Exhibit 10.30
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REVOLVING CREDIT AGREEMENT
BETWEEN
CORPORATE OFFICE PROPERTIES, L.P., AS BORROWER,
CORPORATE OFFICE PROPERTIES TRUST, AS GUARANTOR, AND
ANY COLLATERAL PROPERTY SUBSIDIARY, WHICH MAY NOW BE OR
HEREAFTER BECOMES A PARTY TO THIS AGREEMENT,
COLLECTIVELY AS LOAN PARTIES
AND
PRUDENTIAL SECURITIES CREDIT CORP., AS LENDER
DATED AS OF
DECEMBER 28, 1999
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REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
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PREAMBLE.......................................................................................1
ARTICLE 1. DEFINITIONS........................................................................1
Section 1.01. Certain Defined Terms........................................................1
Section 1.02. Accounting and Banking Terms................................................19
Section 1.03. Discretion..................................................................19
ARTICLE 2. THE CREDIT FACILITIES.............................................................19
Section 2.01. The Credit Facilities.......................................................19
Section 2.02. The Loans; Procedure for Borrowing..........................................20
Section 2.03. Rate of Interest; Calculation of Interest...................................22
Section 2.04. Indemnity and Funding Losses................................................23
Section 2.05. Mandatory Prepayments.......................................................23
Section 2.06. Optional Prepayments........................................................24
Section 2.07. Payments....................................................................24
Section 2.08. Application of Payments.....................................................25
Section 2.09. Use of Loan Proceeds........................................................25
Section 2.10. Fees........................................................................25
Section 2.11. Increased Costs.............................................................26
Section 2.12. LIBOR Alternate Rate........................................................26
Section 2.13. Additional Disbursement......................................................27
Section 2.14 Release of Properties........................................................27
Section 2.15 Right of First Offer.........................................................28
ARTICLE 3. REPRESENTATIONS AND WARRANTIES....................................................29
Section 3.01. Organization and Powers; REIT Status........................................29
Section 3.02. Power and Authorization.....................................................29
Section 3.03. Permits; Compliance with Laws...............................................29
Section 3.04. No Legal Bar................................................................30
Section 3.05. Litigation..................................................................30
Section 3.06. Solvency....................................................................30
Section 3.07. The Collateral..............................................................30
Section 3.08. Capitalization..............................................................31
Section 3.09. No Default..................................................................31
Section 3.10. No Secondary Liabilities....................................................31
Section 3.11. Taxes.......................................................................31
Section 3.12. Financial Statements and Condition..........................................32
Section 3.13. ERISA; Labor Relations......................................................32
Section 3.14. Environmental Matters.......................................................32
Section 3.15. Correct Information.........................................................33
Section 3.16. Investment Company Act......................................................34
Section 3.17. Margin Regulations..........................................................34
Section 3.18. Leases......................................................................34
Section 3.19. Insurance...................................................................34
Section 3.20. Brokers.....................................................................34
ARTICLE 4. CONDITIONS PRECEDENT..............................................................34
Section 4.01. Conditions Precedent to Effectiveness.......................................34
Section 4.02. Conditions Precedent to Initial and Subsequent Fundings.....................37
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ARTICLE 5. AFFIRMATIVE COVENANTS.............................................................42
Section 5.01. Maintenance of Existence, Properties and REIT Status........................43
Section 5.02. Insurance...................................................................43
Section 5.03. Punctual Payment............................................................44
Section 5.04. Payment of Liabilities......................................................44
Section 5.05. Compliance with Laws........................................................44
Section 5.06. Payment of Taxes, Etc.......................................................44
Section 5.07. Financial Statements and Other Information..................................44
Section 5.08. Accounts and Reports........................................................46
Section 5.09. Inspection; Audit...........................................................46
Section 5.10. UCC Filings.................................................................47
Section 5.11 Deleted prior to execution..................................................47
Section 5.12. Reserves....................................................................47
Section 5.13. Operational Documents.......................................................47
Section 5.14. Environmental Compliance....................................................48
Section 5.15. Disclosure..................................................................48
Section 5.16 Deferred Maintenance.........................................................48
Section 5.17 Capitalization...............................................................49
ARTICLE 6. NEGATIVE COVENANTS................................................................49
Section 6.01. Indebtedness................................................................49
Section 6.02. Liens.......................................................................50
Section 6.03. Contingent Obligations......................................................50
Section 6.04. Fundamental Changes.........................................................51
Section 6.05. Dispositions of Assets......................................................51
Section 6.06. Sales and Leasebacks........................................................51
Section 6.07. Dividends and Redemptions...................................................51
Section 6.08. Amendment of Certain Agreements.............................................52
Section 6.09. Certain Other Transactions..................................................52
Section 6.10. Transactions with Affiliates and Certain Other Persons......................52
Section 6.11. Fiscal Year.................................................................52
Section 6.12. ERISA.......................................................................52
Section 6.13. Regulations G, T, U and X...................................................52
Section 6.14. Environmental Compliance....................................................53
Section 6.15 Ownership of Collateral Property Subsidiaries...............................53
ARTICLE 7. FINANCIAL COVENANTS...............................................................53
Section 7.01. Minimum Consolidated Interest Converage.....................................53
Section 7.02. Maximum Consolidated Unhedged Floating Rate Debt............................53
Section 7.03. Maximum Consolidated Total Indebtedness.....................................53
Section 7.04. Financial Reporting Tests...................................................53
Section 7.05. Minimum Net Worth...........................................................54
ARTICLE 8. EVENTS OF DEFAULT.................................................................54
Section 8.01. Events of Default...........................................................54
Section 8.02. Remedies Upon an Event of Default...........................................56
ARTICLE 9. MISCELLANEOUS.....................................................................57
Section 9.01. Notices.....................................................................57
Section 9.02. Survival of this Agreement..................................................58
Section 9.03. Indemnity...................................................................58
Section 9.04. Costs, Expenses and Taxes...................................................59
Section 9.05. Further Assurances..........................................................60
Section 9.06. Amendment and Waiver........................................................60
Section 9.07. Remedies Cumulative.........................................................61
Section 9.08. Marshaling, Recourse to Security: Payments Set Aside........................61
Section 9.09. Setoff......................................................................61
Section 9.10. Binding Effect..............................................................62
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Section 9.11. Applicable Law..............................................................62
Section 9.12. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial........62
Section 9.13. Inconsistencies.............................................................62
Section 9.14. Performance of Obligations..................................................63
Section 9.15. Assignment; Participation...................................................63
Section 9.16. Confidentiality.............................................................63
Section 9.17. Construction................................................................63
Section 9.18. Entire Agreement............................................................64
Section 9.19. Severability................................................................64
Section 9.20. Headings....................................................................64
Section 9.21. Execution of Counterparts...................................................64
Section 9.22. Limitation of Liability.....................................................64
Section 9.23 Addition of Collateral Property Subsidiaries................................65
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EXHIBITS:
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Exhibit A Form of Approved Lease
Exhibit B Form of Assignment of Leases and Rents
Exhibit C Form of Assignment of Management Agreements
Exhibit D Form of Collateral Assignment
Exhibit E Form of Deed of Trust /Mortgage
Exhibit F Form of Environmental Indemnity
Exhibit G Form of Estoppel Certificate
Exhibit H Deleted prior to execution
Exhibit I Form of Subordination Agreement
Exhibit J Form of Notice of Borrowing
Exhibit K Form of Secured Note
Exhibit L Form of Notice of Optional Prepayment
Exhibit M Form of Opinion of Counsel
Exhibit N Form of Indemnity and Guaranty of Recourse Obligations
Exhibit O Form of Compliance Certificate
SCHEDULES:
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Schedule 2.13 Additional Disbursement
Schedule 3.05 Litigation
Schedule 3.07 Existing Liens
Schedule 3.14 Environmental Matters
Schedule 3.19 Insurance Policies
Schedule 4.02 (c)(iii) Rent Rolls
Schedule 4.02(l) Title Insurance Requirements
Schedule 4.02(m) Survey Requirements
Schedule 5.16 Deferred Maintenance
Schedule 5.17 Capitalization
Schedule 6.01 Existing Indebtedness
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REVOLVING CREDIT AGREEMENT
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THIS REVOLVING CREDIT AGREEMENT dated as of December 28, 1999 (this
"AGREEMENT") between CORPORATE OFFICE PROPERTIES, L.P., a Delaware limited
partnership (the "BORROWER"),CORPORATE OFFICE PROPERTIES TRUST, a Maryland real
estate investment trust ("COPT") and any COLLATERAL PROPERTY SUBSIDIARY (a
"COLLATERAL PROPERTY SUBSIDIARY") which may now be or hereafter become a party
to this Agreement, and PRUDENTIAL SECURITIES CREDIT CORP., a Delaware
corporation (the "LENDER"),
W I T N E S S E T H:
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WHEREAS, the Borrower desires to Borrow from Lender on a revolving
credit basis up to FIFTY MILLION AND 00/00 DOLLARS ($50,000,000) in connection
with (i) the funding of certain acquisition and development activities by the
Borrower, (ii) the funding of the Transaction Costs (as hereinafter defined);
and (iii) the funding of Borrower's working capital requirements in connection
with its general business purposes; and
WHEREAS, the Lender is willing to extend the financial accommodations
contemplated hereby to the Borrower on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1. DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS As used in this Agreement, the
following terms shall have the following meanings:
"ACQUISITION" has the meaning set forth in the recitals hereto.
"ACQUISITION DOCUMENTS" means each purchase agreement to be entered
into between and among the Borrower and the seller or sellers of each
Acquisition Property in connection with the purchase of such Acquisition
Property and all of the other agreements, documents and instruments entered into
in connection therewith.
"ACQUISITION PROPERTIES" means 100% fee simple ownership interests in
office properties that (i) are being acquired by the Borrower using, in part,
the proceeds of the Loans, (ii) satisfy the applicable conditions precedent and
covenants set forth in this Agreement, and (iii) are located in the mid-Atlantic
region of the United States of America and are otherwise generally consistent
with the Borrower's existing office properties.
"ADDITIONAL DISBURSEMENTS" has the meaning set forth in Section 2.13
hereof.
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"AFFILIATE" means any (i) officer, director, shareholder, member or
partner of the Borrower, (ii) Person that directly or indirectly controls, is
controlled by, or is under common control with the Borrower, and (iii) Person in
which 10% or more of the ownership interest of such Person is owned by a
shareholder, member or partner of the Borrower. For purposes of this definition,
"control" of a person means the possession, directly or indirectly, of the power
to direct or cause the direction of its management and policies, whether through
the ownership of voting capital stock, by contract or otherwise, and the terms
"controlled" and "common control" shall have correlative meanings. In no event
shall the Lender be deemed to be an Affiliate of the Borrower.
"AGREEMENT" and "CREDIT AGREEMENT" means this Credit Agreement, as the
same from time to time may be amended, modified, supplemented, extended or
restated.
"APPLICABLE MARGIN" means one hundred fifty (150) basis points.
"APPROVED BANK" means banks which have (i) (a) a minimum net worth of
$500,000,000 and/or total assets of $10,000,000,000, and (ii) a minimum long
term debt rating of (a) BBB+ or higher by S&P, and (b) Baal or higher by
Moody's.
"APPROVED LEASE" means a Lease in the form of EXHIBIT A hereto.
"ASSIGNMENTS OF LEASES" mean, collectively, the Assignment of Leases
and Rents to be entered into between the Borrower and the Lender, in each case,
in the form of EXHIBIT B hereto as a condition to the making of a Loan, as the
same may from time to time be amended, modified, supplemented or extended.
"ASSIGNMENTS OF MANAGEMENT AGREEMENTS" mean, collectively, (i) the
Assignment of Property Management Agreements dated as of the Closing Date
between the Borrower and the Lender, and (ii) the Assignment of Property
Management Agreements to be entered into between the Borrower and the Lender, in
each case, in the form of EXHIBIT C hereto, as the same may from time to time be
amended, modified, supplemented or extended.
"ASSIGNMENTS" mean, collectively, the Assignments of Leases, the
Assignments of Management Agreements and the Collateral Assignments.
"AUTHORIZED PERSON" means Roger A. Waesche, Jr. or John Harris Gurley
or such other individual designated in writing by the Borrower as being
authorized by the Borrower to provide the Lender with any and all notices
required to be made hereunder by the Borrower; which authorizations shall remain
in full force and effect, and may be conclusively relied on by the Lender in all
circumstances, until the Lender actually receives a written notice from the
Borrower stating otherwise.
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"AVAILABLE COMMITMENT" means, as at any date at which the same is to be
determined, the amount equal to (i) the Commitment, minus (ii) the aggregate
amount of all Loans then outstanding, minus (iii) the aggregate amount of all
outstanding Reserves.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
101 ET SEQ.), as amended from time to time, and any successor statute.
"BASE LIBOR" in respect of each Interest Period means a rate per annum
equal to the rate at which U.S. dollar deposits, in an amount equal to the
aggregate principal amount of the relative Loan or Loans which is to be
outstanding during such Interest Period, for delivery on the first day of such
Interest Period with 30-day maturities, (i) are offered in immediately available
funds in the London Interbank Market to the appropriate office of the Lender by
leading banks in the Eurodollar market, (ii) are quoted on the Dow Jones
Telerate, a division of Dow Jones & Company, Inc., or (iii) are quoted on any
comparable alternative source selected by the Lender, in the case of the first
Interest Period for each Loan, at such time as the Lender elects on the first
Business Day of such Interest Period and, in the case of all other Interest
Periods, at 11:00 a.m., London time, on the first Business Day of such Interest
Period.
"BASE RATE" means, for any day, the per annum fluctuating rate of
interest equal to the higher of (i) the interest rate announced by the Lender as
its Dollar base rate from time to time in New York, New York, and (ii) the
Federal Funds Rate plus one-half of one percent (.5%). The interest rate
announced by the Lender as its Dollar base rate from time to time in New York,
New York on December 15, 1999 was 7.75%.
"BORROWER" has the meaning set forth in the recitals hereto and
includes its successors and assigns.
"BORROWING DATE" means, with respect to any Loan, the Business Day on
which the Lender makes such Loan pursuant to a Notice of Borrowing given
pursuant to Section 2.02(b)(i) hereof.
"BREAKAGE FEE" means the cost (including any hedging loss or negative
carry on the hedge position), if any, to the Lender associated with the negative
carry or breaking of all or a portion of any hedging arrangement entered into by
the Lender to reduce its interest rate risk due to changes in LIBOR in
connection with any prepayment on the Loans or the Borrower's failure to borrow.
"BUILDING CONDITION REPORT" has the meaning set forth in Section 4.02
(e) hereof.
"BUSINESS DAY" means any day on which dealings in currencies and
exchange (including, without limitation, U.S. dollar deposits in the London
Interbank Market) between banks may be carried on in New York, New York or the
City of London, England, other than a Saturday or
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Sunday or any other day on which banks in New York, New York or the City of
London, England are authorized or required by law to close.
"CLOSING DATE" means December __, 1999, the date on which this
Agreement is signed by the parties hereto at the offices of Pryor Cashman
Sherman & Flynn LLP at 410 Park Avenue, New York, New York 10022 or at such
other place as the Lender may determine.
"COLLATERAL" means all property and interest in property in or against
which the owner thereof shall have granted, or purported to have granted, a
security interest or Lien in favor of the Lender under the Loan Documents as
security for the Obligations of the Borrower to the Lender and, if such owner is
a Person other than the Borrower, for such owner's obligations to the Lender,
and shall include, without limitation the Collateral Properties.
"COLLATERAL ASSIGNMENTS" mean, collectively, the Collateral Assignment
Agreement to be entered into between the Borrower and the Lender, in each case,
in the form of EXHIBIT D hereto, as a condition to the making of a Loan, as the
same may from time to time be amended, modified, supplemented or extended.
"COLLATERAL DOCUMENTS" mean without limitation, collectively, the
Mortgages, the Deeds of Trust, the Assignments and the title insurance and other
insurance policies endorsed to name the Lender as a first mortgagee and/or
additional insured required under Section 5.02 hereof and under the Mortgages,
and the Deeds of Trust.
"COLLATERAL PROPERTIES" mean, collectively, (a) the Acquisition
Properties, (b) the existing properties of the Borrower in which the Borrower
owns a 100% fee simple interest and that (i) are acceptable to Lender in all
respects in its sole discretion which, at Borrower's option are pledged as
collateral for the Note, (ii) are office properties located in the mid Atlantic
region of the United States of America that are generally consistent with the
Borrower's existing office properties, (iii) are pledged to, and encumbered in
favor of, the Lender by the Borrower in the same manner in which Acquisition
Properties are pledged to and encumbered in favor of Lender, and (iv) satisfy
the applicable conditions precedent and covenants set forth in this Agreement
and the Collateral Documents in the same manner and on the same terms as set
forth with respect to an Acquisition Property, and (c) all other assets and
interest related to the development, use and operation of the Acquisition
Properties and other existing properties described in (b) hereof. Lender shall
have the right to reject any property which Borrower proposes to be included as
a Collateral Property.
"COLLATERAL PROPERTY SUBSIDIARY" means any single purpose, wholly owned
Subsidiary of COPT or Borrower that owns any Collateral Property.
"COMMITMENT" means $50,000,000.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
annexed hereto as Exhibit O delivered by Borrower to Lender pursuant to Section
5.07(b) hereof.
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"CONSOLIDATED ADJUSTED NET INCOME" means, for any period and without
duplication, for Borrower and its Subsidiaries, the sum of the amounts for such
period of (i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
provisions for taxes based on income, (iv) total depreciation expense, (v) total
amortization expense, (vi) gains or losses on the sales of Mortgaged Properties
and other Properties, debt restructurings or other nonrecurring expenses, and
(vii) income expense attributable to minority interest; less a recurring capital
expense reserve equal to $0.15 per net rentable square foot for all Properties,
and as adjusted in a manner acceptable to Lender for (x) unconsolidated
partnerships, joint ventures and similar entities, and (y) straight line rents,
all of the foregoing as determined on a consolidated basis for Borrower and its
Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to capital leases in accordance
with GAAP and capitalized interest) of Borrower and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Borrower and
its Subsidiaries, such interest to be calculated for purposes of this Agreement
against the outstanding principal amounts such Indebtedness as follows:
(a) for the Loans, using a constant based on the then current Yield as
of the date of determination, plus the Market Spread, instead of
the interest rates actually applicable thereto;
(b) for all other fixed rate Indebtedness, at the interest rates
actually applicable thereto; and
(c) for all other variable rate Indebtedness, using a constant based
on the Yield plus the Market Spread, instead of the interest rates
actually applicable thereto.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Borrower) in which any other Person (other than Borrower or any
of its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Borrower or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any of its Subsidiaries or that
Person's assets are acquired by Borrower or any of its Subsidiaries, (iii) the
income of any Subsidiary of Borrower to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or losses
attributable to any disposition of any assets of Borrower or its Subsidiaries or
returned surplus assets of any Pension Plan, and (v) (to the extent not included
in clauses (i) through (iv) above) any net extraordinary gains or net non-cash
extraordinary losses.
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"CONSOLIDATED TANGIBLE NET WORTH" means, as at any date of
determination, the shareholders' equity of Borrower and its Subsidiaries
(determined on a book basis), plus accumulated depreciation, less Intangible
Assets, on a consolidated basis determined in conformity with GAAP.
"CONSOLIDATED TOTAL ASSETS" means, at any date of determination, total
assets of Borrower and its Subsidiaries on a consolidated basis which may
properly be classified as assets in conformity with GAAP plus, in the event that
any guarantees of indebtedness of non-consolidated joint ventures are included
in the calculation of Consolidated Total Liabilities for such period pursuant to
clause (iii) of the definition of Consolidated Total Liabilities, the pro rata
share of Borrower or such Subsidiary in the assets of such non-consolidated
joint venture. The value of any real property asset included in Consolidated
Total Assets shall be determined by capitalizing the Consolidated Adjusted Net
income using a 9.5% capitalization rate; provided, however, in the case of: (a)
any real property asset owned less than one year, the value of such asset shall
be determined by using the aggregate purchase price for such asset; and (b) any
real property asset which is under development, the value of such asset shall be
determined by using the direct costs incurred in connection with such
development until the earlier of: (i) 30 months following the commencement of
construction of such asset and (ii) 12 months following receipt of a certificate
of occupancy, or the equivalent, with respect to such asset.
"CONSOLIDATED TOTAL INDEBTEDNESS" means, as of any date of
determination, the sum of the following, without duplication: (i) all
Indebtedness of Borrower and its Subsidiaries, determined on a consolidated
basis; plus (ii) all Contingent Obligations of Borrower and its Subsidiaries;
plus (iii) all Guaranties of Borrower or any of its Subsidiaries; plus (iv) all
letter of credit reimbursement agreement obligations.
"CONSOLIDATED TOTAL LIABILITIES" means, as at any date of
determination, the sum of each of the following, without duplication, for
Borrower and its Subsidiaries, on a consolidated basis, (i) all indebtedness for
borrowed money, (ii) any obligation owed for all or any part of the deferred
purchase price of assets or services which would be shown to be a liability (or
on the liability side of the balance sheet) in accordance with GAAP, (iii) all
guaranteed obligations including any guaranteed indebtedness of consolidated or
non-consolidated joint ventures, (iv) the maximum amount of all letters of
credit issued or acceptance facilities established for the account of Borrower
or any of its Subsidiaries, and, without duplication, all drafts drawn
thereunder (other than letters of credit offset by a like amount of Cash or
government securities held in escrow to secure such letter of credit and draws
thereunder), (v) all capitalized lease obligations, (vi) all indebtedness (A) of
another Person secured by any Lien on any property or asset owned or held by
Borrower or any of its Subsidiaries regardless of whether the indebtedness
secured thereby shall have been assumed by Borrower or such Subsidiary or is
non-recourse to the credit of Borrower or such Subsidiary, and (B) of any
consolidated Affiliate of Borrower whether or not such indebtedness has been
assumed by Borrower, (vii) indebtedness created or arising under any conditional
sale or title retention agreement, and (viii) withdrawal liability or
insufficiency under ERISA or under any qualified plan or related trust;
including
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within the foregoing, trade payables and accrued expenses arising or incurred in
the ordinary course of business.
"CUSTOMARY PERMITTED LIENS" means: (a) Liens (other than any Lien
imposed under Environmental Laws or ERISA) arising as a matter of law to secure
payment of taxes, assessments or charges owing to any Governmental Authority but
which are not yet due or which are being contested in good faith by appropriate
proceedings or other appropriate actions and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance with
GAAP; (b) statutory Liens of landlords and Liens of carriers, warehousemen and
other Liens (other than any Lien imposed under Environmental Laws or ERISA)
imposed by law, created in the ordinary course of business and for amounts not
yet due (or which are being contested in good faith by appropriate proceedings
or other appropriate actions which are sufficient to prevent imminent
foreclosure of such Liens, are promptly instituted and diligently conducted) and
with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP; (c) Liens (other than any Lien imposed
under Environmental Laws or ERISA) incurred or deposits made in the ordinary
course of business (including, without limitation, security deposits for leases,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, contracts (other than for the repayment or
guarantee of borrowed money or purchase money obligations), statutory
obligations and other similar obligations or arising as a result of progress
payments under government contracts; (d) easements (including, without
limitation, reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, encroachments, minor defects
or irregularities in title, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of real property, which
individually or in the aggregate do not or are not reasonably likely to have a
Material Adverse Effect on the conduct of a Borrower and/or any of its
Subsidiaries, its business or on the use of such real property or on the value
to or marketability by such Borrower or such Subsidiary of its interests in such
real property; and (e) extensions, renewals or replacements of any Lien referred
to in clauses (a) through (d) above; PROVIDED, HOWEVER, that (i) the principal
amount of the obligation secured thereby is not increased, except as otherwise
permitted by such clauses in the first instance, and (ii) any such extension,
renewal or replacement is limited to the property originally encumbered thereby.
"DEBT SERVICE COVERAGE" means, as of the date of determination, a ratio
based upon, among other things, operating income, all operating expenses and
reserves (including, among other reserves, a capital expense reserve, as
provided in this definition), payments of debt service on the Loan or Loans
being tested assuming a twenty-five (25) year amortization of the Loan or Loans
being tested, as of the date of determination, and an interest rate equal to the
Yield plus the Market Spread, and such other items of income and expense as
Lender may apply in its underwriting standards and criteria, in determining Debt
Service Coverage. For purposes of determining Debt Service Coverage, Lender
shall apply a capital expense reserve (the "Capital Expense Reserve") of twenty
cents ($.20) per square foot for each Collateral Property, or such lesser amount
based upon an engineering or structural report prepared by an engineer hired by
7
Borrower and approved by Lender; provided however, in no event shall the Capital
Expense Reserve equal less than fifteen cents ($.15) per square foot. The
determination of Debt Service Coverage and the factors used therein, shall be in
Lender's sole but reasonable discretion which determination shall be binding and
conclusive absent manifest error.
"DEEDS OF TRUST" mean, collectively, the Deeds of Trust, Security
Agreements and Assignments of Leases and Rents and Indemnity Deeds of Trust to
be entered into between the Borrower and/or Collateral Property Subsidiary and
the Lender, in each case substantially in the form of EXHIBIT E hereto, as a
condition to the making of a Loan, as the same may from time to time be amended,
modified, supplemented or extended.
"DEFAULT" means any event which is, or with the lapse of time or giving
of notice, or both, would be, an Event of Default.
"DOLLARS" and "$" means lawful money of the United States of America.
Any reference in this Agreement to payment in "Dollars" or "$" means payment in
Dollar funds immediately available for use by the Lender in New York, New York.
"ENVIRONMENTAL CLAIM" means any third party (including, without
limitation, governmental authorities and employees) action, lawsuit,
investigation, claim, proceeding, order, decree, consent agreement, notice of
violation or other legal proceeding (collectively an "ACTION") (including,
without limitation, any Action under OSHA or any similar law relating to the
safety or health of employees) which seeks to impose liability for (i)
pollution, contamination, protection, clean-up, restoration, destruction, loss
or injury to or of the air, surface water, groundwater, land (including, without
limitation, surface and subsurface strata) or other natural resources; (ii)
solid, gaseous or liquid Waste generation, handling, transportation, treatment,
processing, clean-up, storage, disposal, recycling or reclamation; (iii)
exposure to pollutants, contaminants, hazardous materials, hazardous substances,
toxic materials or substances, or Wastes; (iv) the safety or health of
employees; (v) the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport, recycling, reclamation or handling of
chemical substances, pollutants, contaminants, hazardous materials, hazardous
substances, toxic materials or substances, (vi) Wastes or (vii) noise. An
"ENVIRONMENTAL CLAIM" includes, but is not limited to, a common law action, as
well as a legal proceeding initiated or brought by any federal, state or local
executive, legislative, judicial, regulatory or administrative agency, board or
authority or any third party to issue, modify, adopt, terminate or enforce the
provisions of an Environmental Permit or to modify, adopt, terminate or enforce
a Requirement of Environmental Law, to the extent that such a proceeding
attempts to redress violations or alleged violations of the applicable
Environmental Permit or Requirement of Environmental Law.
"ENVIRONMENTAL INDEMNITIES" mean, collectively, (i) the Environmental
Indemnity dated as of the Closing Date between the Borrower and the Lender, and
(ii) the Environmental Indemnity to be entered into between the Borrower and the
Lender, in each case, in the form of
8
EXHIBIT F hereto, as the same may from time to time be amended, modified,
supplemented or extended.
"ENVIRONMENTAL LAWS" shall mean any federal, state, local and foreign
laws, regulations, codes, ordinances, plans, orders, decrees, judgments,
injunctions, notices or demand letters issued, promulgated or entered thereunder
by any Governmental Authority relating to pollution or protection of the
environment, including, without limitation, laws relating to reclamation of land
or waterways and laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, hazardous materials, hazardous substances,
toxic materials or substances, or Wastes into the environment or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, hazardous
materials, hazardous substances, toxic materials or substances, or Wastes, or
otherwise relating to worker health and safety or public health and safety to
which the Borrower and its Subsidiaries are subject, including, without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970 ("OSHA"), as amended, the Resource Conservation and Recovery
Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the
Toxic Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, and any other environmental
conservation or protection laws.
"ENVIRONMENTAL LIABILITIES" means all costs arising from or related to
any Environmental Claim, Environmental Permit or Requirement of Environmental
Law (including, without limitation, all costs arising under any theory or
process of recovery or relief, at law or in equity), whether based on
negligence, strict liability, RCRA, CERCLA or otherwise, including, but not
limited to, remedial, removal, response, restoration, abatement, investigative,
monitoring, personal injury, death and property damage costs, and any other
related costs, expenses, losses, damages, penalties, fines, liabilities and
obligations, including, without limitation, attorneys' fees, court costs and
interest paid or accrued.
"ENVIRONMENTAL MATTERS" means any and all matters relating to any
Requirement of Environmental Law, Environmental Claim or Environmental Permit.
"ENVIRONMENTAL PERMIT" means any permit, license, notice, order,
approval or other authorization under any applicable law, rule, regulation or
other requirement of the United States or of any state, municipality or other
subdivision thereof relating to (i) pollution or protection of the environment
or safety and health, including, without limitation, all laws, rules,
regulations or other requirements relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, hazardous materials, hazardous
substances, toxic materials or substances, or Wastes into or on the air, surface
water, groundwater or land (including, without limitation, surface and
subsurface strata), or (ii) the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transport, recycling,
reclamation or handling of chemical substances, pollutants, contaminants,
hazardous materials, hazardous substances, toxic materials or substances, or
Wastes.
9
"ENVIRONMENTAL REPORTS" means the Environmental Reports delivered to
the Lender pursuant to Section 4.02(d) hereof.
"EQUITY PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) from
the issuance of any equity Securities of Borrower or any of its Subsidiaries,
including additional issuances of common shares, preferred shares or Partnership
Interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE" means each Person (as defined in Section 3(9) of
ERISA) that is a member of any "controlled group" (as defined in Section
4001(14) of ERISA) that includes the Borrower.
"ERISA TERMINATION EVENT" means (i) any Reportable Event, (ii) the
withdrawal of the Borrower or any of its ERISA Affiliates from a Plan during a
Plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate a Plan
or to treat any Plan amendment as a termination under Section 4041 of ERISA,
(iv) any Plan amendment or the occurrence of any event that constitutes a
"partial termination" (within the meaning of Section 411(d)(3) of the IRC) with
respect to any Plan, (v) the institution of proceedings to terminate a Plan or
the appointment of a trustee by the PBGC pursuant to Section 4044 of ERISA or
(vi) any event or condition that might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
"ESTOPPEL CERTIFICATES" mean, collectively, the Estoppel Certificates
to be entered into by the tenants of the Collateral Properties in favor of the
Lender, in each case, in the form of EXHIBIT G hereto, as the same may from time
to time be amended, modified, supplemented or extended by Lender, as a condition
to the making of a Loan.
"EVENT OF DEFAULT" means any event specified as such in Section 8.01
hereof.
"EXPIRATION DATE" means the earlier of (i) the first anniversary of the
first Loan under this Agreement or (ii) 365 days from the Closing Date. The
Expiration Date is subject to Section 2.01(b) hereof. At no time shall the
Expiration Date be more than three hundred sixty five (365) days from any day
during the term hereof, inclusive of any extension period granted by Lender.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, PROVIDED, that (i) if the day for which such rate is to be
10
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to the Lender, directly or indirectly, on such
Business Day on such transactions as determined by the Lender.
"FISCAL QUARTER" means each of the four periods of three months of each
year, ending on the last day of each March, June, September and December, which
in the aggregate constitute a Fiscal Year.
"FISCAL YEAR" means the fiscal year ending on December 31.
"GAAP" means generally accepted accounting principles (i) in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
the Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination, and (ii) which are consistently applied in form and substance.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"INDEBTEDNESS" means (without duplication), with respect to any Person,
all obligations, contingent and otherwise, which, in accordance with GAAP, would
be included in determining total liabilities as shown on the liabilities side of
a balance sheet of such Person as at any date at which the amount thereof is to
be determined, but in any event and as well including, the Note, all other
amounts due under the Loan Documents, any contingent obligations arising due to
all guarantees, endorsements (other than endorsements for collection or deposits
in the ordinary course of business) and all other contingent obligations whether
or not in respect of any Indebtedness of others, deferred taxes and accrued
obligations, all liabilities secured by any mortgage, pledge or lien existing on
property owned or acquired subject to such mortgage, pledge or lien, whether or
not the liability secured thereby shall have been assumed, and all lease
obligations.
"IDOT" means the Indemnity Deed of Trust to be entered into by Borrower
or any Collateral Property Subsidiary with respect to any Collateral Property
located in the State of Maryland, in each case substantially in the form of
Exhibit E attached hereto and otherwise in form and substance acceptable to
Lender and its counsel, , as a condition to the making of a Loan, as the same
may from time to time be amended, modified, supplemented or extended.
"INITIAL BORROWING DATE" means the first Borrowing Date on which the
first Loan is made hereunder.
11
"INTEREST EXPENSES" of any Person shall mean, for any period, the
interest expenses incurred, accrued or paid of such Person for such period on
the aggregate principal amount of their Indebtedness, determined in accordance
with GAAP.
"INTEREST PERIOD" means a period commencing, in each instance, on the
first day of a calendar month and ending on the last day of such month provided,
however, that in the case of any Loan which is made on other than the first day
of a calendar month, the first Interest Period for such Loan shall commence on
the Borrowing Date of such Loan and end on the last day of the calendar month in
which the Borrowing Date occurs; PROVIDED, HOWEVER, that no Interest Period for
any Loan shall extend beyond the Expiration Date.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar agreement
or arrangement designed to protect the Borrower or any of its Subsidiaries
against fluctuations in interest rates, which agreement or approval shall be
approved by Lender as to form and substance; provided, however, that such
approval by Lender shall not be required if such agreement (i) shall have a
minimum term of two (2) years, or, in the case of loans pursuant to which
interest shall accrue at a rate other than a fixed rate, a term equal to the
term of such floating rate loan (to the extent the term of floating rate loan is
less than two(2) years, (ii) shall have the effect of capping the interest rates
covered thereby at a rate equal to or lower than the Interest Rate Cap at the
time of purchase or execution, and (iii) shall be with an Approved Bank,
provided that it is acknowledged and agreed that the Borrower shall have no
obligation to replace any Interest Rate Agreement even if the counterparty
thereto shall cease to be an Approved Bank.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"INTEREST RATE CAP" means the Treasury Rate plus 3%.
"JURISDICTONAL CAPPED MORTGAGES" shall collectively mean the
Mortgage(s) or Deed(s) of Trust now or hereafter covering Collateral Property
located in any state in which the mortgage recording tax or other cost of
recording a mortgage or deed of trust is not de minimus and, therefore, which
secures a maximum original principal amount of indebtedness which is less than
the Commitment, whether for the purpose of limiting the debt secured by such
Mortgage or Deed of Trust and the mortgage recording taxes payable in connection
therewith or otherwise with the approval of Lender.
12
"KNOWLEDGE" means, with respect to any Person, what such Person knows
or should have known, in each case, after due inquiry.
"LEASES" mean, collectively, all of the leases now existing or
hereafter entered into in connection with the Collateral Properties.
"LENDER" has the meaning given to it in the preamble of this Agreement,
and its successors, participants and assigns (including any Person who becomes a
holder of the Note).
"LENDER'S OFFICE" means the Lender's principal office at One New York
Plaza, New York, New York 10292.
"LIBOR" in respect of each Interest Period shall be the rate per annum
equal to the product arrived at by multiplying the Base LIBOR applicable to such
Interest Period by a fraction (expressed as a decimal), the numerator of which
shall be the number one and the denominator of which shall be the number one
minus the aggregate reserve percentages (expressed as a decimal) from time to
time established by the Board of Governors of the United States Federal Reserve
System and any other Governmental Authority to which the Lender is now or
hereafter subject, including, without limitation, any reserve on "Eurocurrency
Liabilities" (as defined in Regulation D of the Board of Governors of the United
States Federal Reserve System) at the ratios provided in such Regulation from
time to time, it being agreed that the Loans shall be deemed to constitute
Eurocurrency Liabilities and it being further agreed that such Eurocurrency
Liabilities shall be deemed to be subject to such reserve requirements without
the benefit of or credit for prorations, exceptions or offsets that may be
available to the Lender from time to time under such Regulation and irrespective
of whether the Lender actually maintain all or any portion of such reserve.
"LIEN" means, with respect to any Person, (i) any lien (including,
without limitation, any statutory lien), mortgage, hypothecation, privilege,
security interest, pledge, encumbrance, charge (general or special, floating or
fixed) or conditional sale or other title retention arrangement (including,
without limitation, the rights of a lessor under a capital lease to the property
leased thereunder) or other security interest of any kind upon any property or
assets of any character of such Person, whether now owned or hereafter acquired
by such Person, or upon the income or profits therefrom, (ii) the transfer,
pledge or assignment by such Person of any of its property or assets for the
purpose of subjecting the same to the payment of any indebtedness of such Person
or others in priority to the payment by such Person of its general creditors,
(iii) any sale, assignment, pledge or other transfer by such Person of its
accounts receivable, contract rights, general intangibles or chattel paper with
recourse, and (iv) any agreement to give or do any of the foregoing.
"LOAN" or "LOANS" means the loans made pursuant to Section 2.02(a)
hereof.
"LOAN AVAILABILITY PERIOD" means the period from and including the
Closing Date to the date which is three (3) months prior to the Expiration Date.
13
"LOAN DOCUMENTS" mean, collectively, this Agreement, the Note, the
Collateral Documents, the Estoppel Certificates, the Subordination Agreements,
the Environmental Indemnities, the Indemnities and Guaranties of Recourse
Obligation, and all other documents, agreements, instruments and certificates
executed and delivered by, or on behalf of, the Borrower in connection with the
transactions contemplated by this Agreement.
"LOAN PARTY" means the Borrower, COPT and each Collateral Property
Subsidiary.
"LOAN-TO-VALUE RATIO" means, as of the date of determination, a ratio
taking into account, among other things, the sum of the outstanding Loan being
tested, the proceeds of which were used to acquire the applicable Collateral
Property, the outstanding Reserves, if any, applicable to such Collateral
Property, the market value of such Collateral Property applying a capitalization
rate of 9.5%, and such other factors as Lender shall apply in its underwriting
standards and criteria in determining the Loan-to-Value Ratio. Such
determination shall be made by Lender in its sole but reasonable discretion,
which determination shall be binding and conclusive absent manifest error.
Lender shall have the right, in its sole discretion, to apply a higher or lower
capitalization rate for any period following the one (1) year anniversary of the
Closing Date if the Maturity Date is extended as permitted herein.
"MARKET SPREAD" two hundred thirty (230) basis points above the Yield.
Lender shall have the right, in its sole discretion, to designate a higher or
lower number of basis points as the Market Spread for any period following the
one (1) year anniversary of the Closing Date, if the Maturity Date is extended
as permitted herein.
"MATERIAL ADVERSE CHANGE" of the Borrower or its Subsidiaries means a
material adverse change in the business, condition (financial or otherwise),
assets, properties or operations of the Borrower or Subsidiary.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or events
which (i) would have any material adverse effect whatsoever upon the validity or
enforceability of this Agreement, the Note or any other Related Document, (ii)
is or would reasonably be expected to have a material adverse effect on the
business, condition (financial or other), assets, properties or operations of
the Borrower or its Subsidiaries, as the case may be and as applicable, (iii)
would materially impair the Borrower's or its Subsidiaries' ability to fulfill
their respective obligations under the terms and conditions of this Agreement or
the other Related Documents to which they are a party thereto, or (iv) would
materially impair the Lender's rights in or to, or have a material adverse
effect on, the Collateral.
"MEMORANDA OF LEASE" mean, collectively, each memorandum of lease
describing a Lease and recorded in the appropriate filing offices of the
respective jurisdiction except that a memorandum of lease shall not be recorded
with respect to Leases made in connection with any Collateral Property located
in the State of Maryland.
14
"MODIFICATIONS" has the meaning set forth in Section 4.02(f) hereof.
"MOODY'S" means Moody's Investors Service, Inc. or any successor to the
business thereof.
"MORTGAGES" mean, collectively, the Mortgages, Security Agreements and
Assignments of Leases and Rents to be entered into between the Borrower and the
Lender, in each case, substantially in the form of EXHIBIT E hereto, as a
condition to the making of a Loan, as the same may from time to time be amended,
modified, supplemented or extended.
"NET INCOME" of any Person means, for any period taken as one
accounting period, the net income (or loss) of such Person for such period after
eliminating all intercompany items, determined in accordance with GAAP;
PROVIDED, HOWEVER, that there shall be excluded (i) the income (or loss) of such
Person in which any other Person has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to such Person by
such other Person during such period, (ii) except to the extent includable
pursuant to the foregoing clause (i), the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of such Person or is merged into or
consolidated with such Person or that Person's assets are acquired by such
Person, and (iii) any extraordinary gains or losses and gains or losses from
sales of assets (other than sales of inventory in the ordinary course of
business), determined in accordance with GAAP.
"NET WORTH" of any Person shall mean, for any period, the excess of (i)
Total Assets, over (ii) Total Liabilities.
"NOTE" shall mean the Secured Promissory Note in the form of Exhibit K.
"NOTICE OF BORROWING" has the meaning given to it in Section 2.02(b)(i)
hereof.
"NOTICE OF OPTIONAL PREPAYMENT" has the meaning given to it in Section
2.06 hereof.
"OBLIGATIONS" means, as to the Borrower, all liabilities, obligations
and indebtedness of the Borrower to the Lender of any and every kind and nature
(including, without limitation, principal payments, interest charges, late fees,
default interest, other charges and expenses, attorneys' fees, maintenance,
commitment and other fees chargeable to the Borrower by the Lender and future
advances made to or for the benefit of such Person), whether arising under this
Agreement, under any of the Related Documents, under any refinancing or
modification of the credit facilities provided under this Agreement or any of
the Related Documents, pursuant to any arrangement, agreement or understanding
hereafter among the Borrower and the Lender or otherwise, or acquired by the
Lender from any other source, whether now or hereafter owing, arising, due or
payable from the Borrower to the Lender, whether before or after the filing of a
proceeding under the Bankruptcy Code by or against the Borrower, regardless of
how evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, including, without limitation,
obligations or guarantees of performance or payment.
15
"OPERATIONAL DOCUMENTS" mean and include without limitation,
collectively, the Acquisition Documents, the Leases, the Memoranda of Lease, the
Building Condition Reports, the Environmental Reports and the Service
Agreements.
"PARTNERSHIP INTERESTS" means the general and/or limited partnership
interests (including all partnership units, all rights under partnership
agreements and all rights to distributions) of such Person that is a
partnership.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERMITS" shall have the meaning set forth in Section 3.03 hereof.
"PERMITTED USE OF FUNDS" The proceeds of the Loans shall be used by
Borrower for no purpose other than: (i) to fund certain of Borrower's
acquisition, redevelopment and development activities that (a) satisfy the
applicable covenants set forth in this Agreement and (b) are located in the
mid-Atlantic region of the United States and are otherwise generally consistent
with Borrower's existing properties; and (ii) to fund Borrower's working capital
requirements in connection with its general business purposes.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"PLAN" means any "Employee Benefit Plan" (as defined in Section 3(3) of
ERISA) as covered by any provision of ERISA and as maintained, or otherwise
contributed to, or at any time during the five calendar year period immediately
preceding the date of this Agreement was maintained or otherwise contributed to,
by the Borrower, or any ERISA Affiliate of the Borrower for the benefit of the
respective employees of the Borrower or an ERISA Affiliate of the Borrower.
"PML" has the meaning set forth in Section 4.02(e) hereof.
"PROHIBITED TRANSACTION" means any "prohibited transaction" (within the
meaning of Section 406 of ERISA or Section 4975 of the IRC) with respect to any
Plan for which transaction no statutory exemption is not available.
"REGULATIONS D, G, T, U AND/OR X" means Regulations D, G, T, U and/or X
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"REIT" means a "real estate investment trust" as defined in Sections
856-860 of the IRC.
"REGULATORY CHANGE" means the introduction of, or any change in, United
States federal, state or local laws or regulations (including Regulation D) or
treaties or foreign laws or
16
regulations after the Closing Date or the adoption or making after such date of
any interpretations, directives, guidelines or requests applying generally to a
class of banks and/or financial institutions, including the Lender, of or under
any United States federal, state, or local rules or regulations or any treaties
or foreign laws or regulations (whether or not having the force of law) by any
court or monetary or Governmental Authority charged with the interpretation or
administration thereof. Notwithstanding the foregoing, a "Regulatory Change"
shall not include any change in the aggregate reserve percentages included in
the definition of "LIBOR" which are from time to time established by the Board
of Governors of the United States Federal Reserve System and any other
Governmental Authority to which the Lender is now or hereafter subject
(including, without limitation, any reserve on "Eurocurrency Liabilities" (as
defined in Regulation D of the Board of Governors of the United States Federal
Reserve System)).
"RELATED DOCUMENTS" means, collectively, the Loan Documents and the
Operational Documents.
"RELEASE" and "Releases" means a release or releases of a Collateral
Property from the applicable Mortgage(s) or Deed(s) of Trust in the manner and
upon compliance with the requirements, terms and conditions set forth in Section
2.14 hereof.
"RELEASE PROPERTY" has the meaning set forth in Section 2.14 hereof.
"RELEASE PRICE" has the meaning set forth in Section 2.14 hereof.
"REPAIRS" has the meaning set forth in Section 5.16 hereof.
"REPORTABLE EVENT" means any "reportable event" described in Section
4043(b) of ERISA with respect to which the 30 day notice requirement set forth
in Section 4043(a) of ERISA has not been waived by the PBGC that occurs or has
occurred in connection with any Plan.
"REQUIREMENTS OF ENVIRONMENTAL LAW" means any and all requirements
imposed by and provisions of any law, rule, regulation, order, decision or
decree of any federal, state or local executive, legislative, judicial,
regulatory or administrative agency, board or authority which relate to (i)
pollution, contamination, protection, clean-up, restoration, destruction, loss
or injury to or of the air, surface water, groundwater, land (including, without
limitation, surface and subsurface strata) or other natural resources; (ii)
solid, gaseous or liquid Waste generation, handling, transportation, treatment,
processing, clean-up, storage, disposal, recycling or reclamation; (iii)
exposure to pollutants, contaminants, hazardous materials, hazardous substances,
toxic materials or substances, or Wastes; (iv) the safety or health of employees
(other than social security laws); (v) the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transport, recycling,
reclamation or handling of chemical substances, pollutants, contaminants,
hazardous materials, hazardous substances, toxic materials or substances, or
Wastes; or (vi) noise.
17
"RESERVES" mean the reserves, maintained in accordance with customary
real estate practices for loans of a similar type, established by the Borrower,
and reasonably approved by Lender, at the closing of each applicable Loan
against the availability under this Agreement in the amount equal to 125% of the
costs of the Modifications.
"SECURITIES" mean all shares, options, membership interests,
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, limited liability company, partnership or
equivalent entity, whether voting or non-voting, including, without limitation,
common stock, preferred stock, warrants, convertible debentures and all
agreements, instruments and documents convertible, in whole or in part, into any
one or more of or all of the foregoing.
"SERVICE AGREEMENTS" mean, collectively, the material management,
operational and service agreements entered into in connection with the
Acquisition Properties.
"SUBORDINATION AGREEMENTS" mean, collectively, the Subordination,
Non-Disturbance and Attornment Agreements to be entered into between the tenants
of the Collateral Properties and the Lender, in each case, in the form of
EXHIBIT J hereto, as a condition to the making of a Loan, as the same may from
time to time be amended, modified, supplemented or extended.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership or equivalent entity of which more than
50% of the outstanding Securities having ordinary voting power to elect or
appoint a majority of the Board of Directors, managers, general partners or
equivalent positions of such corporation, limited liability company, partnership
or equivalent entity is at the time directly or indirectly owned by such Person,
or by one or more other Subsidiaries of such Person.
"S&P" means Standard & Poor's, a division of the McGraw Hill Companies,
or any successor to the business thereof.
"TOTAL ASSETS" of any Person shall mean, at the date of determination,
all assets of such Person which would, determined in accordance with GAAP, be
classified on a balance sheet as an asset.
"TOTAL LIABILITIES" of any Person shall mean, at the date of
determination, all liabilities of such Person which would, determined in
accordance with GAAP, be classified on a balance sheet as a liabilities.
"TRANSACTION COSTS" means the fees, costs and expenses payable by the
Borrower pursuant to this Agreement or in connection herewith and the fees,
costs and expenses payable by the Borrower in connection with the Loan
Documents, in each case including, but not limited to, attorney's fees and
expenses.
18
"TREASURY RATE" means, as of any date of determination, a rate equal to
the Yield as reported in Federal Reserve Statistical Release H.15-Selected
Interest Rate, published most recently prior to the date the applicable Treasury
Rate is being determined.
"WASTE" or "WASTES" means any material or substance that is defined,
identified or regulated as a waste, solid waste or hazardous waste pursuant to
any applicable federal, state or local law, rule, regulation, order, decision or
decree, including, without limitation, Section 1004 of the RCRA. As used in this
Agreement the phrase "pollutants, contaminants, hazardous materials, hazardous
substances, toxic materials or substances, or Wastes", includes, without
limitation, in each instance, asbestos, polychlorinated biphenyl's, radioactive
materials, oil, petroleum, petroleum products and waste oils.
"WITHOUT RECOURSE" or "WITHOUT RECOURSE" means with reference to any
obligation or liability, any obligation or liability for which the obligor
thereunder is not liable or obligated other than as to its interest in a
designated Acquisition Property or the Collateral Properties or other
specifically identified asset only, subject to such limited exceptions to the
non-recourse nature of such obligation or liability, such as fraud,
misappropriation, misapplication and environmental indemnities, as are usual and
customary in like transactions involving institutional lenders at the time of
the incurrence of such obligation or liability.
"YIELD" means the yield to maturity for the then current non-callable
ten (10) year U.S. Treasury Bond.
Section 1.02. ACCOUNTING AND BANKING TERMS. All accounting and banking
terms not specifically defined herein shall be construed in the case of
accounting terms, in accordance with GAAP and, in the case of banking terms, in
accordance with general practice among commercial banks and financial
institutions in New York, New York.
Section 1.03. DISCRETION. Whenever it is provided in this Agreement or
in any of the Loan Documents that (i) the Lender exercises any right given to it
to approve or disapprove, (ii) any arrangement or term is to be satisfactory to
the Lender, or (iii) any other decision or determination is to be made by the
Lender, the decision of the Lender to approve or disapprove, all decisions that
arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by the Lender, shall be in the reasonable
discretion of the Lender, except as may be otherwise expressly and specifically
provided herein to be in Lender's (a) sole discretion, (b) sole and absolute
discretion, or (c) sole, but reasonable discretion.
ARTICLE 2. THE CREDIT FACILITIES
Section 2.01. THE CREDIT FACILITIES; RIGHT TO EXTEND. (a) At all times
during the Loan Availability Period (or earlier termination of the Loan
Availability Period hereunder), subject to the terms and conditions and relying
upon the representations and warranties hereinafter set forth, the Lender agrees
to make available to the Borrower, one or more Loans on a revolving
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credit basis in the aggregate principal amount of up to the Available
Commitment, to be made to the Borrower upon the request of an Authorized Person
in multiple advances, each on a Borrowing Date. The funds advanced pursuant to
the Loans shall be used only for Permitted Uses of Funds. All of the Loans shall
be without recourse to the Borrower subject, however, to certain limitations and
exclusions as required by Lender. In addition, all of the Loans are hereby
cross-collateralized and cross-defaulted with each other and are hereby
cross-defaulted with other Indebtedness of the Loan Parties which, when
originally extended had or has a principal amount of not less than $75,000,000
or which provided or provides for advances in the aggregate of not less than
$75,000,000, and shall be cross-defaulted with that certain secured credit
facility dated as of May 28, 1998 between Bankers Trust Company, as agent and
lender, and the Loan Parties (the "BT Facility").
(b) Borrower may, by notice to Lender given at least thirty (30) days
prior to the date Borrower submits the Compliance Certificate required by
Section 5.07(b), request a three (3) month extension of the Expiration Date,
which request shall be granted or denied in writing by Lender, in Lender's sole
discretion. Lender shall make its determination within ten (10) business days
following Lender's receipt of any and all documentation required by Lender in
order to process each such request, including, but not limited to (i) the
Compliance Certificate, (ii) the Trust's most recent quarterly report on Form
10Q filed with the Securities and Exchange Commission for the Fiscal Quarter
ending immediately prior to Borrower's request for such extension, (iii) the
most recent operating statements for each Collateral Property, (iv) the most
recent rent rolls for each of the Collateral Properties, and (v) such other
information requested by Lender from time to time. Lender's failure to respond
to Borrower's request within such ten (10) day period shall be deemed to be a
denial of Borrower's request for such extension. The granting of one or more
extensions of the Expiration Date shall not be deemed to be a consent to any one
or more subsequent requests for extensions, and any extensions may be
conditioned on such requirements as Lender shall elect.
At no time shall the Expiration Date be more than three hundred sixty
five (365) days from any day during the term hereof, inclusive of any extension
period granted by Lender.
Section 2.02. THE LOANS; PROCEDURE FOR BORROWING. (a) The Loans shall
be evidenced by the Note executed on the Closing Date by Borrower in the form of
EXHIBIT K attached hereto, and secured by Collateral Documents for each Loan.
Each and all of which shall mature on the Expiration Date and bear interest for
the period from the Borrowing Date thereof to the date of payment in full
thereof on the unpaid principal amount thereof from time to time outstanding, at
the applicable interest rates per annum determined and payable as specified in
Section 2.03 hereof. The Loans shall be administered by the Lender; PROVIDED,
HOWEVER, that the Lender may elect, at its expense, to have the Loans
administered and serviced by a third party.
(b)(i) Each request for a Loan shall be made upon written notice in the
form of EXHIBIT J hereto (a "NOTICE OF BORROWING") given by an Authorized Person
of the Borrower to the Lender not later than 11:00 a.m. (New York City time) on
the third (3rd) Business Day prior to the requested Borrowing Date. Such notice
shall be made by telecopy or telephone, confirmed
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immediately in writing, by delivery of a Notice of Borrowing specifying therein
(A) the requested Borrowing Date, which shall not, in any event, be later than
three (3) months prior to the Expiration Date, (B) the aggregate amount of the
Loans therein requested to be made, which amount shall not be greater than the
Available Commitment or less than One Hundred Thousand and No/100 Dollars
($100,000.00) and in multiples of not less than Ten Thousand and No/100 Dollars
($10,000.00). The Notice of Borrowing shall be irrevocable and shall bind the
Borrower to borrow in accordance with such notice. Upon fulfillment of the
applicable conditions set forth herein, the Lender may, in its sole discretion,
make such Loan available to the Borrower by disbursing such proceeds as an
Authorized Person of the Borrower may instruct the Lender in advance in writing.
Lender shall not be required to fund more than three (3) Loan advances in any
thirty (30) day period.
(ii) The obligations of the Borrower to pay the principal of and
interest on the Loans shall be evidenced by the Note in favor of the Lender duly
executed and delivered by the Borrower on the Closing Date. All Loans to
Borrower pursuant to this Agreement and all payments of the principal of such
Loans to Lender shall be recorded by Lender on the schedule annexed to the Note
and by specific reference made a part thereof. The amounts of principal
indicated by said Schedule as outstanding or accrued and unpaid, as the case may
be, shall constitute rebuttable presumptive evidence of the principal
outstanding and the accrued and unpaid interest on the Loans; provided, that any
failure or error on the part of Lender in recording any Loan on such Schedule
shall not limit the obligation of Borrower to pay all principal of and interest
accruing on the Loans. Although the Note shall be dated on the Closing Date,
interest in respect thereof shall be payable only on the outstanding principal
amounts of each Loan from the date of the making of such Loan until the
principal amount thereof shall be paid in full in accordance with this
Agreement.
(iii) Borrower and the Trust shall evidence their liability on account
of the limitations and exclusions from the without recourse nature of their
obligations by each of their execution of an Indemnity and Guaranty of Recourse
Obligations in the form of EXHIBIT N hereto.
(c) The obligation of Lender to make a Loan shall be subject to the
following, in each instance, giving effect to the Loan then requested by
Borrower:
(i) If the Loan is in connection with an Acquisition Property, the
Loan-To-Value Ratio of each Acquisition Property shall not exceed 65% and each
such Acquisition Property shall have a Debt Service Coverage ratio equal to or
greater than 1.25 to 1.0;
(ii) the Loan-To-Value Ratio for the Collateral Properties, in the
aggregate shall not exceed 65%, and the Debt Service Coverage ratio for the
Collateral Properties, in the aggregate shall be equal to or greater than 1.25
to 1.0;
(iii) the Loan Amount to be funded for an Acquisition Property shall
equal the lesser of (A) 65% of the value of the Acquisition Property, as
determined by Lender in its sole discretion taking into account the factors
considered by Lender in determining an Individual Loan-To-Value Ratio, (B) 65%
of the final purchase price of the Acquisition Property, after
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taking into account any credits or adjustments thereto, and (C) an amount such
that the Acquisition Property can satisfy a Debt Service Coverage ratio equal to
or greater than 1.25 to 1.0;
(iv) the conditions set forth in Article 4.0 shall have been
satisfied or complied with to Lender's satisfaction in its sole discretion; and
(v) the Mortgages of record for the Collateral Properties shall
equal the amount of the Loans then outstanding plus the amount of the Loan then
being requested by Borrower.
(d) In each instance throughout this Agreement, all determinations
of Loan-to-Value Ratios and Debt Service Coverage ratios shall be made by Lender
in its sole but reasonable discretion taking into account Lender's then
applicable underwriting standards and criteria. Such determination shall be
binding and conclusive absent manifest error.
Section 2.03. RATE OF INTEREST; CALCULATION OF INTEREST. (a) Each Loan
shall bear interest on the unpaid principal amount thereof from the Borrowing
Date until such principal amount is paid in full at a rate or rates per annum
determined in accordance with this Section 2.03 or Section 2.12, if applicable.
The Borrower shall pay interest on the unpaid amount of each Loan at the rate
per annum for each Interest Period equal to the sum of (i) LIBOR in effect from
time to time applicable to each Interest Period for such Loan, plus (ii) the
Applicable Margin. Interest shall be payable in arrears on the third (3rd)
business day of each calendar month, commencing with the first calendar month
immediately following the Borrowing Date and ending on the date the principal
amount of such Loan shall be paid or prepaid, to the extent of the interest
accrued on the principal amount of such Loan so paid or prepaid.
(b) From and after the occurrence of any Event of Default under Section
8.01 hereof, and for so long as such Event of Default shall continue (after as
well as before judgment), the unpaid principal amount of each Loan and any other
amount then due and payable but not yet paid hereunder shall bear interest at a
rate per annum equal to the then interest rate of such outstanding Loan
determined in accordance with clause (a) above PLUS five hundred (500) basis
points per annum, payable on demand. Overdue interest shall be compounded and
bear interest, to the extent permitted by law, on each date for payment of
interest on the Loans hereunder. The Borrower shall pay a late charge of four
percent (4%) of each monthly payment not paid within ten (10) days after the
date upon which such payment was due (which amount the Borrower and the Lender
agree is a fair and reasonable estimate of the Lender's damages in light of all
of the facts and circumstances as of the date of this Agreement). Such late
charge shall be due and payable by the Borrower concurrently with the late
payment for which such charge is assessed hereunder.
(c) Interest shall be calculated on a basis of a 360-day year for the
actual number of days elapsed during the Interest Period on the balance
outstanding during such Interest Period. To the extent that interest is required
to be calculated at the Base Rate plus the Applicable Margin pursuant to Section
2.12 hereof, any change in the interest rate on the Loans shall become effective
as of the opening of business on the day on which such change in the Base Rate
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becomes effective. The Lender shall, as soon as practicable, notify the
Borrower of the effective date and the amount of each such change in the Base
Rate; PROVIDED, HOWEVER, that any failure by the Lender to give the Borrower any
such notice shall not affect the application of such change in the Base Rate.
Each determination of an interest rate by the Lender pursuant to any provision
of this Agreement shall be, absent manifest error, deemed to be correct.
(d) Anything herein to the contrary notwithstanding, the obligations of
the Borrower under this Agreement and the Note shall be subject to the
limitation that payments of interest shall not be required to the extent that
receipt thereof would be contrary to provisions of law applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. If
the Borrower pays the Lender interest in excess of the maximum amount permitted
by applicable law, such excess shall be applied in reduction of the principal
balance of the Note, and any remaining excess shall be refunded to the Borrower.
Section 2.04. INDEMNITY AND FUNDING LOSSES. The Borrower hereby agrees
to indemnify the Lender and to reimburse and hold the Lender harmless from any
Breakage Fees, loss, liability, cost or actual out-of-pocket expense (including,
without limitation, reasonable attorney's fees and expenses for the Lender
incurred in connection with any action or proceeding between or among the
Borrower and any Lender or between the Lender and any third party or otherwise)
that the Lender may sustain or incur as a consequence of (a) a default by the
Borrower in the payment of principal of, or interest on, any Loan, (b) a default
by the Borrower in borrowing (or in fulfilling on or before the requested
Borrowing Date the applicable conditions set forth in Article 4 hereof with
respect to such borrowing), (c) a default by the Borrower in making any
prepayment after notice thereof has been given in accordance with Section 2.05
or 2.06 hereof, or (d) the Borrower making any payment of principal with respect
to any Loan on a day other than the last day of the Interest Period applicable
thereto. The Lender shall deliver to the Borrower a certificate as to the amount
of such loss, liability, cost or expense, which certificate shall be conclusive
in absence of manifest error. This covenant shall survive payment of the Loans
and termination of this Agreement as to claims arising prior to the indefeasible
payment in full of the Loans.
Section 2.05. MANDATORY PREPAYMENTS. (a) EXCESS OF COMMITMENT. If at
any time the aggregate unpaid principal amount of the Loans outstanding exceeds
the Commitment, the Borrower shall immediately repay such Loans as Lender shall
require, without premium or penalty, in a principal amount at least equal to
such excess and in a minimum amount equal to $10,000 or any larger whole
multiple of $10,000, together with accrued interest on the amount prepaid to the
date of repayment.
(b) FINANCIAL REPORTING TESTS. If at any time (i) the
Loan-To-Value Ratio for the Collateral Properties in the aggregate exceeds 75%
or (ii) the Debt Service Coverage ratio for the Collateral Properties in the
aggregate is less than 1.25 to 1.0, the Borrower shall promptly, but in no event
later than ten (10) days after notice from Lender, either (I) prepay a portion
of the Loans designated by Lender in its sole discretion, or (II) grant the
Lender a first and only mortgage lien, in form and substance satisfactory to the
Lender, in certain of its existing properties which are
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currently unencumbered, and otherwise pledge to and encumber in favor of Lender
such property as if it were an Acquisition Property, which have a Loan-To-Value
Ratio equal to or less than 65%, and a Debt Service Coverage ratio equal to or
greater than 1.25 to 1.0, and are otherwise satisfactory to the Lender in all
respects in Lender's sole discretion; in either case so that (x) the
Loan-To-Value Ratio of the Collateral Properties in the aggregate does not
exceed 70%, (y) the Debt Service Coverage ratio for the Collateral Properties in
the aggregate equals or is greater than 1.25 to 1.0, and (z) the Loans are
otherwise in compliance with the provisions of Section 7 hereof. Any such
prepayment shall be accompanied by the attendant Breakage Fees.
(c) ASSET SALES. Subject to Section 6.05 hereof, the Borrower
shall apply all net proceeds of any Collateral sales as a mandatory prepayment
of the Loan without penalty or premium. Subject to Section 2.08 hereof, all such
amounts designated for mandatory prepayment, as aforesaid, shall be applied to
the respective scheduled principal payments outstanding (i) first to Borrower's
indebtedness with respect to such Collateral and then (ii) in accordance with
Section 2.05(b) hereof.
Section 2.06. OPTIONAL PREPAYMENTS. The Borrower may, upon at least two
(2) Business Days prior notice to the Lender, voluntarily prepay any Loan in
whole at any time or in part from time to time, with accrued interest to the
date of such prepayment on the amount prepaid but, subject to Section 2.04(d)
hereof, in an amount not less than $100,000 or an integral multiple of $100,000
in excess thereof, and so long as in each such instance the remaining Loans, in
the aggregate, have a Debt Service Coverage ratio equal to or greater than 1.25
to 1.0 and a Loan-To-Value Ratio that shall not exceed 75% based on the Lender's
underwriting standards and determination, in its sole but reasonable discretion.
Each such notice shall be made by an Authorized Person of the Borrower by
telecopy or telephone, confirmed immediately in writing, by delivery of a Notice
of Optional Prepayment, substantially in the form of EXHIBIT L hereto,
specifying therein (i) the proposed date of such prepayment, and (ii) the
aggregate amount of the particular Loan(s) therein proposed to be prepaid. Each
Notice of Optional Prepayment shall be irrevocable and shall bind the Borrower
to make such prepayment in accordance with such notice. Any amounts prepaid
pursuant to this Section 2.06 may be re-borrowed by Borrower during the Loan
Availability Period in accordance with the terms and conditions of this
Agreement.
Borrower shall not be entitled to make an optional prepayment, if,
after giving effect to the prepayment as requested in a Notice of Optional
Prepayment, the financial reporting tests set forth in Section 2.05(b) shall not
be satisfied, unless the "make whole" provisions of said Section are complied
with by Borrower.
Section 2.07. PAYMENTS. All payments (including prepayments) to be made
by the Borrower under this Agreement shall be made by wire transfer to the
Lender, in Dollars and in immediately available funds, at such place or places
as the Lender may from time to time designate by written notice to the Borrower.
All payments to be made hereunder by the Borrower shall be made without setoff,
counterclaim or defense. If any payment hereunder
24
becomes due and payable on a day other than a Business Day, the due date of such
payment shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest thereon shall be payable at the applicable
rate during such extension; PROVIDED, HOWEVER, that no such payments of each
Loan shall extend beyond the Expiration Date.
Section 2.08. APPLICATION OF PAYMENTS. All payments of principal under
this Agreement shall be applied to Loan or Loans then outstanding in such manner
and order of priority as the Lender shall elect in its sole and absolute
discretion. Notwithstanding the foregoing, the amounts secured by any
Jurisdictional Capped Mortgage shall not be reduced in connection with any
payments of principal which the Lender has the right to apply to the Loans in
such manner and order as Lender shall elect in its sole and absolute discretion
in accordance with the immediately preceding sentence until the aggregate
maximum principal amount secured by such Jurisdictional Capped Mortgage(s) shall
exceed the total principal amount of all Loans then outstanding. In any such
event, the Lender will determine in its sole discretion which Mortgages or Deeds
of Trust comprising such Jurisdictional Capped Mortgages are to be reduced.
Section 2.09. USE OF LOAN PROCEEDS. The Borrower shall use the proceeds
of the Loans for the Permitted Uses of Funds only provided however that any
acquisition complies with the provisions of Section 7.04 and Article 4 hereof
and the other covenants contained herein.
Section 2.10. FEES. (a) Upon Borrower's signing of this Agreement, a
non-refundable commitment fee (the "Commitment Fee") shall be deemed earned in
full by Lender and shall be due and payable to Lender, as set forth below:
(i) A Commitment Fee in the amount of $62,500 shall be due and
payable by Borrower on account of the credit facility being made available to
Borrower by Lender pursuant to the terms of this Agreement, provided that Lender
receives payment thereof on or prior to December 31, 1999.
(ii) In the event that Lender has not received the payment
described in 2.10(a)(i) on or prior to December 31, 1999, then a Commitment Fee
in the amount of $3,500 shall be payable by Borrower on account of the credit
facility being made available to Borrower by Lender pursuant to the terms of
this Agreement.
(iii) In all events, the obligation of the Lender to make any Loan
(including any Loans to be made on the Closing Date) shall be subject to
Lender's receipt of the fees set forth in (a) or (b) hereof , as applicable,
prior to the relevant Borrowing Date.
(b) A non-refundable expense reimbursement fee payable to the
Lender by the Borrower on the Closing Date and on each Borrowing Date
thereafter. Such expense reimbursement fee shall include any fees and expenses
incurred or paid by Lender in connection with the processing, underwriting or
closing of a Loan including, without limitation, property inspection fees,
appraisal fees, attorney fees, fees for title insurance, recording fees and
taxes,
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travel expenses of Lender's personnel or Lender's attorneys, and other
out-of-pocket expenses incurred by Lender.
Section 2.11. INCREASED COSTS. If any Regulatory Change: (a) subjects
the Lender to any tax of any kind whatsoever with respect to this Agreement, the
Note or any Loan or changes the basis of taxation of payments to the Lender of
principal, interest, commitment fees, or any other amount payable hereunder in
any of the foregoing (except for changes in the rate of tax on the overall net
income of the Lender); (b) imposes, modifies or holds applicable to the Lender
(or any corporation controlling the Lender) any reserve or capital adequacy
requirements or liquidity ratios or requires the Lender or any corporation
controlling the Lender) to make special deposits against or in respect of assets
or liabilities of, deposits with or for the account of, or credit extended by,
the Lender; or (c) imposes on the Lender any other condition affecting this
Agreement, the Note or the Loans; and the result of any of the foregoing is (i)
to increase the cost to the Lender of making or maintaining Loans or to reduce
any amount received or receivable by the Lender hereunder, (ii) to require the
Lender (or any corporation controlling the Lender) to make any payment to any
fiscal, monetary, regulatory or other authority calculated on or by reference to
any amount received or receivable by the Lender under this Agreement or the
Note, or (iii) to reduce the rate of return on the Lender's capital as a
consequence of its obligations hereunder to a level below that which the Lender
could have achieved but for such adoption, change or compliance (taking into
consideration the Lender's policies with respect to capital adequacy), in any
case by an amount deemed by the Lender to be material, then, in any such case,
the Borrower shall promptly pay the Lender (or such corporation controlling the
Lender), on its written demand, any additional amount necessary to compensate
the Lender (or such corporation) for such additional cost, reduced amount
receivable or reduction in rate of return with respect to this Agreement, the
Note or the Loans, together with interest on such amount from the date demanded
until payment in full thereof at the rate per annum applicable to Loans,
calculated on the basis of a 360-day year for the actual days elapsed. If the
Lender becomes entitled to claim any additional amount pursuant to this Section
2.11, the Lender shall promptly submit to the Borrower a certificate as to any
additional amount payable pursuant to the first sentence of this Section 2.11,
which amount shall be, absent manifest error, presumed to be correct; PROVIDED,
HOWEVER, that the determination thereof is made on a reasonable basis. In
determining such amount, the Lender shall use any reasonable averaging and
attribution methods.
Section 2.12. LIBOR ALTERNATE RATE In the event, and on each occasion,
that on the day of the commencement of a particular Interest Period, the Lender
determines in good faith (which determination shall be conclusive and binding
upon the Borrower) that (a) U.S. dollar deposits, in an amount equal to the
aggregate principal amount of the Loans which are outstanding during such
Interest Period, for delivery on the first day of such Interest Period and for
the number of days in such Interest Period, are not generally available in the
London Interbank Market or the circumstances affecting the London Interbank
Market make it impractical to determine LIBOR, or (b) any Regulatory Change
shall make it unlawful for the Lender to make or maintain LIBOR with respect to
any Loan or to fund any Loan at LIBOR in the London Interbank Market or to give
effect to its obligations hereunder, then the outstanding principal amount of
the Loans shall
26
bear interest at an interest rate equal to the Base Rate plus the Applicable
Margin, unless and until the Lender shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower) that the
aforesaid circumstances no longer exist, whereupon the interest rate applicable
to such Loans shall be converted back to an interest rate equal to LIBOR plus
the Applicable Margin, determined in the manner set forth above as of the
commencement of the next Interest Period.
Section 2.13. ADDITIONAL DISBURSEMENT. (a) Lender may agree, from time
to time with respect to certain Collateral Properties to advance to Borrower an
amount which is less than the principal amount of the Loan secured by such
Collateral Properties. In that event, Lender shall prepare a SCHEDULE 2.13 to
this Agreement which shall become a part hereof and set forth the additional
disbursements which Lender shall make to Borrower with respect to the Collateral
Properties identified on such Schedule (the "Additional Disbursement") subject
to the terms of this Section 2.13.
(b) Upon and with a request by Borrower for an Additional
Disbursement, Borrower shall provide evidence in all respects satisfactory to
Lender that: (i) additional rentals which support the Additional Disbursement
are derived from leases under which the lease term has commenced; (ii) the
lessees or tenants under such leases are acceptable to Lender; (iii) assuming
the Additional Disbursement, the requirements set forth in Sections 7.01 and
7.03 hereof are met; and, (iv) no Event of Default has occurred or is
continuing.
(c) Lender shall make no more than two Additional Disbursements
with respect to the Collateral Properties identified on any SCHEDULE 2.13
hereto. Borrower's right to request such Additional Disbursements shall
terminate 180 days from the Borrowing Date set forth on the applicable SCHEDULE
2.13. No Additional Disbursement shall be made by Lender in an amount less than
One Hundred Thousand ($100,000.00) Dollars.
Section 2.14. RELEASE OF PROPERTIES. Upon Borrower's written request
received from time to time, Lender shall release one (1) or more individual
Collateral Properties from the lien of the Loan Documents ("Release Property"),
upon the following terms and conditions:
(a) Borrower's written request shall be received by Lender at
least sixty (60) days prior to the date of the requested release (the "Release
Date").
(b) At the time of the request and the time of the release; there shall
be no event of default under the Loan Documents, and there shall exist no
condition or state of facts which with the passage of time or the giving of
notice or both, would constitute a default under the Loan Documents.
(c) Each Release Property released shall be the entire property
identified with the applicable Loan.
27
(d) For each Release Property, Borrower shall have either (i) made the
"Release Price" payment to Lender, in an amount equal to 100% of the principal
balance of the Loan applicable to the Release Property, together with any
interest due thereon plus any applicable Breakage Fees, or (ii) shall have
substituted certain of its existing properties, which are currently
unencumbered, which have a Loan-To-Value Ratio equal to or less than 65%, and a
Debt Service Coverage ratio equal to or greater than 1.25 to 1.0, and are
otherwise satisfactory to Lender in Lender's sole discretion, for the Release
Property. If Lender is prepared to accept a substitute property for the Release
Property, Borrower shall execute and deliver any and all documents required by
Lender in order for such substituted property to be a Collateral Property,
including without limitation, the Loan Documents.
(e) At the time of the release, Lender shall have the right to
recalculate the Debt Service Coverage ratio and the Loan-To-Value Ratio. If on
the date of determination, the aggregate Debt Service Coverage ratio for the
Collateral Properties (excluding the Release Property) is less than 1.25 to 1.0
or the aggregate Loan-To-Value Ratio for the Collateral Properties (excluding
the Release Property) is greater than 75%, Borrower shall be obligated to make a
mandatory prepayment in accordance with, and as provided in, Section 2.05(b) as
a condition to Lender's consent to any requested release.
(f) Borrower shall pay to Lender any and all of Lender's costs and
expenses incurred with respect to any request for a release whether or not
Lender consents to such release. Such costs and expenses may include, without
limitation, all escrow, closing and recording costs including, but not limited
to, the cost of preparing and delivering any reconveyance documentation and
modification of the Loan Documents, including legal fees and costs, the cost of
any title insurance endorsements that Lender may require, any expenses incurred
by the Lender in connection with the partial release, the acceptance of any
substitute property and any sums then due and payable under the Loan Documents.
(g) the Mortgages of record for the Collateral Properties shall equal
the amount of the remaining Loans including any payments or re-borrowings of
principal by Borrower as of the date of the Release.
(h) Such other terms and conditions, and execution of such other
documents, as Lender shall reasonably require.
Section 2.15. RIGHT OF FIRST OFFER. Borrower acknowledges that as an
inducement to make the Loan, Lender shall have the right of first offer to
provide directly (or arrange with a third party lender to provide) to Borrower
any replacement financing with respect to any or all of the Collateral
Properties (the "REPLACEMENT LOAN"). With respect to such right of first offer,
if Borrower seeks any replacement financing with respect to any or all of the
Collateral Properties, Borrower shall so notify Lender in writing (the
"REPLACEMENT LOAN NOTICE"), which Replacement Loan Notice shall be accompanied
by the material terms and conditions of the financing sought by Borrower.
Borrower covenants and agrees that the terms and conditions set forth in the
Replacement Loan Notice shall be on the then generally available and current
market terms and conditions for loans being made by institutional lenders to
borrowers similar to the
28
Borrower and secured by properties similar to the Collateral Property which is
the subject of the Replacement Loan Notice. If Lender advises Borrower within
twenty (20) days of receipt of the Replacement Loan Notice, that Lender
preliminarily believes it can provide the financing sought by Borrower, then
Borrower agrees to commence a customary loan application process with Lender,
and to exclusively pursue same with Lender. If Lender advises Borrower that it
cannot provide the financing sought by Borrower, Borrower shall have the right
to apply to a third party lender of Borrower's choice for such financing. If
Borrower is prepared to make a loan application, or accept a loan commitment
from a third party lender, Borrower shall promptly notify Lender of the terms
and conditions Borrower is intending to accept from such third party lender.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
extend the financial accommodations hereunder, each of the Loan Parties hereby
represents and warrants to the Lender that:
Section 3.01. ORGANIZATION AND POWERS; REIT STATUS. COPT is a real
estate investment trust duly organized and validly existing and in good standing
under the laws of the State of Maryland. The Borrower is a limited partnership
duly organized and validly existing and in good standing under the laws of the
State of Delaware. The Borrower is duly qualified to do business as a foreign
corporation or entity and is in good standing in each jurisdiction (other than
the state of its respective incorporation or organization) in which the conduct
of its respective business or the ownership or operation of its respective
properties or assets makes such qualification necessary, except where the
failure to so qualify would not have a Material Adverse Effect. Each Loan Party
has full power and authority to own its respective properties and assets and
carry on its respective business as now conducted. COPT has not taken any action
that would prevent it from maintaining its qualification as a REIT.
Section 3.02. POWER AND AUTHORIZATION. (a) Each Loan Party has full
power, right and legal authority to execute, deliver and perform its respective
obligations under this Agreement, the Note and such of the other Related
Documents, to which it is a party. Each Loan Party has taken all actions
necessary to authorize the execution and delivery of, and the performance of its
obligations under such documents and to make borrowings by the Borrower under
this Agreement, as the case may be. This Agreement, the Note and such of the
other Related Documents to which it is a party, constitute legal, valid and
binding obligations of the Borrower and the other Loan Parties enforceable
against each of them in accordance with their respective terms subject to the
effect of any applicable bankruptcy, insolvency, reorganization or moratorium or
similar laws affecting the rights of creditors generally. No consent of any
person, and no consent, license, approval or authorization, or registration or
declaration with, any Governmental Authority, which has not been obtained, taken
or made (other than the financing statements and filings required to be filed
pursuant to this Agreement and the Related Documents, which have been delivered
to the Lender for filing on the Closing Date and on the date of the closing of
each Loan, as the case may be), is required in connection with the
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execution, delivery or performance by each Loan Party of this Agreement, the
Note or the other Related Documents to which it is a party, or the making of
borrowings by any Loan Party under this Agreement.
Section 3.03. PERMITS; COMPLIANCE WITH LAWS. (A) The Borrower or such
other applicable Loan Party has all permits, licenses and governmental
franchises and other authorizations from all Governmental Authorities
(collectively, the "PERMITS") that are necessary to own and operate its business
as presently being conducted and as contemplated to be conducted immediately
after the Closing Date and the date of the closing of each Loan. All such
Permits are valid and subsisting and in full force and effect. (B) Each Loan
Party is in compliance with the terms of such Permits and all statutes, laws,
ordinances, governmental rules or regulations (including Environmental Laws) and
all judgments, orders or decrees (federal, state, local or foreign) to which it
is subject, except for violations of which would not have a Material Adverse
Effect.
Section 3.04. NO LEGAL BAR. The execution, delivery and performance by
the Borrower and any other Loan Party of this Agreement, the Note and such of
the other Related Documents to which it is a party, and the making of borrowings
hereunder by any such Loan Party, do not and will not (i) violate or contravene
any provisions of any existing law, statute, rule, regulation or ordinance or
charter document, (ii) violate or contravene any provision of any order or
decree of any court or Governmental Authority to which the Borrower or any Loan
Party or any of its properties or assets are subject, (iii) violate or
contravene any provision of any mortgage, indenture, security agreement,
contract, undertaking or other agreement or instrument to which the Borrower is
a party or which purports to be binding upon either of it or any of its
properties or assets, except for violations or contravention of which would not
have a Material Adverse Effect, or (iv) result in the creation or imposition of
any Lien on any of the properties of the Borrower or any Loan Party (other than
as created pursuant to the Loan Documents) pursuant to the provisions of any
mortgage, indenture, security agreement, contract, undertaking or other
agreement or instrument.
Section 3.05. LITIGATION. There are no judgments or any litigation or
administrative proceedings of or before any court or Governmental Authority now
pending, nor, to the knowledge of the Borrower, are any such litigation or
proceedings now threatened, against the Borrower or any of its properties,
involving an individual claim in excess of $200,000 or claims in the aggregate
in excess of $300,000, except as disclosed in SCHEDULE 3.05, nor, to the
knowledge of the Borrower, is there a valid basis for the initiation of any such
litigation or proceeding, including those set forth in SCHEDULE 3.05.
Section 3.06. SOLVENCY. Immediately after giving effect to each of the
financing transactions contemplated hereby on and after each Borrowing Date, the
Borrower and, if applicable, any Collateral Property Subsidiary, is solvent. For
purposes of this Section 3.06, the term "solvent" means that, at the time of
said determination, (i) the fair value of such Person's assets exceeds the
aggregate sum of its liabilities (including, without limitation, contingent
liabilities), (ii) such Person is able to pay its debts as they mature, (iii)
the property owned by
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such Person has a value in excess of the total aggregate sum required to pay its
debts, and (iv) such Person has capital sufficient to carry on its business.
Section 3.07. THE COLLATERAL. The chief places of business and chief
executive offices of the Borrower, and the offices where the Borrower keeps its
respective books and records concerning any of the Collateral are located at the
addresses specified in the Collateral Documents. The Borrower, or if applicable,
a Collateral Property Subsidiary, owns the Collateral in which it has granted a
security interest and Lien in favor of the Lender pursuant to the Loan
Documents, free and clear of any Lien, security interest charge or encumbrance,
except as otherwise expressly permitted by Section 6.02 hereof or the Related
Documents or as otherwise disclosed in SCHEDULE 3.07 hereto. All financing
statements and filings required to be filed, and all related required fees and
taxes, have been delivered to the Lender for filing and recording, and all other
steps required to be taken have been taken, so that upon proper filing and
recording in the proper offices Lender shall have, a valid, perfected, first
priority continuing and enforceable security interest in and Lien on the
Collateral and such security interest and Lien ranks prior to any other security
interest in or Lien upon the Collateral.
Section 3.08. CAPITALIZATION. The authorized capital stock or
partnership interest, as the case may be, of the Borrower is validly issued,
fully paid and nonassessable.
Section 3.09. NO DEFAULT. The Borrower is not in default in any respect
in the payment or performance (i) of any of its respective material obligations
for the payment of money, or (ii) under any material franchise, license or
leasehold interest and no default has occurred and is continuing.
Section 3.10. NO SECONDARY LIABILITIES. There are no outstanding
contracts of guaranty or suretyship made by the Borrower, nor is the Borrower
subject to any other material contingent liability or obligation required to be
shown on the financial statements of the Borrower, except (a) as shown on such
financial statements referred to in Section 3.12 hereof, and (b) the endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business. To the knowledge of the Borrower, the Borrower
is not a party to any materially burdensome contract or agreement, or subject to
any charter or other corporate restriction adversely affecting in any material
manner its respective management, business, assets, properties, assets,
operations, prospects or condition (financial or other).
Section 3.11. TAXES. The Borrower has timely filed, or caused to be
filed, all federal, state, local and foreign tax returns that are required to be
filed by it and has paid, or caused to be paid, all taxes, assessments, interest
and penalties thereon, on or before the due dates thereof, unless such tax,
assessment, charge, levy, claim is actively being contested in good faith by
appropriate proceedings and there has been set aside on the books of such Person
adequate reserves in accordance with GAAP applied with respect thereto. There
are no material claims pending or, to the knowledge of the Borrower, proposed or
threatened against the Borrower for past federal, state or local taxes, except
those, if any, as to which proper reserves, determined in accordance with GAAP,
are reflected in the most recent financial statements. All such tax
31
reports or returns fairly reflect the taxes of the Borrower for the periods
covered thereby. No Internal Revenue Service or other tax audit of the Borrower
has occurred, is pending or, to the knowledge of the Borrower, threatened, and
the results of any completed audits are properly reflected in the financial
statements.
Section 3.12. FINANCIAL STATEMENTS AND CONDITION. The unaudited
consolidated financial statements of the Borrower and COPT as of September 30,
1999 prepared by management, true, complete and accurate copies of each of which
were delivered to the Lender on or before the Closing Date, (i) present fairly
the financial position of the Borrower and COPT, as applicable, on a
consolidated basis as of the dates of said statements, and the results of
operations of the Borrower for the periods covered by said statements of
earnings are in accordance with GAAP, except, in each case, as disclosed
therein, (ii) have been prepared in conformity in all material respects with
GAAP, and (iii) disclose all liabilities, direct and contingent, required to be
shown in accordance with such principles. As of September 30, 1999, there were
no material obligations or liabilities, direct or indirect, fixed or contingent,
which are not reflected in such financial statements and that are required to be
so reflected thereon under GAAP. No Material Adverse Change has occurred since
September 30, 1999.
Section 3.13. ERISA; LABOR RELATIONS (A) No Reportable Event has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. The present value of all accrued benefits under each Plan
maintained by the Borrower, any Loan Party or any ERISA Affiliate (based on
those assumptions used to fund the Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. There are no multiemployer plans. Neither the Borrower nor any Loan
Party or any of its ERISA Affiliates has had a complete or partial withdrawal
from any multiemployer plan. The present value (determined using actuarial and
other assumptions which are reasonable in respect of the benefits provided and
the employees participating) of the liability of the Borrower, any Loan Party
and each ERISA Affiliate for post retirement benefits to be provided to their
current and former employees under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the assets
under all such Plans allocable to such benefits. (B) Neither the Borrower nor
any Loan Party is a party to any collective bargaining agreement. There are no
lockouts, strikes, labor disputes or other material controversies pending
between the Borrower, any Loan Party and any of its employees, which in the
aggregate, might have a Material Adverse Effect.
Section 3.14. ENVIRONMENTAL MATTERS. Except as disclosed in SCHEDULE
3.14 hereto, the Borrower, and any Collateral Property Subsidiary, as
applicable, and each respective parcel of real property owned or leased by it
are in material compliance with all Environmental Laws and Requirements of
Environmental Law; there are no conditions existing currently or, to the
knowledge of the Borrower or any Collateral Property Subsidiary, likely to exist
that would subject the Borrower or any Collateral Property Subsidiary to
damages, penalties, injunctive relief or cleanup costs in an aggregate amount
exceeding $200,000 under any Environmental
32
Matters or assertions thereof, or which require or are likely to require
cleanup, removal, remedial action or other response pursuant to Environmental
Laws by the Borrower; neither the Borrower nor any Collateral Property
Subsidiary is a party to any Environmental Claim or litigation or administrative
proceedings involving an individual claim in excess of $200,000 or claims in the
aggregate in excess of $300,000, nor so far as is known by the Borrower or any
Collateral Property Subsidiary, is any such litigation or administrative
proceeding threatened against the Borrower or any Collateral Property
Subsidiary, which asserts or alleges that the Borrower or any Collateral
Property Subsidiary has violated or is violating Environmental Laws or
Environmental Permits in any material respect or that the Borrower or any
Collateral Property Subsidiary is required to clean up, remove or take remedial
or other responsive action due to the disposal, depositing, storage, discharge,
leaking or other release of any hazardous substances or materials; neither the
Borrower nor any Collateral Property Subsidiary nor any respective parcel of
real property owned or leased by it are subject to any Environmental Claim or
judgment, decree, order or citation related to or arising out of Environmental
Matters involving an individual claim in excess of $200,000 or claims in the
aggregate in excess of $300,000 and the Borrower and any Collateral Property
Subsidiary has not been named or listed as a potentially responsible party by
any Governmental Authority in a matter arising under any Environmental Matters
involving an individual claim in excess of $200,000 or claims in the aggregate
in excess of $300,000; the Borrower and/or any Collateral Property Subsidiary,
as applicable, has obtained all Environmental Permits from governmental
authorities required under Environmental Laws relative to each parcel of real
property owned or leased by it; the Borrower and/or any Collateral Property
Subsidiary, as applicable, is in compliance in any material respect with all
terms and conditions of Environmental Permits, and is also in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any federal, state or local law or any regulations, code, plan,
order, decree or judgment relating to public health and safety, worker health
and safety and pollution or protection of the environment or any notice or
demand letter issued, entered, promulgated or approved thereunder, except where
the failure to so comply would not have a Material Adverse Effect; the Borrower
and/or any Collateral Property Subsidiary, as applicable, has not received
notice (whether written or oral), specifying that certain facts, events or
conditions, interfere with or prevent continued compliance with, or give rise to
any liability involving an individual claim in excess of $200,000 or claims in
the aggregate in excess of $300,000 under any law, common law or regulation,
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant, or
hazardous or toxic material or Waste; and there are not now, nor to the
knowledge of the Borrower have there ever been, materials stored, spilled,
deposited, treated, recycled or disposed of on, under or at any parcel of real
property owned or leased by the Borrower and/or any Collateral Property
Subsidiary, as applicable, or stored, spilled, deposited, treated, recycled or
disposed of at the direction of the Borrower and/or any Collateral Property
Subsidiary, as applicable, present in soils or ground water, that would require
cleanup, removal or some other remedial action under Environmental Laws.
33
Section 3.15. CORRECT INFORMATION. The information, exhibits and
reports furnished in writing by, or on behalf of, the Borrower and any other
Loan Party to the Lender in connection with the negotiation and preparation of
this Agreement and the other Loan Documents are true and correct and do not
contain any omissions or misstatements of fact that would make the statements
contained therein misleading or incomplete in any material respect, which
omissions or misstatements could have, individually or in the aggregate, a
Material Adverse Effect. There is no fact now known to the Borrower or COPT that
has not been disclosed to the Lender that materially adversely affects the
management, business, assets, properties, operations or condition (financial or
other) of the Borrower and/or COPT.
Section 3.16. INVESTMENT COMPANY ACT. The Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or subject to any
other statute that regulates the incurring of indebtedness for borrowed money.
Section 3.17. MARGIN REGULATIONS. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying "margin
stock" or "margin securities" (within the meaning of Regulation U), none of the
Obligations or liabilities of the Borrower are secured, directly or indirectly,
by "margin stock" or "margin securities", and no part of the proceeds of any
extension of credit hereunder will be used for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock" or "margin
securities", or in a manner which would breach of contravene any of Regulations
G, T, U, or X.
Section 3.18. LEASES. Complete and correct copies of all Leases under
which Borrower or any Collateral Property Subsidiary is lessor have been
delivered to Lender and are the only leases of real property under which
Borrower or such Collateral Property Subsidiary is a lessor. Each Lease and
lease is valid and subsisting and is not in default in any material respect, nor
has the Borrower or any Collateral Property Subsidiary received any written
notice of its default under the Leases and leases.
Section 3.19. INSURANCE. SCHEDULE 3.19 hereto sets forth a summary of
all insurance policies maintained by the Borrower or the Collateral Property
Subsidiary, as applicable, as of the date of closing of each Loan. In addition
to the requirements set forth in the Collateral Documents, the insurance
maintained by the Borrower or the Collateral Property Subsidiary, as applicable,
is in amounts and of a nature as is customarily maintained by Persons conducting
operations similar to that of the Borrower or such Collateral Property
Subsidiary, and is with insurance carriers who are rated by A. M. Best Company's
Rating Service as "A" or better or are otherwise satisfactory to the Lender.
Section 3.20. BROKERS. The Borrower represents that it has not engaged
or authorized any broker, finder or similar agent who would be entitled to a
commission or other fee in respect of this Agreement.
34
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. The obligations of
the Lender to execute and deliver this Agreement and proceed to the Closing Date
are subject to the fulfillment of the following conditions precedent. The Lender
shall have received on or before the Closing Date each of the following
documents and instruments, each dated such date, in form and substance
satisfactory to the Lender and its counsel:
(a) The Note, executed and delivered on behalf of Borrower by each of
the general partners of Borrower.
(b) a certificate of the Secretary of COPT or other appropriate
authorized Persons, dated as of the Closing Date, certifying (i) that attached
thereto are true and complete copies of the resolutions of the Board of
Directors or authorized persons of COPT, the general partner of Borrower
authorizing the execution, delivery and performance by the Borrower of this
Agreement, the borrowings hereunder by the Borrower and the execution, delivery
and performance by the Borrower of the Note and such of the Related Documents to
which it is a party, (ii) that said resolutions are all the resolutions adopted
by the Board of Directors or authorized persons of the Borrower in connection
with the transactions contemplated thereby and are in full force and effect
without modification as of such date, and (iii) as to the incumbency and
signatures of each of its trust managers or other appropriate authorized Persons
executing this Agreement, the Note and such of the Related Documents to which it
is a party;
(c) (i) copies of the applicable charter documents of the Borrower,
certified as of a recent date by the Secretary of State of the State of its
formation and organization; (ii) certificates of said Secretary of State as to
the due organization, existence and good standing of the Borrower, as of a
recent date; (iii) certificates of good standing of the Secretary of State of
each jurisdiction in which the Borrower is qualified to do business; and (iv) a
certificate of the Secretary, trust manager or other appropriate authorized
Person of the Borrower dated the Closing Date, certifying (A) that attached
thereto are true, correct and complete copies of the applicable charter
documents as is in effect on the date of such certification, and (B) that such
charter documents have not been amended since the date of the last amendment
thereto indicated in the certificate of the Secretary of State furnished
pursuant to clause (i) above;
(d) (i) copies of the applicable charter documents of COPT, certified
as of a recent date by the Secretary, trust manager or other appropriate
authorized Person of COPT; (ii) certificates of good standing of the Secretary
of State of each jurisdiction in which COPT is qualified to do business; and
(iii) a certificate of the Secretary, trust manager or other appropriate
authorized Person of COPT dated the Closing Date, certifying (A) that attached
thereto are true, correct and complete copies of the applicable charter
documents as is in effect on the date of such certification, and (B) that such
charter documents have not been amended since the date of the last amendment
thereto indicated in the certificate of the Secretary of State furnished
pursuant to clause (i) above;
35
(e) the applicable Related Documents are duly executed by all the
parties thereto (other than the Lender);
(f) the Borrower shall have delivered to the Lender at least ten (10)
Business Days prior to the Closing Date all appropriate Uniform Commercial Code,
tax lien, judgment and bankruptcy searches, dated as of a date that is within a
recent date of the Closing Date;
(g) evidence that all actions necessary or, in the opinion of the
Lender and its counsel, desirable, to create and perfect the security interests
and other Liens granted under the Loan Documents, have been duly taken, that
there are no security interests as senior to the security interests granted in
favor of the Lender with respect to any of the Acquisition Properties and/or
Collateral Properties, and the security interests granted to Lender at the time
of the creation or perfection of any such security interest or Lien has not been
reduced or diminished in any manner;
(h) an opinion of John Harris Gurley, Esq.,counsel to the Borrower,
substantially in the form of EXHIBIT M hereto;
(i) such resolutions, consents, approvals or acknowledgments with
respect to such of the transactions hereunder as may be necessary or as the
Lender or its counsel may deem appropriate;
(j) the Borrower shall have delivered to the Lender at least fifteen
(15) Business Days prior to the Closing Date the financial statements set forth
in Section 3.12 hereof;
(k) a certificate showing that, at the time of the Closing Date and
after giving effect to the initial funding hereunder and the consummation of all
other transactions contemplated by this Agreement and the Loan Documents, (i)
the representations and warranties contained in this Agreement and in the other
Related Documents shall be true and correct on and as of such date and no
representation made or information supplied to the Lender shall have proven to
be inaccurate or misleading in any material respect; and (ii) no Event of
Default or Default shall have occurred; and the Lender shall have received a
certificate of the Borrower signed on its behalf by its president or chief
financial officer that (A) no Material Adverse Change has occurred since
September 30, 1999; (B) no material litigation or administrative proceeding of
or before any court or governmental body or agency is pending or threatened
against the Borrower or any of its properties except as set forth on Schedule
4.01 hereto; and (C) the Borrower is in compliance with all pertinent federal,
state and local laws, rules and regulations, including, without limitation,
those with respect to ERISA, OSHA and all Environmental Laws, except where the
violation of which would not have a Material Adverse Effect;
(l) evidence that, as of the Closing Date, the Borrower has paid all
past and current premiums due and payable on its existing insurance policies,
and has delivered to the Lender at least ten (10) Business Days prior to the
Closing Date all loss payee/additional insured
36
endorsements, duly executed, required under Section 5.02 hereof or the
Collateral Documents to be delivered on or before the Closing Date;
(m) payment in full of all amounts then due and payable under the terms
of this Agreement, including, without limitation, (i) all of the fees payable to
the Lender pursuant to this Agreement, and (ii) all of the Lender's
out-of-pocket expenses (including, without limitation, the reasonable fees and
disbursements of the Lender's counsel, subject to the overall limitations
contained in Section 9.04(a) hereof); and
(n) such other and further documents as the Lender and its counsel may
have reasonably requested and all legal matters incident to this Agreement, the
transactions contemplated hereby and the Loans shall be reasonably satisfactory
to the Lender and its counsel.
Section 4.02. CONDITIONS PRECEDENT TO INITIAL AND SUBSEQUENT FUNDINGS.
The obligation of the Lender to make any Loan (including any Loans to be made on
the Closing Date) shall be subject to the fulfillment of the following
conditions precedent at least fifteen (15) Business Days (unless otherwise noted
below) prior to the relevant Borrowing Date:
(a) the intended use of the funds advanced pursuant to any Loan shall
be a Permitted Use of Funds, and Lender shall have received a breakdown of the
application of all funds theretofore advanced hereunder, including fees and
expenses, which shall be satisfactory to Lender in its sole and absolute
discretion.
(b) the Lender shall have received notice by the Borrower and a Notice
of Borrowing required by Section 2.02 hereof no later than 3:00 p.m. on the
third (3rd) Business Day prior to the proposed Borrowing Date and Lender shall
have, in its sole and absolute discretion, approved the Loan requested in the
Notice of Borrowing, and the intended use of funds indicated therein;
(c)(i) the representations and warranties set forth in Article 3 hereof
and in the other Related Documents shall be true and correct on and as of such
Borrowing Date as though made on and as of such date and no representation made
or information supplied to the Lender shall have proven to be inaccurate or
misleading in any material respect; (ii) Each of the Loan Parties, including any
Collateral Property Subsidiary shall then be in compliance with all the terms
and provisions of this Agreement, the Note and the other Related Documents to
which it is a party, including, without limitation, the requirement that the
proposed Acquisition Properties satisfy the Financial Covenants and other
criteria set forth herein and in the Loan Documents; (iii) no Event of Default
or Default shall have occurred and be continuing; (iv) no Material Adverse
Change shall have occurred since September 30, 1999; (v) the income and expenses
of the Collateral Properties, the Leases, the occupancy of the Collateral
Properties and all other features of the transaction, including the financial
condition of the Loan Parties, any of its subsidiaries, as represented to the
Lender in any loan application or in any other documents and communications
presented to the Lender in order to induce the Lender to make the Loans shall
not have materially adversely changed; (vi) no material litigation or
administrative proceeding of or before any court or governmental body or agency
is pending or threatened against the Borrower or any Loan Party
37
or any of its properties; (vii) the Borrower and any other Loan Party, as
applicable, is in compliance with all pertinent federal, state and local laws,
rules and regulations, including, without limitation, those with respect to
ERISA, OSHA and all Environmental Laws, except where the violation of which
would not have a Material Adverse Effect; (viii) none of the Collateral
Properties shall have suffered material damage, which has not been repaired to
the Lender's satisfaction; (ix) none of the Collateral Properties shall have
been taken in condemnation or other similar proceeding, nor shall any such
proceeding be pending; (x) there shall have been no material structural change
in the physical condition of any portion of the Collateral Properties; (xi) to
the best of Borrower's knowledge, no notices of violations of any municipal
ordinances shall have been filed against the Collateral Properties by any
municipal department; (xii) none of the Borrower, its Subsidiaries, any
Collateral Property Subsidiary, any tenant under any Lease deemed by the Lender
to be material to the Lender's security nor any guarantor of any such Lease
shall be the subject of any bankruptcy, reorganization, insolvency or similar
proceeding; and (xiii) the Lender shall have received a certificate of the
Borrower and/or any Loan Party, signed on its behalf by its president or its
chief financial officer to such effect;
(d) the Lender shall have received, at the Borrower's, or any
Collateral Property Subsidiary's, as applicable, expense and in form and
substance satisfactory to the Lender, (i) detailed historical operating
statements (for a minimum of a trailing 12-month period) of each Collateral
Property; (ii) the Borrower's or any Collateral Property Subsidiary's cash flow
projections, as applicable, relating to each Collateral Property; (iii) all
applicable detailed rent rolls relating to each Collateral Property; (iv) true,
accurate and complete copies of the Borrower's books and records relating to
each Collateral Property and all material contracts, including, but not limited
to, all Leases and abstracts; and (v) the Borrower's or any Collateral Property
Subsidiary's complete underwriting analysis , as applicable, relating to each
Collateral Property.
(e) the Lender shall have received, at the Borrower's or any Collateral
Property Subsidiary's expense, as applicable, a written analysis and
environmental report (each an "ENVIRONMENTAL REPORT") with respect to the
following environmental conditions relating to each Collateral Property, which
shall be in form and substance satisfactory to the Lender and prepared no
earlier than six (6) months prior to the respective Borrowing Date by
independent qualified environmental professionals satisfactory to the Lender,
which analysis shall include, without limitation, (i) a Phase I environmental
site assessment assessing the presence of environmental contaminants and
asbestos, PCBs or storage tanks at such Collateral Properties conducted in
accordance with ASTM Standard E 1527-93, or any successor thereto published by
ASTM, and (ii) such further site assessments as the Lender may require due to
the results obtained in clause (i) above; the Borrower shall have obtained
permission for such environmental professional to enter upon the Collateral
Properties for purposes of conducting such environmental assessment; such
Environmental Report shall meet the Lender's requirements, shall be certified to
the Lender and its successors and assigns, and the Lender and its successors and
assigns shall be entitled to rely on such environmental assessment and such
Environmental Report; no environmental condition at any Collateral Property
shall have been discovered which is unacceptable to the Lender;
38
(f) the Lender shall have received an engineer's building condition
report in form and substance satisfactory to the Lender, prepared no earlier
than six (6) months prior to the respective Borrowing Date by an independent
qualified consulting engineer satisfactory to the Lender, and any additional or
supplemental reports that may be required by the Lender (collectively, the
"BUILDING CONDITION REPORT"), which reports shall (i) evaluate the physical
condition of the Collateral Properties, identifying conditions requiring
immediate or near term attention and estimate the approximate cost of
remediation, and (ii) include, without limitation, information regarding
compliance with the Americans with Disabilities Act; the Lender shall not have
received any unsatisfactory engineer's report or site inspection conducted by
the Lender or any engineering firm retained by the Lender; such Building
Condition Report shall meet the Lender's requirements, shall be certified to the
Lender and its successors and assigns, and the Lender and its successors and
assigns shall be entitled to rely on such Building Condition Report. If the
Building Condition Report shall recommend modifications to such Collateral
Properties which shall be equal to or greater than one dollar ($1.00) per square
foot per Collateral Property (collectively the "Modifications"), Lender shall
have the right to require Borrower to establish Reserves for such Modifications.
(g) the Lender shall have received, in form and substance satisfactory
to the Lender, true, correct and complete copies (including any and all
amendments or modifications thereto) of (i) all of the Operational Documents,
and (ii) all third party reports requested by the Lender relating to each
Collateral Property, prepared by qualified firms approved by the Lender;
(h) the Lender shall have received all fees payable pursuant to this
Agreement, including, without limitation, (i) all of the fees payable to the
Lender pursuant to this Agreement, and (ii) all of the Lender's out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of the Lender's counsel);
(i) the Lender shall receive a favorable legal opinion of the
Borrower's and the Collateral Property Subsidiary's counsel, in form and
substance satisfactory to the Lender and its counsel in their sole discretion,
as to the due execution, authorization and enforceability of the Loan Documents
and as to such other matters, including due perfection of the Lender's security
interests and liens on the Collateral as the Lender may reasonably request, and
the Lender shall have received the favorable opinion of the Lender's local
counsel, if necessary, as to such matters as the Lender may reasonably require;
(j) the Lender shall have received all appropriate Uniform Commercial
Code, tax lien, judgment and bankruptcy searches, dated as of a date that is
within a recent date of the date of the closing of such Loan;
(k) the Lender shall have received evidence that all actions necessary
or, in the opinion of the Lender and its counsel, desirable, to create and
perfect the security interests and other Liens granted under the Loan Documents,
have been duly taken, that there are no security interests as senior to the
security interests granted in favor of the Lender, and the security
39
interests granted to Lender at the time of the creation or perfection of any
such security interest or Lien has not been reduced or diminished in any manner;
(l) Lender shall have received an ALTA extended coverage mortgagee form
of title insurance policy, with a deletion of the creditor's rights exception
and otherwise conforming to the Lender's title insurance requirements set forth
in Section 4.02(l) hereto, together with such reinsurance as the Lender may
require from title insurance companies acceptable to the Lender insuring the
first mortgage Liens on the properties, subject only to matters acceptable to
the Lender, in respect of each parcel covered by each Mortgage or Deed of Trust.
Each such policy shall (i) be in the amount of the Mortgage or Deed of Trust
being insured thereunder, (ii) be issued at ordinary rates; (iii) insure that
the Mortgage or Deed of Trust insured thereby creates a valid first Lien on such
parcel free and clear of all defects and encumbrances, except such as may be
approved by Lender; (iv) be in the form of ALTA Loan Policy-1992, or such other
form as shall be acceptable to Lender; (vi) contain such endorsements and
affirmative coverage as Lender may request, including, but not limited to, any
endorsements necessary to evidence that Lender is insured in an amount equal to
the amount of the Loans then outstanding after giving effect to any payments or
re-borrowing of principal by Borrower and/or such Collateral Property Subsidiary
as of the date of the issuance of such title insurance to the extent same are
available; (vii) be issued by title companies satisfactory to Lender (including
such title companies acting as co-insurers or reinsurers, at the option of
Lender); and (viii) otherwise conform hereto. Lender shall have received
evidence satisfactory to it that all premiums in respect of such policy, and all
charges for endorsements and mortgage recording tax, if any, have been paid in
full.
(m) the Lender shall have received a survey of the Collateral
Properties being acquired and/or pledged and mortgaged to the Lender in
connection with the requested Loan dated or re-dated to within 60 days of the
closing of such Loan which (i) was prepared by a surveyor registered or licensed
in the jurisdiction in which such property is located, containing the legal
metes and bounds description of the property and a certification from the
surveyor to the Lender and the title insurance company in form and substance
reasonably satisfactory to the Lender, (ii) substantially conforms to the
Lender's survey requirements set forth in SCHEDULE 4.02(M) hereto, and (iii) is
otherwise in form and substance reasonably satisfactory to the Lender;
(n) the Lender shall have received a duly executed Estoppel Certificate
and Subordination Agreement from tenants under Leases comprising, in the
aggregate, 80% of the rentable square footage in the Collateral Properties
including, in all events from those tenants with Leases covering a minimum of
10,000 square feet or 10% of the rentable square footage (a "Major Tenant") in
the Collateral Property, completed in a manner acceptable to Lender in its sole
discretion; PROVIDED, HOWEVER, that to the extent that Estoppel Certificates are
not delivered for certain tenants, other than a Major Tenant, the Lender may, in
its sole discretion, accept an Estoppel Certificate from the Borrower with
respect to such tenant's occupancy at the Collateral Properties certified by
such Borrower as being true, correct and complete;
(o) the Lender shall have received evidence, in form and substance
satisfactory to the Lender that (i) the Collateral Properties are served by all
utilities required for the current or contemplated use thereof, (ii) all utility
service is provided by public utilities and the Collateral
40
Properties have accepted or is equipped to accept such utility service, (iii)
all public roads and streets necessary for service of and access to the
Collateral Properties for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally open
for use by the public, and (iv) the Collateral Properties are served by public
water and sewer systems;
(p) the Lender shall have received such consents, approvals or
acknowledgments with respect to such of the transactions hereunder as may be
necessary or as the Lender or its counsel may deem appropriate;
(q) evidence that, as of the date of the closing of such Loan, the
Borrower and any Collateral Property Subsidiary has paid all past and current
premiums due and payable on its existing insurance policies, and has delivered
to the Lender all loss payee/additional insured endorsements, duly executed,
required under Section 5.02 hereof or the Collateral Documents to be delivered
on or before such date of closing;
(r) evidence that the Borrower and/or the Collateral Property
Subsidiary has satisfied all of the conditions precedent set forth in the
Collateral Documents; and
(s) the Lender shall have received such other and further documents,
certificates, reports and other information with respect to the Borrower, the
Collateral Property Subsidiary or any other Loan Party or relating to the
transactions contemplated by this Agreement as Lender may reasonably request,
all of which shall be satisfactory in form and substance to Lender.
(t) after giving effect to such Loan and the application of proceeds
therefrom, no Default or Event of Default shall have occurred and be continuing
on and as of the date such Loan is made.
(u) Lender shall have received payment of all fees and expenses then
due to Lender and its counsel;
(v) Lender shall have received a favorable legal opinion of Borrower's
and the applicable Collateral Property Subsidiary's counsel as to the due
execution, authorization and enforceability of any proposed Collateral Property
and, in connection therewith, such matters as Lender may reasonably require;
(w) Borrower or such Collateral Property Subsidiary, as applicable,
shall have paid all mortgage recording taxes payable (if any) in each
jurisdiction in which any Collateral Property is located. Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary
contained in any Loan Document, Borrower or such Collateral Property Subsidiary,
as applicable , acknowledges and agrees that, to the extent there is a payment
of principal of the Loans which results in the aggregate outstanding principal
amount of the Loans being less than the aggregate maximum principal amount of
the Loans secured by any Mortgage(s) (whether or not such aggregate outstanding
principal amount of the Loans was originally less than the aggregate maximum
principal amount of the Loans secured by such Mortgage(s) prior to such
41
payment), then (A) Borrower or such Collateral Property Subsidiary, as
applicable ,shall pay any and all additional mortgage recording taxes in
connection with any future Borrowing pursuant to this Agreement so that the
Mortgages or Deeds of Trust in existence at or prior to such Borrowing will
secure, in accordance with applicable law, the amount of such Borrowing up to
the aggregate maximum original principal amount secured by such Mortgages or
Deeds of Trust, and (B) if and to the extent that Lender determines in good
faith that any such additional mortgage recording taxes are so due and payable
in connection with any such future Borrowing and unless Borrower or such
Collateral Property Subsidiary, as applicable ,shall have presented to Lender
evidence, satisfactory to Lender, that any such additional mortgage recording
taxes are not so due and payable, Borrower or such Collateral Property
Subsidiary, as applicable, shall pay such additional mortgage recording taxes to
the appropriate governmental taxing authorities;
(x) Lender shall have received evidence that the Mortgages or Deeds of
Trust of record shall secure the full amounts of the Loans then outstanding,
after giving effect to any payments or re-borrowings of principal by Borrower;
(y) Lender shall be granted a valid first mortgage lien on each
Collateral Property subject only to such liens as are acceptable to Lender. The
Lien shall be in the amount of the Commitment, unless the Collateral Property is
located in any jurisdiction in which the mortgage recording tax or other cost of
recording a mortgage or deed of trust is not de minimus, in which event the Lien
shall be in an amount equal to one hundred twenty five percent (125%) of the
fair market value of such Collateral Property, which amount shall be determined
by Lender in its sole but reasonable discretion using Lender's then applicable
underwriting standards and criteria;
(z) Each Collateral Property Subsidiary shall have executed and
delivered to Lender (i) a Guaranty in favor of Lender in form and substance
satisfactory to Lender; (ii) an allonge to the Note in the amount of the
Borrowing with respect to each Borrowing; (iii) counterparts of all Loan
Documents executed by Borrower in connection with each Borrowing; (iv) and shall
otherwise comply with each of the requirements in this Section 4.02 and this
Agreement;
(aa) the Lender shall receive a favorable legal opinion of Borrower's
counsel, who shall be licensed to practice in the State of New York and shall
otherwise be reasonably acceptable to Lender, in form and substance reasonably
satisfactory to the Lender and its counsel in their sole discretion, as to the
enforceability of this Agreement under New York law and such other matters as
the Lender may reasonably require, prior to the initial funding hereunder; and
(bb) Lender agrees that it shall reasonably consider such modifications
to any and all exhibits to this Agreement as Borrower shall request prior to the
initial funding hereunder.
ARTICLE 5. AFFIRMATIVE COVENANTS
Each of the Loan Parties hereby covenants and agrees that, from and
after the date of execution of this Agreement and so long as any amount may be
borrowed hereunder or is
42
otherwise due to the Lender under this Agreement or any Loan Document is not
indefeasibly repaid in full, such Loan Party shall comply and shall cause each
of their respective Subsidiaries to comply with each of the following covenants:
Section 5.01. MAINTENANCE OF EXISTENCE, PROPERTIES AND REIT STATUS. (a)
Each of the Loan Parties shall do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and continue to conduct
its business substantially as now and proposed to be conducted. Each of the Loan
Parties shall (i) do or cause to be done all things necessary to preserve and
keep in full force and effect all of its other rights and franchises, and comply
with all laws applicable to it, except for violations thereof which would not
have a Material Adverse Effect; (ii) at all times, maintain, preserve and
protect all material franchises and Intellectual Property; and (iii) preserve
all the remainder of its material properties and keep the same in good repair,
working order and condition and from time to time make, or cause to be made, all
necessary and proper repairs, renewals and replacements, betterments and
improvements thereto so that the business carried on in connection therewith may
be properly conducted at all times. (b) COPT shall at all times (i) conduct its
affairs and the affairs of its Subsidiaries in a manner so as to maintain its
status as a REIT and shall not take any action which could lead to its
disqualification as a REIT; (ii) not engage in any business other than the
business of acting as a REIT; and (iii) cause its common shares to be duly
listed on the New York Stock Exchange and timely file all reports required to be
filed by it in connection therewith.
Section 5.02. INSURANCE. (A) The Borrower or the Collateral Property
Subsidiary, as applicable, will maintain or cause to be maintained, at its own
expense, the insurance required under the provisions of Paragraph 3 of the
Mortgages or Deeds of Trust with respect to its Collateral Properties and
business. Not later than ten (10) Business Days prior to the renewal,
replacement or material modification of any policy or program required to be
maintained by this Section 5.02, the Borrower shall deliver or cause to be
delivered to the Lender a detailed schedule setting forth for each such policy
or program: (i) the amount of such policy, (ii) the risks and amounts (with
deductibles) insured against by such policy, (iii) the name of the insurer and
each insured party under such policy, (iv) the policy number of such policy and
(v) a comparison of such policy with the policy so renewed, replaced or
modified. The Borrower will, if so requested by the Lender, deliver to the
Lender the original policy of such insurance and, as often as the Lender may
reasonably request, a report of a reputable insurance broker with respect to
such insurance. Further, the Borrower will, at the request of the Lender, duly
execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of this Section 5.02 and cause the respective
insurers to acknowledge notice of such assignment.
(B) The Borrower or any Collateral Property Subsidiary, as applicable,
will use all and any insurance proceeds from property damage/casualty insurance
or condemnation awards it receives in accordance with the terms of Paragraph 4
of the Mortgages; PROVIDED, HOWEVER, that in the event that (i) a Default or
Event of Default has occurred and is continuing, or (ii) no Default or Event of
Default has occurred and is continuing and the individual or aggregate amount of
any and all such insurance proceeds or condemnation awards exceeds $250,000,
then the Borrower will not restore or replace such Collateral Property without
the prior written
43
consent of the Lender, and absent such consent, such insurance proceeds or
condemnation awards shall forthwith be paid to the Lender and applied to the
permanent reduction of the Obligations of the Borrower and any Collateral
Property Subsidiary, as applicable, then outstanding, without penalty or premium
but subject to Section 2.04 hereof, in such order as the Lender shall determine.
(C) Within two (2) Business Days after the occurrence of any damage to,
or loss or taking of, any Collateral Property of the Borrower in excess of
$100,000, the Borrower will, provide to the Lender written notice (or telephone
notice promptly confirmed in writing) thereof and a description of the property
damaged, lost or taken.
Section 5.03. PUNCTUAL PAYMENT. The Borrower shall duly and punctually
pay the principal of and interest on the Note and any other amount due under
this Agreement or any of the Related Documents to which it is a party,
including, without limitation, the amounts payable under Section 2.09 hereof.
Section 5.04. PAYMENT OF LIABILITIES. The Borrower will pay and
discharge in the ordinary course of business, where applicable, all of its
obligations and liabilities (including, without limitation, tax liabilities and
other governmental charges), except where the same may be contested in good
faith by appropriate proceedings, and maintain in accordance with GAAP
appropriate reserves for any of the same.
Section 5.05. COMPLIANCE WITH LAWS. The Borrower and all Loan Parties
will observe and comply with all applicable material laws, statutes, rules,
regulations or other requirements having the force of law, including, without
limitation, all Environmental Laws.
Section 5.06. PAYMENT OF TAXES, ETC The Borrower or any Collateral
Property Subsidiary, as applicable, will pay and discharge all lawful taxes,
assessments, and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of the Collateral Property, before the same shall
become in default or within ten (10) days thereafter, as well as all lawful
claims for labor, materials, and supplies which, if unpaid, might become a Lien
or charge upon such property or any part thereof within ten (10) days
thereafter, as well as all lawful claims for labor, materials, and supplies
which, if unpaid, might become a Lien or charge upon any Collateral Property or
any part thereof within ten (10) days of such claims being due and payable;
PROVIDED, HOWEVER, that no such tax, assessment, charge, levy, claim need be
paid and discharged so long as the validity thereof shall be contested in good
faith by appropriate proceedings and there shall have been set aside on the
books of such Person adequate reserves in accordance with GAAP applied with
respect thereto, but such tax, assessment, charge, levy, or claim shall be paid
before the property subject thereto shall be sold to satisfy any Lien which had
attached as security therefor.
Section 5.07. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower
shall furnish to the Lender, in form and substance acceptable to the Lender and
at the Borrower's expense:
44
(a) within ninety (90) days after the end of each Fiscal Year, audited
consolidated balance sheets of COPT and its Subsidiaries as at the end of such
Fiscal Year and the related audited consolidated statements of income and
changes in financial position of COPT and its Subsidiaries for such Fiscal Year,
prepared in accordance with GAAP, including consolidated financial reports with
all related schedules and notes attached thereto, setting forth, in each case,
in comparative form, corresponding figures from the preceding Fiscal Year, all
in reasonable detail, prepared by management and audited by and with an
unqualified certification of, nationally recognized independent certified public
accountants satisfactory to the Lender, together with a certificate or
certificates signed by the chief financial officer of COPT stating (i) whether
COPT and its Subsidiaries is then or has been in violation of any covenants
pertaining to this Agreement or pertaining to any other debt covenant of the
Borrower or its Subsidiaries and that, to their knowledge, no event has occurred
which, with the passage of time or the giving of notice or both, would
constitute any such violation, and (ii) (A) setting forth, in each case, in
comparative form, corresponding figures for such Fiscal Year from the annual
budget, in reasonable detail, (B) calculating and stating each of the financial
covenants contained in Article 7 hereof, and (C) commenting upon the financial
statements to an extent reasonably satisfactory to the Lender, as requested by
the Lender;
(b) within forty-five (45) days after the end of each Fiscal Quarter,
quarterly unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and the related unaudited
consolidated statements of income and changes in financial position of the
Borrower and its Subsidiaries as at the end of such Fiscal Quarter, prepared in
accordance with GAAP and accompanied by a Compliance Certificate in favor of
Lender and such other parties as Lender shall require which have an interest in
this Agreement signed by the chief financial officer of the Borrower (i) setting
forth in each case, in comparative form, figures for the preceding twelve (12)
month period, calculated on a trailing twelve (12) month basis, ending on the
last day of such Fiscal Quarter and for the corresponding Fiscal Quarter in the
annual budget and figures for the corresponding Fiscal Quarter in the preceding
Fiscal Year, all in reasonable detail, (ii) calculating and stating each of the
financial covenants contained in Article 7 hereof, and (iii) commenting upon the
financial statements to an extent reasonably satisfactory to the Lender, as
requested by the Lender;
(c) within thirty (30) days after the end of each Fiscal Quarter,
quarterly operating statements for each Collateral Property, all in reasonable
detail, certified by the chief financial officer of the Borrower;
(d) within thirty (30) days after the end of each Fiscal Quarter,
quarterly rent rolls for each Collateral Property, all in reasonable detail, and
accompanied by a certificate signed by the chief financial officer of COPT in
such form as is reasonably satisfactory to Lender;
(e) immediately upon any revision to any of the financial statements
referred to in clauses (a) or (b) above, such financial statements, as revised;
45
(f) within ten (10) days of filing, true, complete and correct copies
of all federal, state, local and foreign tax returns that are required to be
filed by COPT, including, without limitation, all related schedules and annexes
to such tax returns;
(g) as soon as available, a true copy of any "management letter" or
other communication to the Borrower, its officers, general partners, managers,
members or Board of Directors by its accountants regarding matters which arose
or were ascertained during the course of the audit and which said accountants
determined ought to be brought to management's attention;
(h) upon the occurrence and continuation of an Event of Default,
appraisals of any of the assets of the Borrower as the Lender may from time to
time request; PROVIDED, HOWEVER, that nothing herein shall prevent the Lender
from obtaining such appraisals at any time prior to the indefeasible payment in
full of the obligations if such appraisals are at the Lender's expense;
(i) immediately upon any officer, director, general partner, manager or
member of any Loan Party obtaining knowledge (i) of any condition or event which
constitutes a Default or Event of Default, (ii) of any condition or event which,
in the opinion of management of any Loan Party, would have a Material Adverse
Effect, (iii) that any Person has given any notice to any Loan Party or taken
any other action with respect to a claimed default or event or condition of the
type referred to in clause (f) of Section 8 hereof, or (iv) of the institution
of any litigation involving claims against the Borrower equal to or greater than
$200,000 with respect to any single cause of action or $300,000 with respect to
the aggregate of all causes of action or any adverse determination in any
litigation involving a potential liability to any Loan Party equal to or greater
than $200,000 with respect to any single cause of action or $300,000 with
respect to the aggregate of all causes of action, an officers' certificate
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person and the
nature of such claimed Default, Event of Default, event or condition, and what
action, if any, the Borrower has taken, is taking or proposes to take with
respect thereto;
(j) immediately upon any Loan Party becoming aware, with respect to any
Loan Party of the occurrence of (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or any withdrawal from, or the
termination, reorganization or insolvency of any multiemployer plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or any
Loan Party or any ERISA Affiliate or any multi-employer plan with respect to the
withdrawal from, or the terminating, reorganization or insolvency of, any Plan;
and
(k) as soon as practicable, such other information concerning the
financial affairs and condition (financial or otherwise) of any Loan Party as
the Lender may from time to time reasonably request.
Section 5.08. ACCOUNTS AND REPORTS. The Borrower and any Collateral
Property Subsidiary will keep accurate records and books of account in which
complete, accurate and
46
correct entries will be made of all dealings or transactions in relation to its
businesses and affairs, as applicable, and the Collateral.
Section 5.09. INSPECTION; AUDIT. (A) The Borrower, or any Collateral
Property Subsidiary, as applicable, at its own expense, will permit any
authorized representative designated by the Lender, upon reasonable advance
notice, to (i) visit and inspect its properties and condition, (ii) to discuss
their respective affairs, finances and accounts with its officers, general
partners, managers, members or directors, and (iii) after an Event of Default to
audit its books and records related thereto, at such reasonable times and as
often as may be reasonably requested by the Lender. Borrower's ability to permit
Lender or its representatives access to any Collateral Property shall be subject
to the rights of tenants as set forth in the Leases. (B) Upon the occurrence and
continuation of an Event of Default, the Borrower, at its own expense, will
provide to the Lender, at the request of the Lender made from time to time,
environmental audit reports in form and substance satisfactory to the Lender.
(C) At any time other than (i) in connection with Sections 2.05(b), 2.12,
4.02(d) or 5.11 hereof, or (ii) upon the occurrence and continuation of an Event
of Default, the Borrower, or any Collateral Property Subsidiary, as applicable,
at the Lender's expense, will provide to the Lender, at the request of the
Lender made from time to time, environmental audit reports in form and substance
satisfactory to the Lender.
Section 5.10. UCC FILINGS. Within thirty (30) days of the each
Borrowing Date, the Borrower shall deliver to the Lender UCC search reports
evidencing UCC filings made in each jurisdiction required in the Collateral
Documents.
Section 5.11 [Deleted Prior to Execution.]
Section 5.12. RESERVES. The Borrower and/or any Collateral Property
Subsidiary, as applicable, shall (i) maintain each Reserve until such time as
the applicable Modifications are fully completed, and (ii) complete such
Modifications within 180 days after the closing of such Loan. All fees and
expenses in connection with the Building Condition Report and the Modifications
shall be paid by the Borrower or the Collateral Property Subsidiary, as
applicable.
Section 5.13. OPERATIONAL DOCUMENTS. (i) Borrower shall submit to
Lender as part of any Loan request made by Borrower to Lender, copies of any and
all Operational Documents affecting the Collateral Property which is the subject
of the Loan request. Lender shall have the right, in its sole discretion, to
decline to fund any Loan based upon Lender's review of such Operational
Documents.
(ii) (A) For so long as a Loan remains outstanding with respect to a
Collateral Property, the Borrower, or a Collateral Property Subsidiary, as
applicable, shall deliver any additional Operational Documents for such
Collateral Property to the Lender for its consent prior to the Borrower or such
Collateral Property Subsidiary, as applicable, entering into such Operational
Document, accompanied by a summary of the material terms and conditions of such
Operation Document; PROVIDED, HOWEVER, that (i) the Borrower or Collateral
Property Subsidiary, as applicable, may enter into a proposed Lease without the
consent of Lender if (a) such Lease is on
47
the form of the Approved Lease, (b) the aggregate premises demised to the
tenant, or an affiliate thereof in the Collateral Property, is less than 25,000
square feet, (c) the lease term is less than ten (10) years and, (d) the lease
is otherwise on fair market terms and conditions; (ii) Borrower or such
Collateral Property Subsidiary, as applicable,, without Lender's prior consent,
may modify any Lease originally entered into without Lender's consent so long as
after giving effect to the modification, the Lease would not have initially been
subject to Lender's consent, and (iii) the consent of Lender is not required
with respect to Service Agreements which are terminable upon less than thirty
(30) days notice. (B) Each Operational Document shall be in full force and
effect and free from default by either party. (C) All rights of the Borrower
under the Operational Documents shall be assigned to the Lender, and the Lender,
at its option, may require the parties to any such Operational Document to enter
into an agreement with the Lender which shall provide that (i) copies of all
notices given or received under any such Operational Document shall be sent to
the Lender, (ii) the Lender shall have the right, but not the obligation, to
perform any term, condition or agreement of the Borrower under any such
Operational Document and to cure any default of the Borrower under any such
Operational Document within specified additional time periods, and (iii) such
other provisions as the Lender may require. (D) The Borrower shall deliver each
proposed Lease and any and all amendments, supplements or other modification of
each Lease to the Lender for its consent prior to the Borrower entering into
same unless the Borrower is permitted to enter into such instrument as provided
in sub-section (A)(i) above, and Lender agrees that it will provide its comments
to same or its consent or disapproval of same within five (5) business days of
its receipt thereof. (E) Borrower shall deliver to Lender fully executed copies
of any Leases or amendments, supplements or modifications thereof, within ten
(10) days after execution thereof.
Section 5.14. ENVIRONMENTAL COMPLIANCE. The Loan Parties acknowledge
and agree that, based on any information in any Environmental Report delivered
to the Lender pursuant to Section 4.02(d) hereof or on any uncertainties raised
thereby, the Lender reserves the absolute right, in its sole and exclusive
discretion, to decline to fund any Loan for the acquisition of the Collateral
Properties, to impose additional conditions that must be met prior to or after
the closing of such Loan (including but not limited to requiring additional
investigation into environmental conditions in connection with the Collateral
Properties, testing and sampling of soil, water, air, building materials, or
other substances or materials), and/or to change any terms and conditions of any
Loan, including but not limited to the principal amount thereof, the interest
rate, representations and warranties, covenants, guaranties, indemnities, and/or
other terms and conditions of each Loan.
Section 5.15. DISCLOSURE. Each Loan Party shall give notice to the
Lender promptly upon such Loan Party obtaining knowledge of a specific claim
against the Lender or its officers, directors, employees, agents, Affiliates or
any Person under the Lender's control, by any Loan Party, for any action or
failure to act by the Lender, or any officer, director, employee, agent or
Affiliate of the Lender, or any Person under the Lender's control. The failure
to disclose any such specific claim within 180 days shall constitute an
irrevocable waiver and forgiveness of such claim by the Loan Parties.
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Section 5.16. DEFERRED MAINTENANCE. (a)Attached hereto as SCHEDULE 5.16
is a list of certain repair items Borrower or such Collateral Property
Subsidiary, as applicable, has agreed to complete on the Collateral Properties
identified therein within 6 months of the Borrowing Date (the "Repairs"). Such
Repairs shall be completed in a good and workmanlike manner and shall in all
respects be acceptable to Lender. Evidence of the completion or progress toward
the completion of such Repairs as evidenced by a certificate of completion or
other documentation satisfactory to Lender from the contractor or engineer
performing or supervising such Repairs shall be provided to Lender monthly on
the first day of the month next following the month of the Borrowing Date.
(b) Lender reserves the right, in its sole discretion, to waive the
requirement that certain Repairs be completed. Borrower or a Collateral Property
Subsidiary, as applicable, may request a waiver with respect to certain Repairs
and shall submit evidence to Lender in support of such waiver for review and
evaluation by Lender.
(c) Borrower and such Collateral Property Subsidiary, as applicable,
covenants and agrees that each of the Repairs and all materials, equipment,
fixtures, or any other item comprising a part of any Repair shall be
constructed, installed or completed, as applicable, free and clear of all
mechanic's, materialman's or other liens.
(d) All Repairs shall comply with all applicable laws, ordinances,
rules and regulations of all governmental authorities having jurisdiction over
the Collateral Properties and applicable insurance requirements including,
without limitation, applicable building codes, special use permits,
environmental regulations, and requirements of insurance underwriters.
Section 5.17. CAPITALIZATION. Within ten (10) days of the Closing Date
and upon the request of Lender, Borrower shall deliver to Lender SCHEDULE 5.17
to be attached hereto, and made a part hereof, setting forth: any and all
outstanding subscriptions, warrants, options, convertible securities or other
rights (contingent or other), or commitments therefor, to subscribe for,
purchase or acquire any Securities or to pay any dividends on any Securities, or
to distribute to any holders of Securities any properties or assets of the
Borrower, and all Subsidiaries, partnerships, joint ventures, limited liability
companies or other similar entities or business corporations in which Borrower,
COPT, or any Subsidiary has an interest.
ARTICLE 6. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, from and after the date
of execution of this Agreement and so long as any amount may be borrowed
hereunder or is otherwise due to the Lender under this Agreement or any Loan
Document is not indefeasibly repaid in full, the Borrower shall comply with each
of the following covenants:
Section 6.01. INDEBTEDNESS. The Borrower shall not directly or
indirectly, create, incur, assume or otherwise become or remain liable with
respect to any Indebtedness, other than: (a) Indebtedness of the Borrower to the
Lender incurred pursuant to this Agreement or the other
49
Loan Documents; (b) Indebtedness of the Borrower which is secured by the Liens
referred to in Section 6.02(c) hereof and incurred in the normal course of
business in connection with installment purchases or Capitalized Leases of
equipment or fixed assets located on or related to any Collateral Properties, in
an aggregate amount not exceeding $400,000 at any time outstanding; (c)
Indebtedness of the Borrower which is secured by Liens incurred in connection
with the purchase or acquisition of equipment or fixed assets not located on or
related to any Collateral Properties, as security for the deferred purchase or
acquisition price of such equipment or assets, each of which Liens shall (i)
extend only to the equipment or fixed assets so purchased or acquired, (ii)
secure only up to 100% of the deferred purchase or acquisition price thereof,
and (iii) be incurred in the normal course of business; (d) taxes, assessments,
and governmental charges with respect to the Borrower to the extent that payment
thereof shall not at the time be required to be made pursuant to the provisions
of Section 5.06 hereof; (e) current trade accounts payable or accrued expenses,
operating lease obligations, customer deposits and deferred liabilities other
than for borrowed money, all incurred and continuing in the ordinary course of
business, exclusive of trade accounts payable and operating lease obligations
which remain unpaid for a period longer than six months after the same shall
have become due and payable, unless they shall be contested in good faith and,
where appropriate, by appropriate proceedings and there shall have been set
aside on the books of the Borrower adequate reserves in accordance with GAAP;
(f) Indebtedness expressly permitted by Section 6.03 hereof; (g) unsecured
Indebtedness in an aggregate amount not to exceed at any time $25,000,000; (h)
Indebtedness secured by a mortgage or deed of trust on real property that (i) is
not a Collateral Property, (ii) secures only up to 100% of the fair market value
of each particular property, and (iii) is incurred in the normal course of
business; or (i) existing Indebtedness, not otherwise listed in clauses (a)
through (h) above, listed on SCHEDULE 6.01 hereto.
Section 6.02. LIENS. The Borrower, and any Collateral Property
Subsidiary, as applicable, shall not directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any of the Collateral,
whether now owned or hereafter acquired, except (a) Liens arising under the Loan
Documents in favor of the Lender, (b) Customary Permitted Liens, (c) Liens
incurred in connection with the purchase or acquisition of equipment or fixed
assets, as security for the deferred purchase or acquisition price of such
equipment or assets, each of which Liens shall extend only to the equipment or
fixed assets so purchased or acquired and shall secure only up to 100% of the
deferred purchase or acquisition price thereof; PROVIDED, HOWEVER, that the
aggregate amount of all Indebtedness secured by such Liens shall not exceed at
any time the Indebtedness permitted under Section 6.01(b) hereof minus the
aggregate amount of all then outstanding capitalized leases, (d) other existing
Liens disclosed on SCHEDULE 3.07 hereto, (e) extensions, renewals or
replacements of any Lien referred to in clauses (a), (c) and (d) above;
PROVIDED, HOWEVER, that (i) in the case of clause (c) above, the principal
amount of the obligation secured thereby is not increased, and (ii) any such
extension, renewal or replacement is limited to the property originally
encumbered thereby.
Section 6.03. CONTINGENT OBLIGATIONS. Any Loan Party shall not directly
or indirectly, create, incur, assume or otherwise become or remain liable with
respect to any contingent Indebtedness or other obligation or liability of any
Person, other than (i) guaranties resulting
50
from endorsement of negotiable instruments for collection in the ordinary course
of business; (ii) non-recourse guaranties of the Indebtedness of single asset
Subsidiaries of such Loan Party; (iii) warranties with respect to performance,
and not relating to Indebtedness of any Person, which have been or are made in
the ordinary course of business of such Person to its customers; and (iv)
guaranties made by COPT or Borrower in connection with construction loans or
asset purchase agreements entered into by any single asset Subsidiaries.
Section 6.04. FUNDAMENTAL CHANGES. (A) The Loan Parties shall not enter
into any merger or consolidation with, or liquidate, wind-up or dissolve into,
any other Person if immediately after such transaction, the stockholders of COPT
immediately prior to such transaction shall hold less than a majority of the
total voting power entitled to vote in the election of directors, managers or
trustees of the Person surviving such transaction. (B) Borrower and COPT shall
not convey, lease, sell, transfer or otherwise dispose of, in one transaction or
a series of related transactions, all or a majority of its business, property or
assets, whether now or hereafter acquired. (C) The Loan Parties shall not
purchase or acquire all or substantially all of the business, properties, assets
or Securities of any Person, without the prior written consent of the Lender, if
such event would result in or constitute a violation of any other
representation, warranty or covenant contained herein . (D) The Loan Parties
shall not change the nature of its respective business as currently conducted or
as contemplated hereunder to be conducted if it results in a Material Adverse
Change to any of the Loan Parties, or engage in any new business which is not an
integral part of its business as currently conducted if such action shall have a
Material Adverse Effect on the Loan Parties and/or the transactions contemplated
by this Agreement . (E) Borrower shall not permit the acquisition by any Person
or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of 30% or
more of the voting power of the outstanding shares of common stock of COPT.
Lender acknowledges that as of the date hereof, Constellation Real Estate, Inc.
is the holder of approximately 42% of the outstanding shares of stock of COPT.
(F) On any date, 50% or more of the members of the Board of Directors of
Borrower shall have been (i) members of the Board of Directors of Borrower on
the date twelve (12) months prior to such date, or (ii) approved (by
recommendation, nomination, election or otherwise) by Persons who constitute at
least a majority of the members of the Board of Directors of Borrower as such
Board of Directors was constituted on the date twelve (12) months prior to such
date.
Section 6.05. DISPOSITIONS OF ASSETS. The Borrower shall not assign,
sell, lease or otherwise dispose of, whether by sale, merger, consolidation,
liquidation, dissolution, abandonment or otherwise, any of the Collateral,
except for (a) if the Loan corresponding to such Collateral Property being
disposed is paid in full and, after giving effect to such disposition, (i) all
of the remaining Collateral Properties comply with Section 7.03 hereof, as
measured as of such disposition date, (ii) the Borrower complies with Sections
7.01 and 7.02 hereof, as measured as of such disposition date, or (iii) no
Default or Event of Default shall occur, and (b) dispositions consented to in
advance in writing by the Lender.
51
Section 6.06. SALES AND LEASEBACKS. The Borrower shall not become
liable directly or indirectly, with respect to any lease, whether a capital
lease or any other lease, of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, which the Borrower has sold or
transferred, or is to sell or transfer, to any other Person.
Section 6.07. DIVIDENDS AND REDEMPTIONS. COPT shall not declare, pay or
make any dividend or other distribution of assets, properties, cash, rights,
obligations or Securities on account of any shares of its Securities, including,
without limitation, by redemption, purchase, retirement or other acquisition,
except (a) dividends or distributions payable during any Fiscal year in an
amount not to exceed eighty percent (80%) of the total of funds from operations
as reported in COPT's corresponding Form 10Q filed with the Securities and
Exchange Commission, or (b) as otherwise consented to in advance in writing by
the Lender.
Section 6.08. AMENDMENT OF CERTAIN AGREEMENTS. The Loan Parties shall
not make any amendment or modification to its charter or organizational
documents, or the Related Documents, without the prior written consent of the
Lender, unless (i) in the case of a Lease, such amendment or modification is an
immaterial departure from the form of Approved Lease and does not result in
terms that would not be reasonably considered to be fair market terms or (ii) in
the case of a charter document or organizational document, such amendment or
modification is associated with the contribution of assets and the admission of
limited partners into Borrower.
Section 6.09. CERTAIN OTHER TRANSACTIONS. The Loan Parties shall not
enter into any transaction that materially adversely affects the Collateral.
Section 6.10. TRANSACTIONS WITH AFFILIATES AND CERTAIN OTHER PERSONS.
The Loan Parties shall not directly or indirectly, enter into or permit to exist
any transaction (including, without limitation, the purchase, sale, lease, or
exchange of any property and guarantees and assumptions of obligations of an
Affiliate) with any stockholder, officer, director, employee, partner, member or
Affiliate of any Loan Party, other than (i) transactions on an arms-length basis
on terms no less favorable to such party than if such Affiliate was not an
Affiliate of such party; (ii) the payment of salary and other customary
compensation for a similarly situated business of its directors, officers and
employees in the ordinary course of its business; (iii) management and leasing
agreements which are entered into in the ordinary course of the Borrower's
business, are consistent with existing similar agreements of the Borrower and
are customary in the industry; and (iv) transactions consented to in advance in
writing by the Lender, in its sole and absolute discretion.
Section 6.11. FISCAL YEAR. Neither COPT nor any of its Subsidiaries
shall change its Fiscal Year.
Section 6.12. ERISA. The Loan Parties shall not be or become obligated
to PBGC in excess of $100,000 or be or become obligated to the Internal Revenue
Service with respect to excise or other penalty taxes provided for in Section
4975 of the IRC in excess of $100,000. The
52
Borrower shall not seek any waiver from the minimum funding standard set forth
under Section 302 of ERISA or Section 412 of the IRC or engage in any material
Prohibited Transaction with respect to any Plan.
Section 6.13. REGULATIONS G, T, U AND X. The Loan Parties shall not
apply, directly or indirectly, any part of the proceeds of the Loans for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any "margin security" as defined in Regulation U or for the purpose of reducing
or retiring any Indebtedness which was originally incurred for any such purpose,
or in violation of Regulation G, T, U or X.
Section 6.14. ENVIRONMENTAL COMPLIANCE. Each of the Loan Parties shall
not permit its real or personal property to be (a) the site of the disposal or
release of any product or Waste that is now or later regulated by or subject to
any Environmental Law or any other pollutant, contaminant or Waste; (b) the
source of any such contamination of any adjacent property or of any groundwater
or surface water; or (c) the source of any air emissions in excess of any legal
limit now or later in effect.
Section 6.15. OWNERSHIP OF COLLATERAL PROPERTY SUBSIDIARIES. The Loan
Parties shall not permit any of the Collateral Property Subsidiaries to cease to
be a single purpose wholly owned Subsidiary of COPT or Borrower. Borrower shall
not cease to be a Subsidiary of COPT and the financial statements of Borrower
shall not cease to be consolidated with the financial statements of COPT in
accordance with GAAP.
ARTICLE 7. FINANCIAL COVENANTS
Each Loan Party covenants and agrees that, from and after the date of
execution of this Agreement and so long as any amount may be borrowed hereunder
or is otherwise due to the Lender under this Agreement or any Loan Document is
not indefeasibly repaid in full, the Loan Parties shall comply with and shall
cause each of their respective Subsidiaries to comply with each of the following
covenants:
Section 7.01 MINIMUM CONSOLIDATED INTEREST COVERAGE. As of the last day
of any Fiscal Quarter, the Loan Parties shall not permit the ratio of
Consolidated Adjusted Net Income to Consolidated Interest Expense to be less
than 1.75 to 1.0; (such amounts to be determined with reference to the preceding
twelve (12) month period ending on such last day);
Section 7.02 MAXIMUM CONSOLIDATED UNHEDGED FLOATING RATE DEBT. The Loan
Parties shall not at any time permit Consolidated Total Indebtedness subject to
a variable interest rate that is not subject to Interest Rate Agreements to
exceed 20% of Consolidated Total Assets. Borrower shall submit evidence of
compliance with the requirements governing Interest Rate Agreements with the
Compliance Certificates delivered to Lender pursuant to Section 5.07(b) hereof.
53
Section 7.03. MAXIMUM CONSOLIDATED TOTAL INDEBTEDNESS. The Loan Parties
shall not at any time permit Consolidated Total Indebtedness to exceed 65% of
Consolidated Total Assets.
Section 7.04. FINANCIAL REPORTING TESTS. At any time during each Fiscal
Quarter, measured as of the last day of such Fiscal Quarter for the Fiscal
Quarter then ended, the Loan-To-Value Ratio of the Collateral Properties in the
aggregate shall not exceed 75%, based on the Lender's underwriting standards and
determination and the Debt Service Coverage ratio of each Collateral Property
shall be equal to or greater than 1.25 to 1.0.
Section 7.05. MINIMUM NET WORTH. At any time during each Fiscal Quarter
the Net Worth of COPT and its Subsidiaries, on a consolidated basis, shall not
be less than (i) $175,000,000 plus (ii) 80% of any Equity Proceeds received by
Borrower and its subsidiaries (other than from Borrower and its Subsidiaries)
after the Closing Date.
ARTICLE 8. EVENTS OF DEFAULT
Section 8.01. EVENTS OF DEFAULT. Each of the following events or
conditions shall constitute an Event of Default under this Agreement:
(a) the Borrower shall fail to pay, within two (2) business days after
the date when due, any installment of principal (including mandatory
prepayments) of any Loan, any interest on any Loan or any other amount due and
payable hereunder or with respect to any Loan;
(b) any representation, warranty or statement given in this Agreement
or in any other Related Document by any party thereto (other than the Lender) or
in any certificate, opinion, report, financial statement or other written
statement furnished at any time pursuant to this Agreement shall prove to be or
have been untrue or misleading in any material respect as of the date on which
it is made or deemed to be made;
(c)(i) any Loan Party shall fail to perform, keep or observe in any
respect any covenant or condition contained in Sections 5.01, 5.03, 5.04
(provided such obligations and liabilities referred to in Section 5.04 are
accelerated), 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.13, 5.15 and 5.16
hereof or Articles 6 or 7 hereof, or (ii) any Loan Party shall fail to perform,
keep or observe in any respect any covenant or condition contained in Sections
5.02, 5.04 (provided such obligations and liabilities referred to in Section
5.04 are not accelerated), 5.05 and 5.14 hereof and such failure shall not be
cured to the Lender's reasonable satisfaction within ten (10) business days
after the occurrence of such failure;
(d) any Loan Party or any other party to a Related Document (other than
the Lender) shall fail to perform, keep or observe in any respect any other
term, provision, condition, covenant, waiver, warranty or representation
contained in this Agreement or in any other Related Document to which it is a
party that is required to be performed, kept or observed by any Loan Party or
any party to a Related Document, other than the Lender, and the same, if
curable, shall
54
not be cured to the Lender's satisfaction within ten (10) business days after
the occurrence of such failure;
(e)(i) the Lender shall not have at any time first priority perfected
Liens and security interests in all of the Collateral, (ii) any of the Related
Documents shall at any time for any reason cease to be in full force and effect
or shall be declared to be null and void, or the validity or enforceability
thereof shall be contested by any of the parties thereto (other than the
Lender), or (iii) any of such parties shall deny that it has any or any further
liability or obligation thereunder at a time when it in fact does have such
liabilities or obligations thereunder;
(f) any Loan Party shall fail to (i) pay all or any portion of any
Indebtedness due in connection with the Banker's Trust Facility or any other
Indebtedness the aggregate principal amount of which is in excess of $75,000,000
(other than the Obligations) when due (whether by stated maturity, required
prepayment, acceleration, demand or otherwise) after the expiration of any
applicable grace periods; or (ii) perform or observe any term, covenant or
condition to be performed on its part or to be observed under any loan
agreement, credit agreement, mortgage, indenture or other instrument relating to
such Indebtedness, when required to be performed or observed;
(g) any Loan Party permits either an individual judgment against it in
excess of $200,000 or judgments against it in excess of $300,000 in the
aggregate, to remain unstayed, unbonded or not discharged for a period of more
than thirty (30) days, unless such judgment is being contested in good faith and
the Loan Party has established reserves in accordance with GAAP that are
satisfactory to the Lender;
(h) any of the operations or business of any Loan Party is suspended,
other than in the ordinary course of its business which has a Material Adverse
Effect;
(i) a Loan Party or any Subsidiary commences any case, proceeding or
other action relating to it in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up, arrangement, composition, compromise,
readjustment of its debts or any other relief under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition, compromise,
readjustment of debt or similar act or law of any jurisdiction, now or hereafter
existing, or consents to; approves of, or acquiesces in, any such case,
proceeding or other action, or applies for a receiver, trustee or custodian for
itself or for all or a substantial part of its properties or assets, or makes an
assignment for the benefit of creditors, or fails generally to pay its debts as
they mature or admits in writing its inability to pay its debts as they mature,
or is adjudicated insolvent or bankrupt;
(j) there is commenced against a Loan Party or any Subsidiary any case
or proceeding or any other action is taken against a Loan Party or such
Subsidiary in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition, compromise, readjustment of its debts or
any other relief under any bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, compromise, readjustment of debt or
similar
55
act or law of any jurisdiction, now or hereafter existing; or there is appointed
a receiver, trustee or custodian for the Loan Party or such Subsidiary or for
all or a substantial part of their respective properties or assets; or there is
issued a warrant of attachment, execution or similar process against any
substantial part of the properties or assets of the Loan Party or such
Subsidiary; and any such event continues for thirty (30) days undismissed,
unstayed, unbonded or undischarged;
(k) (i) any Loan Party or any of its Subsidiaries engages in any
Prohibited Transaction involving any Plan; (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA) that is not waived exists for
more than sixty (60) days with respect to any Plan; (iii) a Reportable Event
occurs with respect to, or proceedings commence to have a trustee appointed, or
a trustee is appointed, to administer or to terminate, any Plan, which
Reportable Event or institution of proceedings is likely to result in the
termination of such Plan for purposes of Title IV of ERISA and, in the case of a
Reportable Event, the continuance of such Reportable Event unremedied for 10
days after notice of such Reportable Event pursuant to Section 4043(a), (c) or
(d) of ERISA is given or the continuance of such proceedings for ten (10) days
after commencement thereof, as the case may be; (iv) the Loan Party or any of
its Subsidiaries fully or partially withdraws from any multi-employer Plan;
PROVIDED, HOWEVER, that any event or condition described in any of clauses (i)
through (iv) of this paragraph (k) shall not constitute an Event of Default
unless such event or condition, together with all other such events or
conditions (if any), is likely to subject such Loan Party to any tax, penalty or
other liabilities in the aggregate material in relation to the management,
business, properties, assets, operations or condition (financial or other) of
the Loan Party or such Subsidiary; or (v) any Plan terminates for purposes of
Title IV of ERISA, or PBGC institutes proceedings for the involuntary
termination of any Plan, in either case, with a vested unfunded liability of
$100,000 or more;
(l) there shall occur a cessation of a substantial part of the business
of any Loan Party for a period which significantly affects such Loan Party's
capacity to continue its respective business; or any Loan Party shall suffer the
loss or revocation of any license or Permit now held or hereafter acquired by
such Loan Party which is necessary to the continued or lawful operation of a
part of its respective business that would have a Material Adverse Effect; or
any Loan Party shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any part of its
respective business affairs for a period of thirty (30) days which would have a
Material Adverse Effect; or any Lease shall be canceled or terminated by the
other party to such Lease prior to the expiration of its stated term which
individually or in the aggregate which would have a Material Adverse Effect;
(m) a Material Adverse Change shall have occurred; or
(n) the occurrence of any event of default under any Indebtedness
(other than the Indebtedness represented by this Agreement) which would permit
the holder thereunder to accelerate such Indebtedness or exercise any other
rights or remedies available to such holder.
56
Section 8.02. REMEDIES UPON AN EVENT OF DEFAULT. If any Event of
Default shall have occurred and be continuing, the Lender may by notice to any
Loan Party (i) declare the commitment of the Lender to make Loans hereunder to
be terminated, whereupon the same shall forthwith terminate, (ii) sell or
dispose of the Loans in a commercially reasonable manner and/or (iii) declare
any or all of the Loans, all interest thereon, any accrued and unpaid fees and
all other amounts payable hereunder or in respect of such Loans to be forthwith
due and payable, whereupon they shall become and be forthwith due and payable,
without presentment, demand, protest, or further notice of any kind, all of
which are hereby expressly waived by each Loan Party and each of their
respective Subsidiaries. Notwithstanding the foregoing, upon the occurrence of
any Event of Default described in Sections 8.01(i) or (j) above, the commitment
of the Lender to make Loans shall automatically be terminated and the Loans, all
interest thereon and all accrued and unpaid fees and all other amounts payable
hereunder or in respect of the Loans shall immediately become due and payable,
without any requirement on the part of the Lender to give notice, or make
declaration, of any kind regarding such Event of Default and without
presentment, demand, protest or any other requirement on the part of the Lender,
all of which are hereby expressly waived by each Loan Party and each of their
respective Subsidiaries.
ARTICLE 9. MISCELLANEOUS
Section 9.01. NOTICES. All notices hereunder shall be in writing and
shall be conclusively deemed to have been received and shall be effective,
except as explicitly otherwise noted, (i) on the day on which delivered if
delivered personally, or transmitted by telecopier (followed by a mailed written
confirmation), (ii) on the next Business Day if delivered by a nationally
recognized overnight courier (such as Federal Express), or (iii) three (3)
Business Days after the date on which the same is mailed by certified United
States mail, postage prepaid, and shall be addressed:
(a) in the case of the Borrower, to:
Corporate Office Properties, L.P.
c/o Corporate Office Properties Trust
8815 Centre Park Drive
Columbia, Maryland 21045
Attention: General Counsel
Telecopier No.: (410) 992-7534
(b) in the case of the Lender, to:
Prudential Securities Credit Corp.
One New York Plaza
New York, New York 10292
Attention: Michael Moore, Director
Telecopier No.: (212) 778-3194
Attention: Lainie Kaye, Vice President
57
Telecopier No.: (212) 778-5099
Attention: Michael Pierro, Vice President
Telecopier No.: (212) 778-2239
Prudential Securities Credit Corp.
One Seaport Plaza
199 Water Street
New York, New York 10292
Attention: Fred Robustelli, First Vice President
Telecopier No.: (212) 214-7938
With a copy (other than copies of any Notice of Borrowing) to:
Pryor, Cashman, Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Attention: Andrew S. Levine, Esq.
Telecopier No.: (212) 326-0806
or at such other address as the party giving such notice shall have been advised
of in writing for such purpose by the party to which the same is directed.
Section 9.02. SURVIVAL OF THIS AGREEMENT. All covenants, agreements,
representations and warranties made herein, or in the Loan Documents or in any
certificate delivered pursuant hereto or thereto shall survive the execution by
the Borrower and delivery to the Lender of this Agreement, the Note and the
other Loan Documents and the making and repayment of the Loans hereunder, and
shall continue in full force and effect so long as any Obligations of the
Borrower remains outstanding and unpaid or this Agreement remains in effect.
Section 9.03. INDEMNITY. Each Loan Party and its respective
Subsidiaries agrees to defend, protect, indemnify and hold harmless the Lender
and each of its Affiliates, officers, directors, employees, agents, attorneys
and consultants (collectively called the "INDEMNITEES") from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for such Indemnitees incurred in connection with any action or
proceeding between or among any Loan Party and any Indemnitee or between any
Indemnitee and any third party or otherwise, whether or not relating to any
investigative, administrative or judicial proceeding and whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees (whether direct, indirect, special,
consequential, punitive or treble and whether based on any federal, state or
local, or foreign, laws or other statutory regulations, including, without
limitation, Environmental Laws, securities and commercial laws and regulations,
under common law or at equitable cause, or on contract or otherwise) in any
manner relating to or arising out of this Agreement or any of the Related
Documents, or any act, event or transaction
58
related or attendant thereto or contemplated hereby, or any action or inaction
by any Indemnitee under or in connection therewith, any commitment of the Lender
hereunder, or the making of the Loans, or the management of such Loans, or the
use or intended use of the proceeds of any Loan, advance or other financial
accommodation provided hereunder, or any ERISA liabilities, or the use or
intended use of the Collateral Properties or any accident or injury occurring on
the Collateral Properties, or any claims asserted against the Lender by reason
of its alleged obligations under any Lease, or the payment of any brokerage
commission to anyone in connection with funding the Loans, or any
misrepresentation made by any Loan Party or any of their respective Subsidiaries
to the Lender in the Loan Documents, including, in each such case, any
allegation of any such matters, whether meritorious or not (collectively, the
"INDEMNIFIED MATTERS"); PROVIDED, HOWEVER, that any Loan Party and their
respective Subsidiaries shall not have any obligation to any Indemnitee
hereunder with respect to Indemnified Matters directly caused by or resulting
primarily from the willful misconduct or gross negligence of such Indemnitee.
The covenants of each of the Loan Parties contained in this Section 9.03 shall
survive the payment in full of all amounts due and payable under this Agreement
or any of the Loan Documents and the full satisfaction of all other Obligations
of the Borrower.
Section 9.04. COSTS, EXPENSES AND TAXES. (a) Each Loan Party agrees to
pay on demand (i) all reasonable out-of-pocket costs and expenses incurred by
the Lender in connection with the preparation, execution, delivery, filing,
recording, and administration of this Agreement, each of the Related Documents,
and any other documents, instruments or agreements which may be delivered in
connection with this Agreement (including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Lender, and local counsel who
may be retained by said counsel) with respect thereto and with respect to
advising the Lender as to its rights and responsibilities under this Agreement,
(ii) all costs and expenses in connection with all third party reports, the
audit, appraisal, valuation, investigation, and the creation, perfection,
priority or protection of the Lender's Liens against the Collateral, including,
without limitation, all costs and expenses (A) to pay or discharge taxes, Liens,
security interests or other encumbrances levied, placed or threatened against
the Collateral and (B) for title and lien searches, title insurance premiums,
filing and recording fees and taxes, duplication costs and corporate search
fees, including, without limitation, all title and lien searches, title
insurance premiums, filing and recording fees and taxes incurred in connection
with the filing and recording of the Mortgages and the Deeds of Trust, (iii) all
out-of-pocket costs and expenses in connection with the audits, inspections and
investigations conducted pursuant to Section 2.12 and Section 5.09 hereof, and
(iv) all costs and expenses (including, without limitation, the reasonable fees
and expenses of the Lender's counsel) of the Lender in connection with the
monitoring, refinancing and/or enforcement of this Agreement and each of the
Related Documents and such other documents, instruments or agreements which may
be delivered in connection with this Agreement.
(b) Any and all payments by any Loan Party under this Agreement or the
Note shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of the Lender,
taxes imposed on or in respect of its income (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred
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to as "TAXES"). If any Loan Party shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to the Lender, (i) the sum
payable shall be increased as may be necessary so that, after making all
required deductions (including deductions applicable to additional sums payable
under this Section 9.04), the Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Loan Party shall
make such deductions, and (iii) the Loan Party shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(c) The Loan Parties further agree to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or similar
levies which arise in connection with the execution and delivery of this
Agreement, any of the Related Documents or any of the other instruments,
documents or agreements executed and/or delivered in connection herewith or
therewith, or any payment made hereunder or in connection herewith (hereinafter
collectively referred to as "OTHER TAXES").
(d) The Loan Parties shall indemnify the Lender for the full amount of
Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable by the Borrower under this
Section 9.04) paid by the Lender and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Lender makes
written demand therefor. A certificate as to any additional amount payable to
the Lender under this Section 9.04 submitted to the Borrower by the Lender shall
show in reasonable detail the amount payable and the calculations used to
determine such amount and shall, absent manifest error, be final, conclusive and
binding upon each of the parties hereto.
(e) Without prejudice to the survival of any other agreement of the
Loan Parties hereunder, the agreements and obligations of the Borrower contained
in this Section 9.04 shall survive the payment in full of all amounts due and
payable under this Agreement or any of the Related Documents and the full
satisfaction of all other Obligations of the Borrower.
Section 9.05. FURTHER ASSURANCES. (a) At any time and from time to
time, upon the request of the Lender, the Borrower or such other Loan Party
requested by Lender shall execute, deliver and acknowledge, or cause to be
executed, delivered and acknowledged, such further documents and instruments and
do such other acts and things as the Lender may reasonably request in order to
effect fully the intent and purposes of this Agreement and the Related
Documents, and any other agreements, instruments and documents delivered
pursuant hereto or in connection with the making of the Loans, in proper form
for recording and otherwise in form and substance reasonably satisfactory to the
Lender and its counsel.
(b) Each of the Loan Parties agrees that from time to time, at its
expense, it shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Lender may reasonably request, in order to create, evidence, perfect or
preserve any security interest or Lien granted or purported to be
60
granted hereby or by any Loan Document or to enable the Lender to exercise and
enforce its rights and remedies hereunder or under any Loan Document with
respect to any Collateral.
Section 9.06. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement or any of the Related Documents to which the Lender
is a party, nor any consent to any departure by any Loan Party therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given; PROVIDED, HOWEVER, that no
amendment, waiver or consent, shall, unless in writing and signed by the holder
of the Note do any of the following: (i) increase the Commitment, (ii) reduce
the principal of, or premiums or interest on, the Note, (iii) postpone any date
fixed for any payment of principal of, or interest on, the Note or any other
amount due hereunder or under any Loan Document to the holder of the Note, or
waive any default in the payment of principal, interest or any other amount due
hereunder or under any Loan Document to which such holder of the Note is a
party, (iv) release any material portion of the Collateral, or (v) amend this
Section 9.06 or any other provision requiring the consent of the holder of the
Note. No failure on the part of the Lender or the holder of the Note to
exercise, and no delay in exercising, any right, power or privilege hereunder or
under any of the Related Documents shall operate as a waiver thereof, nor shall
a single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. No notice to or
demand on any Loan Party in any case shall entitle such Loan Party to any other
or further notice or demand in the same, similar or other circumstances.
Section 9.07. REMEDIES CUMULATIVE. This Agreement, the Related
Documents and the Obligations of the Loan Parties hereunder and thereunder are
in addition to and not in substitution for any other Obligations of any of the
Loan Parties or security interests granted by any of the Loan Parties now or
hereafter held by the Lender and shall not operate as a merger of any contract
or debt or suspend the fulfillment of or affect the rights, remedies or powers
of the Lender in respect of any such Obligation or security interest held by the
Lender for the fulfillment thereof. The rights and remedies provided in this
Agreement and in any Related Document are cumulative and not exclusive of any
other rights or remedies provided by law.
Section 9.08. MARSHALING, RECOURSE TO SECURITY: PAYMENTS SET ASIDE. The
Lender shall not be under any obligation to marshal any assets in favor of any
of the Loan Parties or any other party or against or in payment of any or all of
the Obligations of the Loan Parties to the Lender hereunder or under the Related
Documents or otherwise. Recourse to security shall not be required at any time.
To the extent that any Loan Party makes a payment or payments to the Lender, or
the Lender enforces its security interests or exercises its rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff 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 obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and reinstated and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not
occurred.
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Section 9.09. SETOFF. In addition to any rights and remedies of the
Lender now or hereafter provided by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, on the occurrence and
during the continuation of any Event of Default to setoff and apply against any
Obligation, whether matured or unmatured, of the Borrower, any amount owing from
the Lender to the Borrower, at or at any time after the happening of any such
Event of Default, and such right of setoff may be exercised by the Lender
against the Borrower or against any trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, receiver or execution, judgment or
attachment creditor, notwithstanding the fact that such right of setoff shall
not have been exercised by the Lender before the making, filing or issuance, or
service on the Lender of, or of notice of, any such event or proceeding.
Section 9.10. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower and the Lender, and thereafter
shall be binding upon and inure to the benefit of the Borrower and the Lender
and their respective successors and assigns; PROVIDED, HOWEVER, that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lender. For the purposes of this
Section 9.10, an assignment shall be deemed to include (i) if the Borrower is a
corporation, the voluntary or involuntary sale, conveyance or transfer of the
Borrower's Securities (or the Securities of any corporation directly or
indirectly controlling the Borrower by operation of law or otherwise) or the
creation or issuance of a new stock by which an aggregate of more than ten
percent (10%) of the Borrower's Securities shall be vested in a party or parties
who are not now shareholders, (ii) if the Borrower is a partnership, the change,
removal or resignation of a general partner or managing partner, or (iii) if the
Borrower is a limited liability company, the change, removal or resignation of a
managing member.
Section 9.11. APPLICABLE LAW. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, and construed and
interpreted in accordance with, the substantive law of the State of New York,
without regard to its choice of law provisions.
Section 9.12. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL. All judicial proceedings brought against the Borrower or the Lender
with respect to this Agreement or any Related Document may be brought in any
state or federal court of competent jurisdiction in the State of New York and,
by its execution and delivery of this Agreement, the Borrower accepts, for
itself and in connection with its properties, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
or any of the Related Documents from which no appeal has been taken or is
available. The Borrower irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to its notice
address specified in Section 9.01 hereof, such service to become effective five
(5) days after such mailing. EACH OF THE BORROWER AND THE LENDER HEREBY
KNOWINGLY, INTENTIONALLY AND IRREVOCABLY WAIVE (A) TRIAL BY JURY IN ANY ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
62
OR ANY RELATED DOCUMENT, AND (B) ANY OBJECTION (INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY RELATED DOCUMENT IN
ANY JURISDICTION SET FORTH ABOVE. Nothing herein shall affect the right of the
Lender to serve process in any other manner permitted by law.
Section 9.13. INCONSISTENCIES. This Agreement and each of the Loan
Documents shall be construed to the extent reasonable to be consistent, one with
the other, but to the extent that the terms and conditions of this Agreement or
any other Loan Document are actually inconsistent with the terms and conditions
of any Loan Document, the terms and conditions of this Agreement shall govern.
Section 9.14. PERFORMANCE OF OBLIGATIONS. The Borrower acknowledges and
agrees that the Lender may, but shall have no obligation to, make any payment or
perform any act required of the Borrower under this Agreement or any Related
Document or take any other action which the Lender in its sole discretion deems
necessary or desirable to protect or preserve the Collateral, including, without
limitation, any action to pay or discharge taxes, Liens, security interests or
other encumbrances levied or placed on or threaten to be placed on any
Collateral.
Section 9.15. ASSIGNMENT; PARTICIPATION. The Lender may assign (by
novation or otherwise) or participate all or a proportionate part of its rights,
obligations and interests in the Loans and its rights hereunder and under the
Related Documents without restriction. The Lender may, prior to or after the
execution of this Agreement syndicate the Loans with one or more financial
institutions, who will become parties to this Agreement, in which case the
Lender will be the sole and exclusive agent for such other financial
institutions upon such terms and conditions as the Lender deems appropriate.
Each Loan Party hereby agrees to reasonably cooperate with the Lender, to effect
assignments and/or participations made with respect hereto.
Section 9.16. CONFIDENTIALITY. The Lender shall maintain the
confidential nature of, and shall not use or disclose, the Loan Party's
confidential financial information, without first obtaining such party's written
consent, which consent shall not be unreasonably withheld or delayed. Nothing in
this Section 9.16 shall require the Lender to obtain the consent of the
Borrower, before exercising any of its rights under the Related Documents upon
the occurrence of a Default or Event of Default. The obligations of the Lender
shall in no event apply to: (i) providing information about the Loans or any
party to any Related Document to any actual or potential assignee or participant
contemplated in Section 9.15 hereof; (ii) any situation in which the Lender, in
the sole discretion of the Lender, is required by law or required or requested
by any governmental, regulatory or supervisory authority or official to disclose
information; (iii) providing information to counsel to the Lender in connection
with the transactions contemplated by the Related Documents; (iv) providing
information to independent auditors retained by the Lender; (v) any information
that is in or becomes part of the public domain otherwise than through a
wrongful act of the Lender or any employees or agents thereof; (vi) any
information that is in the possession of the Lender prior to receipt thereof
from the Borrower or any other Person known to the Lender to be acting on behalf
of the Borrower; (vii) any information that is
63
independently developed by the Lender; and (viii) any information that is
disclosed to the Lender by a third party that has no obligation of
confidentiality with respect to the information disclosed.
Section 9.17. CONSTRUCTION. The parties hereto acknowledge that each
party and its counsel have reviewed this Agreement and each of the Loan
Documents and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any of the Loan Documents.
Section 9.18. ENTIRE AGREEMENT; BINDING EFFECT. This Agreement, taken
together with all of the Related Documents and all certificates and other
documents delivered by the Borrower to the Lender, embodies the entire agreement
and, except as otherwise contemplated herein, supersedes all prior agreements,
written and oral, relating to the subject matter hereof.
Section 9.19. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 9.20. HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 9.21. EXECUTION OF COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
Section 9.22. LIMITATION OF LIABILITY. No claim may be made by any Loan
Party or any other Person against the Lender or its Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect,
consequential, punitive or treble damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Related Documents, or
any act, omission or event occurring in connection herewith or therewith; and
the Borrower hereby waives, releases and agrees not to sue upon any claim for
any and all special, indirect, consequential, punitive or treble damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
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Section 9.23 ADDITION OF COLLATERAL PROPERTY SUBSIDIARIES. From time to
time subsequent to the date hereof, pursuant to Section 4.02 of this Agreement,
Collateral Property Subsidiaries may become parties hereto, as additional Loan
Parties, by executing a counterpart of this Agreement in form and substance
reasonably acceptable to Lender. Upon delivery of any such counterpart to
Lender, each Collateral Property Subsidiary shall be a Loan Party as fully a
party hereto as if such Collateral Property Subsidiary were an original
signatory hereof. Each Loan Party expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Loan Party hereunder, nor by any election of Lender not to cause any
Collateral Property Subsidiary to become an additional Loan Party hereunder.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
LOAN PARTIES:
CORPORATE OFFICE PROPERTIES, L.P.
a Delaware limited partnership
By: Corporate Office Properties Trust, a
Maryland real estate investment trust,
its sole general partner
by: /s/ Roger A. Waesche, Jr.
--------------------------
Name: Roger A. Waesche, Jr.
Title: Senior Vice President
CORPORATE OFFICE PROPERTIES TRUST
a Maryland real estate investment trust
By: /s/ Roger A. Waesche, Jr.
--------------------------
Name: Roger A. Waesche, Jr.
Title: Senior Vice President
LENDER:
PRUDENTIAL SECURITIES CREDIT CORP., a Delaware
corporation
By:
--------------------------
Name:
Title:
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