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, other than
customary demolition, building and other construction related permits. No legal
proceedings are pending or, to the knowledge of Borrower, threatened with
respect to the zoning of the Property. Neither the zoning nor any other right to
construct, use or operate the Property is in any way dependent upon or related
to any real estate other than the Property. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Property without Lender's prior written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned.
Section 4.7 Leases; Agreements.
(A) Leases; Agreements. Borrower has delivered to Lender true and
complete copies of all (i) Leases and (ii) material contracts and agreements
affecting the operation and management of the Property, including, without
limitation, the existing Management Agreement, any leasing brokerage agreement
and any service and maintenance contracts and such Leases, contracts and
agreements have not been modified or amended except pursuant to amendments or
modifications delivered to Lender. Except for the rights of current Manager
pursuant to the existing Management Agreement, no Person has any right or
obligation to manage the Property or to receive compensation in connection with
such management. Except for the parties to any leasing brokerage agreement that
has been delivered to Lender, no Person has any right or obligation to lease or
solicit tenants for the Property, or (except for cooperating outside brokers) to
receive compensation in connection with such leasing.
-25-
(B) Rent Roll, Disclosure. A true and correct copy of the Rent Roll is
attached hereto as Schedule 4.7(B) and except for the Leases described in the
Rent Roll the Property is not subject to any Leases. Except only as specified in
the Rent Roll, (i) the Leases are in full force and effect; (ii) Borrower has
not given any notice of default to any tenant under any Lease which remains
uncured; (iii) no tenant has asserted in writing any rights of set off, claims
or defenses under any Lease and no tenant has any such rights of set off, claim
or defense to the enforcement of any Lease except as expressly set forth in the
Leases; (iv) no tenant is in arrears in the payment of rent, additional rent or
any other material charges due under any Lease, or, to the knowledge of
Borrower, is materially in default in the performance of any other obligations
under the applicable Lease; (v) Borrower has completed all work or alterations
required to be completed by the landlord or lessor under each Lease as of the
date hereof, and all of the other obligations of landlord or lessor under the
Leases required to be completed as of the date hereof, have been performed; (vi)
there are no rent concessions (whether in form of cash contributions, work
agreements, assumption of an existing tenant's other obligations, or otherwise)
or extensions of time whatsoever not reflected in such Rent Roll; (vii) no
tenant has an option to terminate its respective Lease except as provided in the
Leases; and (viii) to the knowledge of Borrower no bankruptcy or insolvency
proceeding has been commenced (and is continuing) by or against any tenant under
any Lease.
(C) Lease Issues. Except as set forth on Schedule 4.7(C), there are no
legal proceedings commenced (or, to the knowledge of the Borrower, threatened)
against Borrower or any Affiliate thereof by any tenant or former tenant. No
rental in excess of one month's rent has been prepaid under any of the Leases
(except for security deposits and estimated additional rent amounts paid on
account of operating expenses, taxes and other expense escalations or
pass-throughs). Each of the Leases is valid and binding on the parties thereto
in accordance with its terms.
(D) No Residential Units. There are no residential units in the
Property. To Borrower's knowledge, no person occupies any part of the Property
for dwelling purposes.
Section 4.8 Condition of Property. To Borrower's knowledge, except as set forth
in the property condition report for the Property delivered to Lender, all
Improvements including, without limitation, the roof and all structural
components, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior doors, parking facilities, sidewalks and
landscaping are in good condition and repair. Borrower is not aware of any
latent or patent structural or other material defect or deficiency in the
Property. City water supply, storm and sanitary sewers, and electrical, gas and
telephone facilities are available to the Property within the boundary lines of
the Property, are fully connected to the Improvements and are fully operational,
are sufficient to meet the reasonable needs of the Property as now used or
presently contemplated to be used, and no other utility facilities are necessary
to meet the reasonable needs of the Property as now used or presently
contemplated. To the knowledge of Borrower, the design and as-built conditions
of the Property are such that surface and storm water does not accumulate on the
Property (except in facilities specifically designed for the same) and does not
drain from the Property across land of adjacent property owners in any manner
which would have a Material Adverse Effect on the Property or, to Borrower's
knowledge, violate any applicable law. To Borrower's knowledge, except as may be
shown on the Survey, no part of the Property is within a flood plain and none of
the Improvements create
-26-
encroachment over, across or upon the Property's boundary lines, rights of way
or easements, and no building or other improvements on adjoining land create
such an encroachment which could reasonably be expected to have a Material
Adverse Effect. Access to the Property for the current and contemplated uses
thereof is provided by means of public roads and streets which are physically
and legally open for use by the public. To Borrower's knowledge, any liquid or
solid waste disposal, septic or sewer system located at the Property is in good
and safe condition and repair and in compliance with all applicable law.
Section 4.9 Litigation; Adverse Facts. Except as set forth on Schedule 4.9,
there are no judgments outstanding against any Borrower Party, or affecting the
Property or any property of any Borrower Party, nor is there any action, charge,
claim, demand, suit, proceeding, petition, governmental investigation or
arbitration now pending or, to the knowledge of Borrower after due inquiry,
threatened against any Borrower Party or affecting the Property which, in the
case of Guarantor, could reasonably be expected to result in a Material Adverse
Effect and other than any claims or proceedings fully covered by insurance
maintained by the applicable Borrower Party (except to the extent of
commercially reasonable deductibles). The actions, charges, claims, demand,
suits, proceedings, petitions, investigations and arbitrations set forth on
Schedule 4.9 will not result, if adversely determined, and could not reasonably
be expected to result, either individually or in the aggregate, in any Material
Adverse Effect and do not relate to and will not affect the consummation of the
transactions contemplated hereby.
Section 4.10 Payment of Taxes. All federal, state and local tax returns and
reports of each Borrower Party required to be filed have been timely filed, and
all taxes, assessments, fees and other governmental charges (including any
payments in lieu of taxes) upon such Person and upon its properties, assets,
income and franchises which are due and payable have been paid when due and
payable, except for those taxes which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
Except as otherwise disclosed in writing to Lender, there is not presently
pending (and to Borrower's knowledge, there is not contemplated) any special
assessment against the Property or any part thereof. No tax liens have been
filed and to the knowledge of Borrower Parties, no claims are being asserted
with respect to any such taxes. The charges, accruals and reserves on the books
of Borrower Parties in respect of any taxes or other governmental charges are in
accordance with GAAP.
Section 4.11 Adverse Contracts. Except for the Loan Documents, none of the
Borrower Parties is a party to or bound by, nor is any property of such Person
subject to or bound by, any contract or other agreement which restricts such
Person's ability to conduct its business in the ordinary course or, either
individually or in the aggregate, has a Material Adverse Effect or could
reasonably be expected to have a Material Adverse Effect.
Section 4.12 Performance of Agreements. No Borrower Party is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any Contractual Obligation of any such
Person which could have a Material Adverse Effect, and no condition exists that,
with the giving of notice or the lapse of time or both, would constitute such a
default.
Section 4.13 Governmental Regulation. No Borrower Party is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company
-27-
Act of 1940 or to any federal or state statute or regulation limiting its
ability to incur indebtedness for borrowed money.
Section 4.14 Employee Benefit Plans. No Primary Borrower Party maintains or
contributes to, or has any obligation (including a contingent obligation) under,
any Employee Benefit Plans.
Section 4.15 Broker's Fees. No broker's or finder's fee, commission or similar
compensation will be payable by or pursuant to any contract or other obligation
of any Borrower Party with respect to the making of the Loan or any of the other
transactions contemplated hereby or by any of the Loan Documents.
Section 4.16 Environmental Compliance.
(A) No Environmental Claims. There are no claims, liabilities,
investigations, litigation, administrative proceedings, pending or to the
knowledge of Borrower, threatened, or judgments or orders relating to any
Hazardous Materials (collectively, "Environmental Claims") asserted or, to
Borrower's knowledge, threatened against Borrower or relating to the Property.
Except as disclosed in the Environmental Report, neither Borrower nor, to the
knowledge of Borrower, any other Person has caused or permitted any Hazardous
Material to be used, generated, reclaimed, transported, released, treated,
stored or disposed of in a manner which could form the basis for a,
Environmental Claim against Borrower or relating to the Property.
(B) Storage of Hazardous Materials. Except as disclosed in the
Environmental Report, except for materials customarily used or stored in
connection with operation and management of properties similar to the Property,
which materials at the Property exist only in reasonable quantities and are
stored, contained, transported, used, released, and disposed of reasonably and
without violation of any Environmental Laws, to the knowledge of Borrower, no
Hazardous Materials are or were stored or otherwise located, and no underground
storage tanks or surface impoundments are or were located, on the Property or
any other real property currently or formerly owned, leased or operated by
Borrower, or to the knowledge of Borrower, on adjacent parcels of real property,
and no part of such real property, or to the knowledge of Borrower, no part of
such adjacent parcels of real property, including the groundwater located
therein or thereunder, is presently contaminated by Hazardous Materials.
(C) Compliance with Environmental Laws. To Borrower's knowledge, except
as may be set forth in the Environmental Report, Borrower has been and is
currently in compliance in all material respects with all applicable
Environmental Laws, including obtaining and maintaining in effect all permits,
licenses or other authorizations required by applicable Environmental Laws.
Section 4.17 Solvency. Borrower (a) has not entered into the transaction or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor
and (b) received reasonably equivalent value in exchange for its obligations
under the Loan Documents. Giving effect to the Loan, the fair saleable value of
Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and Contingent Obligations. The fair
saleable
-28-
value of Borrower's assets is and will, immediately following the making of the
Loan, be greater than Borrower's probable liabilities, including the maximum
amount of its Contingent Obligations on its debts as such debts become absolute
and matured. Borrower's assets do not and, immediately following the making of
the Loan 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 Indebtedness and liabilities
(including Contingent Obligations and other commitments) beyond its ability to
pay such Indebtedness and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Borrower and the amounts to be
payable on or in respect of obligations of Borrower).
Section 4.18 Disclosure. No financial statements, Loan Document or any other
document, certificate or written statement furnished to Lender by any Borrower
Party and, to the knowledge of Borrower, no document or statement furnished by
any third party on behalf of any Borrower Party, for use in connection with the
Loan contains any untrue representation, warranty or statement of a material
fact, and none omits or will omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading. There is no
material fact known to Borrower that has had or will have a Material Adverse
Effect and that has not been disclosed in writing to Lender by Borrower.
Section 4.19 Use of Proceeds and Margin Security. Borrower Parties shall use the
proceeds of the Loan only for the purposes set forth herein and consistent with
all applicable laws, statutes, rules and regulations. No portion of the proceeds
of the Loan shall be used by Borrower or any Person in any manner that might
cause the borrowing or the application of such proceeds to violate Regulation T,
Regulation U or Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System.
Section 4.20 Insurance. Set forth on Schedule 4.20 is a complete and accurate
description of all policies of insurance for Borrower that are in effect as of
the Closing Date. Borrower's insurance under such policies satisfies the
requirements contained in Section 5.4 hereof, no notice of cancellation has been
received with respect to such policies, and, to the knowledge of Borrower,
Borrower is in compliance with all conditions contained in such policies.
Section 4.21 Separate Tax Lots. The Property is comprised of one (1) or more
parcels which constitute separate tax lots. No part of the Property is included
or assessed under or as part of another tax lot or parcel, and no part of any
other property is included or assessed under or as part of the tax lots or
parcels comprising the Property.
Section 4.22 Investments. No Primary Borrower Party has any (i) direct or
indirect interest in, including without limitation stock, partnership interest
or other securities of, any other Person, or (ii) direct or indirect loan,
advance or capital contribution to any other Person, including all indebtedness
and accounts receivable from that other Person.
Section 4.23 Bankruptcy. No Borrower Party is or has been a debtor, and no
property of any of them (including the Property) is property of the estate, in
any voluntary or involuntary case under the Bankruptcy Code or under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect. No Borrower Party and no property of any of them is or has been under
the possession or control of a receiver, trustee or other custodian. No Borrower
Party has
-29-
made any assignment for the benefit of creditors. No such assignment or
bankruptcy or similar case or proceeding is now contemplated.
Section 4.24 Defaults. No Default or Event of Default exists.
Section 4.25 No Plan Assets. Borrower is not and will not be (i) an employee
benefit plan as defined in Section 3(3) of ERISA which is subject to ERISA, (ii)
a plan as defined in Section 4975(e)(1) of the IRC which is subject to Section
4975 of the IRC, or (iii) an entity whose underlying assets constitute "plan
assets" of any such employee benefit plan or plan for purposes of Title I of
ERISA or Section 4975 of the IRC.
Section 4.26 Governmental Plan. Borrower is not and will not be a "governmental
plan" within the meaning of Section 3(32) of ERISA and transactions by or with
Borrower are not and will not be subject to state statutes applicable to
Borrower's regulating investments of and fiduciary obligations with obligations
with respect to governmental plans.
Section 4.27 Not Foreign Person. No Borrower Party is a "foreign person" within
the meaning of Section 1445(f)(3) of the IRC.
Section 4.28 No Collective Bargaining Agreement. No Borrower Party is a party to
any collective bargaining agreement.
ARTICLE V
COVENANTS OF BORROWER PARTIES
Each Borrower Party covenants and agrees that until payment in full of
the Loan, all accrued and unpaid interest and all other Obligations, unless
Lender shall otherwise give its prior written consent, such Person shall perform
and comply with all covenants in this Article V applicable to such Person.
Section 5.1 Financial Statements and Other Reports.
(A) Financial Statements.
(i) Annual Reporting. Within ninety (90) days after the end of
each calendar year, Borrower and Guarantor shall each provide true and complete
copies of its Financial Statements for such year to Lender. The annual Financial
Statements for each Borrower Party shall be accompanied by a certification
executed by the entity's chief executive officer or chief financial officer,
satisfying the criteria set forth below. The annual Financial Statements of
Borrower also shall be accompanied by a Compliance Certificate (as defined
below).
(ii) Quarterly Reporting - Borrower. Within forty-five (45) days
after the end of each calendar quarter, Borrower shall provide true and complete
copies of its Financial Statements for such quarter to Lender, together with a
certification executed on behalf of Borrower by its chief executive officer or
chief financial officer in accordance with the criteria set forth below and a
Compliance Certificate.
-30-
(iii) Quarterly Reporting - Guarantor. Within forty-five (45)
days after the end of each calendar quarter, Guarantor shall provide true and
complete copies of its Financial Statements for such quarter to Lender, together
with a certification executed on behalf of Guarantor by its chief executive
officer or chief financial officer in accordance with the criteria set forth
below.
(iv) Leasing Reports. Within thirty (30) days after the end of
each calendar quarter, Borrower shall provide to Lender certified Rent Roll and
a schedule of security deposits held under Leases, in form and substance
reasonably acceptable to Lender.
(v) Monthly Reporting. Within thirty (30) days after the end of
each calendar month, Borrower shall provide to Lender accrual basis operating
statements together with statements of cash flow for the Property, each in a
form reasonably satisfactory to Lender, (a) for such month, (b) for the year to
date and (c) for the 12 month period ended as of the end of such calendar month.
(vi) Additional Reporting. In addition to the foregoing, each
Borrower Party shall promptly provide to Lender such further documents and
information concerning its operations, properties, ownership, and finances as
Lender shall from time to time reasonably request.
(vii) GAAP. Borrower Parties will maintain systems of accounting
established and administered in accordance with sound business practices and
sufficient in all respects to permit preparation of Financial Statements in
conformity with GAAP. All Financial Statements shall be prepared in accordance
with GAAP, consistently applied.
(viii) Certifications of Financial Statements and Other
Documents, Compliance Certificate. Together with the Financial Statements and
other documents and information provided to Lender by or on behalf of any
Borrower Party under this Section, such Borrower Party also shall deliver to
Lender a certification in form and substance reasonably satisfactory to Lender,
executed on behalf of such Borrower Party by its chief executive officer or
chief financial officer, stating that, to such officer's knowledge, such
Financial Statements, documents, and information are true and complete in all
material respects and do not omit to state any material information without
which the same might reasonably be misleading. In addition, where this Loan
Agreement requires a "Compliance Certificate", the Borrower Party required to
submit the same shall deliver a certificate duly executed on behalf of such
Borrower Party by its chief executive officer or chief financial officer, in
form and substance reasonably satisfactory to Lender, stating that there does
not exist any Default or Event of Default under the Loan Documents (or if the
any exists, specifying the same in detail) and stating the Debt Service Coverage
Ratio for the twelve (12) month period ended as of the end of such quarter.
(ix) Fiscal Year. Each Borrower Party represents that its fiscal
year ends on December 31, and agrees that it shall not change its fiscal year.
(B) Accountants' Reports. Promptly upon receipt thereof, each Primary
Borrower Party will deliver copies of all significant reports submitted by
independent public accountants in connection with each annual, interim or
special audit of the Financial Statements or other affairs
-31-
of such Borrower Party made by such accountants, including the comment letter
submitted by such accountants to management in connection with the annual audit.
(C) Tax Returns. Within thirty (30) days after filing the same,
Borrower shall deliver to Lender a copy of its Federal income tax returns (or
the return of the applicable Person into which Borrower's Federal income tax
return is consolidated) certified on its behalf by its chief financial officer
(or similar position) to be true and correct.
(D) Annual Operating and Capital Expenditure Budgets. No later than
thirty (30) days prior to the expiration of each calendar year, Borrower shall
deliver to Lender for informational purposes only the Operating Budget and the
Capital Expenditure Budget (in each case presented on a monthly and annual
basis) for the Property for the following calendar year; which Operating Budgets
and Capital Expenditure Budgets shall be subject to Lender's reasonable approval
commencing with the proposed budgets for the calendar year 2011. The proposed
Operating Budget shall identify and set forth Borrower's best estimate, after
due consideration, of all revenue, costs, and expenses, and shall specify Gross
Revenue and Operating Expenses. If any of said budgets or plans for any calendar
year from and after calendar year 2011 are not in form and substance reasonably
satisfactory to Lender, Lender may disapprove the same and specify the reasons
therefor, and Borrower shall promptly amend and resubmit for approval revised
budgets or plans, as applicable, making such changes as are necessary to comply
with the reasonable requirements of Lender. In the event that after the Optional
Prepayment Date, Borrower incurs any extraordinary operating expense or
extraordinary Capital Expenditure not set forth in the Operating Budget or
Capital Expenditure Budget (each, an "Extraordinary Expense"), then Borrower
shall promptly deliver to Lender a reasonably detailed explanation of such
proposed Extraordinary Expense for Lender's approval.
(E) Material Notices.
(i) Borrower shall promptly deliver, or caused to be delivered to
Lender, copies of all notices of default given or received with respect to
noncompliance related to any Indebtedness of any Borrower Party, including
Indebtedness under the Loan Documents.
(ii) Borrower shall promptly deliver to Lender copies of any and
all material notices (including without limitation any notice alleging any
default or breach) received from any manager, franchisors, licensors, or tenant
for or pertaining to the Property.
(F) Events of Default, etc. Promptly upon Borrower obtaining knowledge
of any of the following events or conditions, Borrower shall deliver a
certificate executed on its behalf by its chief financial officer or similar
officer specifying the nature and period of existence of such condition or event
and what action Borrower or any Affiliate thereof has taken, is taking and
proposes to take with respect thereto: (i) any condition or event that
constitutes an Event of Default or Default; (ii) any Material Adverse Effect; or
(iii) any actual or alleged breach or default or assertion of (or written threat
to assert) remedies under any Management Agreement.
(G) Litigation. Promptly upon Borrower's obtaining knowledge of (1) the
institution of any action, suit, proceeding, governmental investigation or
arbitration against or affecting Borrower or the Property not previously
disclosed in writing by Borrower to Lender or (2) any
-32-
material development in any action, suit, proceeding, governmental investigation
or arbitration at any time pending against or affecting Borrower or the Property
which, in each case, if adversely determined would reasonably be expected to
have a Material Adverse Effect, Borrower will give notice thereof to Lender and
provide such other information as may be reasonably available to enable Lender
and its counsel to evaluate such matter.
(H) Insurance. Within the thirty (30) day period prior to the end of
each insurance policy period of Borrower, Borrower will deliver binders or
certificates of insurance evidencing renewal of any existing coverages (or
copies of any new insurance policies not previously delivered to Lender),
reports, and/or other information (all in form and substance reasonably
satisfactory to Lender), (i) outlining all material insurance coverage
maintained as of the date thereof by Borrower and all material insurance
coverage planned to be maintained by Borrower in the subsequent insurance policy
period, and (ii) evidencing payment in full of the premiums for such insurance
policies.
(I) Other Information. With reasonable promptness, each Borrower Party
will deliver such other information and data with respect to such Person and its
Affiliates or the Property as from time to time may be reasonably requested by
Lender.
Section 5.2 Existence; Qualification. Each Primary Borrower Party will at all
times preserve and keep in full force and effect its existence as a limited
partnership, limited liability company, or corporation, as the case may be and
all rights and franchises material to its business, including its qualification
to do business in each state where it is required by law to so qualify. Without
limitation of the foregoing, Borrower and, to the extent required by applicable
law, Member shall at all times be qualified to business in the state where the
Property is located.
Section 5.3 Payment of Impositions and Claims.
(A) Subject to Borrower's contest rights set forth in subsection (B)
below, Borrower will pay (i) all Impositions; (ii) all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets (hereinafter referred to as the "Claims"); and (iii) all federal, state
and local income taxes, sales taxes, excise taxes and all other taxes and
assessments of Borrower on its business, income or assets; in each instance
before any penalty or fine is incurred with respect thereto.
(B) Borrower shall not be required to pay, discharge or remove any
Imposition or Claim so long as Borrower contests in good faith such Imposition
or Claim or the validity, applicability or amount thereof by an appropriate
legal proceeding which operates to prevent the collection of such amounts and
the sale of the Property or any portion thereof, so long as: (i) no Event of
Default shall have occurred and be continuing, (ii) prior to the date on which
such Imposition or Claim would otherwise have become delinquent, Borrower shall
have given Lender prior written notice of its intent to contest said Imposition
or Claim; (iii) prior to the date on which such Imposition or Claim would
otherwise have become delinquent, in the case of Impositions or Claims in excess
of $200,000, Borrower shall have deposited with Lender (or with a court of
competent jurisdiction or other appropriate body approved by Lender) such
additional amounts as are necessary to keep on deposit at all times, an amount
equal to at least
-33-
one hundred twenty-five percent (125%) (or such higher amount as may be required
by applicable law) of the total of (x) the balance of such Imposition or Claim
then remaining unpaid, and (y) all interest, penalties, costs and charges
accrued or accumulated thereon; (iv) no risk of sale, forfeiture or loss of any
interest in the Property or any part thereof arises, in Lender's reasonable
judgment, during the pendency of such contest; (v) such contest does not, in
Lender's reasonable determination, have a Material Adverse Effect; and (vi) such
contest is based on bona fide, material, and reasonable claims or defenses. Any
such contest shall be prosecuted with due diligence, and Borrower shall promptly
pay the amount of such Imposition or Claim as finally determined, together with
all interest and penalties payable in connection therewith. Lender shall have
full power and authority, but no obligation, to apply any amount deposited with
Lender under this subsection to the payment of any unpaid Imposition or Claim to
prevent the sale or forfeiture of the Property for non-payment thereof, if
Lender reasonably believes that such sale or forfeiture is threatened. Any
surplus retained by Lender after payment of the Imposition or Claim for which a
deposit was made shall be promptly repaid to Borrower unless an Event of Default
shall have occurred, in which case said surplus may be retained by Lender to be
applied to the Obligations. Notwithstanding any provision of this Section to the
contrary, Borrower shall pay any Imposition or Claim which it might otherwise be
entitled to contest if an Event of Default shall occur, or if, in the reasonable
determination of Lender, the Property is in jeopardy or in danger of being
forfeited or foreclosed. If Borrower refuses to pay any such Imposition or
Claim, upon five (5) Business Days' prior written notice, Lender may (but shall
not be obligated to) make such payment and Borrower shall reimburse Lender on
demand for all such advances.
Section 5.4 Maintenance of Insurance. Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, public liability,
property damage, business interruption and other types of insurance with respect
to its business and the Property (including all Improvements now existing or
hereafter erected thereon) against all losses, hazards, casualties, liabilities
and contingencies as customarily carried or maintained by Persons of established
reputation engaged in similar businesses and as Lender (and, if the Mortgage
encumbers a leasehold, the applicable lease) shall require and in such amounts
and for such periods as Lender shall require. Without limitation of the
foregoing, Borrower shall maintain or cause to be maintained policies of
insurance with respect to the Property in the following amounts and covering the
following risks:
(i) Property damage insurance covering loss or damage to the
Property caused by fire, lightning, hail, windstorm, explosion, hurricane (to
the extent available), vandalism, malicious mischief, and such other losses,
hazards, casualties, liabilities and contingencies as are normally and usually
covered by fire policies in effect where the Property is located endorsed to
include all of the extended coverage perils and other broad form perils,
including the standard "all risks" clauses, with such endorsements as Lender may
from time to time reasonably require including, without limitation, building
ordinance and law (including demolition costs and increased cost of construction
coverage), lightning, windstorm, civil commotion, hail, riot, strike, water
damage, sprinkler leakage, collapse and malicious mischief. Such policy shall be
in an amount not less than that necessary to comply with any coinsurance
percentage stipulated in the policy, but not less than 100% of the full
replacement cost of all Improvements (without any deduction for depreciation),
and shall contain a replacement cost and agreed amount endorsements in an amount
not less than the outstanding principal amount of the
-34-
Loan. The deductible under such policy, shall not exceed an amount customarily
required by institutional lenders for similar properties in the general vicinity
of the Property, but in no event in excess of $100,000.
(ii) Broad form boiler and machinery insurance in an amount equal
to the lesser of 100% of the full replacement cost of the building (without any
deduction for depreciation) in which the boiler or similar vessel is located, or
$2,000,000. In addition, Lender may require a rider to such policy to extend
such coverage to electrical machinery and equipment, air conditioning,
refrigeration, and mechanical objects.
(iii) Intentionally Omitted.
(iv) Flood insurance if the Property is in an area now or
hereafter designated as "flood prone" or a "special flood hazard area" (as
defined under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994 (as
each may be amended, or any successor law, collectively, the "Flood Insurance
Acts")). Such policy shall be in an amount equal to the lesser of (1) the
outstanding principal balance of the Loan and (2) the maximum amount of such
insurance available under the Flood Insurance Acts and shall have a maximum
permissible deductible equal to an amount customarily required by institutional
lenders for similar properties in the general vicinity of the Property, but in
no event in excess of $100,000.
(v) Business interruption or rent loss insurance in an amount
equal to the gross income or rentals from the Property for an indemnity period
of eighteen (18) months, such amount being adjusted annually. Lender shall be
named as loss payee under such insurance.
(vi) During any period of reconstruction, renovation or
alteration of the Property, a complete value, "All Risks" Builders Risk form or
"Course of Construction" insurance policy in non-reporting form and in an amount
reasonably satisfactory to Lender.
(vii) Commercial General Liability insurance covering bodily
injury and death in an amount not less than $1,000,000 per occurrence and
$3,000,000 in the aggregate with a deductible in an amount customarily required
by institutional lenders for similar properties in the general vicinity of the
Property, but in no event in excess of $100,000, and an umbrella liability
policy in the amount of $50,000,000. If Lender permits such liability coverage
to be written on a blanket basis, then such policy shall provide that the
aggregate limit of insurance applies separately to the Property.
(viii) If required by applicable state laws, worker's
compensation or employer's liability insurance in accordance with such laws.
(ix) Borrower shall cause Manager to maintain errors and
omissions insurance in an amount satisfactory to Lender in its reasonable
discretion.
(x) Such other insurance and endorsements, if any, with respect
to the Property and the operation thereof as Lender may reasonably require from
time to time, provided same are customarily required by institutional lenders
for similar properties in the general vicinity of the Property, or which are
otherwise required by the Loan Documents.
-35-
Each carrier providing any insurance, or portion thereof,
required by this Section shall be licensed to do business in the jurisdiction or
jurisdictions in which the Property is located, and shall have a claims paying
ability rating by S&P of not less than "AA", by Moody's of not less than "Aa2"
and by Fitch of not less than "AA" and an A.M. Best Company, Inc. rating of not
less than A and financial size category of not less than XIII. Except as
otherwise expressly set forth in this Loan Agreement, Borrower shall cause all
insurance (except general public liability and workers' compensation insurance)
carried in accordance with this Section to be payable to Lender as a mortgagee
and not as a coinsured, and, in the case of all policies of insurance carried by
each lessee for the benefit of Borrower, if any, to cause all such policies to
be payable to Lender as Lender's interest may appear. Notwithstanding the
foregoing, Lender hereby approves: (a) St. Paul Fire and Marine Insurance Co. as
the carrier providing the commercial general liability insurance required under
clause (vii) of this Section 5.4 so long as such carrier maintains a claims
paying ability by S&P of not less than "AA-" and by Moody's of not less than
"Aa3" and (b) Great American Insurance Co. as the carrier providing the umbrella
liability insurance required under clause (vii) of this Section 5.4 so long as
such carrier maintains a claims paying ability by S&P of not less than "A+", by
Moody's of not less than "A3" and by Fitch of not less than "AA-" and an A.M.
Best Company, Inc. rating of not less than A and financial size category of not
less than XII. In the event that such general or umbrella liability insurance
required under clause (vii) of this Section 5.4 shall hereafter be provided by
another insurance carrier, any such carrier shall thereafter be required to
comply with the ratings requirements of the first sentence of this paragraph.
All insurance policies and renewals thereof (i) shall be in a
form reasonably acceptable to Lender, (ii) shall provide for a term of not less
than one year, (iii) shall provide by way of endorsement, rider or otherwise
that such insurance policy shall not be canceled, endorsed, altered, or reissued
to effect a change in coverage unless such insurer shall have first given Lender
thirty (30) days prior written notice thereof, (iv) shall include a standard
mortgagee clause in favor of and in form acceptable to Lender, (v) shall provide
for claims to be made on an occurrence basis, except that boiler and machinery
coverage may be made on an accident basis, and (vi) shall contain an agreed
value clause updated annually (if the amount of coverage under such policy is
based upon the replacement cost of the Property). All property damage insurance
policies (except for flood and earthquake policies) must automatically reinstate
after each loss.
Section 5.5 Maintenance of the Property; Casualty.
(A) Borrower will maintain the Property or cause the Property to be
maintained in good repair, working order and condition, subject to ordinary wear
and tear and the provisions of this Loan Agreement with respect to casualty and
condemnation and will make or cause to be made all appropriate repairs, renewals
and replacements thereof. Without limitation of the foregoing, Borrower will
operate and maintain the Property substantially in accordance with the
applicable Operating Budget and Capital Expenditure Budget. In addition, after
the Optional Prepayment Date, unless Lender agrees otherwise, Borrower shall
cause all items in the Capital Expenditure Budget to be performed and completed
in substantially in accordance with such plan. All work required or permitted
under this Loan Agreement shall be performed in a workmanlike manner and in
compliance with all applicable laws. So long as no Event of Default has occurred
and is continuing, Borrower may, without Lender's consent, perform alterations
to the Property which (i) do not constitute a Material Alteration, (ii) do not
adversely affect
-36-
Borrower's financial condition or the value or Net Operating Income of the
Property and (iii) are in the ordinary course of Borrower's business. Borrower
shall not perform any Material Alteration without Lender's prior written
consent, which consent shall not be unreasonably withheld or delayed; provided,
however, that Lender may, in its sole and absolute discretion, withhold consent
to any Material Alteration which is likely to result in a decrease of Net
Operating Income from the Property by 5% or more for a period of 30 days or
longer. Lender shall approve or disapprove any request for approval of any
Material Alteration within fifteen (15) Business Days after the submission by
Borrower to Lender of a written request for such approval together with a
reasonably detailed description of such Material Alteration including a
construction budget therefor on a line item basis, copies of the plans and
specifications for same, a list of all contractors and subcontractors providing
services or materials in connection with such Material Alteration and copies of
all material contracts and subcontracts. Lender's consent to any Material
Alteration shall be deemed given, if the correspondence from Borrower to Lender
requesting such approval contains a bold-faced, conspicuous legend at the top of
the first page thereof stating that "IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY
DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIFTEEN (15) BUSINESS DAYS,
YOUR APPROVAL SHALL BE DEEMED GIVEN," and if Lender shall fail to respond to or
to expressly deny such request for approval in writing within fifteen (15)
Business Days after receipt of Borrower's written request therefor together with
the documents and information required above and any other information
reasonably requested by Lender in writing prior to the expiration of such
fifteen (15) Business Day period in order to adequately review the same, then
Lender shall be deemed to have approved such Material Alteration. Lender may, as
a condition to giving its consent to a Material Alteration, require that
Borrower deliver to Lender evidence reasonably satisfactory to Lender that
Borrower has cash available for payment of the cost of such Material Alteration
in an amount equal to 125% of the cost of the Material Alteration as reasonably
estimated by Lender. Upon substantial completion of the Material Alteration,
Borrower shall provide evidence reasonably satisfactory to Lender that (i) the
Material Alteration was constructed in accordance with all applicable laws and
substantially in accordance with plans and specifications approved by Lender
(which approval shall not be unreasonably withheld or delayed), (ii) all
contractors, subcontractors, materialmen and professionals who provided work,
materials or services in connection with the Material Alteration have been paid
in full and have delivered unconditional releases of lien and (iii) all material
licenses necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued. Borrower shall reimburse Lender upon demand
for all reasonable out-of-pocket costs and expenses (including the reasonable
fees of any architect, engineer or other professional engaged by Lender)
incurred by Lender in reviewing plans and specifications or in making any
determinations necessary to implement the provisions of this Section 5.5(A).
(B) In the event of casualty or loss at the Property, Borrower shall give
immediate written notice of the same to the insurance carrier and to Lender and
shall promptly commence and diligently prosecute to completion, in accordance
with the terms hereof, the repair and restoration of the Property as nearly as
possible to the Pre-Existing Condition (hereinafter defined) (a "Restoration").
Borrower shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Borrower hereby authorizes and empowers Lender as
attorney-in-fact for Borrower to make proof of loss, to adjust and compromise
any claim under insurance policies, to appear in and prosecute any action
arising from such insurance policies, to collect
-37-
and receive insurance proceeds, and to deduct therefrom Lender's expenses
incurred in the collection of such proceeds; provided however, that nothing
contained in this Section shall require Lender to incur any expense or take any
action hereunder. Borrower further authorizes Lender, at Lender's option, (i) to
hold the balance of such proceeds to be used to reimburse Borrower for the cost
of Restoration of the Property or (ii) subject to Subsection 5.5(C), to apply
such proceeds to payment of the Obligations whether or not then due, in any
order, and, provided that no Event of Default has occurred and is continuing,
upon any such application of insurance proceeds to the Obligations pursuant to
the foregoing, no Prepayment Consideration shall be due and payable.
Notwithstanding the foregoing, in the event of a casualty where the loss does
not exceed the Restoration Threshold, Borrower may settle and adjust such claim;
provided that (a) no Event of Default has occurred and is continuing and (b)
such adjustment is carried out in a commercially reasonable and timely manner.
(C) Lender shall not exercise Lender's option to apply insurance
proceeds to payment of the Obligations if all of the following conditions are
met: (i) no Event of Default then exists; (ii) Lender reasonably determines that
there will be sufficient funds to complete the Restoration of the Property to at
least the Pre-Existing Condition and to timely make all payments due under the
Loan Documents during the Restoration of the Property; (iii) Lender reasonably
determines that the rental income of the Property, after the Restoration thereof
to the Pre-Existing Condition (and after the expiration of any business
interruption or rent loss insurance), will be sufficient to meet all Operating
Expenses, payments for Reserves and payments of principal and interest under the
Note and any other loan payment obligations (including any obligations under any
permitted subordinate financing) relating to the Property and maintain a Debt
Service Coverage Ratio at least equal to the lesser of the Debt Service Coverage
Ratio as of the Closing Date and immediately preceding the casualty; (iv) Lender
reasonably determines that the Restoration of the Property to the Pre-Existing
Condition will be completed within one (1) year of the date of the loss or
casualty to the Property, but in no event later than six (6) months prior to the
Optional Prepayment Date; (v) less than fifty percent (50%) of the total floor
area of the Improvements has been damaged, destroyed or rendered unusable as a
result of such fire or other casualty; (vi) tenant leases requiring payment of
annual rent equal to at least seventy percent (70%) of the Gross Revenues from
the Property during the twelve (12) month period immediately preceding the date
of such fire or other casualty remain in full force and effect during and after
the Restoration of the Property; and (vii) Lender is reasonably satisfied that
the Property can be restored and repaired as nearly as possible to the condition
it was in immediately prior to such casualty and in compliance with all
applicable zoning, building and other laws and codes (the "Pre-Existing
Condition"). Notwithstanding anything to the contrary set forth in this Section
5.5, to the extent the insurance proceeds paid or payable with respect to any
casualty to the Property (either singly or when aggregated with all other then
unapplied proceeds with respect to the Property) do not exceed the Restoration
Threshold, the estimated cost of completing the applicable Restoration shall not
be greater than the Restoration Threshold, and provided that no Event of Default
shall have occurred and be continuing, such proceeds are to be paid directly to
Borrower to be applied to Restoration of the Property in accordance with the
terms hereof (except that insurance proceeds paid with respect to the insurance
maintained under Section 5.4(v) above shall be deposited directly to the Central
Account and applied in accordance with the provisions of the Cash Management
Agreement).
-38-
(D) If Lender elects to make the insurance proceeds available for the
Restoration of the Property (or is required to make such proceeds available
pursuant to Section 5.5(C) above), Borrower agrees that, if at any time during
the Restoration, the cost of completing such Restoration, as reasonably
determined by Lender, exceeds the undisbursed insurance proceeds, Borrower
shall, promptly upon demand by Lender, deposit the amount of such excess with
Lender, and Lender shall first disburse such deposit to pay for the costs of
such Restoration on the same terms and conditions as the insurance proceeds are
disbursed. If Borrower deposits such excess with Lender and if, after completion
of the Restoration, any funds remain from the combination of insurance proceeds
and the funds so deposited with Lender by Borrower, and if no Event of Default
shall have occurred and be continuing, then Lender shall disburse to Borrower
such remaining funds (together with any interest earned thereon).
(E) Lender may, at Lender's option, condition disbursement of any
insurance proceeds on Lender's approval of plans and specifications of an
independent architect licensed in the state where the Property is located and
reasonably satisfactory to Lender (the "Architect"), any and all material
contractors, subcontractors and materialmen engaged in the Restoration and the
contracts and subcontracts under which they have been engaged, contractor's cost
estimates, architect's certificates, waivers of liens, sworn statements of
mechanics and materialmen and such other evidence of costs, percentage
completion of construction, application of payments, and satisfaction of liens
as Lender may reasonably require. Lender shall not be obligated to disburse
insurance proceeds more frequently than once every calendar month. If insurance
proceeds are applied to the payment of the Obligations, any such application of
proceeds to principal shall not extend or postpone the due dates of the monthly
payments due under the Note or otherwise under the Loan Documents, or change the
amounts of such payments. Any amount of insurance proceeds remaining in Lender's
possession after full and final payment and discharge of all Obligations shall
be refunded to Borrower or otherwise paid in accordance with applicable law. If
the Property is sold at foreclosure or if Lender acquires title to the Property,
Lender shall have all of the right, title and interest of Borrower in and to any
insurance policies and unearned premiums thereon and in and to the proceeds
resulting from any damage to the Property prior to such sale or acquisition.
(F) In no event shall Lender be obligated to make disbursements of
insurance 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 Architect, less a retainage equal to five percent (5%) of such costs
incurred until the Restoration has been completed. The retainage shall in no
event be less than the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The retainage shall
not be released until the Architect certifies to Lender that the Restoration has
been completed substantially in accordance with the provisions of this Section
5.5 and that all material approvals necessary for the re-occupancy and use of
the Property have been obtained from all appropriate governmental authorities,
and Lender receives evidence reasonably satisfactory to Lender that the costs of
the Restoration have been paid in full or will be paid in full out of the
retainage.
Section 5.6 Inspection. Subject to the rights of tenants, Borrower shall permit
any authorized representatives designated by Lender to visit and inspect during
normal business hours the Property and its business, including its financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss its affairs, finances and business with its officers and
-39-
independent public accountants (with such Borrower's representative(s) present),
at such reasonable times during normal business hours and as often as may be
reasonably requested. Unless an Event of Default has occurred, Lender shall
provide advance written notice of at least three (3) Business Days prior to
visiting or inspecting the Property or Borrower's offices.
Section 5.7 Environmental Compliance.
(A) Environmental Laws. Borrower shall at all times comply in all
material respects with all applicable Environmental Laws. Borrower shall not:
(i) violate any applicable Environmental Law; or (ii) generate, use, transport,
handle, store, release or dispose of any Hazardous Materials in or into, on or
onto, or from the Property (except in accordance with applicable law); or (iii)
permit any Lien imposed pursuant to any Environmental Law to be imposed or to
remain on the Property.
(B) Remedial Action. Borrower shall promptly take and diligently
prosecute any and all necessary remedial actions upon obtaining knowledge of the
presence, storage, use, disposal, transportation, active or passive migration,
release or discharge of any Hazardous Materials on, under or about the Property
in violation of any Environmental Laws. In the event Borrower undertakes any
remedial action with respect to any Hazardous Material on, under or about the
Property, Borrower shall conduct and complete such remedial action in compliance
with all applicable Environmental Laws, and in accordance with the applicable
policies, orders and directives of all federal, state and local governmental
authorities.
(C) Further Assurance. If Lender at any time has a reasonable basis to
believe that a violation of any Environmental Law related to the Property has
occurred and is continuing or that any basis for a material Environmental Claim
affecting Borrower or related to the Property exists, then Borrower agrees,
promptly after written request from Lender, to provide Lender with such reports,
certificates, engineering studies or other written material or data as Lender
may reasonably require so as to satisfy Lender that Borrower and the Property
are in material compliance with all applicable Environmental Laws.
(D) O&M Plan. Borrower agrees to develop, implement and carry out an
operations and maintenance program with respect to asbestos and
asbestos-containing materials (the "O&M Plan") located in the Property as
recommended in the Environmental Report. Within thirty (30) days after the date
hereof, Borrower shall cause the O&M Plan to be prepared by the environmental
consultant or engineer that prepared the Environmental Report or another
environmental consultant or engineer reasonably acceptable to Lender, and
deliver such O&M Plan to Lender for Lender's approval which approval shall not
be unreasonably withheld, conditioned or delayed. Lender's requirement that
Borrower develop and comply with the O&M Plan shall not be deemed to constitute
a waiver or modification of any covenants or agreements of Borrower or Guarantor
with respect to Hazardous Material or Environmental Laws as set forth herein or
in the Environmental Indemnity.
Section 5.8 Environmental Disclosure.
(A) Borrower shall promptly upon becoming aware thereof advise Lender
in writing and in reasonable detail of: (1) any release, disposal or discharge
of any Hazardous Material on,
-40-
under, or about the Property required to be reported to any federal, state or
local governmental or regulatory agency under any applicable Environmental Laws
except such releases, disposals or discharges pursuant to and in compliance with
valid permits, authorizations or registrations under said Environmental Laws;
(2) any and all written communications sent or received by Borrower with respect
to any Environmental Claims or any release, disposal or discharge of Hazardous
Material required to be reported to any federal, state or local governmental or
regulatory agency; (3) any remedial action taken by Borrower or any other Person
in response to any Hazardous Material on, under or about the Property; (4) the
discovery by Borrower of any occurrence or condition on any real property
adjoining or in the vicinity of the Property that could cause the Property or
any part thereof to be classified as "border-zone property" or to be otherwise
subject to any restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws the existence of which could result in an
Environmental Claim with respect to the Property; and (5) any request for
information from any governmental agency that indicates such agency is
investigating whether Borrower may be potentially responsible for a release,
disposal or discharge of Hazardous Materials.
(B) Borrower shall promptly notify Lender of any proposed action to be
taken pertaining in any way to the Property to commence any operations that
could reasonably be expected to subject Borrower or the Property to additional
laws, rules or regulations, including laws, rules and regulations requiring
additional or amended environmental permits or licenses which could reasonably
be expected to subject Borrower to any material obligations or requirements
under any Environmental Laws. Borrower shall, at its own expense, provide copies
of such documents or information as Lender may reasonably request in relation to
any matters disclosed pursuant to this Section.
Section 5.9 Compliance with Laws and Contractual Obligations. Borrower will (A)
comply with the requirements of all present and future applicable laws, rules,
regulations and orders of any governmental authority in all jurisdictions in
which it is now doing business or may hereafter be doing business, other than
those laws, rules, regulations and orders the noncompliance with which would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (B) maintain all licenses and permits now held or
hereafter acquired by Borrower, the loss, suspension, or revocation of which, or
failure to renew, could have a Material Adverse Effect and (C) perform, observe,
comply and fulfill all of its obligations, covenants and conditions contained in
any Contractual Obligation, including the Loan Documents.
Section 5.10 Further Assurances. Borrower Parties and their Affiliates shall,
from time to time, execute and/or deliver such documents, instruments,
agreements, financing statements, and perform such acts as Lender at any time
may reasonably request to evidence, preserve and/or protect the Collateral at
any time securing or intended to secure the Obligations and/or to better and
more effectively carry out the purposes of this Loan Agreement and the other
Loan Documents.
Section 5.11 Performance of Agreements and Leases. Each Borrower Party shall
duly and punctually perform, observe and comply in all material respects with
all of the terms, provisions, conditions, covenants and agreements on its part
to be performed, observed and complied with hereunder and under the other Loan
Documents to which it is a party and all material agreements
-41-
entered into or assumed by such Person in connection with the Property, and will
not suffer or permit any default or event of default (giving effect to any
applicable notice requirements and cure periods) to exist under any of the
foregoing. Borrower shall comply with, observe and perform all of Borrower's
material obligations as landlord under all Leases and shall enforce the material
terms, covenants and conditions contained in the Leases upon the part of the
tenants thereunder to be observed or performed.
Section 5.12 Leases.
(A) Without the prior written consent of Lender, Borrower shall not (i)
enter into any Major Lease; (ii) cancel or terminate (including, without
limitation, by exercise of any landlord recapture rights) any Major Lease
(except to enforce any such Major Lease after an "event of default" thereunder
or pursuant to the exercise by any tenant of any termination rights expressly
provided in any existing Major Lease or Major Lease hereafter approved by
Lender); (iii) approve any assignment of any Major Lease (except as required
pursuant to the express terms of any existing Major Lease or Major Lease
hereafter approved by Lender) that releases the original tenant from its
obligations under such Major Lease, (iv) amend, modify or waive the provisions
of any Major Lease in any material and adverse respect (including, without
limitation, any amendment, modification or waiver reducing the fixed initial
term of any Major Lease, reducing the rent payable under any Major Lease,
changing any renewal provisions of any Major Lease or materially increasing the
obligations of the landlord or materially decreasing the obligations of the
tenant under any Major Lease or pursuant to which any premises covered by such
Major Lease is surrendered); or (v) cancel or modify any guaranty, or release
any security deposit, letter of credit, or other item constituting security
pertaining to any Major Lease (except as required pursuant to the express terms
of any existing Major Lease or Major Lease hereafter approved by Lender).
Lender shall not unreasonably withhold, delay or condition its
consent to any Major Lease transaction described in items (i) through (v) above
provided that (x) no Event of Default shall have occurred and be continuing, (y)
the conditions of clauses (i) and (ii) of Subsection 5.12(B) are satisfied with
respect to such proposed Major Lease and (z) in the reasonable judgment of
Lender, the proposed tenant thereunder (if not then a tenant of the Property) is
a reputable Person engaged in a business activity which is consistent with
ordinary office building uses and with creditworthiness reasonably adequate to
perform its obligations under the proposed Major Lease (taking into account any
security, guarantees or other credit support posted or delivered by such
proposed tenant).
(B) Notwithstanding the provisions of Subsection 5.12(A) above,
provided that no Event of Default shall have occurred and be continuing,
Lender's consent shall not be required as provided above for the creation,
assignment, termination (including, without limitation, by exercise of any
recapture rights, amendment or modification of any Lease which is not a Major
Lease (including the renewal or extension after the date hereof of any Lease
(which is not a Major Lease) (such renewal or extension, a "Renewal Lease"))
provided that the applicable Lease (or Renewal Lease):
(i) provides for payment of a net effective rent (after taking
into account any free rent, construction allowances or other concessions granted
by landlord) and other material
-42-
amounts payable no less than ninety-five percent (95%) of the then effective
fair market rent then prevailing for similar properties and leases in the market
area (and taking into account the type and creditworthiness of the tenant, the
length of the term including any renewals and the location and size of the
premises covered thereby);
(ii) is otherwise on commercially reasonable terms; and
(iii) a copy of such Lease is delivered to Lender promptly after
execution thereof together with Borrower's certification that such Lease
satisfies the foregoing conditions of this Section 5.12.
(C) Any request for approval of a Lease or assignment, termination,
amendment or modification of any Lease requiring approval as set forth above
shall be made to Lender in writing and together with such request Borrower shall
furnish to Lender: (i) a brief biographical description of and current financial
statements for the proposed tenant and any guarantor of the proposed Lease, (ii)
a copy of the proposed form of Lease (or amendment or modification), and (iii) a
summary of the material terms of such proposed Lease (or amendment or
modification) including, without limitation, rental terms and the term of the
proposed Lease and any options. Lender shall approve or disapprove each Major
Lease or other Lease (or amendment or modification of any Major Lease or other
Lease) for which Lender's approval is required under this Loan Agreement within
ten (10) Business Days after the submission by Borrower to Lender of a written
request for such approval, accompanied by a substantially final draft of the
Major Lease or other Lease (or amendment or modification) together with the
information and documents required under clauses (i) through (iii) above (and
provided that any such approval shall be subject to delivery by Borrower of an
executed copy of the Lease (or amendment or modification) promptly after
execution thereof, which executed Lease (or amendment or modification) shall not
have been modified or revised in any material respect from the prior drafts
thereof reviewed by Lender). Lender's consent to any Major Lease or other Lease
shall be deemed given, if the correspondence from Borrower to Lender requesting
such approval contains a bold-faced, conspicuous legend at the top of the first
page thereof stating that "IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS
REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) BUSINESS DAYS, YOUR APPROVAL
SHALL BE DEEMED GIVEN," and if Lender fails to respond to or to expressly deny
such request for approval in writing within ten (10) Business Days after receipt
by Lender of such written request and the information and documents required
above and any other information reasonably requested by Lender in writing prior
to the expiration of such ten (10) Business Day period in order to adequately
review the same, then Lender shall be deemed to have approved such Major Lease
or other Lease.
Borrower shall promptly send Lender copies of any notices of
default received from the tenant under any Lease; and will enforce (short of
terminating such Lease) the performance by the tenant of the tenant's
obligations under any Lease.
Except for security deposits or estimated additional rent
amounts on account of operating expense, tax or other escalations or
pass-throughs, no Lease shall provide for payment of rent more than one month in
advance, and Borrower shall not under any circumstances collect any rent more
than one month in advance. Borrower, at Lender's request, shall furnish Lender
-43-
with executed copies of all Leases hereafter made (to the extent not theretofore
provided to Lender). Each Lease or a separate agreement with the tenant of such
Lease, in recordable form and substance reasonably satisfactory to Lender, shall
specifically provide that, subject to the following sentence, such Lease is
subordinate to the Mortgage; that the tenant attorns to Lender, such attornment
to be effective upon Lender's acquisition of title to the Property; that the
tenant agrees to execute such further evidences of attornment as Lender may from
time to time reasonably request; that the attornment of the tenant shall not be
terminated by foreclosure; that in no event shall Lender, as holder of the
Mortgage or as successor landlord, be liable to the tenant for any act or
omission of any prior landlord or for any liability or obligation of any prior
landlord occurring prior to the date that Lender or any subsequent owner acquire
title to the Property. Lender shall enter into, and, if required by applicable
law to provide constructive notice, record in the county where the subject
Property is located, and permit the applicable tenant to record a subordination,
non-disturbance and attornment agreement, in form and substance substantially
similar to the form attached hereto as Exhibit A (a "Non-Disturbance
Agreement"), with any tenant (other than an Affiliate of Borrower) entering into
any Lease demising at least 5,000 square feet of the Property within ten (10)
Business Days after written request therefor by Borrower delivered together with
an executed copy of the applicable Lease, and provided that Lender shall have
confirmed that such Lease satisfies the conditions of clauses (i) and (ii) of
Subsection 5.12(B) above.
Section 5.13 Management.
(A) Borrower shall cause Manager to manage the Property in accordance
with the Management Agreement. Borrower shall (i) diligently perform and observe
all of the material terms, covenants and conditions of the Management Agreement
on the part of Borrower to be performed and observed and (ii) promptly notify
Lender of any notice to Borrower of any default under the Management Agreement
of which it is aware. If Borrower shall default in the performance or observance
of any material term, covenant or condition of the Management Agreement on the
part of Borrower to be performed or observed beyond applicable notice and cure
periods, then, without limiting Lender's other rights or remedies under this
Agreement or the other Loan Documents, and without waiving or releasing Borrower
from any of its obligations hereunder or under the Management Agreement upon
five (5) Business Days' notice to Borrower, Lender shall have the right, but
shall be under no obligation, to pay any sums and to perform any act as may be
appropriate to cause all the material terms, covenants and conditions of the
Management Agreement on the part of Borrower to be performed or observed.
Borrower shall cause any new Manager to execute and deliver a subordination
agreement reasonably satisfactory to Lender at the time of execution and
delivery of any Management Agreement.
(B) Borrower shall not surrender, terminate (except in connection with
the enforcement of Borrower's rights thereunder upon a default by Manager, and
after delivery of notice thereof to Lender (but no consent of Lender shall be
required for such termination)), cancel, materially modify, renew or extend the
Management Agreement (except any renewal or extension pursuant to the express
terms of the Management Agreement as in effect on the date hereof or other
renewal or extension of the Management Agreement with the existing Manager on
terms no less favorable to Borrower than those in effect on the date hereof), or
enter into any other Management Agreement with Manager or any other Person, or
consent to the assignment by the Manager of its interest under the Management
Agreement, in each case without the
-44-
express consent of Lender, which consent shall not be unreasonably withheld and
may be conditioned upon Borrower delivering a Rating Confirmation. 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 a subordination of
management agreement in the form delivered in connection with the closing of the
Loan.
(C) Lender shall have the right to require Borrower to replace the
Manager with a Person chosen by Lender, upon the earliest to occur of any one or
more of the following events: (i) upon the occurrence and during the continuance
of an Event of Default; (ii) at any time following the date which is sixty (60)
days after the Optional Prepayment Date; or (iii) thirty (30) days after notice
from Lender to Borrower that Manager has engaged in fraud, gross negligence or
willful misconduct arising from or in connection with its performance under the
Management Agreement.
Section 5.14 Material Agreements. Except for Leases complying with the Loan
Documents and Management Agreements complying with the foregoing, Borrower shall
not enter into or become obligated under any material agreement pertaining to
the Property, including without limitation brokerage agreements, unless the same
may be terminated without cause and without payment of a penalty or premium, on
not more than 30 day's prior written notice.
Section 5.15 Deposits; Application of Receipts. Borrower will deposit all
Receipts from the Property into, and otherwise comply with, the Accounts
established from time to time hereunder. Subject to Article VII hereof and the
Cash Management Agreement, Borrower shall promptly apply such Receipts to the
payment of all current and past due Operating Expenses, and to the repayment of
all sums currently due or past due under the Loan Documents, including all
payments into the Reserves.
Section 5.16 Estoppel Certificates.
(A) Within ten (10) Business Days following a request by Lender,
Borrower shall provide to Lender a duly acknowledged written statement
confirming (i) the amount of the outstanding principal balance of the Loan, (ii)
the terms of payment and maturity date of the Note, (iii) the date to which
interest has been paid, (iv) to the knowledge of Borrower, whether any offsets
or defenses exist against the Obligations, and if any such offsets or defenses
are alleged to exist, the nature thereof shall be set forth in detail and (v)
that this Loan Agreement, the Note, the Mortgage and the other Loan Documents
are valid, legal and binding obligations of Borrower and have not been modified
or amended, or, if modified or amended, giving the particulars of any such
modification or amendment.
(B) Within ten (10) Business Days following a written request by
Borrower, Lender shall provide to Borrower for informational purposes only, a
duly acknowledged written statement setting forth the amount of the outstanding
principal balance of the Loan, the date to which interest has been paid, and
whether Lender has provided Borrower with written notice of any Event of Default
which remains uncured. Compliance by Lender with the requirements of this
Section shall be for informational purposes only and shall not be deemed to be a
waiver of any rights or remedies of Lender hereunder or under any other Loan
Document.
-45-
Section 5.17 Indebtedness. So long as the Loan is outstanding, no Primary
Borrower Party will directly or indirectly create, incur, assume, guaranty, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness except:
(A) the Obligations;
(B) (i) unsecured trade payables not evidenced by a note and arising
out of purchases of goods or services in the ordinary course of business and
(ii) Indebtedness incurred in the financing of equipment or other personal
property used at the Property in the ordinary course of business, provided that
(a) each such trade payable is payable not later than 60 days after the original
invoice date and is not overdue by more than 30 days and (b) the aggregate
amount of such Indebtedness relating to financing of equipment and personal
property referred to in clause (ii) above outstanding does not, at any time,
exceed two percent (2%) of the annual Gross Revenues from the Property. In no
event shall any Indebtedness other than the Loan be secured, in whole or in
part, by the Property or any portion thereof or interest therein; and
(C) tenant improvement obligations (or allowances therefor) due and
payable by Borrower pursuant to the Leases and amounts due under the Management
Agreement.
Section 5.18 Liens and Related Matters. The obligations of Borrower Parties
under this Section are in addition to and not in limitation of their obligations
under Article XI herein. So long as the Loan is outstanding:
(A) No Liens. No Primary Borrower Party shall directly or indirectly
create, incur, assume or permit to exist any Lien on or with respect to the
Property, any other Collateral or any direct or indirect ownership interest in
Borrower, except Permitted Encumbrances.
(B) No Negative Pledges. No Primary Borrower Party shall enter into or
assume any agreement (other than the Loan Documents) prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
Section 5.19 Contingent Obligations. No Primary Borrower Party shall directly or
indirectly create or become or be liable with respect to any Contingent
Obligation except Contingent Obligations existing on the Closing Date and
described in Schedule 4.4.
Section 5.20 Restriction on Fundamental Changes. Except as otherwise expressly
permitted under this Loan Agreement (or with the prior written consent of
Lender):
(A) No Primary Borrower Party shall, or shall permit any other Person
to, (i) amend, modify or waive any term or provision of such Borrower Party's
partnership agreement, certificate of limited partnership, articles of
incorporation, by-laws, articles of organization, operating agreement, or other
organizational documents relating to any of the representations, warranties or
covenants of Article IX of this Loan Agreement or this Section 5.20 or any other
material term or provision of such Borrower Party's organizational documents,
unless required by law; or (ii) liquidate, wind-up or dissolve such Borrower
Party.
(B) No Primary Borrower Party shall, nor permit or suffer any other
Person on its behalf, to (i) issue, sell, assign, pledge, convey, dispose or
otherwise encumber any stock,
-46-
membership interest, partnership interest, or other equity or beneficial
interest in Borrower or (ii) grant any options, warrants, purchase rights or
other similar agreements or understandings with respect thereto.
(C) No Primary Borrower Party shall acquire by purchase or otherwise
all or any part of the business or assets of, or stock or other evidence of
beneficial ownership of, any Person.
Section 5.21 Transactions with Related Persons. Except for fees payable to
Manager under the Management Agreement, Borrower shall not pay any management,
consulting, director or similar fees to any Related Person of Borrower or to any
director (other than any customary fees of the Outside Director), officer or
employee of Borrower. Borrower shall not directly or indirectly enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Related Person of
Borrower or with any director, officer or employee of any Borrower Party, except
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of Borrower and upon fair and reasonable terms
which are no less favorable to Borrower than would be obtained in a comparable
arm's length transaction with a Person that is not a Related Person of Borrower.
Borrower shall not make any payment or permit any payment to be made to any
Related Person of Borrower when or as to any time when any Event of Default
shall exist.
Section 5.22 ERISA.
(A) No ERISA Plans. None of the Primary Borrower Parties will establish
any Employee Benefit Plan, Pension Plan or Multiemployer Plan, or will commence
making contributions to (or become obligated to make contributions to) any
Employee Benefit Plan, Pension Plan or Multiemployer Plan.
(B) Compliance with ERISA. Borrower shall not: (i) engage in any
prohibited transaction under Section 406 of ERISA or Section 4975 of the IRC; or
(ii) permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit Plan
which establishment or amendment could result in liability to Borrower or any
ERISA Affiliate or increase the obligation of Borrower.
(C) No Plan Assets. Borrower shall not at any time during the term of
this Loan Agreement become (1) an employee benefit plan defined in Section 3(3)
of ERISA which is subject to ERISA, (2) a plan as defined in Section 4975(e)(1)
of the IRC which is subject to Section 4975 of the IRC, (3) a "governmental
plan" within the meaning of Section 3(32) of ERISA or (4) an entity any of whose
underlying assets constitute "plan assets" of any such employee benefit plan,
plan or governmental plan for purposes of Title I or ERISA, Section 4975 of the
IRC or any state statutes applicable to the Borrowers regulating investments of
governmental plans.
Section 5.23 Lender's Expenses. Borrower shall pay, on demand by Lender, all
reasonable expenses, charges, costs and fees (including reasonable attorneys'
fees and expenses) in connection with the negotiation, documentation, closing,
administration, servicing, enforcement interpretation, and collection of the
Loan and the Loan Documents, and in the preservation and protection of Lender's
rights hereunder and thereunder. Without limitation Borrower shall pay
-47-
all costs and expenses, including reasonable attorneys' fees, incurred by Lender
in any case or proceeding under Title 11 of the United States Code (or any law
succeeding or replacing any of the same). At the Closing, Lender is authorized
to pay directly from the proceeds of the Loan any or all of the foregoing
expenses then or theretofore incurred.
Section 5.24 Tenant Estoppels. Upon request by Lender, Borrower shall exercise
commercially reasonable efforts to obtain and deliver, in form and substance
reasonably satisfactory to Lender, estoppel certificates and/or subordination
agreements from tenants from which satisfactory estoppel certificates and/or
subordination agreements were not obtained prior to Closing. The failure of
Borrower to obtain any such additional estoppel certificates or subordination
agreements after exercising such commercially reasonable efforts shall not be a
default hereunder.
ARTICLE VI
RESERVES
Section 6.1 Security Interest in Reserves; Other Matters Pertaining to Reserves.
(A) Borrower hereby pledges, assigns and grants to Lender a security
interest in and to all of Borrower's right, title and interest in and to the
Reserves, as security for payment and performance of all of the Obligations
hereunder and under the Note and the other Loan Documents. The Reserves
constitute Account Collateral and are subject to the security interest in favor
of Lender created herein and all provisions of this Loan Agreement and the other
Loan Documents pertaining to Account Collateral.
(B) In addition to the rights and remedies provided in Article VII and
elsewhere herein, upon the occurrence of any Event of Default, Lender shall have
all rights and remedies pertaining to the Reserves as are provided for in any of
the Loan Documents or under any applicable law. Without limiting the foregoing,
upon and at all times after the occurrence and during the continuance of any
Event of Default, Lender in its sole and absolute discretion, may use the
Reserves (or any portion thereof) for any purpose, including but not limited to
any combination of the following: (i) payment of any of the Obligations
including the Prepayment Consideration applicable upon such payment in such
order as Lender may determine in its sole discretion; provided, however, that
such application of funds shall not cure or be deemed to cure any default; (ii)
reimbursement of Lender for any losses or expenses (including, without
limitation, reasonable legal fees) suffered or incurred as a result of such
default; (iii) payment for the work or obligation for which such Reserves were
reserved or were required to be reserved; and (iv) application of the Reserves
in connection with the exercise of any and all rights and remedies available to
Lender at law or in equity or under this Loan Agreement or pursuant to any of
the other Loan Documents.
Section 6.2 Funds Deposited with Lender.
(A) Interest, Offsets. Except only as expressly provided otherwise
herein, all funds of Borrower which are deposited with Lender as Reserves
hereunder shall be held by Lender in one or more Permitted Investments. Lender
is authorized to commingle any of the Reserves with each other and with any
other funds held by Lender. All interest which accrues on the Reserves
-48-
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. Additional provisions pertaining to investments are set forth in
Article VII.
(B) Funding at Closing. Borrower shall deposit with Lender the amounts
necessary to fund each of the Reserves as set forth below. Deposits into the
Reserves at Closing may occur by deduction from the amount of the Loan that
otherwise would be disbursed to Borrower, followed by prompt deposit of the same
into the applicable Sub-Account of the Central Account in accordance with the
Cash Management Agreement. Notwithstanding such deductions, the Loan shall be
deemed for all purposes to be fully disbursed at Closing.
Section 6.3 Impositions and Insurance Reserve. On the Closing Date, Borrower
shall deposit with Lender (or such agent of Lender as Lender may designate in
writing to Borrower from time to time) $2,136,702.54 and, pursuant to the Cash
Management Agreement, Borrower shall deposit monthly, on the first day of each
calendar month commencing with February 1, 2001, 1/12th of the annual charges
(as reasonably estimated by Lender) for all Impositions and, to the extent such
amounts are required to the escrowed hereunder as provided below, Insurance
Premiums payable with respect to the Property hereunder (said funds, together
with any interest thereon and additions thereto, the "Impositions and Insurance
Reserve"). The initial amount of the monthly deposit to be made to the
Impositions and Insurance Reserve from and after the date hereof shall be
$167,391.44. Borrower shall also deposit with Lender on demand, to be added to
and included within such reserve, a sum of money which Lender reasonably
estimates, together with such monthly deposits, will be sufficient to make the
payment of each such charge at least thirty (30) days prior to the date
initially due. Borrower shall provide Lender with bills and all other documents
necessary for the payment of the foregoing charges at least thirty (30) days
prior to the date on which each payment shall first become due. So long as (i)
no Event of Default has occurred and is continuing, (ii) Borrower has provided
Lender with the foregoing bills and other documents in a timely manner, and
(iii) sufficient funds are held by Lender for the payment of the Impositions and
Insurance Premiums (if applicable) relating to the Property, Lender shall pay
said items or disburse to Borrower from such Reserve an amount sufficient to pay
said items. Notwithstanding the foregoing or anything to the contrary contained
herein or in the other Loan Documents, Borrower shall not be required to deposit
Insurance Premiums in the Impositions and Insurance Reserve unless and until
Borrower fails to maintain any of the insurance coverage required under Section
5.4 hereof or any other Event of Default shall occur hereunder; whereupon
Borrower shall immediately be required to commence and continue to escrow
Insurance Premiums in accordance with this Section 6.3 for the remainder of the
term of the Loan.
Section 6.4 Replacement Reserve. At Closing, Borrower shall deposit with Lender
(or its agent) $-0- and, pursuant to the Cash Management Agreement, Borrower
shall deposit with Lender (or such agent) monthly, on the first day of each
calendar month commencing with February 1, 2001, $17,738, for the purpose of
creating a reserve for Capital Expenditures in accordance with the Capital
Expenditure Budget then in effect (said funds, together with any interest
thereon and additions thereto, the "Replacement Reserve"). The funds contained
in the Replacement Reserve shall be utilized by Borrower solely for Capital
Expenditures performed during the term of the Loan in accordance with Capital
Expenditure Budget (as amended from time to time and which shall have been
approved annually in advance by Lender commencing
-49-
with the Capital Expenditure Budget for the calendar year 2011), and shall not
be used by Borrower for purposes for which any other Reserve is established.
Within ten (10) days after written request from Borrower, Lender shall direct
the Central Account Bank to disburse funds from the Replacement Reserve to pay
for costs that have been incurred by Borrower for such Capital Expenditures,
provided that (i) no Event of Default has occurred and is continuing, (ii)
Borrower shall provide to Lender such documentation and certifications as Lender
may reasonably request to substantiate the requirement for and entitlement to
such disbursement, (iii) Borrower shall provide Lender with all invoices,
receipts, lien waivers and other documentation of lawful and workmanlike
progress or completion, lien-free status, and availability of sufficient funds,
all as may be reasonably requested by Lender and Lender may require, at
Borrower's expense, an inspection of the Property and/or a certificate of
completion by a licensed independent architect approved by Lender.
Section 6.5 Hazardous Materials Remediation Reserve. At Closing, Borrower shall
reserve from the proceeds of the Loan and shall deposit with Lender (or such
agent of Lender as Lender may designate in writing from time to time), an amount
equal to $2,500 (said funds, together with any interest thereon and additions
thereto, the "Hazardous Materials Remediation Reserve") for certain work related
to Hazardous Materials on the Property as indicated in the Environmental Report
for the Property prepared and delivered prior to the Closing and as such work is
more particularly described on Schedule 6.5 (the "Environmental Work"). Within
six (6) months after the Closing, Borrower shall complete such Environmental
Work and shall provide to Lender such closure reports, no-further-action
letters, and other evidence of compliance with law as Lender may reasonably
require. The funds contained in the Hazardous Materials Remediation Reserve
shall be utilized by Borrower solely for performance of the Environmental Work
in accordance with the Environmental Reports, and shall not be used by Borrower
for purposes for which any other Reserve is established. Upon written
application of Borrower, Borrower shall be entitled to draw upon the Hazardous
Materials Remediation Reserve to pay for costs that have been incurred by
Borrower for such Environmental Work, provided that (i) no Event of Default has
occurred and is continuing, (ii) Borrower shall provide to Lender such
documentation and certifications as Lender may reasonably request to
substantiate the requirement for and entitlement to such disbursement, (iii)
Borrower shall provide Lender with all invoices, receipts, lien waivers and
other documentation of lawful and workmanlike progress or completion, lien-free
status, and availability of sufficient funds, all as may be reasonably requested
by Lender, and (iv) Borrower shall provide Lender such evidence as may be
reasonably satisfactory to Lender that, after payment of such draw, the funds
remaining in such Reserve shall be sufficient to pay for the remainder of such
Environmental Work. Subject to the foregoing conditions, Borrower shall be
entitled to draw any remaining balance in the Hazardous Materials Remediation
Reserve when all such Environmental Work is complete to Lender's reasonable
satisfaction and is paid for.
ARTICLE VII
CENTRAL ACCOUNT/CASH MANAGEMENT
Section 7.1 Establishment of Central Account.
(A) Central Account. On or before the Closing Date, pursuant to the
terms of the Cash Management Agreement, Borrower shall establish and maintain an
Eligible Account in the
-50-
name of the Lender, as secured party hereunder, to serve as the "Central
Account" (said account, and any account replacing the same in accordance with
this Loan Agreement and the Cash Management Agreement, the "Central Account";
and the depositary institution in which the Central Account is maintained, the
"Central Account Bank"). The Central Account shall be under the sole dominion
and control of Lender (which dominion and control may be exercised by Servicer);
and except as expressly provided hereunder and/or in the Cash Management
Agreement, Borrower shall have no rights to control or direct the investment or
payment of funds therein. Lender may elect to change any financial institution
in which the Central Account shall be maintained. The Central Account shall be
deemed to contain such sub-accounts as Lender may designate ("Sub-Accounts"),
which may be maintained as separate ledger accounts and need not be separate
Eligible Accounts. The Sub-Accounts shall include the following as more
particularly described in the Cash Management Agreement:
(i) "Debt Service Sub-Account" shall mean the Sub-Account of the
Central Account established for the purposes of reserving for payments of
principal and interest and other amounts due under the Loan Documents (but
without duplication of amounts covered under item (ii) below); and
(ii) "Reserve Sub-Accounts" shall mean the Sub-Accounts of the
Central Account established for the purpose of holding funds in the Reserves
including: (a) the "Imposition and Insurance Reserve Sub-Account"; and (b) the
"Replacement Reserve Sub-Account".
Section 7.2 Flow of Funds.
(A) Deposit of Receipts into the Central Account. Pursuant to the Cash
Management Agreement, Borrower shall direct (i) all tenants under the Leases to
pay all Rents thereunder directly into the Central Account and (ii) any and all
other Receipts (including Rents that are not paid into the Central Account in
accordance with the foregoing) to be deposited promptly into the Central Account
and in no event later than two (2) Business Days after the same are paid to or
for the benefit of Borrower. To the extent that Borrower or any Person on
Borrower's behalf holds any Receipts, whether in accordance with this Loan
Agreement or otherwise, Borrower shall be deemed to hold the same in trust for
Lender for the protection of the interests of Lender hereunder and under the
Loan Documents.
(B) Application of Funds in Central Account. Funds in the Central
Account shall be allocated to the Sub-Accounts (or paid, as the case may be) in
accordance with the Cash Management Agreement.
Section 7.3 Application of Funds After Event of Default. If any Event of Default
shall occur and be continuing, then notwithstanding anything to the contrary in
this Section or elsewhere, Lender shall have all rights and remedies available
under applicable law and under the Loan Documents. Without limitation of the
foregoing, for so long as an Event of Default exists, Lender may apply any and
all funds in the Central Account and/or any Sub-Accounts against all or any
portion of any of the Obligations, in any order.
-51-
ARTICLE VIII
DEFAULT, RIGHTS AND REMEDIES
Section 8.1 Event of Default.
"Event of Default" shall mean the occurrence or existence of any one or
more of the following:
(A) Scheduled Payments. Failure of Borrower to pay any scheduled
payment amount when the same is due under this Loan Agreement, the Note, or any
other Loan Documents (whether such amount is interest, principal, Reserves, or
otherwise); or
(B) Other Payments. Failure of Borrower to pay any amount from time to
time owing under this Loan Agreement, the Note, or any other Loan Documents
(other than amounts subject to the preceding paragraph) within ten (10) days
after written notice to Borrower that same is due; or
(C) Breach of Reporting Provisions. Failure of any Borrower Party to
perform or comply with any term or condition contained in Section 5.1 which
continues for a period of thirty (30) days after written notice; or
(D) Breach of Provisions Regarding Insurance, Transfers, Liens, Single
Purpose. (i) Failure to keep in force the insurance required by Section 5.4
hereof or (ii) the failure to comply with any other covenant of Section 5.4
which failure under this clause (ii) continues for five (5) Business Days after
notice from Lender. The demolition or removal of, or except as permitted under
Section 5.5(A), the making of any Material Alteration to any of the Improvements
without Lender's consent. Breach or default under any of Sections 5.13(B), 5.17,
5.18, 5.19 or 5.20, Article IX or Section 11.1 hereof or Section 9 of the
Mortgage; or
(E) Breach of Warranty. Any representation, warranty, certification or
other statement made by any Borrower Party or Affiliate thereof in any Loan
Document or in any statement or certificate at any time given in writing
pursuant to or in connection with any Loan Document is false in any material
respect as of the date made and if such breach is capable of cure (it being
acknowledged that any material breach of the representations and warranties
under Sections 4.3, 4.4, 4.7, 4.9 or 4.18 shall not be deemed capable of cure),
such breach is not cured within the applicable cure period provided under
Section 8.1(F); or
(F) Other Defaults Under Loan Documents. A default shall occur in the
performance of or compliance with any term contained in this Loan Agreement or
the other Loan Documents and such default is not fully cured within thirty (30)
days after receipt by Borrower of notice from Lender of such default (other than
occurrences described in other provisions of this Section 8.1 for which a
different grace or cure period is specified or which constitute immediate Events
of Default); provided however that if (i) the default is capable of cure but
with diligence cannot be cured within such period of thirty (30) days, (ii)
Borrower (or the applicable Borrower Party) has commenced the cure within such
thirty (30) day period and at all times after such commencement has pursued such
cure diligently, and (iii) Borrower delivers to Lender promptly following demand
(which demand may be made from time to time by Lender) evidence satisfactory to
Lender of the foregoing, then such period shall be extended for so long as is
-52-
reasonably necessary for Borrower in the exercise of due diligence to cure such
default, but in no event beyond the 90th day after the original notice of
default; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court
enters a decree or order for relief with respect to any Borrower Party, in an
Involuntary Borrower Party Bankruptcy, which decree or order is not stayed or
other similar relief is not granted under any applicable federal or state law;
(ii) the occurrence and continuance of any of the following events for sixty
(60) days unless dismissed or discharged within such time: (x) an Involuntary
Borrower Party Bankruptcy is commenced, (y) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over any Borrower Party or over all or a
substantial part of its property, is entered, or (z) an interim receiver,
trustee or other custodian is appointed without the consent of any Borrower
Party, for all or a substantial part of the property of such Person; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) An order
for relief is entered with respect to any Borrower Party, or any such Person
commences a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case or to the
conversion of an involuntary case to a voluntary case under any such law or
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for any Borrower Party or for all or a substantial part of the
property of any Borrower Party; (ii) any Borrower Party makes any assignment for
the benefit of creditors; or (iii) the Board of Directors or other governing
body of any Borrower Party adopts any resolution or otherwise authorizes action
to approve any of the actions referred to in this subsection 8.1(H); or
(I) Bankruptcy Involving Ownership Interests or Property. Other than as
described in either of Subsections 8.1(G) or 8.1(H), all or any portion of the
Collateral becomes property of the estate or subject to the automatic stay in
any case or proceeding under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect (provided that if the
same occurs in the context of an involuntary proceeding, it shall not constitute
an Event of Default if it is dismissed or discharged within sixty (60) days
following its occurrence); or
(J) Solvency. Any Borrower Party ceases to be solvent or admits in
writing its inability to pay its debts as they become due; or
(K) Judgment and Attachments. Any lien, money judgment, writ or warrant
of attachment, or similar process is entered or filed against any Borrower Party
or any of its assets, which claim is not fully covered by insurance (other than
with respect to the amount of commercially reasonable deductibles permitted
hereunder), could reasonably be expected to have a Material Adverse Effect and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days; or
(L) Injunction. Any Borrower Party is enjoined, restrained or in any
way prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of its business which injunction
could reasonably be expected to have a Material Adverse Effect and such order
continues for more than sixty (60) days; or
-53-
(M) Invalidity of Loan Documents. This Loan Agreement, the Mortgage or
any Loan Document for any reason ceases to be in full force and effect or ceases
to be a legally valid, binding and enforceable obligation of Borrower or any
Lien securing the Obligations shall, in whole or in part, cease to be a
perfected first priority Lien, subject to the Permitted Encumbrances (except in
any of the foregoing cases in accordance with the terms hereof or under any
other Loan Document); or
(N) Cross-Default with Other Loan Documents. A default beyond any
applicable grace periods shall occur under any of the other Loan Documents;
(O) Default under Management Agreement. Any event of default on the
part of Borrower shall occur and be continuing under the Management Agreement;
or
(P) Ground Lease Default. Any default by Borrower beyond any applicable
grace period shall occur under the Ground Lease or any actual, attempted or
purported surrender, termination, modification or amendment of the Ground Lease
without Lender's consent.
If more than one of the foregoing paragraphs shall describe the same condition
or event, then Lender shall have the right to select which paragraph or
paragraphs shall apply. In any such case, Lender shall have the right (but not
the obligation) to designate the paragraph or paragraphs which provide for
non-written notice (or for no notice) or for a shorter time to cure (or for no
time to cure).
Section 8.2 Acceleration and Remedies.
(A) Upon the occurrence of any Event of Default described in any of
Subsections 8.1(G), 8.1(H), or 8.1(I), the unpaid principal amount of and
accrued interest and fees on the Loan and all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
requirements of any kind, all of which are hereby expressly waived by each
Borrower Party. Upon and at any time after the occurrence of any other Event of
Default, at the option of Lender, which may be exercised without notice or
demand to anyone, all or any portion of the Loan and other Obligations shall
immediately become due and payable.
(B) Upon the occurrence of an Event of Default, all or any one or more
of the rights, powers, privileges and other remedies available to Lender against
Borrower under this Loan Agreement or any of the other 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 Obligations shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to the Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, if an Event of
Default is continuing (i) to the fullest extent permitted by law, Lender shall
not be subject to any "one
-54-
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 and
the Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Obligations or the Obligations have been paid in full.
(C) Lender shall have the right from time to time to partially
foreclose the Mortgage in any manner and for any amounts secured by the Mortgage
then due and payable as determined by Lender in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Lender may foreclose the Mortgage
to recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose the Mortgage to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by the Mortgage as
Lender may elect. Notwithstanding one or more partial foreclosures, the Property
shall remain subject to the Mortgage to secure payment of sums secured by the
Mortgage and not previously recovered.
(D) 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 as Lender shall determine in its sole
discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. 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 the aforesaid severance
upon the occurrence and during the continuance of an Event of Default, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, Lender shall not make or execute any such documents under such power
until three (3) days after notice has been given to Borrower by Lender of
Lender's intent to exercise its rights under such power.
(E) Any amounts recovered from the Property or any other collateral for
the Loan after an Event of Default may be applied by Lender toward the payment
of any interest and/or principal of the Loan and/or any other amounts due under
the Loan Documents in such order, priority and proportions as Lender in its sole
discretion shall determine.
(F) The rights, powers and remedies of Lender under this Agreement
shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Loan Agreement or the other
Loan Documents, or existing at law or in equity or otherwise. Lender's rights,
powers and remedies may be pursued singly, concurrently or otherwise, at such
time and in such order as Lender may determine in Lender's sole discretion. No
delay or omission to exercise any remedy, right or power accruing upon an Event
of Default shall impair any such remedy, right or power or shall be construed as
a waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to
-55-
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
Section 8.3 Performance by Lender.
(A) If any Borrower Party shall fail to perform, or cause to be
performed, any covenant, duty or agreement contained in any of the Loan
Documents beyond any applicable notice and cure period, Lender may (but shall
have no obligation to) perform or attempt to perform such covenant, duty or
agreement on behalf of such Borrower Party. In such event, Borrower shall, at
the request of Lender, promptly pay to Lender any amount reasonably expended by
Lender in such performance or attempted performance, together with interest
thereon at the Default Rate, from the date of such expenditure until paid. Any
amounts advanced or expended by Lender to perform or attempt to perform any such
matter shall be added to and included within the indebtedness evidenced by the
applicable Note and shall be secured by all of the Collateral securing the
applicable Loan. Notwithstanding the foregoing, it is expressly agreed that
Lender shall not have any liability or responsibility for the performance of any
obligation of Borrower under this Loan Agreement or any other Loan Document.
(B) Lender may cease or suspend any and all performance required of
Lender under the Loan Documents upon and during the continuance of any Event of
Default.
ARTICLE IX
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS
Section 9.1 Applicable to Primary Borrower Parties. Each Primary Borrower Party
hereby jointly and severally represents, warrants and covenants as of the
Closing Date and until such time as all Obligations are paid in full, that
absent express advance written waiver from Lender, which may be withheld in
Lender's sole discretion, such Primary Borrower Party.
(A) does not own and will not own any assets other than the Property
(including incidental personal property necessary for the operation thereof and
proceeds therefrom) or direct or indirect ownership interests in Borrower (the
"Ownership Interests");
(B) is not engaged and will not engage in any business, directly or
indirectly, other than the ownership, management and operation of the Property
or the Ownership Interests;
(C) will not enter into any contract or agreement with any partner,
member, shareholder, trustee, beneficiary, principal or Affiliate of any
Borrower Party except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis
with third parties other than such Affiliate;
(D) has not incurred and will not incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than (i) the
Obligations, (ii) subject to the terms and conditions of Section 5.17, unsecured
trade payables incurred in the ordinary course of business of operating the
Property and Indebtedness relating to financing of equipment and personal
property in the ordinary course of business and (iii) any other Indebtedness
expressly permitted hereunder or under the other Loan Documents;
-56-
(E) has not made and will not make any loan or advances to any Person
(including any of its Affiliates);
(F) is and reasonably expects to remain solvent and pay its own
liabilities, indebtedness, and obligations of any kind from its own separate
assets as the same shall become due;
(G) has done or caused to be done and will do all things necessary to
preserve its existence;
(H) shall continuously maintain its existence and be qualified to do
business in all states necessary to carry on its business including the state
where the Property is located;
(I) will conduct and operate its business as presently conducted and
operated;
(J) will maintain books and records and bank accounts separate from
those of its partners, members, shareholders, trustees, beneficiaries,
principals, Affiliates, and any other Person;
(K) will be, and at all times will hold itself out to the public as, a
legal entity separate and distinct from any other Person (including any of its
partners, members, shareholders, trustees, beneficiaries, principals and
Affiliates, and any Affiliates of any of the same), and not as a department or
division of any Person;
(L) will file such tax returns with respect to itself as may be
required under applicable law;
(M) has and reasonably expects to maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(N) will not enter into any transaction of merger or consolidation, or
acquire by purchase or otherwise all or substantially all of the business or
assets of, or any stock or beneficial ownership of, any Person;
(O) will not commingle or permit to be commingled its funds or other
assets with those of any other Person;
(P) has and will maintain its assets in such a manner that it is not
costly or difficult to segregate, ascertain or identify its individual assets
from those of any other Person;
(Q) does not and will not hold itself out to be responsible for the
debts or obligations of any other Person;
(R) has not and will not guarantee or otherwise become liable on or in
connection with any obligation of any other Person;
-57-
(S) except for funds deposited into the Accounts in accordance with the
Loan Documents, shall not hold title to its assets other than in its name;
(T) shall comply with all of the assumptions, statements,
certifications, representations, warranties and covenants regarding or made by
it contained in or appended to the nonconsolidation opinion delivered pursuant
hereto.
Section 9.2 Applicable to Member and Borrower. In addition to their respective
obligations under Section 9.1, each of Borrower and Member hereby represents,
warrants and covenants as of the Closing Date and until such time as all
Obligations are paid in full, that absent express advance written waiver from
Lender, which may be withheld in Lender's sole discretion:
(A) Member shall at all times act as the sole shareholder of Borrower,
with all of the rights, powers, obligations and liabilities thereof under the
trust agreement of Borrower and shall take any and all actions and do any and
all things necessary or appropriate to the accomplishment of the same and will
engage in no other business.
(B) Neither Member nor Borrower shall, without the affirmative vote of
the Outside Director, institute proceedings to be adjudicated bankrupt or
insolvent; consent to the institution of a bankruptcy or insolvency proceedings
against it or Borrower; file a petition seeking, or consent to, reorganization
or relief under any applicable federal or state law relating to bankruptcy;
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) for itself or Borrower or a substantial
part of its or Borrower's property; make any assignment for the benefit of
creditors; or admit in writing its inability to pay its debts generally as they
become due.
(C) Neither Member nor Borrower shall, without the affirmative vote of
the Outside Director, for itself or for Borrower (i) liquidate or dissolve, in
whole or in part; (ii) consolidate, merge or enter into any form of
consolidation with or into any other Person, nor convey, transfer or lease its
or Borrower's assets substantially as an entirety to any Person nor permit any
Person to consolidate, merge or enter into any form of consolidation with or
into itself or Borrower, nor convey, transfer or lease its or Borrower's assets
substantially as an entirety to any Person; and (iii) amend any provisions of
its or Borrower's organizational documents containing provisions similar to
those contained in this Article IX.
(D) Each of Borrower and Member shall promptly elect and at all times
maintain at least one independent director (an "Outside Director"), who shall be
selected by Member or the sole member of Member, respectively, and shall be
reasonably satisfactory to Lender and shall not have been at the time of such
individual's appointment as Outside Director, and may not have been at any time
during the preceding five years (except solely by virtue of such person's
serving as an independent director or independent manager of any Affiliate of
Borrower or Manager (other than HRPT or any Person directly or indirectly
controlling any Borrower Party)), (i) a shareholder, member or partner of, or an
officer, director, paid consultant or employee of, Borrower or any of its
shareholders, members,
-58-
partners, subsidiaries or Affiliates, (ii) a customer, supplier or creditor of,
or any Person that has provided any service in any form whatsoever to Borrower
or any Affiliate of Borrower or any of their respective shareholders, members,
partners, subsidiaries or Affiliates, (iii) a Person controlling or under common
control with any such shareholder, director, partner, member, supplier or
customer, or (iv) a member of the immediate family of any such shareholder,
member, officer, director, partner, employee, supplier or customer. As used
herein, the term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies of a Person,
whether through ownership of voting securities or beneficial ownership
interests, by contract or otherwise.
ARTICLE X
RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS
Section 10.1 Secondary Market Transactions Generally. Lender shall have the
right to engage in one or more Secondary Market Transactions with respect to the
Loan, and to structure and restructure all or any part of the Loan, including
without limitation in multiple tranches, as a wraparound loan, or for inclusion
in a REMIC or other Securitization. Without limitation, Lender shall have the
right to cause the Note and the Mortgage to be split into a first and a second
mortgage loan, or into a one or more loans secured by mortgages and by ownership
interests in Borrower in whatever proportion Lender determines, and thereafter
to engage in Secondary Market Transactions with respect to all or any part of
the indebtedness and loan documentation. Each Borrower Party acknowledges that
it is the intention of the parties that all or a portion of the Loan will be
securitized and that all or a portion of the Loan will be rated by one or more
Rating Agencies. Each Borrower Party further acknowledges that additional
structural modifications may be required to satisfy issues raised by any Rating
Agencies. As used herein, "Secondary Market Transaction" means any of (i) the
sale, assignment, or other transfer of all or any portion of the Obligations or
the Loan Documents or any interest therein to one or more investors, (ii) the
sale, assignment, or other transfer of one or more participation interests in
the Obligations or Loan Documents to one or more investors, or (iii) the
transfer or deposit of all or any portion of the Obligations or Loan Documents
to or with one or more trusts or other entities which may sell certificates or
other instruments to investors evidencing an ownership interest in the assets of
such trust or the right to receive income or proceeds therefrom including,
without limitation, in connection with a Securitization.
Section 10.2 Cooperation; Limitations. Borrower Parties shall use all reasonable
efforts and cooperate reasonably and in good faith with Lender in effecting any
such restructuring or Secondary Market Transaction. Such cooperation shall
include without limitation, executing and delivering such reasonable amendments
to the Loan Documents and the organizational documents of Primary Borrower
Parties as Lender may reasonably request, provided however that no such
amendment shall modify (i) the interest rate payable under the Note; (ii) the
stated maturity date of the Note, (iii) the amortization of the principal amount
of the Note, (iv) any other material economic terms of the Obligations, (v) the
non-recourse provisions of the Loan or (vi) any provision, the effect of which
would materially increase Borrower's obligations or materially decrease
Borrower's rights under the Loan Documents. Such cooperation also shall include
using reasonable efforts to obtain such certificates and assurances from
governmental entities and others as Lender may reasonably request. Borrower
Parties shall not be required to provide additional collateral that was not
initially contemplated by the parties to effect any such restructuring or
Secondary Market Transaction after the Closing Date. Borrower Parties shall not
be required to pay any third party costs and expenses incurred by Lender in
connection with any
-59-
such Secondary Market Transaction unless otherwise payable by the Borrower
Parties under this Loan Agreement or the other Loan Documents.
Section 10.3 Information. At no cost or expense to the Borrower Parties,
Borrower Parties shall provide such access to personnel and such information and
documents relating to Borrower Parties, Manager, the Property and Collateral and
the business and operations of all of the foregoing and such opinions of counsel
(including, without limitation, nonconsolidation opinions) as Lender may
reasonably request or as any Rating Agency may request in connection with any
such Secondary Market Transaction including, without limitation, updated
financial information, appraisals, market studies, environmental reviews (Phase
I's and, if appropriate, Phase II's), property condition reports and other due
diligence investigations together with appropriate verification of such updated
information and reports through letters of auditors and consultants and, as of
the closing date of the Secondary Market Transaction, updated representations
and warranties made in the Loan Documents and such additional representations
and warranties as Lender or the Rating Agencies may reasonably require. Lender
shall be permitted to share all such information with the investment banking
firms, Rating Agencies, accounting firms, law firms, other third party advisory
firms, potential investors, servicers and other service providers and other
parties involved in any proposed Secondary Market Transaction. Borrower
understands that any such information may be incorporated into any offering
circular, prospectus, prospectus supplement, private placement memorandum or
other offering documents for any Secondary Market Transaction. Lender and all of
the aforesaid third-party advisors and professional firms and investors shall be
entitled to rely upon such information. Without limiting the foregoing, Borrower
and Guarantor shall provide in connection with each of (i) a preliminary and a
final private placement memorandum or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable (the documents referred to in the foregoing
clauses (i) and (ii), collectively, the "Disclosure Documents"), an agreement
certifying that Borrower and Guarantor have examined such Disclosure Documents
specified by Lender and that each such Disclosure Document, as it relates to
Borrower, Guarantor, any Affiliates, the Property, Manager and all other aspects
of the Loan, does not, and as to information provided in third party reports of
engineers and environmental consultants, to Borrower's and Guarantor's
knowledge, does not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading. Borrower
and Guarantor shall indemnify, defend, protect and hold harmless Lender, Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), their respective
Affiliates, directors, employees, agents and each Person, if any, who controls
Lender, Merrill Lynch or any such Affiliate within the meaning of Section 15 of
the Securities Act of 1993 or Section 20 of the Securities Exchange Act of 1934,
and any other placement agent or underwriter with respect to any Securitization
or Secondary Market Transaction from and against any losses, claims, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) that arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any information or documents furnished by Borrower, Guarantor or their
Affiliates or representative or in any representation or warranty of any
Borrower Party contained herein or in the other Loan Documents or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated in such information or necessary in order to make the
statements in such information not materially misleading. Lender may publicize
the
-60-
existence of the Obligations in connection with Lender's Secondary Market
Transaction activities or otherwise.
Section 10.4 Additional Provisions. In any Secondary Market Transaction, Lender
may transfer its obligations under this Loan Agreement and under the other Loan
Documents (or may transfer the portion thereof corresponding to the transferred
portion of the Obligations), and thereafter Lender shall be relieved of any
obligations hereunder and under the other Loan Documents arising after the date
of said transfer with respect to the transferred interest. Each transferee
investor shall become a "Lender" hereunder.
ARTICLE XI
RESTRICTIONS ON LIENS, TRANSFERS; ASSUMABILITY
Section 11.1 Restrictions on Transfer and Encumbrance. Except as expressly
permitted in this Article XI or as otherwise expressly permitted under this Loan
Agreement or in the other Loan Documents, Borrower shall not cause or suffer to
occur or exist, directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, any sale, transfer, mortgage, pledge, Lien or
encumbrance (other than Permitted Encumbrances) of (i) all or any part of the
Property or any interest therein, or (ii) any direct or indirect ownership or
beneficial interest in Borrower, irrespective of the number of tiers of
ownership, without the prior written consent of Lender.
Section 11.2 Transfers of Beneficial Interests in Borrower. For purposes of this
Section, a sale or transfer of a beneficial interest in Borrower shall be deemed
to include, but is not limited to:
(A) if Borrower or any general partner or managing member of Borrower
is a corporation, (i) the voluntary or involuntary sale, conveyance, transfer or
pledge of a majority of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such corporation by operation of
law or otherwise) or (ii) the creation or issuance of new stock, in any of the
foregoing cases, by which an aggregate of more than 49% of such corporation's
stock shall be vested in a party or parties who are not now stockholders;
(B) if Borrower or any general partner or managing member of Borrower
is a limited liability company, (i) the change, removal or resignation of a
managing member of Borrower or such general partner or member or (ii) the sale,
conveyance, transfer or pledge of all or any portion of the membership interests
of a managing member (or for a single member limited liability company, the sole
member) of Borrower or such general partner or managing member or any profits or
proceeds relating to such membership interest; provided, however, that if
Borrower or any general partner or managing member of Borrower is a single
member limited liability company, the sale, conveyance, transfer or pledge in
the aggregate of not more than 49% of the sole member's interest in Borrower or
such general partner or managing member shall not constitute a sale or transfer
prohibited by this Section 11 provided that such sale, conveyance, transfer or
pledge does not in the aggregate result in a change of control of Borrower or
such general partner or managing member;
-61-
(C) if Borrower, or any general partner or managing member of Borrower,
is a limited or general partnership, (i) the change, removal or resignation of a
managing general partner or managing partner or (ii) the sale, conveyance,
transfer or pledge of all or any portion of the general partner's interest of
any general partner or managing partner or any profits or proceeds relating to
such partnership interest; or
(D) if Borrower or any general partner or managing member of Borrower
is a limited partnership or limited liability company, the sale, conveyance,
transfer or pledge of limited partnership interests or non-managing membership
interests which in the aggregate constitute more than a 49% interest in Borrower
or any managing general partner or managing member of Borrower, or any profits
or proceeds relating to such limited partnership interests or non-managing
membership interests.
Notwithstanding the foregoing, the sale, transfer, issuance, conveyance, pledge
or hypothecation of any shares of stock in HRPT, the recapitalization or
restructuring of any debt and/or shareholders' equity of HRPT or the merger or
consolidation of HRPT with or into another Person shall not be deemed a sale or
transfer of a beneficial interest in Borrower for purposes of this Section. Any
reference in this paragraph to HRPT shall also apply to any successor to HRPT,
whether by operation of law or otherwise.
Section 11.3 Assumability.
(A) In the event Borrower desires to transfer all of 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, and have replacement pledgors
pledge all of the ownership interests in the Transferee Borrower (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. 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 shall not unreasonably withhold its consent to a Transfer
and Assumption provided and upon the conditions that:
(i) No Event of Default shall have occurred and be continuing;
(ii) Borrower shall have submitted to Lender true, correct and
complete copies of any and all information and documents of any kind reasonably
requested by Lender concerning the Property, Transferee Borrower, replacement
guarantors and indemnitors and Borrower;
(iii) Evidence satisfactory to Lender shall have been provided
showing that the Transferee Borrower and such of its Affiliates as shall be
designated by Lender comply and will
-62-
comply with Article IX, as those provisions may be modified by Lender taking
into account the ownership structure of Transferee Borrower and its Affiliates;
(iv) Borrower shall have obtained (and delivered to Lender) a
Rating Confirmation with respect to the Transfer and Assumption and all related
transactions;
(v) 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;
(vi) 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; and
(vii) The identity, experience, and financial condition of the
Transferee Borrower and the replacement guarantors and indemnitors shall be
satisfactory to Lender in its sole discretion.
(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:
(i) Borrower shall deliver to Lender an assumption fee in the
amount of one-half of one percent (.50%) of the then unpaid principal balance of
the Loan;
(ii) Borrower, Transferee Borrower, the original and replacement
guarantors and indemnitors shall execute and deliver any and all documents
reasonably required by Lender, in form and substance reasonably required by
Lender;
(iii) Counsel to the Transferee Borrower and replacement
guarantors and indemnitors shall deliver to Lender opinions in form and
substance satisfactory to Lender as to such matters as Lender and the Rating
Agencies shall reasonably require, which may include opinions as to
substantially the same matters as were required in connection with the
origination of the Loan including, without limitation, a bankruptcy
non-consolidation opinion;
(iv) 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 Lender's policy of
title insurance in form and substance acceptable to Lender, in Lender's
reasonable discretion; and
(v) Borrower shall deliver to Lender a payment in the amount of
all remaining unpaid costs incurred by Lender in connection with the Transfer
and Assumption, including but not limited to, Lender's attorneys fees and
expenses, all recording fees, and all fees payable to the title company in
connection with the Transfer and Assumption.
-63-
ARTICLE XII
RECOURSE; LIMITATIONS ON RECOURSE
Section 12.1 Limitations on Recourse. Subject to the provisions of this Article,
and notwithstanding any provision of the Loan Documents other than this Article,
no personal liability shall be asserted, sought or obtained by Lender or
enforceable against (i) any Borrower Party, (ii) any Affiliate of any Borrower
Party, (iii) any Person owning, directly or indirectly, any legal or beneficial
interest in any Borrower Party or any Affiliate of any Borrower Party or (iv)
any partner, member, principal, officer, controlling person, beneficiary,
trustee, advisor, shareholder, employee, agent, Affiliate or director of any
Persons described in clauses (i) through (iv) above (collectively, the
"Exculpated Parties") by Lender in respect of the Obligations, this Loan
Agreement, the Mortgage, the Note, the Property or any other Loan Document, or
the making, issuance or transfer thereof, all such liability, if any, being
expressly waived by Lender and each successive holder of the Note and the
Mortgage shall accept the Note and the Mortgage upon the express condition that
Lender's sole recourse for the Obligations and the performance and observance of
the obligations contained in this Loan Agreement, the Note, the Mortgage and the
other Loan Documents shall be to exercise any or all of its rights and remedies
with respect to the Property, the Rents and other Collateral including, without
limitation, any or all of the following:
(i) Foreclosure of the lien of the Mortgage in accordance with
the terms and provisions set forth in the Mortgage;
(ii) Action against any other security at any time given to
secure the payment of the Note and under the other Loan Documents;
(iii) Exercise of any other remedy set forth in this Loan
Agreement, the Mortgage or any other Loan Document.
Notwithstanding anything to the contrary in this Loan Agreement, the Mortgage or
any of the Loan Documents, 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 Bankruptcy Code to file a claim for the full amount of the
Obligations secured by the Mortgage or to require that all collateral shall
continue to secure all of the Obligations owing to Lender in accordance with the
Loan Documents.
Section 12.2 Partial Recourse. Notwithstanding Section 12.1, Borrower, Guarantor
and any general partner of Borrower shall be personally liable in the amount of
any liability, loss, damage, cost or expense (including, without limitation,
attorneys' fees and expenses) resulting from any and all of the following: (i)
fraud; (ii) material and intentional misrepresentation by any Borrower Party in
this Loan Agreement or any other Loan Document or otherwise in connection with
obtaining the Loan; (iii) insurance proceeds, condemnation awards, or other sums
or payments attributable to the Property which Borrower has received and which
are not applied in accordance with the provisions of the Loan Documents; (iv)
all rents, profits, issues, products and income of the Property received or
collected by or on behalf of Borrower or any Borrower Party and not deposited
into the Central Account in accordance with Article VII and the Cash Management
Agreement or otherwise received after the occurrence and during the
-64-
continuance of an Event of Default (other than by Lender or Servicer) and not
applied in accordance with the Loan Documents; (v) failure to turn over to
Lender, after the occurrence and during the continuance of an Event of Default,
or misappropriation of any tenant security deposits or rents collected in
advance (other than by Lender or Servicer); (vi) failure by Borrower, any
general partner of Borrower, or any indemnitor or guarantor to comply with the
covenants, obligations, liabilities, warranties and representations contained in
the Environmental Indemnity or otherwise pertaining to environmental matters;
(vii) waste; (viii) all reasonable costs and expenses, including attorneys' fees
and expenses, incurred in collecting any amount due under the Loan Documents;
(ix) all liabilities and expenses under the indemnification provisions of
Section 10.3 and (x) any actual, attempted or purported modification, amendment,
termination or surrender of the Ground Lease (except pursuant to a rejection of
the Ground Lease in any proceeding under the Bankruptcy Code in which Borrower
or the ground lessor is a debtor) without the prior written consent of Lender.
Section 12.3 Miscellaneous. No provision of this Article shall (i) affect the
enforcement of the Environmental Indemnity, the Guaranty or any guaranty or
similar agreement executed in connection with the Loan, (ii) release or reduce
the debt evidenced by the Note, (iii) impair the lien of the Mortgage or any
other security document, (iv) impair the rights of Lender to enforce any
provisions of the Loan Documents, or (v) limit Lender's ability to obtain a
deficiency judgment or judgment on the Note or otherwise against any Borrower
Party to the extent necessary to obtain any amount for which such Borrower Party
may be personally liable in accordance with this Article or any other Loan
Document.
ARTICLE XIII
WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES
To the extent that any Borrower Party (in this Article, a
"Waiving Party") is deemed for any reason to be a guarantor or surety of or for
any other Borrower Party or to have rights or obligations in the nature of the
rights or obligations of a guarantor or surety (whether by reason of execution
of a guaranty, provision of security for the obligations of another, or
otherwise) then this Article shall apply. This Article shall not affect the
rights of the Waiving Party other than to waive or limit rights and defenses
that Waiving Party would have (i) in its capacity as a guarantor or surety or
(ii) in its capacity as one having rights or obligations in the nature of a
guarantor or surety. Waiving Party, in the broadest and most comprehensive
sense, hereby waives any and all claims, rights, or defenses that may be
asserted by a guarantor or surety against a creditor. Without limitation of the
foregoing:
Waiving Party hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of receivership or
bankruptcy of any of the other Borrower Parties, protest or notice with respect
to any of the obligations of any of the other Borrower Parties, setoffs and
counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor and notices of
acceptance, the benefits of all statutes of limitation, and all other demands
whatsoever (and, except to the extent expressly required under any of the Loan
Documents, shall not require that the same be made on any of the other Borrower
Parties as a condition precedent to the obligations of Waiving Party), and
covenants that the Loan Documents will not be discharged, except by complete
payment and performance of the obligations evidenced and secured thereby, except
only as limited by the
-65-
express contractual provisions of the Loan Documents. Waiving Party further
waives all notices that the principal amount, or any portion thereof, and/or any
interest on any instrument or document evidencing all or any part of the
obligations of any of the other Borrower Parties to Lender is due, notices of
any and all proceedings to collect from any of the other Borrower Parties or any
endorser or any other guarantor of all or any part of their obligations, or from
any other person or entity, and, to the extent permitted by law, notices of
exchange, sale, surrender or other handling of any security or collateral given
to Lender to secure payment of all or any part of the obligations of any of the
other Borrower Parties.
Except only to the extent provided otherwise in the express
contractual provisions of the Loan Documents, Waiving Party hereby agrees that
all of its obligations under the Loan Documents shall remain in full force and
effect, without defense, offset or counterclaim of any kind, notwithstanding
that any right of Waiving Party against any of the other Borrower Parties or
defense of Waiving Party against Lender may be impaired, destroyed, or otherwise
affected by reason of any action or inaction on the part of Lender. Waiving
Party waives all rights and defenses arising out of an election of remedies by
the Lender, even though that election of remedies, may have destroyed the
Waiving Party's rights of subrogation and reimbursement against the other
Borrower Parties.
Lender is hereby authorized, without notice or demand, from
time to time, (a) to renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, all or any part of the obligations of
any of the other Borrower Parties; (b) to accept partial payments on all or any
part of the obligations of any of the other Borrower Parties; (c) to take and
hold security or collateral for the payment of all or any part of the
obligations of any of the other Borrower Parties; (d) to exchange, enforce,
waive and release any such security or collateral for such obligations; (e) to
apply such security or collateral and direct the order or manner of sale thereof
as in its discretion it may determine; (f) to settle, release, exchange,
enforce, waive, compromise or collect or otherwise liquidate all or any part of
such obligations and any security or collateral for such obligations. Any of the
foregoing may be done in any manner, and Waiving Party agrees that the same
shall not affect or impair the obligations of Waiving Party under the Loan
Documents.
Waiving Party hereby assumes responsibility for keeping itself
informed of the financial condition of all of the other Borrower Parties and any
and all endorsers and/or other guarantors of all or any part of the obligations
of the other Borrower Parties, and of all other circumstances bearing upon the
risk of nonpayment of such obligations, and Waiving Party hereby agrees that
Lender shall have no duty to advise Waiving Party of information known to it
regarding such condition or any such circumstances.
Waiving Party agrees that neither Lender nor any person or
entity acting for or on behalf of Lender shall be under any obligation to
marshall any assets in favor of Waiving Party or against or in payment of any or
all of the obligations secured hereby. Waiving Party further agrees that, to the
extent that any of the other Borrower Parties or any other guarantor of all or
any part of the obligations of the other Borrower Parties makes a payment or
payments to Lender, or Lender receives any proceeds of collateral for any of the
obligations of the other Borrower Parties, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid or refunded, then,
-66-
to the extent of such payment or repayment, the part of such obligations which
has been paid, reduced or satisfied by such amount shall be reinstated and
continued in full force and effect as of the time immediately preceding such
initial payment, reduction or satisfaction.
Waiving Party (i) shall have no right of subrogation with
respect to the obligations of the other Borrower Parties; (ii) waives any right
to enforce any remedy that Lender now has or may hereafter have against any of
the other Borrower Parties any endorser or any guarantor of all or any part of
such obligations or any other person; and (iii) waives any benefit of, and any
right to participate in, any security or collateral given to Lender to secure
the payment or performance of all or any part of such obligations or any other
liability of the other parties to Lender.
Waiving Party agrees that any and all claims that it may have
against any of the other Borrower Parties, any endorser or any other guarantor
of all or any part of the obligations of the other Borrower Parties, or against
any of their respective properties, shall be subordinate and subject in right of
payment to the prior payment in full of all obligations secured hereby.
Notwithstanding any right of any of the Waiving Party to ask, demand, sue for,
take or receive any payment from the other Borrower Parties, all rights, liens
and security interests of Waiving Party, whether now or hereafter arising and
howsoever existing, in any assets of any of the other Borrower Parties (whether
constituting part of the security or collateral given to Lender to secure
payment of all or any part of the obligations of the other Borrower Parties or
otherwise) shall be and hereby are subordinated to the rights of Lender in those
assets.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Expenses and Attorneys' Fees. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
reasonable fees, costs and expenses incurred by Lender in connection with any
matters contemplated by or arising out of this Loan Agreement, including the
following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand: (A) reasonable fees, costs and expenses
(including reasonable attorneys' fees, and other professionals retained by
Lender) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (B) reasonable fees, costs and expenses (including
reasonable attorneys' fees and other professionals retained by Lender) incurred
in connection with the administration of the Loan Documents and the Loan and any
amendments, modifications and waivers relating thereto; (C) reasonable fees,
costs and expenses (including reasonable attorneys' fees) incurred in connection
with the review, documentation, negotiation, closing and administration of any
subordination or intercreditor agreements; and (D) reasonable fees, costs and
expenses (including attorneys' fees and fees of other professionals retained by
Lender) incurred in any action to enforce or interpret this Loan Agreement or
the other Loan Documents or to collect any payments due from Borrower under this
Loan Agreement, the Note or any other Loan Document or incurred in connection
with any refinancing or restructuring of the credit arrangements provided under
this Loan Agreement, whether in the nature of a "workout" or in connection with
any insolvency or bankruptcy proceedings or otherwise. Any costs and expenses
due and payable to Lender after the Closing Date may be paid to Lender pursuant
to the Cash Management Agreement.
-67-
Section 14.2 Indemnity. In addition to the payment of expenses as required
elsewhere herein, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, defend, protect, pay and hold Lender,
its successors and assigns (including, without limitation, the trustee and/or
the trust under any trust agreement executed in connection with any
Securitization backed in whole or in part by the Loan and any other Person which
may hereafter be the holder of the Note or any interest therein), and the
officers, directors, stockholders, partners, members, employees, agents and
Affiliates of Lender and such successors and assigns (collectively called the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, Tax Liabilities,
broker's or finders fees, reasonable costs, expenses and disbursements of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto) that may be imposed on,
incurred by, or asserted against that Indemnitee, in any manner relating to or
arising out of any of the following (to the extent that insurance proceeds paid
on account of same shall be inadequate) (A) the enforcement of any of the Loan
Documents; (B) any breach by Borrower of any representation, warranty, covenant,
or other agreement contained in any of the Loan Documents; (C) the presence,
release, threatened release, disposal, removal, or cleanup of any Hazardous
Material located on, about, within or affecting the Property or any violation of
any applicable Environmental Law for which Borrower is liable; (D) any claim
brought by any third party arising out of any condition or occurrence at or
pertaining to the Property; (E) any design, construction, operation, repair,
maintenance, use, non-use or condition of the Property or Improvements,
including claims or penalties arising from violation of any applicable laws or
insurance requirements, as well as any claim based on any patent or latent
defect, whether or not discoverable by Lender; (F) any performance of any labor
or services or the furnishing of any materials or other property in respect of
the Property or any part thereof; (G) any contest referred to in Section 5.3(B)
hereof; (H) any obligation or undertaking relating to the performance or
discharge of any of the terms, covenants and conditions of the landlord
contained in the Leases; (I) any action or proceeding relating to the Ground
Lease including, without limitation, any case commenced by or against Ground
Lessor under the Bankruptcy Code or any applicable state or local bankruptcy,
insolvency or similar law; or (J) the use or intended use of the proceeds of any
of the Loan (the foregoing liabilities herein collectively referred to as the
"Indemnified Liabilities"); provided, however, that Borrower shall be relieved
of its obligations to an Indemnitee under this Section 14.2 with respect to
Indemnified Liabilities arising (i) from the gross negligence or willful
misconduct of such Indemnitee as determined by a court of competent jurisdiction
or (ii) from any of the matters described in clauses (C)-(I) above occurring
after the date (the "Transfer Date") of transfer of title to the Property to
such Indemnitee by foreclosure, deed-in-lieu thereof, the exercise of power of
sale or otherwise, except for any Indemnified Liabilities arising under clauses
(C) or (E) above as a result of any Hazardous Material located on, about, within
or affecting the Property or any latent defect affecting the Property which
existed prior to the Transfer Date. Any amounts payable to any Indemnitee by
reason of the application of this Section 14.2 shall be payable on demand and
shall bear interest at the Default Rate from the date such loss or damage is
sustained by any Indemnitee until paid. The obligations and liabilities of
Borrower under this Section 14.2 shall survive the term of the Loan and the
exercise by Lender of any of its rights or remedies under the
-68-
Loan Documents, including the acquisition of the Property by foreclosure or a
conveyance in lieu of foreclosure.
Section 14.3 Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this Loan
Agreement, the Note or any other Loan Document, or consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender and any other party to be charged. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower in any case shall entitle Borrower or other Person to any
other or further notice or demand in similar or other circumstances (except for
any notices as expressly required herein or under the other Loan Documents).
Section 14.4 Retention of Borrower's Documents. Lender may, in accordance with
Lender's customary practices, destroy or otherwise dispose of all documents,
schedules, invoices or other papers, delivered by Borrower to Lender unless
Borrower requests in writing that same be returned. Upon such request and at
such Borrower's expense, Lender shall return such papers when Lender's actual or
anticipated need for same has terminated.
Section 14.5 Notices. Unless otherwise specifically provided herein, any notice
or other communication required or permitted to be given shall be in writing and
addressed to the respective party as set forth below. Notices shall be effective
(i) three (3) days after the date such notice is mailed, (ii) on the next
Business Day if sent by a nationally recognized overnight courier service, (iii)
on the date of delivery by personal delivery and (iv) on the date of
transmission if sent by telefax during business hours on a Business Day
(otherwise on the next Business Day) (with receipt of confirmation).
Notices shall be addressed as follows:
If to Borrower or any Borrower Party:
c/o HRPT Properties Trust
400 Centre Street
Newton, Massachusetts 02458-2076
Attn: Jennifer Clark, Esq.
Facsimile: (617) 928-1305
With copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, New York 10036
Attn: Harvey R. Uris, Esq.
Facsimile: (917) 977-2212
-69-
If to Lender:
c/o Merrill Lynch & Co.
100 Church Street
18th Floor
New York, New York 10080
Attn: Andrea Balkan
Facsimile: (212) 602-7552
With a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attn: Robert L. Boyd, Esq.
Facsimile: (212) 906-2021
Any party may change the address at which it is to receive notices to another
address in the United States at which business is conducted (and not a
post-office box or other similar receptacle), by giving notice of such change of
address in accordance with the foregoing. This provision shall not invalidate or
impose additional requirements for the delivery or effectiveness of any notice
(i) given in accordance with applicable statutes or rules of court, or (ii) by
service of process in accordance with applicable law. If there is any assignment
or transfer of Lender's interest in the Loan, then the new Lenders may give
notice to the parties in accordance with this Section, specifying the addresses
at which the new Lenders shall receive notice, and they shall be entitled to
notice at such address in accordance with this Section.
Section 14.6 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement, the making of the Loan hereunder and the
execution and delivery of the Note. Notwithstanding anything in this Loan
Agreement or implied by law to the contrary, the agreements of Borrower Parties
to indemnify or release Lender or Persons related to Lender, or to pay Lender's
costs, expenses, or taxes shall survive the payment of the Loan and the
termination of this Loan Agreement.
Section 14.7 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of Lender in the exercise of any power, right or privilege
hereunder or under the Note or any other Loan Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this Loan Agreement,
the Note and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
Section 14.8 Marshaling; Payments Set Aside. Lender shall not be under any
obligation to marshal any assets in favor of any Person or against or in payment
of any or all of the Obligations. To the extent that any Person makes a payment
or payments to Lender, or Lender
-70-
enforces its remedies or exercises its rights of set off, and such payment or
payments or the proceeds of such enforcement or set off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the Obligations or part thereof originally intended to
be satisfied, and all Liens, if any, and rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set off had not occurred.
Section 14.9 Severability. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Loan Agreement, the
Note or other Loan Documents shall not affect or impair the validity, legality
or enforceability of the remaining provisions or obligations under this Loan
Agreement, the Note or other Loan Documents or of such provision or obligation
in any other jurisdiction.
Section 14.10 Headings. Section and subsection headings in this Loan Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Loan Agreement for any other purpose or be given any substantive
effect.
Section 14.11 APPLICABLE LAW. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
WERE NEGOTIATED IN THE STATE OF NEW YORK, AND EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN WERE DISBURSED FROM NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED
PURSUANT TO THE MORTGAGE AND THE ASSIGNMENT OF LEASES SHALL BE GOVERNED BY THE
LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED, EXCEPT THAT THE SECURITY
INTERESTS IN ACCOUNT COLLATERAL SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK OR THE STATE WHERE THE SAME IS HELD, AT THE OPTION OF LENDER.
Section 14.12 Successors and Assigns. This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that no Borrower Party may assign its rights or obligations
hereunder or under any of the other Loan Documents except as expressly provided
in Article XI.
Section 14.13 Sophisticated Parties, Reasonable Terms, No Fiduciary
Relationship. Borrower Parties represent, warrant and acknowledge that (i) they
are sophisticated real estate
-71-
investors, familiar with transactions of this kind, and (ii) they have entered
into this Loan Agreement and the other Loan Documents after conducting their own
assessment of the alternatives available to them in the market, and after
lengthy negotiations in which they have been represented by competent legal
counsel of their choice. Borrower Parties also acknowledge and agree that the
rights of Lender under this Loan Agreement and the other Loan Documents are
reasonable and appropriate, taking into consideration all of the facts and
circumstances including without limitation the quantity of the Loan, the nature
of the Property, and the risks incurred by Lender in this transaction. No
provision in this Loan Agreement or in any of the other Loan Documents and no
course of dealing between the parties shall be deemed to create (i) any
partnership or joint venture between Lender and Borrower or any other Person, or
(ii) any fiduciary or similar duty by Lender to Borrower or any other Person.
The relationship between Lender and Borrower is exclusively the relationship of
a creditor and a debtor, and all relationships between Lender and any other
Borrower Party are ancillary to such creditor/debtor relationship.
Section 14.14 Reasonableness of Determinations. In any instance where any
consent, approval, determination or other action by Lender is, pursuant to the
Loan Documents or applicable law, required to be done reasonably or required not
to be unreasonably withheld, Borrower shall bear the burden of proof of showing
that the same was not reasonable. In all cases Lender shall conclusively be
deemed to be acting reasonably when implementing any standard or requirement of
any applicable Rating Agency. In the event that a claim or adjudication is made
that Lender or its agents have acted unreasonably or unreasonably delayed acting
in any case where, by law or under this Loan Agreement or the other Loan
Documents, Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedy shall be limited to commencing 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.
Section 14.15 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to any Borrower Party or Affiliates thereof, or any other Person.
Section 14.16 Entire Agreement. This Loan Agreement, the Note, and the other
Loan Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties to the Loan
Documents.
Section 14.17 Construction; Supremacy of Loan Agreement. Borrower Parties and
Lender acknowledge that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review this Loan Agreement
and the other Loan Documents with its legal counsel and that this Loan Agreement
and the other Loan Documents shall be construed as if jointly drafted by
Borrower and Lender. If any term, condition or provision of this Loan
-72-
Agreement shall be inconsistent with any term, condition or provision of any
other Loan Document, then this Loan Agreement shall control.
Section 14.18 Consent to Jurisdiction. EACH BORROWER PARTY HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK OR WITHIN THE COUNTY AND STATE IN WHICH THE PROPERTY IS
LOCATED AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS
OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER PARTY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH THE PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, SUCH OTHER LOAN
DOCUMENTS OR SUCH OBLIGATION. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER
TO BRING PROCEEDINGS AGAINST ANY BORROWER PARTY IN THE COURTS OF ANY OTHER
JURISDICTION.
Section 14.19 Waiver of Jury Trial EACH OF BORROWER PARTIES AND LENDER HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR
ANY DEALINGS BETWEEN ANY BORROWER PARTY AND LENDER RELATING TO THE SUBJECT
MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS
BEING ESTABLISHED. EACH OF BORROWER PARTIES AND LENDER ALSO WAIVES ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF IT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH OF BORROWER PARTIES AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO THIS LOAN AGREEMENT, THAT EACH HAS ALREADY RELIED ON
THE WAIVER IN ENTERING INTO THIS LOAN AGREEMENT AND THAT EACH WILL CONTINUE TO
RELY ON THE WAIVER IN THE FUTURE. EACH OF BORROWER PARTIES AND LENDER FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 14.19 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THE WAIVER SHALL
-73-
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS LOAN AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOAN. IN THE EVENT OF LITIGATION, THIS LOAN AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 14.20 Counterparts; Effectiveness. This Loan Agreement and other Loan
Documents and any amendments or supplements thereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which counterparts together shall constitute but one and the same
instrument. This Loan Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
Section 14.21 Servicer. Lender shall have the right from time to time to
designate and appoint one or more Servicers, and to change or replace any
Servicer. All rights of the Lender hereunder may exercised by Servicer. Servicer
shall be entitled to the benefit of all obligations of any of Borrower Party in
favor of Lender.
Section 14.22 Obligations of Borrower Parties. Borrower Parties other than
Borrower are parties to this Loan Agreement only with regard to the
representations, warranties, and covenants specifically applicable to them.
Section 14.23 Guaranties Unsecured. Anything to the contrary herein or elsewhere
notwithstanding, the Guaranty and all obligations arising under same, including
the obligations incorporated therein from this Agreement by reference, are not
and shall not be secured in any manner whatsoever, including by the Mortgage or
by any Lien on any Collateral.
Section 14.24 Confidentiality. Subject to and without limiting Lender's rights
under Article X hereof, Lender shall use reasonable efforts to hold all
non-public information obtained in connection with the Loan in accordance with
Lender's customary procedures for handling confidential information of this
nature and in accordance with prudent lending or investing practices, it being
understood and agreed by Borrower that in any event Lender may make disclosures
to Lender's employees, officers, agents, representatives, attorneys,
accountants, consultants and advisors in connection with the Loan, Affiliates of
Lender (and to other Persons authorized by Lender to organize, present or
disseminate such information in connection with disclosures otherwise made in
accordance with this Section 14.24), to the Rating Agencies, assignees,
participants, investors or prospective assignees, participants or investors,
servicers, trustees or other Persons as Lender, in its sole discretion, may
require in connection with any Secondary Market Transaction or Securitization,
or disclosures required or requested by any governmental agency or
representative thereof of pursuant to legal process; provided, unless
specifically prohibited by applicable law or court order, Lender shall make
reasonable efforts to notify Borrower of any request by any governmental agency
or representative thereof (other than any such request in connection with any
examination of the financial condition or other routine examination of Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information.
-74-
Section 14.25 Non-liability of Trustees. The Declarations of Trust of Borrower
and Member, copies of which are duly filed with the Department of Assessments
and Taxation of the State of Maryland, provides that the names of such Trusts
refer to the trustees under each such Declaration of Trust collectively as
trustees, but not individually or personally, and that no trustee, officer,
shareholder, employee or agent of Borrower or Member, as applicable, shall be
held to any personal liability, jointly or severally, for any obligation of, or
claim against, Borrower or Member, as applicable. Except as otherwise expressly
provided in this Loan Agreement, persons dealing with Borrower or Member, as
applicable, in any way shall look only to the assets of Borrower or Member, as
applicable, for the payment of any sum or the performance of any obligation
under this Loan Agreement or the other Loan Documents.
[signatures follow on next page]
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Loan Agreement as of the date first written above.
BORROWER:
FRANKLIN PLAZA PROPERTY TRUST,
a Maryland real estate investment trust
By: /s/ John A. Mannix
Name: John A. Mannix
Title: President
MEMBER:
SP HOLDING PROPERTY TRUST,
a Maryland real estate investment trust
By: /s/ John A. Mannix
Name: John A. Mannix
Title: President
GUARANTOR:
HUB REALTY COLLEGE PARK I, LLC,
a Maryland limited liability company
By: HUB Management, Inc.,
Its Manager
By: /s/ John A. Mannix
Name: John A. Mannix
Title: President
LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC.,
a Delaware corporation
By: /s/ Andrea Balkam
Name: Andrea Balkam
Title: Vice President
Signature Page 1
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Loan Agreement as of the date first written above.
GUARANTOR:
HUB REALTY COLLEGE PARK I, LLC,
a Maryland limited liability company
By: HUB Management, Inc.,
its manager
By: /s/ John A. Mannix
Name: John A. Mannix
Title: President
Signature Page 2
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A - Form of Subordination, Non-Disturbance and Attornment Agreement
Schedules
Schedule 3.1(A) - Loan Documents
Schedule 4.1(C) - Organizational Chart for Borrower Parties
Schedule 4.2 - Consents
Schedule 4.7(B) - Rent Roll
Schedule 4.7(C) - Lease Proceedings
Schedule 4.9 - Litigation
Schedule 4.20 - Insurance
Schedule 6.5 - Environmental Work
List of Schedules
EXHIBIT A
FORM OF SUBORDINATION,
NEW DISTURBANCE AND ATTORNMENT AGREEMENT
TENANT: __________________
SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(this "Agreement") is entered into by and among ______________________________,
a ___________________________ ("Tenant"), whose address is
_____________________________, ______________________________, a
___________________________ ("Landlord"), whose address is
___________________________, and _______________________________
_______________________________, its successors and/or assigns ("Lender"), whose
address is _____________________________________________.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Landlord is the owner in fee simple of the real
property described in Exhibit A attached hereto, together with the improvements
thereon (the "Property");
WHEREAS, Landlord or its predecessor and Tenant have entered
into a certain lease, dated __________________, [and
amended/modified/extended/renewed by ____________________________, dated
_______________] (as the same may hereafter be amended, modified, renewed,
extended or replaced, the "Lease"), leasing to Tenant a portion of the Property
(the "Premises");
WHEREAS, Lender has agreed to make a certain mortgage loan to
Landlord (the "Loan"), which will be evidenced by Landlord's Promissory Note in
such amount (the "Note") and secured by, among other things, a certain Mortgage
[Deed of Trust], Assignment of Rents, Security Agreement and Fixture Filing (as
the same may hereafter be amended, modified, extended or recast, the "Mortgage")
and a certain Assignment of Leases and Rents (the "Assignment of Leases")
encumbering the Property, which Mortgage and Assignment of Leases are to be
recorded simultaneously herewith;
WHEREAS, Lender, Landlord and Tenant desire to confirm their
understanding with respect to the Lease and the Loan and the rights of Tenant
and Lender thereunder.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Subordination. The Lease, including all of the terms
thereof, is and shall be subject and subordinate to the lien and all of the
terms of the Mortgage to the full extent of all amounts secured by the Mortgage
and interest thereon.
2. Attornment. Tenant agrees that it will attorn to and
recognize any purchaser of the Property at a Mortgage foreclosure sale or any
transferee who acquires the
A-1
Property by deed in lieu of foreclosure or exercise of a power of sale or
otherwise in respect of the Mortgage (in any such case, the "New Owner") and the
successors and assigns of such purchaser or transferee, as its landlord for the
unexpired balance (and any extensions or renewals, if exercised) of the term of
said Lease upon the same terms and conditions set forth in said Lease.
3. Non-Disturbance. Provided there is no default under the
Lease after any applicable notice and grace period, such New Owner will not
terminate the Lease or disturb Tenant's possession of the Premises under the
Lease or the right to quiet enjoyment thereof, but the Lease shall continue in
accordance with its terms as a direct lease between Tenant and New Owner.
4. Cure by Lender of Landlord Defaults. Tenant agrees to give
Lender or any other New Owner (in accordance with Paragraph 8 hereof) a copy of
any notice of default served upon Landlord which with the passage of time or
otherwise would entitle Tenant to cancel the Lease or abate the rent under the
Lease, provided that prior to such notice Tenant has been notified in writing of
the address of the New Owner, or its agent, servicer or designee. Tenant further
agrees that if Landlord shall have failed to cure such default within the time
provided for in the Lease, then Lender have an additional ten (10) days with
respect to a monetary default and thirty (30) days with respect to a
non-monetary default after its receipt of notice within which to cure such
default or if such non-monetary default cannot be cured within that time, then
such additional time as may be necessary to cure such default shall be granted
if within such thirty (30) days Lender has commenced and is diligently pursuing
the remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings necessary to effect such cure), in which
event the Lease shall not be terminated while such remedies are being so
diligently pursued.
5. Payments to Lender and Exculpation of Tenant. Tenant is
hereby notified that the Lease and the rent and all other sums due thereunder
have been assigned to Lender as security for the Loan. In the event that Lender
notifies Tenant of a default under the Mortgage and directs that Tenant pay its
rent and all other sums due under the Lease to Lender, Tenant shall honor such
direction without inquiry and pay its rent and all other sums due under the
Lease in accordance with such notice. Landlord agrees that Tenant shall have the
right to rely on any such notice from Lender without incurring any obligation or
liability to Landlord as if such notice were given at the direction of Landlord.
Tenant is hereby instructed to disregard any notice to the contrary received
from or at the behest of Landlord.
6. Limitation of Liability. If the New Owner acquires the
interest of Landlord under the Lease, the New Owner shall not be:
(a) liable for any act or omission of any prior landlord
(including Landlord);
(b) subject to any claims, offsets, defenses or counterclaims
which Tenant might have against any prior landlord (including Landlord) arising
prior to the date upon which the New Owner shall succeed to the interests of
Landlord under the Lease;
A-2
(c) bound by any rent or additional rent which Tenant shall
have paid more than one (1) month in advance to any prior landlord (including
Landlord) unless received by New Owner;
(d) liable for the return of any security deposit not actually
received by New Owner;
(e) bound by any amendment or modification of the Lease made
without the written consent of New Owner (if consent is required under the
Mortgage or any of the other loan documents evidencing and/or securing the
Loan);
(f) bound by any covenant to undertake or complete any
improvement to or restoration of the Premises or the Property, except to the
extent insurance proceeds or condemnation awards are made available to New Owner
to cover the cost of the improvement.
Lender shall not, either by virtue of the Mortgage, the Assignment of Leases or
this Agreement, be or become (i) a mortgagee-in-possession or (ii) subject to
any liability or obligation under the Lease or otherwise until Lender shall have
acquired by foreclosure or otherwise the interest of Landlord in the Premises.
Lender's liability or obligation under the Lease shall extend only to those
liabilities or obligations accruing subsequent to the date that Lender has
acquired the interest of Landlord in the Premises as modified by the terms of
this Agreement. In addition, upon such acquisition, Lender shall have no
obligation, nor incur any liability, beyond Lender's then interest in the
Property. In the event of the assignment or transfer of the interest of Lender
under this Agreement, all obligations and liabilities of Lender under this
Agreement shall terminate and, thereupon, all such obligations and liabilities
shall be the sole responsibility of the party to whom Lender's interest is
assigned or transferred.
7. Notice. Any notice, consent or other communication made
hereunder shall be in writing and delivered (i) personally, (ii) mailed by
certified or registered mail, postage prepaid, return receipt requested or (iii)
by depositing the same with a reputable overnight courier service, postage
prepaid, for next business day delivery, to the parties at their addresses first
set forth above and if to Lender, with a copy to Merrill Lynch Credit
Corporation at 4802 Deer Lake Drive East, Jacksonville, Florida 32246-6484,
Attention: Commercial Mortgage Servicing. Notice shall be deemed given when
delivered personally, or four (4) business days after being placed in the United
States mail, if sent by certified or registered mail, or one (1) business day
after deposit with such overnight courier service. Any party can change its
address or party to receive notice by giving at least fifteen (15) days prior
notice to the other parties hereto in accordance with this provision. Tenant
agrees to send a copy of any notice or statement under the Lease to Lender at
the same time such notice or statement is sent to Landlord.
8. Miscellaneous.
(a) Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State in which the Property is
located.
A-3
(c) Amendment. This Agreement shall be deemed to amend any
provisions of the Lease which are inconsistent with the terms hereof.
(d) Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which shall be deemed an original, but all of
which, collectively and separately, shall constitute one and the same agreement.
(e) Non-disturbance. Tenant agrees that this Agreement
satisfies any condition or requirement in the Lease relating to the granting of
a non-disturbance agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates set forth adjacent to their signatures below to be effective as of the
date of the Mortgage.
Date: ______________ TENANT: _____________________
By: ________________________
Name: _______________
Title: ______________
Date: ______________ LANDLORD: ___________________
By: ________________________
Name: _______________
Title: ______________
Date: ______________ LENDER:
By: ________________________
Name: _______________
Title: ______________
WHEN RECORDED, RETURN TO:
A-4
NOTARIZATION FORMS FOR SIGNATURES
Form of Notarial Acknowledgment
STATE OF ________________ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, the
undersigned, a notary public for the state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s) or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature_______________________________________
(SEAL)
A-5
SCHEDULE 3.1(A)
List of Loan Documents
2. Loan Agreement
3. Note
4. Mortgage
5. Assignment of Leases
6. Assignment of Management Agreement
7. Guaranty
8. Environmental Indemnity
9. Financing Statements
10. Cash Management Agreement
Schedule 3.1(A)
SCHEDULE 4.2
Consents
None.
Schedule 4.2
SCHEDULE 4.7(C)
Lease Proceedings
None.
Schedule 4.7(C)
SCHEDULE 4.9
Litigation
None.
Schedule 4.9
SCHEDULE 4.20
Insurance
Schedule 4.20
SCHEDULE 6.5
ENVIRONMENTAL WORK
Estimated Cost
Construction of concrete berm or containment area
to protect against leaks from two 275-gallon
diesel oil above ground storage tanks in the tank
room of Parking Level I of the Property. The
secondary containment should be able to contain
110% of the total volume of the tanks. $2,000
Schedule 6.5
Omitted Schedules
The following schedules to the Loan and Security Agreement have been
omitted:
Schedule Schedule Title
4.1(C) Organizational Chart
for Borrower Parties
4.7(B) Rent Roll
The Registrant agrees to furnish supplementally a copy of the foregoing
omitted schedules to the Securities and Exchange Commission upon request.