MSMCH Loan No.: 13-878027 LOAN AGREEMENT Dated as of September 26, 2013 Between WHITESTONE UPTOWN TOWER, LLC, as Borrower and MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, as Lender DMEAST #17478116 v7
MSMCH Loan No.: 13-878027
LOAN AGREEMENT
Dated as of September 26, 2013
Between
WHITESTONE UPTOWN TOWER, LLC,
as Borrower
and
XXXXXX XXXXXXX MORTGAGE CAPITAL HOLDINGS LLC,
as Lender
DMEAST #17478116 v7
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION ............................................ 1
Section 1.1. Definitions ......................................................................................................... 1
Section 1.2. Principles of Construction ............................................................................... 18
ARTICLE II. THE LOAN ............................................................................................................ 18
Section 2.1. The Loan .......................................................................................................... 18
2.1.1. Agreement to Lend and Borrow ..................................................................... 18
2.1. 2. Single Disbursement to Borrower .................................................................. 19
2.1.3. The Note ......................................................................................................... 19
2.1.4. UseofProceeds .............................................................................................. 19
Section 2.2. Interest Rate ..................................................................................................... 19
2.2.1. InterestRate .................................................................................................... 19
2.2.2. Intentionally Omitted ..................................................................................... 19
2.2.3. Default Rate .................................................................................................... 19
2:2.4. Interest Calculation ........................................................................................ 19
2.2.5. Usury Savings ................................................ : ............................................... 19
Section 2.3. Loan Payments ................................................................................................. 20
2.3.1. Payment Before Maturity Date ...................................................................... 20
2.3.2. Intentionally Omitted ..................................................................................... 20
2.3.3. Payment on Maturity Date ............................................................................. 20
2.3.4. Late Payment Charge ..................................................................................... 20
2.3.5. Method and Place ofPayment.. ...................................................................... 20
Section 2.4. Prepayments ..................................................................................................... 21
2.4.1. Voluntary Prepayments .................................................................................. 21
2.4.2. Mandatory Prepayments ................................................................................. 21
2.4.3. Prepayments After Default ............................................................................. 21
Section 2.5. Defeasance ....................................................................................................... 22
2.5.1. Conditions to Total Defeasance ..................................................................... 22
2.5.2. Intentionally Omitted ..................................................................................... 23
2.5.3. Defeasance Collateral Account ...................................................................... 23
2.5.4. Successor Borrower. ....................................................................................... 24
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2.5.5. Intentionally Omitted ..................................................................................... 24
ARTICLE ill. REPRESENTATIONS AND WARRANTIES .................................................... 24
Section 3.1.
3.1.1.
3.1.2.
3.1.3.
3.1.4.
3.1.5.
3.1.6.
3.1.7.
3.1.8.
3.1.9.
Borrower Representations ............................................................................... 24
Organization ................................................................................................... 24
Proceedings .................................................................................................... 25
No Conflicts ................................................................................................... 25
Litigation ........................................................................................................ 25
Agreements ..................................................................................................... 26
Consents ......................................................................................................... 26
Title ................................................................................................................ 26
No Plan Assets ............................................................................................... 26
Compliance ..................................................................................................... 27
3.1.10. Financial Information ..................................................................................... 27
3.1.11. Condemnation ................................................................................................ 27
3.1.12. Utilities and Public Access ............................................................................. 27
3.1.13. SeparateLots .................................................................................. : ............... 28
3.1.14. Assessments ................................................................................................... 28
3.1.15. Enforceability ................................................................................................. 28
3.1.16. Intentionally Omitted ..................................................................................... 28
3.1.17. Insurance ........................................................................................................ 28
3.1.18. Licenses .......................................................................................................... 28
3.1.19. Flood Zone ..................................................................................................... 28
3.1.20. Physical Condition ......................................................................................... 28
3.1.21. Boundaries ...................................................................................................... 29
3.1.22. Leases ............................................................................................................. 29
3.1.23. Filing and Recording Taxes ........................................................................... 29
3.1.24. Single Purpose ................................................................................................ 30
3.1.25. Tax Filings ...................................................................................................... 34
3 .1.26. Solvency ......................................................................................................... 34
3.1.27. Federal Reserve Regulations .......................................................................... 34
3.1.28. Organizational Chart ...................................................................................... 35
3.1.29. Bank Holding Company ................................................................................. 35
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3.1.30. Investment Company Act ............................................................................... 35
3.1.31. No BankruptcyFiling ..................................................................................... 35
3.1.32. Full and Accurate Disclosure ......................................................................... 35
3.1.33. Foreign Person ................................................................................................ 35
3.1.34. No Change in Facts or Circumstances; Disclosure ........................................ 35
3.1.35. Management Agreement ................................................................................ 35
3.1.36. Perfection of Accounts ................................................................................... 35
3.1.37. Intentionally Omitted ..................................................................................... 36
3.1.38. Material Agreements ...................................................................................... 36
3.1.39. lllegal Activity/Forfeiture .............................................................................. 36
3.1.40. Guarantor and Sponsor Representations ........................................................ 36
3.1.41. Embargoed Person .......................................................................................... 37
3.1.42. Patriot Act ...................................................................................................... 37
3.1.43. Intentionally Omitted ..................................................................................... 38
3.1.44. Survival ofRepresentations ........................................................................... 38
ARTICLE IV. BORROWER COVENANTS : ............................................................................. 38
Section 4.1.
4.1.1.
4.1.2.
4.1.3.
4.1.4.
4.1.5.
4.1.6.
4.1.7.
4.1.8.
Borrower Affirmative Covenants .................................................................... 38
Existence; Compliance with Legal Requirements ......................................... 38
Taxes and Other Charges ............................................................................... 39
Litigation ........................................................................................................ 39
Access to Property .......................................................................................... 39
Further Assurances; Supplemental Mortgage Affidavits ............................... 39
Financial Reporting ........................................................................................ 40
Title to the Property ........................................................................................ 42
Estoppel Statement ......................................................................................... 42
4.1.9. Leases ............................................................................................................. 43
4.1.10. Alterations ...................................................................................................... 44
4.1.11. Intentionally omitted ..................................................................................... .45
4.1.12. Material Agreements ..................................................................................... .45
4.1.13. Performance by Borrower ............................................................................. .45
4.1.14. Costs of Enforcement/Remedying Defaults .................................................. .45
4.1.15. Business and Operations ............................................................................... .00
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4.1.16. Loan Fees ....................................................................................................... 46
4.1.17. Intentionally Omitted .................................................................................... .46
4.1.18. Intentionally Omitted .................................................................................... .46
4.1.19. Required Repairs ............................................................................................ 46
4 .1. 20. Maintenance of Property ................................................................................ 46
4.1.21. Permitted Equipment Leases .......................................................................... 46
Section 4.2. Borrower Negative Covenants ......................................................................... 46
4.2.1. Due on Sale and Encumbrance; Transfers of Interests .................................. 46
4.2.2. Intentionally Omitted ..................................................................................... 48
4.2.3. Dissolution ..................................................................................................... 48
4.2.4. Change in Business ........................................................................................ 48
4.2.5. Debt Cancellation ........................................................................................... 48
4.2.6. Distributions ................................................................................................... 48
4.2.7. Zoning ............................................................................................................ 48
4.2.8. Intentionally omitted ...................................................................................... 48
4.2.9. No Joint Assessment ...................................................................................... 48
4.2.10. Principal Place of Business ............................................................................ 48
4.2.11. ERISA ............................................................................................................ 49
4.2.12. Intentionally Omitted ..................................................................................... 50
4.2.13. Intentionally Omitted ..................................................................................... 50
ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION ...................................... 50
Section 5.1. Insurance .......................................................................................................... 50
5.1.1. Insurance Policies ........................................................................................... 50
5.1.2. Insurance Company ........................................................................................ 54
Section 5.2. Casualty and Condemnation ............................................................................ 55
5.2.1. Casualty .......................................................................................................... 55
5.2.2. Condemnation ..................... , .......................................................................... 55
5.2.3. Casualty Proceeds ................................................................................. , ........ 56
Section 5.3. Delivery of Net Proceeds ................................................................................. 56
5.3.1. Minor Casualty or Condemnation .................................................................. 56
5.3.2. Major Casualty or Condemnation .................................................................. 56
5.3.3. REMIC Compliance ....................................................................................... 60
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ARTICLE VI. RESERVE FUNDS .............................................................................................. 60
Section 6.1. Intentionally Omitted ....................................................................................... 60
Section 6.2. Tax Funds ........................................................................................................ 60
6.2.1. Deposits of Tax Funds .................................................................................... 60
6.2.2. Release of Tax Funds ..................................................................................... 60
Section 6.3. Insurance Funds ............................................................................................... 61
6.3.1. Deposits of Insurance Funds .......................................................................... 61
6.3.2. Release of Insurance Funds ............................................................................ 61
Section 6.4. Capital Expenditure Funds .............................................................................. 61
6.4.1. Deposits of Capital Expenditure Funds .......................................................... 61
6.4.2. Release of Capital Expenditure Funds ........................................................... 62
Section 6.5. Ongoing Rollover Funds .................................................................................. 63
6.5.1. Deposits of Ongoing Rollover Funds ............................................................. 63
6.5.2. Release of Ongoing Rollover Funds .............................................................. 63
Section 6.6. Lease Termination Rollover Funds ................................................................. 64
6.6.1. Deposits of Lease Termination Rollover Funds .............................................. 64
6.6.2. Release of Lease Termination Rollover Funds .............................................. 64
Section 6.7. Unfunded Rollover Funds ................................................................................ 66
6. 7 .1. Deposits of Unfunded Rollover Funds ........................................................... 66
6.7.2. Release of Unfunded Rollover Funds ............................................................ 66
Section 6.8. Application of Reserve Funds ......................................................................... 67
Section 6.9. Security Interest in Reserve Funds and Interest on Reserve Funds ................. 67
6.9.1. Grant of Security Interest ............................................................................... 67
6.9.2. Interest on Reserve Funds .............................................................................. 67
6.9.3. Income Taxes ................................................................................................. 67
6.9.4. Prohibition Against Further Encumbrance ..................................................... 67
6.9.5. Reserve Fund Indemnification ....................................................................... 67
6.9.6. Reserve Fund Fees and Expenses .................................................................. 68
Section 6.10. Intentionally Omitted ....................................................................................... 68
ARTICLE VII. PROPERTY MANAGEMENT ........................................................................... 68
Section 7.1. The Management Agreement .......................................................................... 68
Section 7.2. Prohibition Against Termination or Modification ........................................... 68
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Section 7.3. Replacement of Manager ................................................................................. 69
ARTICLE VIII. PERMITTED TRANSFERS ............................................................................. 69
Section 8.1. Permitted Transfer of the Property .................................................................. 69
Section 8.2. Permitted Transfers of Equity Interests ........................................................... 71
ARTICLE IX. SALE AND SECURITIZATION OF LOAN ...................................................... 72
Section 9.1. Sale of Loan and Securitization ....................................................................... 72
Section 9.2. Securitization Indemnification ......................................................................... 75
Section 9.3. Intentionally Omitted ....................................................................................... 78
Section 9.4. Mezzanine Option ............................................................................................ 78
Section 9.5. Reserves/Escrows ............................................................................................ 78
ARTICLE X. DEFAULTS ........................................................................................................... 78
Section 10.1. Event ofDefault.. ............................................................................................. 78
Section 10.2. Remedies .......................................................................................................... 81
Section 10.3. Right to Cure Defaults ..................................................................................... 82
Section 10.4. Remedies Cumulative ...................................................................................... 83
ARTICLE XI. MISCELLANEOUS ............................................................................................. 83
Section 11.1. Successors and Assigns ................................................................................... 83
Section 11.2. Lender's Discretion ......................................................................................... 83
Section 11.3. Governing Law ................................................................................................ 83
Section 11.4. Modification, Waiver in Writing ..................................................................... 84
Section 11.5. DelayNotaWaiver ......................................................................................... 84
Section 11.6. Notices ............................................................................................................. 85
Section 11.7. Trial by Jury ..................................................................................................... 86
Section 11.8. Headings .......................................................................................................... 86
Section 11.9. Severability ...................................................................................................... 86
Section 11.10. Preferences ....................................................................................................... 86
Section 11.11. Waiver of Notice .............................................................................................. 87
Section 11.12. Remedies of Borrower ..................................................................................... 87
Section 11.13. Expenses; General Indemnity; Mortgage Tax Indemnity; Employee
Benefit Indemnity; Duty to Defend; Survival ........................................... 87
11.13.1. Expenses ......................................................................................................... 87
11.13.2. General Indemnity .......................................................................................... 88
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00.00.0.Xxxxxxxx Tax Indemnity ................................................................................ 89
11.13 .4. Employee Benefit Plans Indemnity ................................................................ 89
11.13.5.Duty to Defend; Attorney's Fees and Other Fees and Expenses ................... 89
11.13.6.Survival .......................................................................................................... 90
11.13.7.Environmental Indemnity ............................................................................... 90
Section 11.14. Schedules Incorporated .................................................................................... 90
Section 11.15. Offsets, Counterclaims and Defenses .............................................................. 90
Section 11.16. No Joint Venture or Partnership; No Third Party Beneficiaries ...................... 90
Section 11.17. Publicity ........................................................................................................... 91
Section 11.18. Waiver of Marshalling of Assets ....................... ~ ............................................. 91
Section 11.19. Waiver of Offsets/Defenses/Counterclaims .................................................... 91
Section 11.20. Conflict; Construction of Documents; Reliance .............................................. 91
Section 11.21. Brokers and Financial Advisors ....................................................................... 92
Section 11.22. Exculpation ...................................................................................................... 92
Section 11.23. Prior Agreements ............................................................................................. 96
Section 11.24. Servicer ............................................................................................................ 96
Section 11.25. Joint and Several Liability ............................................................................... 96
Section 11.26. Creation of Security Interest.. .......................................................................... 96
Section 11.27. Assignments and Participations ....................................................................... 97
Section 11.28. Set-Off ............................................................................................................. 97
Section 11.29. State-Specific Provisions ................................................................................. 98
DMEAST #17478116 v7 Vll
Schedule I
Schedule II
Schedule III -
Schedule N -
Schedule V
Schedule VI -
Schedule VII -
DMEAST #17478116 v7
SCHEDULES
Rent Roll
Required Repairs
Organizational Chart
Intentionally Omitted
Intentionally Omitted
Intentionally Omitted
Description of REA
Vlll
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of September 26, 2013 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this "Agreement"), between
XXXXXX XXXXXXX MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability
company, having an address at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (together with its
successors and assigns, "Lender"), and WHITESTONE UPTOWN TOWER, LLC, a Delaware
limited liability company having an address at c/o Whitestone REIT, 0000 X. Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000 (together with its permitted successors and permitted assigns,
"Borrower").
All capitalized terms used herein shall have the respective meanings set forth in Article I
hereof.
WITNESSETH:
WHEREAS, Borrower desires to obtain the Loan from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and m
accordance with the conditions and terms of this Agreement and the other Loan Documents.
NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree, represent and warrant as follows:
ARTICLE I.
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided:
"Acceptable LLC" shall mean a limited liability company formed under Delaware or
Maryland law which (i) has at least one springing member, which, upon the dissolution of all of
the members or the withdrawal or the disassociation of all of the members from such limited
liability company, shall immediately become the sole member of such limited liability company,
and (ii) otherwise meets the Rating Agency criteria then applicable to such entities.
"Act" shall have the meaning set forth in Section 3.1.24( d) hereof.
"Actual Debt Service Coverage Ratio" shall mean as of the last day of the calendar
month immediately preceding the applicable date of determination, the quotient obtained by
dividing (1) the Adjusted Net Cash Flow by (2) the aggregate actual Debt Service (excluding
Reserve Funds) projected over the twelve (12) month period subsequent to the date of
calculation; provided, that, the foregoing shall be calculated by Lender (A) assuming that the
Loan had been in place for the entirety of said period and (B) disregarding any "interest only"
period under the Loan and assuming that constant principal and interest payments were due for
the entirety of said period based the Interest Rate and a thirty (30) year amortization schedule.
DMEAST #17478116 v7
Lender's calculation of the Actual Debt Service Coverage Ratio shall be conclusive and binding
on Borrower absent manifest error.
"Adjusted Net Cash Flow" shall mean the Underwritten NOI less (a) normalized tenant
improvement and leasing commission expenditures equal to $1.25 per square foot per annum,
and (b) normalized capital improvements equal to $0.17 per square foot per annum. Lender's
calculation of Adjusted Net Cash Flow shall be conclusive and binding on Borrower absent
manifest error.
"Adverse REMIC Event" shall mean, with respect to any REMIC Trust formed
pursuant to a securitization of any portion of the Loan, (i) the endangerment of the status of such
REMIC Trust, (ii) the imposition of a tax upon such REMIC Trust or any of its assets or
transactions (including, without limitation, the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on certain contributions set forth in Section 860G(d)
of the Code), or (iii) any event that may cause the Loan to fail to satisfy the REMIC
Requirements.
"Affiliate" shall mean, as to any Person, any other Person that, directly or indirectly,
(i) owns more than forty percent (40%) of such Person, (ii) is in control of such Person, (iii) is
Controlled by such Person, (iv) is under common ownership or Control with such Person, or
(v) is a director or officer of such Person or of an Affiliate of such Person.
"Affiliated Manager" shall mean any managing agent of the Property in which
Borrower, Guarantor, Sponsor, any SPC Party (if any) or any Affiliate of such entities has,
directly or indirectly, any legal, beneficial or economic interest.
"ALTA" shall mean American Land Title Association, or any successor thereto.
"Alteration Threshold" shall mean three percent (3.0%) of the outstanding principal
balance of the Loan.
"Annual Budget" shall mean the operating and capital budget for the Property setting
forth Borrower's good faith estimate of Operating Income, Operating Expenses, and Capital
Expenditures for the applicable Fiscal Year.
"Approved Annual Budget" shall have the meaning set forth in Section 4.1.6(e) hereof.
"Assignment of Management Agreement" shall mean that certain Conditional
Assignment of Management Agreement and Subordination of Management Agreement dated the
date hereof among Borrower, Manager and Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Award" shall mean any compensation paid by any Governmental Authority m
connection with a Condemnation in respect of all or any part of the Property.
"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or statutes and all rules
DMEAST #17478116 v7 2
and regulations from time to time promulgated thereunder, and any comparable foreign laws
relating to bankruptcy, insolvency or creditors' rights.
"Basic Carrying Costs" shall mean the sum of the following costs associated with the
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii) Insurance Premiums.
"Borrower" shall mean Whitestone Uptown Tower, LLC, a Delaware limited liability
company, together with its permitted successors and permitted assigns.
"Borrower Party(ies)" shall mean, individually and/or collectively, as the context may
require, Borrower, Guarantor, and each of their respective Affiliates that has executed any Loan
Document.
"Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday on
which national banks are not open for general business in (i) the State of New York, (ii) the state
where the corporate trust office of the Trustee is located, or (iii) the state where the servicing
offices of the Servicer are located.
"Buyer" shall have the meaning set forth in Section 8.1 (b) hereof.
"Capital Expenditures" for any period shall mean amounts expended for replacements
and alterations to the Property and required to be capitalized according to GAAP.
"Capital Expenditure Funds" shall have the meaning set forth in Section 6.4.1 hereof.
"Capital Expenditures Work" shall mean any labor performed or materials installed in
connection with any Capital Expenditure.
"Cash Management Agreement" shall mean that certain Cash Management Agreement
of even date herewith among Lender, Borrower and Manager.
"Casualty" shall mean the occurrence of any casualty, damage or injury, by fire or
otherwise, to the Property or any part thereof.
"Casualty Consultant" shall have the meaning set forth in Section 5.3.2(c) hereof.
"Casualty Retainage" shall have the meaning set forth in Section 5.3.2(d) hereof.
"Closing Date" shall mean the date of funding the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and applicable U.S.
Department of Treasury regulations issued pursuant thereto in temporary or final form.
"Condemnation" shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or
eminent domain, of all or any part of the Property, or any interest therein or right accruing
DMEAST #17478116 v7 3
thereto, including any right of access thereto or any change of grade affecting the Property or any
part thereof.
"Condemnation Payment" shall have the meaning set forth in Section 5.3.3 hereof.
"Condemnation Net Proceeds" shall have the meaning set forth in the definition of "Net
Proceeds."
"Control" shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
"Constituent Member" shall have the meaning set forth in Section 3.1.24(f) hereof.
"Covered Rating Agency Information" shall have the meaning set forth in Section
Uffi hereof.
"CPI" shall mean "The Consumer Price Index (New Series) (Base Period 1982-84=100)
(all items for all urban consumers)" issued by the Bureau of Labor Statistics of the United States
Department of Labor (the "Bureau"). If the CPI ceases to use the 1982-84 average equaling 100
as the basis of calculation, or if a change is made in the term, components or number of items
contained in said index, or if the index is altered, modified, converted or revised in any other
way, then the index shall be adjusted to the figure that would have been arrived at had the change
· in the manner of computing the index in effect at the date of this Agreement not been made. If at
any time during the term of the Loan the CPI shall no longer be published by the Bureau, then
any comparable index issued by the Bureau or similar agency of the United States issuing similar
indices shall be used in lieu of the CPl.
"Creditors' Rights Laws" shall have the meaning set forth in Section 3.1.24(d) hereof.
"DBRS" shall mean DBRS, Inc.
"Debt" shall mean the outstanding principal amount of the Loan together with all interest
accrued and unpaid thereon and all other sums (including the Yield Maintenance Premium) due
to Lender in respect of the Loan under the Note, this Agreement, the Security Instrument, the
Environmental Indemnity or any other Loan Document.
"Debt Service" shall mean, with respect to any particular period of time, scheduled
principal and interest payments under the Note.
"Default" shall mean the occurrence of any event hereunder or under any other Loan
Document which, but for the giving of notice or passage of time, or both, would be an Event of
Default.
"Default Rate" shall mean, with respect to the Loan, a rate per annum equal to the lesser
of (i) the Maximum Legal Rate or (ii) five percent (5%) above the Interest Rate.
DMEAST #17478116 v7 4
"Defeasance Collateral Account" shall have the meaning set forth in Section 2.5.3
hereof.
"Defined Benefit Plan" shall mean a plan, document, agreement, or arrangement
currently or previously maintained or sponsored by the Borrower or by any Employee Plan
Affiliate or to which either the Borrower or Employee Benefit Affiliate currently makes, or
previously made, contributions and which (i) provides or is expected to provide retirement
benefits to employees or other workers and (ii) the Borrower could reasonably be expected to
have any liability (including liability attributable from an Employee Plan Affiliate). A Defined
Benefit Plan shall include any plan that if it were terminated at any time, would result in
Borrower or Employee Plan Affiliate being deemed to be a "contributing sponsor" (as defined in
Section 4001(a)(13) of ERISA) of the terminated plan pursuant to ERISA Section 4069. A
Defined Benefit Plan does not include a Multiemployer Plan.
"Disclosure Document" shall have the meaning set forth in Section 9.2(a) hereof.
"Eligible Account" shall mean an identifiable account which is separate from all other
funds held by the holding institution that is either (a) an account or accounts maintained with the
corporate trust department of a federal or state-chartered depository institution or trust company
which complies with the definition of Eligible Institution or (b) a segregated trust account or
accounts maintained with the corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity which, in the case of a state chartered
depository institution or trust company is subject to regulations substantially similar to 12 C.F.R.
§9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by federal and state authority. An Eligible Account will not be
evidenced by a certificate of deposit, passbook or other instrument.
"Eligible Institution" shall mean a federal or state chartered depository institution or
trust company insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody's
and F-1 by Fitch in the case of accounts in which funds are held for thirty (30) days or less or, in
the case of Letters of Credit or accounts in which funds are held for more than thirty (30) days,
the long term unsecured debt obligations of which are rated at least "A" by Fitch and S&P and
"A2" by Moody's.
"Embargoed Person" shall have the meaning set forth in Section 3 .1.41 hereof.
"Employee Benefit Affiliate" shall mean all members of a controlled group of
corporations and all trades and business (whether or not incorporated) under common control
and all other entities which, together with Borrower, are treated as a single employer under any
or all of Sections 414(b), (c), (m) or (o) of the Code.
"Environmental Indemnity" shall mean that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrower and Guarantor in connection with
the Loan for the benefit of Lender.
"Equipment" shall have the meaning set forth in the granting clause of the Security
Instrument.
DMEAST #17478116 v7 5
"Equity Collateral" shall have the meaning set forth in Section 9.4 hereof.
"ERISA" shall have the meaning set forth in Section 4.2.11 hereof.
"Event of Default" shall have the meaning set forth in Section 10.1 hereof.
"Exchange Act" shall have the meaning set forth in Section 9.2(a) hereof.
"Exchange Act Filing" shall have the meaning set forth in Section 9.1 (c) hereof.
"Exculpated Parties" shall have the meaning set forth in Section 11.22 hereof.
"Extraordinary Expense" shall have the meaning set forth in Section 4.1.6(e) hereof.
"Fiscal Year" shall mean each twelve month period commencing on January 1 and·
ending on December 31 during each year of the term of the Loan.
"Fitch" shall mean Fitch, Inc.
"Full Replacement Cost" shall have the meaning set forth in Section 5.1.1(a)(i) hereof.
"GAAP'' shall mean generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such entity as may be in general use by
significant segments of the U.S. accounting profession.
"Governmental Authority" shall mean any court, board, agency, commission, office or
authority of any nature whatsoever or any governmental xxxx (xxxxxxx, xxxxx, xxxxxx, xxxxxxxx,
xxxxxxxxx, xxxx or otherwise) whether now or hereafter in existence.
"Guarantor" shall mean Whitestone REIT Operating Partnership, L.P., a Delaware
limited partnership.
"Guaranty" shall mean that certain Guaranty of Recourse Obligations of Borrower of
even date herewith from Guarantor for the benefit of Lender.
"Improvements" shall have the meaning set forth in the granting clause of the Security
Instrument.
"Indebtedness" shall mean, for any Person, without duplication: (i) all indebtedness of
such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred
purchase price of property for which such Person or its assets is liable, (ii) all unfunded amounts
under a loan agreement, letter of credit, or other credit facility for which such Person would be
liable if such amounts were advanced thereunder, (iii) all amounts required to be paid by such
Person as a guaranteed payment to partners or a preferred or special dividend, including any
mandatory redemption of shares or interests, (iv) all indebtedness guaranteed by such Person,
DMEAST #17478116 v7 6
directly or indirectly, (v) all obligations under leases that constitute capital leases for which such
Person is liable, and (vi) all obligations of such Person under interest rate swaps, caps, floors,
collars and other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations
such Person otherwise assures a creditor against loss.
"Insurance Funds" shall have the meaning set forth in Section 6.3.1 hereof.
"Insurance Premiums" shall have the meaning set forth in Section 5.l.l(b) hereof.
"Interest Bearing Reserve Accounts" shall mean the Ongoing Rollover Funds.
"Interest Rate" shall mean a rate per annum equal to four and ninety seven hundredths
(4.97%).
"Kroll" shall mean Xxxxx Bond Rating Agency, Inc.
"Lease" shall mean any lease, sublease or subsublease, letting, license, concession or
other agreement (whether written or oral and whether now or hereafter in effect) pursuant to
which any Person is granted a possessory interest in, or right to use or occupy all or any portion
of any space in the Property, and every modification, amendment or other agreement relating to
such lease, sublease, subsublease, or other agreement entered into in connection with such lease,
sublease, subsublease, or other agreement and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed· and observed by the
other party thereto.
"Lease Termination Fee" shall have the meaning set forth in Section 6.6.1 hereof.
"Lease Termination Rollover Funds" shall have the meaning set forth in Section 6.6.1
hereof.
"Legal Requirements" shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions of Governmental Authorities affecting Borrower or the Property or any part thereof
or the construction, use, alteration or operation thereof, or any part thereof, whether now or
hereafter enacted and in force, including, without limitation, the Americans with Disabilities Act
of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any instruments, either of
record or known to Borrower, at any time in force affecting the Property or any part thereof,
including, without limitation, any which may (i) require repairs, modifications or alterations in or
to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.
"Lender" shall mean Xxxxxx Xxxxxxx Mortgage Capital Holdings LLC, a New York
limited liability company, together with its successors and assigns.
"Lender Indemnitees" shall have the meaning set forth in Section 11.13.2 hereof.
"Liabilities" shall have the meaning set forth in Section 9.2(b) hereof.
DMEAST #17478116 v7 7
"Licenses" shall have the meaning set forth in Section 3 .1.18 hereof
"Lien" shall mean any mortgage, deed-of-trust, lien, claim, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement
to enter into or create any of the foregoing, on or affecting the Property or any portion thereof or
any direct or indirect interest in Borrower, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"LLC Agreement" shall have the meaning set forth in Section 3 .1.24( d) hereof.
"Loan" shall mean the loan in the original principal amount of Sixteen Million Four
Hundred Fifty Thousand and No/100 Dollars ($16,450,000) made by Lender to Borrower
pursuant to this Agreement.
"Loan Bifurcation" shall have the meaning set forth in Section 9.1(b)(iv) hereof.
"Loan Documents" shall mean, collectively, this Agreement, the Note, the Security
Instrument, the Cash Management Agreement, the Restricted Account Agreement, the
Environmental Indemnity, the Guaranty, the Assignment of Management Agreement and any
other document pertaining to the Property as well as all other documents now or hereafter
executed and/or delivered in connection with the Loan, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Losses" shall have the meaning set forth in Section 11.13.2 hereof.
"Major Lease" shall mean (i) any Lease which, individually or when aggregated with all
other Leases at the Property with the same Tenant or its Affiliate, either (A) accounts for ten
percent (10%) or more of the Property's aggregate total rental income, or (B) demises 25,000
square feet or more of the Property's gross leasable area, (ii) any Lease which contains any
option, offer, right of first refusal or other similar entitlement to acquire all or any portion of the
Property (which such rights shall be deemed to be exclusive of any rights under any Lease to
extend the term thereof or to lease additional space at the Property), or (iii) any instrument
guaranteeing or providing credit support for any Lease meeting the requirements of (i) or (ii)
above.
"Management Agreement" shall mean the management agreement entered into by and
between Borrower and the Manager, pursuant to which the Manager is to provide management
and other services with respect to the Property.
"Manager" shall mean Whitestone REIT Operating Partnership, L.P. or any other
manager approved in accordance with the terms and conditions of the Loan Documents.
"Material Adverse Effect" shall mean a material adverse effect on (i) the Property,
(ii) the business, profits, prospects, management, use, operations or condition (financial or
otherwise) of Borrower, Guarantor, Sponsor or the Property, (iii) the enforceability, validity,
perfection or priority of the lien of the Security Instrument or the other Loan Documents, (iv) the
OM EAST #17478116 v7 8
ability of Borrower to perform its obligations under the Security Instrument or the other Loan
Documents or (v) the ability of Guarantor to perform its obligations under the Guaranty.
"Material Agreements" shall mean each contract and agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair or
improvement of the Property, other than the Management Agreement and the Leases, as to which
either (i) there is an obligation of Borrower to pay more than $50,000.00 per annum; or (ii) the
term thereof extends beyond one year (unless cancelable on thirty (30) days or less notice
without requiring the payment of termination fees or payments of any kind).
"Maturity Date" shall mean October 1, 2023, or such other date on which the final
payment of principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or otherwise.
"Maximum Legal Rate" shall mean the maximum nonusurious interest rate, if any, that
at any time or from time to time may be contracted for, taken, reserved, charged or received on
the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents,
under the laws of such state or states whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.
"Member" shall have the meaning set forth in Section 3 .1. 24( d) hereof.
"Mezzanine Borrower" shall have the meaning set forth in Section 9.4 hereof.
"Mezzanine Option" shall have the meaning set forth in Section 9.4 hereof.
"Minimum Disbursement Amount" shall mean Fifteen Thousand and No/100 Dollars
($15,000).
"Monthly Debt Service Payment Amount" shall mean (x) with respect to the Monthly
Payment Date occurring in November, 2013 and each Monthly Payment Date thereafter through
and including the Monthly Payment Date occurring in April 1, 2016, the monthly interest
accrued on the Loan, and (y) with respect to the Monthly Payment Date occurring in May 1,
2016 and each Monthly Payment Date thereafter, a constant monthly payment of $88,005.80.
"Monthly Payment Date" shall mean the first (1st) day of every calendar month
occurring during the term of the Loan, and if such day is not a Business Day, then the Business
Day immediately preceding such day, commencing on November 1, 2013 and continuing to and
including the Maturity Date.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Xxxxxx Xxxxxxx" shall mean MSMCH and its Affiliates.
"Xxxxxx Xxxxxxx Group" shall have the meaning set forth in Section 9 .2(b) hereof.
"Morningstar" shall mean Morningstar, Inc., an Illinois corporation.
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"MSMCH" shall mean Xxxxxx Xxxxxxx Mortgage Capital Holdings LLC.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in Section 3(37) of
ERISA or Section 400l(a)(3) of ERISA, and to which Borrower or any Employee Benefit
Affiliate is making, is obligated to make or has made or been obligated to make during the last
six years, contributions on behalf of participants who are or were employed by any of them.
"Net Proceeds" shall mean: (i) the net amount of all insurance proceeds payable as a
result of a Casualty to the Property, after deduction of reasonable costs and expenses (including,
but not limited to, reasonable attorneys' fees), if any, in collecting such insurance proceeds, or
(ii) the net amount of the Award, after deduction of reasonable costs and expenses (including,
but not limited to, reasonable attorneys' fees), if any, in collecting such Award ("Condemnation
Net Proceeds").
"Net Proceeds Deficiency" shall have the meaning set forth in Section 5.3.2(f) hereof.
"Note" shall have the meaning set forth in Section 2.1.3 hereof.
"Notice" shall have the meaning set forth in Section 11.6 hereof.
"OFAC" shall have the meaning set forth in Section 3.1.41 hereof.
"Officer's Certificate" shall mean a certificate delivered to Lender by Borrower which is
signed by an authorized senior officer of Borrower.
"Ongoing Rollover Funds" shall have the meaning set forth in Section 6.5.1.
"Operating Expenses" shall mean all expenses, computed in accordance with GAAP or
other sound and prudent accounting principles approved by Lender, of whatever kind and from
whatever source, relating to the ownership, operation, repair, maintenance and management of
the Property that are incurred on a regular monthly or other periodic basis, including, without
limitation (and without duplication), Taxes, Insurance Premiums, management fees (whether or
not actually paid) equal to the greater of the actual management fees and two percent (2.0%) of
annual Operating Income, costs attributable to the ordinary operation, repair and maintenance of
the systems for heating, ventilation and air conditioning, advertising expenses, license fees,
utilities, payroll and related taxes, computer processing charges, operating equipment or other
lease payments as approved by Lender, ground lease payments, bond assessments and other
similar costs, in each instance, actually paid for by BorroweL Operating Expenses shall not
include Debt Service, capital expenditures, tenant improvement costs, leasing commissions, or
other expenses which are paid from escrows required by the Loan Documents, any payment or
expense for which Borrower was or is to be reimbursed from proceeds of the loan or insurance or
by any third party, federal, state or local income taxes, any non-cash charges such as depreciation
and amortization, and any item of expense otherwise includable in Operating Expenses which is
paid directly by any Tenant except real estate taxes paid directly to any taxing authority by any
tenant. Lender's calculation of Operating Expenses shall be conclusive and binding on Borrower
absent manifest error.
DMEAST #17478116 v7 10
"Operating Income" shall mean all revenue derived from the ownership and operation
of the Property from whatever source, including, without limitation, rental income reflected in a
current rent roll for all Tenants paying rent and in actual physical occupancy of their respective
space demised pursuant to Leases which are in full force and effect (whether denominated as
basic rent, additional rent, escalation payments, electrical payments or otherwise), common area
maintenance, real estate tax recoveries, utility recoveries, other miscellaneous expense
recoveries, other required pass-throughs, business interruption, rent loss or other similar
insurance proceeds and other miscellaneous income. Operating Income shall not include
insurance proceeds (other than proceeds of rent loss, business interruption or other similar
insurance allocable to the applicable period), condemnation proceeds (other than condemnation
proceeds arising from a temporary taking or the use and occupancy of all or part of the
applicable Property allocable to the applicable period), proceeds of any financing, proceeds of
any sale, exchange or transfer of the Property or any part thereof or interest therein, capital
contributions or loans to Borrower or an Affiliate of Borrower, any item of income otherwise
includable in Operating Income but paid directly by any Tenant to a Person other than Borrower,
any other extraordinary, non-recurring revenues, payments paid by or on behalf of any Tenant
under a Lease which is the subject of any proceeding or action relating to its bankruptcy,
reorganization or other arrangement pursuant to the Bankruptcy Code or any similar federal or
state law or which has been adjudicated a bankrupt or insolvent unless such Lease has been
affirmed by the trustee in such proceeding or action pursuant to a final, non-appealable order of a
court of competent jurisdiction, payments paid by or on behalf of any Tenant under a Lease the
demised premises of which are not occupied either by such Tenant or by a sublessee thereof,
payments paid by or on behalf of any Tenant under a Lease in whole or partial consideration for
the termination of any Lease, sales tax rebates from any Governmental Authority, payments from
any Tenant in monetary or material non-monetary default under its Lease beyond ninety (90)
days or any other applicable notice and cure periods, whichever is longer, payments from any
Tenant that has expressed its intention (directly, constructively or otherwise) to not renew or to
terminate, cancel and/or reject its applicable Lease, sales, use and occupancy taxes on receipts
required to be accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, interest income from any source other than the Reserve Funds required
pursuant to this Agreement or the other Loan Documents, unforfeited security deposits, utility
and other similar deposits, income from Tenants not paying rent or any disbursements to
Borrower from the Reserve Funds. Lender's calculation of Operating Income shall be
conclusive and binding on Borrower absent manifest error
"Other Charges" shall mean all ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including, without limitation, vault charges and license fees
for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied or
assessed or imposed against the Property or any part thereof.
"Otherwise Rated Insurer" shall have the meaning set forth in Section 5 .1.2.
"Other Required Ratings" shall have the meaning set forth in Section 5.1.2.
"Participant" shall mean any Person that has purchased a participation in this Loan
Agreement pursuant to Section 11.27 hereof.
DMEAST #17478116 v7 11
"Patriot Act" shall have the meaning set forth in Section 3 .1.42 hereof.
"Permitted Encumbrances" shall mean, collectively, (i) the Liens and security interests
created by the Loan Documents, (ii) all Liens, encumbrances and other matters disclosed in the
Title Insurance Policy, (iii) Liens, if any, for Taxes imposed by any Governmental Authority not
yet delinquent, or which are being contested in accordance with the provisions of Section 4.1.2
of this Agreement, (iv) such other title and survey exceptions as Lender has approved or may
approve in writing in Lender's sole discretion, (v) rights of existing Tenants as tenants only in
possession pursuant to written unrecorded Leases with no rights of purchase, (vi) Liens with
respect to Permitted Equipment Leases, and (vii) mechanics', materialmen's, or other Liens
arising in the ordinary course of business, if any, in each case only if the amount or validity or
application in whole or in part of any such Lien is being contested by Borrower, at its own
expense, after prior written notice to Lender, by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, provided that (A) no Event of Default has
occurred and is continuing under this Agreement or any of the other Loan Documents, (B) such
proceeding shall suspend the collection of the amount secured by such Lien from Borrower and
from the Property or Borrower shall have paid such amount under protest, (C) such proceeding
shall be permitted under and be conducted in accordance with the provisions of any other
material instrument to which Borrower is subject and shall not constitute a material default
thereunder, (D) neither the Property nor any part thereof or interest therein will be in imminent
danger of being sold, forfeited, terminated, canceled or lost, (E) Borrower shall have furnished
the security as may be required in the proceeding to insure the payment of any contested amount
secured by such Lien, together with all interest and penalties thereon, and (F) Borrower shall
have bonded over such Lien in a manner acceptable to Lender.
"Permitted Equipment Leases" shall mean equipment leases or other similar
instruments entered into with respect to the Equipment and/or the Personal Property provided,
that, in each case, such equipment leases or similar instruments (i) are entered into on
commercially reasonable terms and conditions in the ordinary course of Borrower's business,
(ii) relate to Equipment and/or Personal Property which is (A) used in connection with the
operation and maintenance of the Property in the ordinary course of Borrower's business and
(B) readily replaceable without material interference or interruption to the operation of the
Property, and (iii) have annual payments not exceeding $50,000.00 in the aggregate.
"Permitted Prepayment Date" shall have the meaning set forth in Section 2.4.1 hereof.
"Permitted Transfer Date" shall have the meaning set forthin Section 8.1 hereof.
"Person" shall mean any individual, corporation, partnership, limited liability company,
joint venture, estate, trust, unincorporated association, any other entity, any federal, state, county
or municipal government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.
"Personal Property" shall have the meaning set forth in the granting clause of the
Security Instrument.
"Policies" shall have the meaning specified in Section 5.1.1(b) hereof.
DMEAST #17478116 v7 12
"Prepayment Date" shall mean the date on which the Loan is prepaid in accordance with
the terms hereof.
"Prohibited Transfer" shall have the meaning set forth in Section 4.2.1 hereof.
"Property" shall mean the parcel of real property, the Improvements thereon and all
personal property owned by Borrower and encumbered by the Security Instrument, together with
all rights pertaining to such property and Improvements, all as more particularly described in the
Granting Clauses of the Security Instrument.
"Property Sale" shall have the meaning set forth in Section 8.1 hereof.
"Prudent Lender Standard" shall, with respect to any matter, be deemed to have been
met if the matter in question (i) prior to a Securitization, is reasonably acceptable to Lender and
(ii) after a Securitization, (A) if permitted by REMIC Requirements applicable to such matter,
would be reasonably acceptable to Lender or (B) if the Lender discretion in the foregoing
subsection (A) is not permitted under such applicable REMIC Requirements, would be
acceptable to a prudent lender of securitized commercial mortgage loans.
"Qualified Manager" shall mean a reputable and experienced professional management
organization approved by Lender (which such approval may, at Lender's option, be conditioned
upon Lender's receipt of a Rating Agency Confirmation with regard to both the identity of the
proposed manager and the replacement management agreement pursuant to which such manager
will be employed).
"Rating Agencies" shall mean each of S&P, Moody's, Fitch, DBRS, Morningstar, Kroll
and any other nationally-recognized statistical rating agency (and any successor to any of the
foregoing), but only to the extent that such Rating Agency has been designated by Lender or is
anticipated to be designated by Lender in connection with any Secondary Market Transaction.
"Rating Agency Confirmation" shall mean a written affirmation from each of the
Rating Agencies that the credit rating of the Securities by such Rating Agency immediately prior
to the occurrence of the event with respect to which such Rating Agency Confirmation is sought
will not be qualified, downgraded or withdrawn as a result of the occurrence of such event,
which affirmation may be granted or withheld in such Rating Agency's sole and absolute
discretion. For the purposes of this Agreement and the other Loan Documents, if (1) any Rating
Agency shall waive, decline or refuse to review or otherwise engage any request for a Rating
Agency Confirmation hereunder or under the other Loan Documents (collectively, a "RA
Declination Event"), or (2) Lender (or any Servicer acting on Lender's behalf) determines
pursuant to and in accordance with any applicable pooling and servicing agreement that a Rating
Agency Confirmation is not required (a "RAC Refusal Event") (hereinafter, each of an RA
Declination Event and a RAC Refusal Event, collectively, a "RAC Satisfaction Condition"),
such RAC Satisfaction Condition shall be deemed (for such request only) to satisfy the condition
that a Rating Agency Confirmation by such Rating Agency (only) be obtained for purposes of
this Agreement or the other Loan Documents, as applicable. For purposes of clarity, any RA
Declination Event or RAC Refusal Event, as applicable, shall not be deemed a RA Declination
Event or RAC Refusal Event, as applicable, for any subsequent request for a Rating Agency
DMEAST #17478116 v7 13
Confirmation hereunder or under the other Loan Documents, and the condition for Rating
Agency Confirmation pursuant to this Agreement and the other Loan Documents for any
subsequent request shall apply regardless of any previous RA Declination or RAC Refusal
Event, as applicable.
"Register" shall have the meaning set forth in Section 11.27 hereof.
"Registration Statement" shall have the meaning set forth in Section 9.2(b) hereof.
"Regulation AB" shall mean Regulation AB under the Securities Act and the Exchange
Act, as such Regulation may be amended from time to time.
"Related Loan" shall mean a loan made to an Affiliate of Borrower or secured by a
Related Property that is included in a Securitization with the Loan.
"Related Property" shall mean a parcel of real property, together with improvements
thereon and personal property related thereto, that is "related", within the meaning of the
definition of Significant Obligor, to the Property.
"Release Date" shall mean the earlier to occur of (i) the date that is forty two (42) full
calendar months after the first Monthly Payment Date and (ii) the date that is two (2) years from
the "startup day" (within the meaning of Section 860G(a)(9) of the Code) of the REMIC Trust
established in connection with the last Securitization involving any portion of this Loan.
"Relevant Sections" shall have the meaning set forth in Section 9 .2(b) hereof.
"REMIC Requirements" shall mean any applicable legal requirements relating to any
REMIC Trust (including, without limitation, any constraints, rules and/or other regulations
and/or requirements relating to the servicing, modification and/or other similar matters with
respect to the Loan (or any portion thereof and/or interest therein)).
"REMIC Trust" shall mean a "real estate mortgage investment conduit" within the
meaning of Section 8 60D of the Code that holds the Note.
"Rent Deficiency" shall have the meaning set forth in Section 6.6.2 hereof.
"Rents" shall mean all rents, moneys payable as damages or in lieu of rent, revenues,
deposits (including, without limitation, security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of Borrower or its agents or employees
from any and all sources arising from or attributable to the Property.
"Replacement Lease" shall have the meaning set forth in Section 6.6.2 hereof.
"Required Repairs" shall have the meaning set forth in Section 4.1.19 hereof.
DMEAST #17478116 v7 14
"Reserve Funds" shall mean, collectively, the Capital Expenditure Funds, the Insurance
Funds, the Tax Funds, the Lease Termination Rollover Funds, the Unfunded Rollover Funds and
the Ongoing Rollover Funds.
"Restoration" shall have the meaning set forth in Section 5.2.1 hereof.
"Restoration Threshold" shall mean three percent (3.0%) of the outstanding principal
balance of the Loan.
"Restricted Account" shall have the meaning ascribed to such term in the Restricted
Account Agreement.
"Restricted Account Agreement" shall mean that certain Deposit Account Control
Agreement of even .date herewith among Lender, Borrower, Bank of America, N.A. and
Manager.
"Restricted Party" shall mean Borrower, Guarantor, Sponsor, any SPC Party (if any),
any Affiliated Manager, or any shareholder, partner, member or non-member manager, or any
direct or indirect legal or beneficial owner of Borrower, Guarantor, Sponsor, any SPC Party (if
any), any Affiliated Manager or any non-member manager; provided that "Restricted Party"
shall not include any of the foregoing Persons or any Person if such Person is a publicly traded
company or a shareholder or a publicly traded company.
"Rollover Funds" have the meaning set forth in Section 6.5.1 hereof.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc.
"Sale or Pledge" shall mean a voluntary or involuntary sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, grant of any options with respect to, or any
other transfer or disposition (directly or indirectly, voluntarily or involuntarily, by operation of
law or otherwise, and whether or not for consideration or of record) of a legal or beneficial
interest.
"Scheduled Defeasance Payments" shall mean scheduled payments of interest and
principal under the Note for all Monthly Payment Dates occurring after the Total Defeasance
Date and up to and including the Maturity Date (including the outstanding principal balance on
the Note as of the Maturity Date), and all payments required after the Total Defeasance Date, if
any, under the Loan Documents for servicing fees and other similar charges.
"Secondary Market Transaction" shall have the meaning set forth in Section 9.1 (a)
hereof.
"Securities" shall have the meaning set forth in Section 9.l(a) hereof.
"Securities Act" shall have the meaning set forth in Section 9.2(a) hereof.
"Securitization" shall have the meaning set forth in Section 9.l(a) hereof.
DMEAST #17478116 v7 15
"Security Agreement" shall mean a security agreement in form and substance that
would be satisfactory to a prudent lender originating commercial loans for securitization similar
to the Loan pursuant to which Borrower grants Lender a perfected, first priority security interest
in the Defeasance Collateral Account and the Total Defeasance Collateral.
"Security Instrument" shall mean that certain first priority Deed of Trust, Assignment
of Leases and Rents and Security Agreement, dated the date hereof, executed and delivered by
Borrower as security for the Loan and encumbering the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Servicer" shall have the meaning set forth in Section 11.24 hereof.
"Servicing Agreement" shall have the meaning set forth in Section 11.24 hereof.
"Severed Loan Documents" shall have the meaning set forth in Section 10.2(c) hereof.
"Short Interest" shall have the meaning set forth in Section 2.4.1 hereof.
"Significant Obligor" shall have the meaning set forth in Item 1101 (k) of Regulation AB
under the Securities Act.
"SPC Party" shall have the meaning set forth in Section 3 .1. 24( c) hereof.
"Special Member" shall have the meaning set forth in Section 3.1.24(d) hereof.
"Sponsor" shall mean Whitestone REIT, a Maryland real estate investment trust.
"State" shall mean the State or Commonwealth in which the Property or any part thereof
is located.
"Successor Borrower" shall have the meaning set forth in Section 2.5.4 hereof.
"Survey" shall mean a survey of the Property prepared by a surveyor licensed in the
State and satisfactory to Lender and the company or companies issuing the Title Insurance
Policy, and containing a certification of such surveyor satisfactory to Lender.
"Tax Funds" shall have the meaning set forth in Section 6.2.1 hereof.
"Taxes" shall mean all real estate and personal property taxes, assessments, water rates
or sewer rents, now or hereafter levied or assessed or imposed against the Property or part
thereof, together with all interest and penalties thereon.
"Tenant" shall mean any Person obligated by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) under any Lease now or hereafter
affecting all or any part of the Property.
"Termination Space" shall have the meaning set forth in Section 6.6.1 hereof.
DMEAST #17478116 v7 16
"Title Insurance Policy" shall mean an ALTA mortgagee title insurance policy in the
form acceptable to Lender issued with respect to the Property and insuring the lien of the
Security Instrument.
"Total Defeasance Collateral" shall mean U.S. Obligations, which provide payments
(i) on or prior to, but as close as possible to, the Business Day immediately preceding all
Monthly Payment Dates and other scheduled payment dates, if any, under the Note after the
Total Defeasance Date and up to and including the Maturity Date, and (ii) in amounts equal to or
greater than the Scheduled Defeasance Payments relating to such Monthly Payment Dates and
other scheduled payment dates.
"Total Defeasance Date" shall have the meaning set forth in Section 2.5.1(a) hereof.
"Total Defeasance Event" shall have the meaning set forth in Section 2.5.1(a) hereof.
"Trustee" shall mean any trustee holding the Loan in a Securitization.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State.
"Underwriter Group" shall have the meaning set forth in Section 9 .2(b) hereof.
"Underwritten NOI" shall mean Underwritten Operating Income less Underwritten
Operating Expenses. Lender's calculation of Underwritten NOI (including determination of
items that do, and do not, qualify as Operating Income or Operating Expenses) shall be
calculated by Lender in good faith based upon Lender's determination of Rating Agency criteria
and shall be final absent manifest error.
"Underwritten Operating Expenses" shall mean projected annualized Operating
Expenses based on a trailing twelve (12) month period adjusted upwards (but not downwards) by
CPI and anticipated increases in Operating Expenses. Lender's calculation of Underwritten
Operating Expenses shall be conclusive and binding on Borrower absent manifest error.
"Underwritten Operating Income" shall mean projected annualized Operating Income
based on the most recent rent roll and such other information as is required to be delivered by
Borrower pursuant to Section 4.1.6 hereof excluding rent relating to tenants under Leases
(pursuant to the most recent rent roll) which is more than thirty (30) days delinquent as
reasonably adjusted by Lender to take into account, a vacancy factor equal to the greater of (a) an
imputed vacancy rate of 5%, (b) market vacancies for the market in which the Property is
located, and (c) the actual vacancy rate at the Property. Lender's calculation of Underwritten
Operating Income shall be conclusive and binding on Borrower absent manifest error.
"Unfunded Rollover Funds" shall have the meaning set forth in Section 6.7.1 hereof.
"Updated Information" shall have the meaning set forth in Section 9.1(b)(i) hereof.
"U.S. Obligations" shall mean "government securities" as defined in Section 2(a)(16) of
the Investment Company Act of 1940 and within the meaning of Treasury Regulation Section
DMEAST #17478116 v7 17
1.860G-2(a)(8); provided, that, (i) such "government securities" are not subject to prepayment,
call or early redemption, (ii) to the extent that any REMIC Requirements require a revised and/or
alternate definition of "government securities" in connection with any defeasance hereunder, the
foregoing shall be deemed amended in a manner commensurate therewith and (iii) the aforesaid
laws and regulations shall be deemed to refer to the same as may be and/or may hereafter be
amended, restated, replaced or otherwise modified.
"Yield Maintenance Premium" shall mean an amount equal to the greater of (i) one
percent (1%) of the amount prepaid and (ii) an amount equal to the present value as of the
Prepayment Date of the Calculated Payments from the Prepayment Date through the Maturity
Date determined by discounting such payments at the Discount Rate. As used in this definition,
the term "Prepayment Date" shall mean the date on which prepayment is made. As used in this
definition, the term "Calculated Payments" shall mean the monthly payments of interest only
which would be due based on the principal amount of the Loan being prepaid on the Prepayment
Date and assuming an interest rate per annum equal to the difference (if such difference is greater
than zero) between (y) the Interest Rate and (z) the Yield Maintenance Treasury Rate. As used
in this definition, the term "Discount Rate" shall mean the rate which, when compounded
monthly, is equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term "Yield Maintenance Treasury Rate" shall
mean the yield calculated by Lender by the linear interpolation of the yields, as reported in the
Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to the
Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates (one longer or one
shorter) most nearly approximating the Maturity Date. In the event Release H.15 is no longer
published, Lender shall select a comparable publication to determine the Yield Maintenance
Treasury Rate. In no event, however, shall Lender be required to reinvest any prepayment
proceeds in U.S. Treasury obligations or otherwise.
Section 1.2. Principles of Construction. All references to sections and schedules are
to sections and schedules in or to this Agreement unless otherwise specified. Any reference in
this Agreement or in any other Loan Document to any Loan Document shall be deemed to
include references to such documents as the same may hereafter be amended, modified,
supplemented, extended, replaced and/or restated from time to time (and, in the case of any note
or other instrument, to any instrument issued in substitution therefor). Unless otherwise
specified, the words "hereof," "herein," and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall
be equally applicable to both the singular and plural forms of the terms so defined.
ARTICLE II.
THE LOAN
Section 2.1. The Loan.
2.1.1. Agreement to Lend and Borrow. Subject to and upon the terms and conditions
set forth herein, Lender shall make the Loan to Borrower and Borrower shall accept the Loan
from Lender on the Closing Date.
DMEAST #17478116 v7 18
2.1.2. Single Disbursement to Borrower. Borrower shall receive only one borrowing
hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of
the Loan may not be reborrowed.
2.1.3. The Note. The Loan shall be evidenced by that certain Promissory Note of even
date herewith, in the stated principal amount of Sixteen Million Four Hundred Fifty Thousand
and No/100 Dollars ($16,450,000) executed by Borrower and payable to the order of Lender in
evidence of the Loan (as the same may hereafter be amended, supplemented, restated, increased,
extended or consolidated from time to time, the "Note") and shall be repaid in accordance with
the terms of this Agreement and the Note.
2.1.4. Use of Proceeds. Borrower shall use proceeds of the Loan to (i) pay and
discharge any existing loans relating to the Property, (ii) pay all past due Basic Carrying Costs, if
any, in respect of the Property, (iii) deposit the Reserve Funds, (iv) pay costs and expenses
incurred in connection with the closing of the Loan, as approved by Lender, in its reasonable
discretion, (v) fund any working capital requirements of the Property, as approved by Lender, in
its reasonable discretion, and (vi) retain the balance, if any.
Section 2.2. Interest Rate.
2.2.1. Interest Rate. Interest on the outstanding principal balance of the Loan shall
accrue from the Closing Date up to but excluding the Maturity Date at the Interest Rate.
2.2.2. Intentionally Omitted.
2.2.3. Default Rate. In the event that, and for so long as, any Event of Default shall
have occurred and be continuing, the outstanding principal balance of the Loan and, to the extent
permitted by law, overdue interest in respect of the Loan, shall accrue interest at the Default
Rate, calculated from the date such payment was due without regard to any grace or cure periods
contained herein.
2.2.4. Interest Calculation. Interest on the outstanding principal balance of the Loan
shall be calculated by multiplying (a) the actual number of days elapsed in the period for which
the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year
(that is, the Interest Rate or the Default Rate, as then applicable, expressed as an annual rate
divided by 360) by (c) the outstanding principal balance. The accrual period for calculating
interest due on each Monthly Payment Date shall be the calendar month immediately prior to
such Monthly Payment Date. Borrower understands and acknowledges that such interest accrual
requirement results in more interest accruing on the Loan than if either a thirty (30) day month
and a three hundred sixty (360) day year or the actual number of days and a three hundred sixty
five (365) day year were used to compute the accrual of interest on the Loan.
2.2.5. Usury Savings. This Agreement and the other Loan Documents are subject to the
express condition that at no time shall Borrower be required to pay interest on the principal
balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Interest Rate
DMEAST #17478116 v7 19
or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the
Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be
deemed to have been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of
the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Loan until payment in full
so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal
Rate from time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.
Section 2.3. Loan Payments
2.3.1. Payment Before Maturity Date. Borrower shall make a payment to Lender of
interest only on the Closing Date through the last day of the calendar month in which the Closing
Date occurs (unless the Closing Date is the first day of a calendar month, in which case no such
separate payment of interest shall be due). Borrower shall make a payment to Lender of
principal (if applicable) and interest in the amount of the Monthly Debt Service Payment
Amount on the Monthly Payment Date occurring in November, 2013, and on each Monthly
Payment Date thereafter to and including the Maturity Date. Each payment shall be applied first
to accrued and unpaid interest and the balance, if any, to principal. The Monthly Debt Service
Payment Amount required hereunder is based upon a thirty (30) year amortization schedule.
2.3.2. Intentionally Omitted.
2.3.3. Payment on Maturity Date. Borrower shall pay to Lender on the Maturity Date
the outstanding principal balance of the Loan, all accrued and unpaid interest and all other
amounts due hereunder and under the Note, the Security Instrument and the other Loan
Documents.
2.3.4. Late Payment Charge. If any principal, interest or any other sum due under the
Loan Documents, other than the payment of principal due on the Maturity Date, is not paid by
Borrower on the date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Security Instrument and the other Loan
Documents.
2.3.5. Method and Place of Payment.
(a) Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later than 1:00
P.M., New York City time, on the date when due and shall be made in lawful money of the
United States of America in immediately available funds at Lender's office, and any funds
received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on
the next succeeding Business Day.
DMEAST #17478116 v7 20
(b) Whenever any payment to be made hereunder or under any other Loan
Document shall be stated to be due on a day which is not a Business Day, the due date thereof
shall be the immediately preceding Business Day.
(c) All payments required to be made by Borrower hereunder or under the
Note or the other Loan Documents shall be made irrespective of, and without deduction for, any
setoff, claim or counterclaim and shall be made irrespective of any defense thereto.
Section 2.4. Prepayments.
2.4.1. Voluntary Prepayments. Except as otherwise provided herein, Borrower shall
not have the right to prepay the Loan in whole or in part. On and after the Monthly Payment
Date occurring in July, 2023 (the "Permitted Prepayment Date") Borrower may, provided no
Event of Default has occurred, at its option and upon thirty (30) days prior notice to Lender (or
such shorter period of time as may be permitted by Lender in its sole discretion), prepay the Debt
in whole on any date without payment of the Yield Maintenance Premium. Any prepayment
received by Lender on a date other than a Monthly Payment Date shall include interest which
would have accrued thereon to the next Monthly Payment Date ("Short Interest") and such
amounts (i.e., principal and interest prepaid by Borrower) shall be held by Lender as collateral
security for the Loan in an interest bearing Eligible Account at an Eligible Institution, with
interest accruing on such amounts to the benefit of Borrower; such amounts prepaid shall be
applied to the Loan on the next Monthly Payment Date, with any interest on such funds paid to
Borrower on such date provided no Event of Default then exists. Any partial prepayment shall
be applied to the last payments of principal due under the Loan.
2.4.2. Mandatory Prepayments. On each date on which Lender actually receives a
distribution of Net Proceeds, and if Lender does not make such Net Proceeds available to
Borrower for a Restoration, Borrower shall, at Lender's option, prepay, or authorize Lender to
apply the Net Proceeds as a prepayment of, the outstanding principal balance of the Note in an
amount equal to one hundred percent (100%) of such Net Proceeds together with the Short
Interest. Additionally, Borrower shall make the Condemnation Payment as and to the extent
required hereunder. No Yield Maintenance Premium shall be due in connection with any
prepayment made pursuant to this Section 2.4.2 or in connection with any Condemnation
Payment. Any prepayment received by Lender pursuant to this Section 2.4.2 on a date other than
a Monthly Payment Date shall be held by Lender as collateral security for the Loan in an interest
bearing Eligible Account at an Eligible Institution, with such interest accruing to the benefit of
Borrower, and shall be applied by Lender on the next Monthly Payment Date, with any interest
on such funds paid to Borrower on such date provided no Event of Default then exists.
2.4.3. Prepayments After Default. If concurrently with or after an Event of Default,
payment of all or any part of the principal of the Loan is tendered by Borrower, a purchaser at
foreclosure or any other Person, such tender shall be deemed an attempt to circumvent the
prohibition against prepayment set forth in Section 2.4.1 above and Borrower, such purchaser at
foreclosure or any other Person shall pay, in addition to the outstanding principal balance, all
accrued and unpaid interest and other amounts then payable under the Loan Documents (i) an
amount equal to the greater of (x) three percent (3%) of the outstanding principal balance of the
Loan to be prepaid or satisfied, and (y) the Yield Maintenance Premium, and (ii) Short Interest.
DMEAST #17478116 v7 21
Section 2.5. Defeasance.
2.5.1. Conditions to Total Defeasance.
(a) Provided no Event of Default shall have occurred and remain uncured,
Borrower shall have the right at any time after the Release Date and prior to the Permitted
Prepayment Date to voluntarily defease the entire Loan and obtain a release of the lien of the
Security Instrument by providing Lender with the Total Defeasance Collateral (hereinafter, a
"Total Defeasance Event"), subject to the satisfaction of the following conditions precedent, as
determined by Lender in accordance with the Prudent Lender Standard:
(i) Borrower shall provide Lender not less than thirty (30) days'
notice (or such shorter period of time if permitted by Lender in its sole
discretion), but not more than ninety (90) days' notice, specifying a date (the
"Total Defeasance Date") on which the Total Defeasance Event is to occur;
(ii) Borrower shall pay to Lender (A) all payments of principal and
interest due on the Loan to and including the Total Defeasance Date and (B) all
other sums, then due under the Note, this Agreement, the Security Instrument and
the other Loan Documents;
(iii) Borrower shall deposit the Total Defeasance Collateral into the
Defeasance Collateral Account and otherwise comply with the provisions of
Section 2.5.2 hereof;
(iv) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Total
Defeasance Collateral;
(v) Borrower shall deliver to Lender an opm10n of counsel for
Borrower that is standard in commercial lending transactions and subject only to
customary qualifications, assumptions and exceptions opining, among other
things, that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Total Defeasance Collateral,
(B) if a Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the Code as a result
of a Total Defeasance Event pursuant to this Section 2.5, and (C) the Total
Defeasance Event will not result in a deemed exchange for purposes of the Code
and will not adversely affect the status of the Note as indebtedness for federal
income tax purposes;
(vi) Borrower shall deliver to Lender a Rating Agency Confirmation as
to the Total Defeasance Event;
(vii) Borrower shall deliver an Officer's Certificate certifying that the
requirements set forth in this Section 2.5 have been satisfied;
DMEAST #17478116 v7 22
(viii) Borrower shall deliver a certificate of a "big four" or other
nationally recognized public accounting firm acceptable to Lender certifying that
the Total Defeasance Collateral will generate monthly amounts equal to or greater
than the Scheduled Defeasance Payments;
(ix) The Total Defeasance Event shall be permitted under REMIC
Requirements in effect as of each of (I) the date Lender receives notice of
Borrower's request to cause a Total Defeasance Event and (II) the date of the
consummation of the Total Defeasance Event;
(x) Borrower shall deliver such other certificates, opinions, documents
and instruments as Lender may reasonably request; and
(xi) Borrower shall pay all costs and expenses of Lender incurred in
connection with the Total Defeasance Event, including Lender's reasonable
attorneys' fees and expenses and Rating Agency fees and expenses.
(b) If Borrower has elected to defease the entire Loan and the requirements of
this Section 2.5 have been satisfied, the Property shall be released from the lien of the Security
Instrument and the Total Defeasance Collateral pledged pursuant to the Security Agreement shall
be the sole source of collateral securing the Loan. In connection with the release of the lien,
Borrower shall submit to Lender, not less than thirty (30) days prior to the Total Defeasance
Date (or such shorter time as is acceptable to Lender in its ~ole discretion), a release of lien (and
related Loan Documents) for execution by Lender. Such release shall be in a form appropriate in
the jurisdiction in which the Property is located and that contains standard provisions protecting
the rights of the releasing lender. In addition, Borrower shall provide all other documentation
that a prudent lender originating mortgage loans for securitization similar to the Loan would
require to be delivered by Borrower in connection with such release, together with an Officer's
Certificate certifying that such documentation (i) is in compliance with all Legal Requirements,
and (ii) will effect such release in accordance with the terms of this Agreement. Borrower shall
pay all costs, taxes and expenses associated with the release of the lien of the Security
Instrument, including Lender's reasonable attorneys' fees. Except as set forth in this Section 2.5,
or upon payment in full of the Debt in accordance with the terms of this Agreement and the other
Loan Documents, no repayment, prepayment or defeasance of all or any portion of the Loan
shall cause, give rise to a right to require, or otherwise result in, the release of the lien of the
Security Instrument on the Property.
2.5.2. Intentionally Omitted.
2.5.3. Defeasance Collateral Account. On or before the date on which Borrower
delivers the Total Defeasance Collateral, Borrower shall open at any Eligible Institution the
defeasance collateral account (the "Defeasance Collateral Account") which shall at all times be
an Eligible Account. The Defeasance Collateral Account shall contain only (i) Total Defeasance
Collateral, and (ii) cash from interest and principal paid on the Total Defeasance Collateral. All
cash from interest and principal payments paid on the Total Defeasance Collateral shall be paid
over to Lender on each Monthly Payment Date and applied first to accrued and unpaid interest
and then to principal. Any cash from interest and principal paid on the Total Defeasance
DMEAST #17478116 v7 23
Collateral not needed to pay the Scheduled Defeasance Payments shall be retained in the
Defeasance Collateral Account as additional collateral for the Loan. Borrower shall cause the
Eligible Institution at which the Total Defeasance Collateral is deposited to enter an agreement
with Borrower and Lender, satisfactory to Lender in its sole discretion, pursuant to which such
Eligible Institution shall agree to hold and distribute the Total Defeasance Collateral in
accordance with this Agreement. The Borrower or Successor Borrower, as applicable, shall be
the owner of the Defeasance Collateral Account and shall report all income accrued on Total
Defeasance Collateral for federal, state and local income tax purposes in its income tax return.
Borrower shall prepay all cost and expenses associated with opening and maintaining the
Defeasance Collateral Account. Lender shall not in any way be liable by reason of any
insufficiency in the Defeasance Collateral Account.
2.5.4. Successor Borrower. In connection with a Total Defeasance Event Defeasance
Event under this Section 2.5, Borrower shall transfer and assign all obligations, rights and duties
under and to the Note and the Security Agreement, together with the Total Defeasance Collateral
to a newly-created successor entity, which entity shall be a single purpose, bankruptcy remote
entity and which entity shall be designated or established by Lender, at Lender's option (the
"Successor Borrower"). Lender shall also have the right to purchase on behalf of Borrower, or
cause to be purchased on behalf of Borrower, the pledged Total Defeasance Collateral. Such
rights to designate or establish the Successor Borrower as provided above or to purchase, or
cause the purchase of, on behalf of Borrower the pledged Total Defeasance Collateral as
provided above may be exercised by MSMCH in its sole discretion and shall be retained by
MSMCH as the original Lender herein (and any successor or assign of MSMCH under a specific
assignment of such retained rights separate and apart from a Secondary Market Transaction
related to all or any portion of the Loan), notwithstanding any Secondary Market Transaction
related to all or any portion of the Loan. Such Successor Borrower shall assume the obligations
under the Note and the Security Agreement and Borrower shall be relieved of its obligations
under the Loan Documents (other than those obligations which by their terms survive a
repayment, defeasance or other satisfaction of the Loan and/or a transfer of the Property in
connection with Lender's exercise of its remedies under the Loan Documents). Borrower shall
pay a minimum of $1,000 to any such Successor Borrower as consideration for assuming the
obligations under the Note and the Security Agreement. Borrower shall pay all costs and
expenses incurred by Lender, including the cost of establishing the Successor Borrower and
Lender's attorney's fees and expenses, incurred in connection therewith.
2.5.5. Intentionally Omitted.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Borrower Representations. Borrower represents and warrants that:
3.1.1. Organization.
(a) Each of Borrower and Guarantor is duly organized, validly existing and in
good standing with full power and authority to own its assets and conduct its business, and is
duly qualified and in good standing in Texas (with respect to Borrower) and all other
DMEAST #17478116 v7 24
jurisdictions in which failure to be so qualified could have a Material Adverse Effect. Borrower
has taken all necessary action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents by it, and has the power and authority to execute,
deliver and perform under this Agreement, the other Loan Documents and all the transactions
contemplated hereby.
(b) Borrower's exact legal name is correctly set forth in the first paragraph of
this Agreement. Borrower is an organization of the type specified in the first paragraph of this
Agreement. Borrower is incorporated or organized under the laws of the state specified in the
first paragraph of this Agreement. Borrower's principal place of business and chief executive
office, and the place where Borrower keeps its books and records, including recorded data of any
kind or nature, regardless of the medium of recording, including software, writings, plans,
specifications and schematics, has been for the preceding four ( 4) months (or, if less than four ( 4)
months, the entire period of the existence of Borrower) and will continue to be the address of
Borrower set forth in the first paragraph of this Agreement (unless Borrower notifies Lender in
writing at least thirty (30) days prior to the date of such change). Borrower's organizational
identification number assigned by the state of its incorporation or organization is 5386832.
Borrower's federal tax identification number is 00-0000000. Borrower is not subject to back-up
withholding taxes.
3.1.2. Proceedings. This Agreement and the other Loan Documents have been duly
authorized, executed and delivered by Borrower and constitute a legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with their respective terms,
except as such enforcement may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.1.3. No Conflicts. The execution and delivery of this Agreement and the other Loan
Documents by Borrower and the performance of its obligations hereunder and thereunder will
not conflict with any provision of any law or regulation to which Borrower is subject, or conflict
with, result in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any of Borrower's organizational documents or any agreement or instrument to
which Borrower is a party or by which it is bound, or any order or decree applicable to Borrower,
or result in the creation or imposition of any lien on any of Borrower's assets or property (other
than pursuant to the Loan Documents).
3.1.4. Litigation. There is no action, suit, arbitration or governmental investigation or
proceeding pending, filed or, to Borrower's knowledge, threatened against Borrower, Borrower
Parties, Sponsor or the Property in any court or by or before any other Governmental Authority
which, if determined adversely against Borrower, Borrower Parties, Sponsor or the Property,
would materially and adversely affect (a) the use, operation or value of the Property or
Borrower's title to the Property, (b) the enforceability, validity, perfection or priority of the lien
of the Security Instrument or the other Loan Documents, (c) the ability of Borrower to perform
its obligations under the Security Instrument or the other Loan Documents, (d) the ability of
Guarantor to perform its obligations under the Guaranty, (e) the principal benefit of the security
DMEAST #17478116 v7 25
intended to be provided by the Loan Documents or (f) the ability of the Property to generate net
cash flow sufficient to service such Loan.
3.1.5. Agreements. Borrower is not a party to any agreement or instrument or subject
to any restriction which might cause a Material Adverse Effect. Borrower is not in default with
respect to any order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default might have consequences that would cause a Material
Adverse Effect. Borrower is not in default in any material respect in the performance,
observance or fulfillment in any material respect of any of the obligations, covenants or
conditions contained in any Permitted Encumbrance or any other material agreement or
instrument to which it is a party or by which it or the Property is bound. Borrower has no
material financial obligation (contingent or otherwise) under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Borrower is a party or by which
Borrower or the Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Property and (b) obligations under the Loan Documents.
3.1.6. Consents. No consent, approval, authorization or order of any court or
Governmental Authority is required for the execution, delivery and performance by Borrower of,
or compliance by Borrower with, this Agreement or the other Loan Documents or the
consummation of the transactions contemplated hereby, other than those which have been
obtained by Borrower.
3.1.7. Title. Borrower has indefeasible and insurable fee simple title to the real property
comprising part of the Property and good title to the balance of the Property owned by it, free
and clear of all Liens whatsoever except the Permitted Encumbrances. The Security Instrument,
when properly recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, the Restricted Account
Agreement and the Cash Management Agreement, will create (i) a valid and enforceable first
priority, perfected lien on the Property, subject only to Permitted Encumbrances and (ii) a legal,
valid and enforceable first priority, perfected security interest in and to, and perfected collateral
assignments of, all personalty (including the Leases and Rents), the proceeds arising from the
Property and other collateral securing the Loan, to the extent a security interest may be created
therein and perfected by the filing of a UCC Financing Statement under the Uniform
Commercial Code as in effect in the applicable jurisdiction, all in accordance with the terms
thereof, in each case subject only to any Permitted Encumbrances. There are no mechanics',
materialman's or other similar liens or claims that have been, or may be, filed for work, labor or
materials affecting the Property that are or may be liens prior to, or equal or coordinate with, the
lien of the Security Instrument. None of the Permitted Encumbrances, individually or in the
aggregate, materially interfere with or affect the value, current use or operation of the Property or
the security intended to be provided by the Security Instrument or with the ability of the Property
to generate net cash flow sufficient to service the Loan or the Borrower's ability to pay its
obligations when and as they become due.
3.1.8. No Plan Assets. As of the date hereof and throughout the term of the Loan
(a) Borrower is not and will not be an "employee benefit plan," as defined in Section 3(3) of
ERISA, subject to Title I of ERISA, (b) Borrower is not and will not be a "governmental plan"
within the meaning of Section 3(32) of ERISA, (c) transactions by or with Borrower are not and
DMEAST #17 478116 v7 26
will not be subject to any state statute, regulation or ruling regulating investments of, or fiduciary
obligations with respect to, governmental plans; and (d) none of the assets of Borrower
constitutes or will constitute "plan assets" of one or more such plans within the meaning of 29
C.P.R. Section 2510.3-101., as modified by Section 3(42) of ERISA. As of the date hereof,
neither Borrower, nor any Employee Benefit Affiliate maintains, sponsors or contributes to a
Defined Benefit Plan or a Multiemployer Plan. Except for the Whitestone REIT 40lk program,
neither the Borrower nor an Employee Benefit Affiliate sponsors, contributes to or maintains
either currently or in the past a plan, document, agreement, or arrangement subject to ERISA.
3.1.9. Compliance. Borrower and the Property and the use thereof comply in all
material respects with all applicable Legal Requirements, including, without limitation, parking,
building, zoning and land use laws, ordinances, regulations, and codes, provided, however that
the Property is legally non-conforming with applicable zoning code due to a shortage of
approximately thirty (30) parking spaces. Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority, the violation of which might
cause a Material Adverse Effect. Borrower has not committed any act which may give any
Governmental Authority the right to cause Borrower to forfeit the Property or any part thereof or
any monies paid in performance of Borrower's obligations under any of the Loan Documents.
The Property is used exclusively for office rental and other appurtenant and related uses. In the
event that all or any part of the Improvements are destroyed or damaged, provided that such
damage or destruction is not caused by Borrower, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and thereafter exist for the
same use without violating any zoning or other ordinances applicable thereto and without the
necessity of obtaining any variances or special permits.
3.1.10. Financial Information. All financial data, including, without limitation, the
statements of cash flow and income and operating expense, that have been delivered to Lender in
respect of the Property (i) are true, complete and correct in all material respects, (ii) accurately
represent the financial condition of the Property as of the date of such reports, and (iii) have been
prepared in accordance with GAAP (or such other accounting method reasonably approved by
Lender) throughout the periods covered, except as disclosed therein. Borrower does not have
any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to cause a Material Adverse Effect, except for the Permitted Encumbrances
and except as referred to or reflected in said financial statements. Since the date of the financial
statements, there has been no material adverse change in the financial condition, operations or
business of Borrower or the Property from that set forth in said financial statements.
3.1.11. Condemnation. No Condemnation or other proceeding has been commenced or,
to Borrower's best knowledge, is contemplated or threatened with respect to all or any portion of
the Property or for the relocation of roadways providing access to the Property.
3.1.12. Utilities and Public Access. The Property is located on or adjacent to a
dedicated road and is served by water, sewer, electric, sanitary sewer and storm drain facilities
adequate to service the Property for its current and intended uses. The Property has, or is served
by, parking to the extent required to comply with all Leases, Material Agreements and all Legal
Requirements.
DMEAST #17478116 v7 27
3.1.13. Separate Lots. The Property is comprised of one (1) or more parcels which
constitute separate tax lots and do not constitute a portion of any other tax lot not a part of the
Property.
3.1.14. Assessments. There are no pending or proposed special or other assessments for
public improvements or otherwise affecting the Property, nor are there any contemplated
improvements to the Property that may result in such special or other assessments.
3.1.15. Enforceability. The Loan Documents are not subject to any right of rescission,
set off, abatement, diminution, counterclaim or defense by Borrower, including the defense of
usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable (except as such enforcement may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, or other
similar laws affecting the enforcement of creditors' rights generally, and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law)), and Borrower has not asserted any right of rescission, set off, abatement, diminution,
counterclaim or defense with respect thereto.
3.1.16. Intentionally Omitted.
3.1.17. Insurance. Borrower has obtained and has delivered to Lender original or
certified copies of all of the Policies, with all premiums prepaid thereunder, reflecting the
insurance coverages, amounts and other requirements set forth in this Agreement. No claims
have been made under any of the Policies, and neither Borrower nor, to Borrower's knowledge,
any other Person has done, by act or omission, anything which would impair the coverage of any
of the Policies.
3.1.18. Licenses. All certifications, permits, licenses and approvals, including without
limitation, certificates of completion and occupancy permits required of Borrower by any
Governmental Authority for the legal use, occupancy and operation of the Property in the
manner in which the Property is currently being used, occupied and operated ("Licenses") have
been obtained and are in full force and effect.
3.1.19. Flood Zone. None of the hnprovements on the Property is located in an area
identified by the Federal Emergency Management Agency as a special flood hazard area, or, if
so located the flood insurance required pursuant to Section 5.1.1(a) hereof is in full force and
effect with respect to the Property.
3.1.20. Physical Condition. The Property, including, without limitation, all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HV AC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings
and doors, landscaping, irrigation systems and all structural components, are in good condition,
order and repair in all material respects; there exists no structural or other material defects or
damages in the Property, whether latent or otherwise, and Borrower has not received notice from
any insurance company or bonding company of any defects or inadequacies in the Property, or
any part thereof, which would adversely affect the insurability of the same or cause the
DMEAST #17478116 v7 28
imposition of extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
3.1.21. Boundaries. Except to the extent disclosed on the Survey, all of the
improvements which were included in determining the appraised value of the Property lie wholly
within the boundaries and building restriction lines of the Property, and no improvements on
adjoining properties encroach upon the Property, and no easements or other encumbrances
affecting the Property encroach upon any of the improvements, so as to cause a Material Adverse
Effect except those which are insured against by title insurance.
3.1.22. Leases. Borrower represents and warrants to Lender with respect to the Leases
that: (a) the rent roll attached hereto as Schedule I is true, complete and correct in all material
respects, and the Property is not subject to any Leases other than the Leases described in
Schedule I, (b) Borrower is the sole owner of the entire lessor's interest in the Leases, (c) the
Leases identified on Schedule I are in full force and effect, there are no material defaults
thereunder by either party, there are no conditions that, with the passage of time or the giving of
notice, or both, would constitute material defaults thereunder, and no Tenant is subject to an
action under any state or federal bankruptcy, insolvency, or similar laws or regulations, (d) the
copies of the Leases delivered to Lender are true and complete, and there are no oral agreements
with respect thereto, (e) no Rent (including security deposits) has been paid more than one (1)
month in advance of its due date, all Rents due have been paid in full and no Tenant is in arrears
in its payment of Rent, (f) there exist no offsets or defenses to the payment of any portion of the
Rents and Borrower has no monetary obligation to any Tenant under any Lease, (g) Borrower
has received no notice from any Tenant challenging the validity or enforceability of any Lease,
(h) no person or entity has any possessory interest in, or right to occupy, the Property except
under and pursuant to a Lease, (i) all security deposits relating to the Leases reflected on the Rent
Roll have been collected by Borrower and are being held in accordance with Legal
Requirements, U) no brokerage commissions or finders' fees are due and payable regarding any
Lease, (k) all Tenants at the Property as of the date hereof are in physical occupancy of the
premises demised under their Leases, are paying full rent under their Leases and have not
exercised any right to "go dark" that they may have under the provisions of their Leases, (1) all
work to be performed by Borrower under each Lease has been performed as required and has
been accepted by the applicable Tenant, (m) any payments, free rent, partial rent, rebate of rent
or other payments, credits, allowances or abatements required to be given by Borrower to any
Tenant has already been received by such Tenant, (n) no Tenant under any Lease (or any
sublease) is an Affiliate of Borrower, and ( o) no Tenant under any Lease has a right or option
pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the
Improvements of which the leased premises are a part.
3.1.23. Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or
other amounts in the nature of transfer taxes required to be paid under applicable Legal
Requirements in connection with the transfer of the Property to Borrower have been paid or are
being paid simultaneously herewith. All mortgage, mortgage recording, stamp, intangible or
other similar tax required to be paid under applicable Legal Requirements in connection with the
execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Security Instrument, have been paid or are being
paid simultaneously herewith. All Taxes, Other Charges and other governmental assessments
DMEAST #17478116 v7 29
due and owing in respect of the Property have been paid, or an escrow of funds in an amount
sufficient to cover such payments has been established hereunder or are insured against by the
title insurance policy to be issued in connection with the Security Instrument.
3.1.24. Single Purpose.
(a) Borrower hereby represents and warrants to, and covenants with, Lender
that as of the date hereof and until such time as the Debt shall be paid in full:
(i) Borrower has not owned and will not own any asset or property
other than (A) the Property, and (B) incidental personal property necessary for the
ownership or operation of the Property.
(ii) Borrower has not and will not engage in any business other than
the ownership, management, operation and financing of the Property and
Borrower has and will conduct and operate its business as presently conducted
and operated.
(iii) Borrower has not and will not enter into any contract or agreement
with any Affiliate of Borrower, any constituent party of Borrower or any Affiliate
of any constituent party, except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an arms-length
basis with third parties other than any such party.
(iv) Borrower has not incurred and will not incur any Indebtedness,
secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than (A) the Debt, (B) trade and operational indebtedness
incurred in the ordinary course of business with trade creditors, provided such
indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially
reasonable terms and conditions, and (4) due not more than sixty (60) days past
the date incurred and paid on or prior to such date, and/or (C) Permitted
Equipment Leases; provided however, the aggregate amount of the indebtedness
described in (B) and (C) shall not exceed at any time three percent (3.0%) of the
outstanding principal amount of the Debt.
(v) Borrower has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party), and has not and shall
not acquire obligations or securities of its Affiliates.
(vi) Borrower has been, is and will remain solvent and Borrower has
paid and will pay its debts and liabilities (including, as applicable, shared
personnel and overhead expenses) from its assets as the same shall become due;
provided, that, in each such case, there exists sufficient cash flow from the
Property to do so.
(vii) Borrower has done or caused to be done and will do or cause to be
done all things necessary to observe organizational formalities and preserve its
existence, and Borrower will not, nor will Borrower permit any constituent party
DMEAST #17478116 v7 30
to amend, modify, terminate or otherwise change the partnership certificate,
partnership agreement, articles of incorporation and bylaws, operating agreement,
trust or other organizational documents of Borrower without the prior consent of
Lender.
(viii) Borrower has maintained and will maintain all of its books,
records, financial statements and bank accounts separate from those of its
Affiliates and any constituent party. Borrower's assets have not and will not be
listed as assets on the financial statement of any other Person; provided, however,
that Borrower's assets may be included in a consolidated financial statement of its
Affiliates provided that (i) appropriate notation shall be made on such
consolidated financial statements to indicate the separateness of Borrower and
such Affiliates and to indicate that Borrower's assets and credit are not available
to satisfy the debts and other obligations of such Affiliates or any other Person
and (ii) such assets shall be listed on Borrower's own separate balance sheet.
Borrower has filed and will file its own tax returns (to the extent Borrower is
required to file any such tax returns) and has not and will not file a consolidated
federal income tax return with any other Person. Borrower has maintained and
will maintain its books, records, resolutions and agreements as official records.
(ix) Borrower has been and will be, and at all times has and will hold
itself out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate of Borrower or any constituent party of Borrower), has
and shall correct any known misunderstanding regarding its status as a separate
entity, has and shall conduct business in its own name, has not and shall not
identify itself or any of its Affiliates as a division or part of the other and has and
shall maintain and utilize separate stationery, invoices and checks bearing its own
name and not the name of any other person or entity unless such person or entity
is clearly designated as being the Borrower's agent.
(x) Borrower has maintained and will maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and character in
light of its contemplated business operations (provided that there exists sufficient
cash flow from the Property to do so).
(xi) Neither Borrower nor any constituent party has or will seek or
effect the liquidation, dissolution, winding up, liquidation, consolidation or
merger, in whole or in part, of Borrower.
(xii) Borrower has not and will not commingle the funds and other
assets of Borrower with those of any Affiliate or constituent party or any other
Person, and has and will hold all of its assets in its own name.
(xiii) Borrower has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any Affiliate or constituent party or any other Person.
DMEAST #17478116 v7 31
(xiv) Borrower has not and will not guarantee or become obligated for
the debts of any other Person and has not and will not hold itself out to be
responsible for or have its credit available to satisfy the debts or obligations of
any other Person.
(xv) Intentionally Omitted.
(xvi) Borrower has not permitted, and will not permit any Affiliate or
constituent party (other than Manager in accordance with due terms of the
Management Agreement) independent access to its bank accounts.
(xvii) Borrower has paid and shall pay from its own funds its own
liabilities and expenses, including all Property related expenses and the salaries of
its own employees (if any) from its own funds and has maintained and shall
maintain a sufficient number of employees (if any) in light of its contemplated
business operations.
(xviii) Borrower has compensated and shall compensate each of its
consultants and agents from its funds for services provided to it, and has paid and
shall pay from its own assets all obligations of any kind incurred.
(xix) Intentionally Omitted.
(b) Intentionally omitted.
(c) If Borrower is a limited partnership or a limited liability company (other
than an Acceptable LLC), each general partner or managing member (each, a "SPC Party")
shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower,
(II) which has not been and shall not be permitted to engage in any business or activity other than
owning an interest in Borrower; (III) which has not been and shall not be permitted to incur any
debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and
(IV) which has and will at all times own at least a 0.5% direct equity ownership interest in
Borrower. Each such SPC Party will at all times comply, and will cause Borrower to comply,
with each of the representations, warranties, and covenants contained in this Section 3.1.24 (to
the extent applicable) as if such representation, warranty or covenant was made directly by such
SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower,
Borrower shall immediately appoint a new SPC Party whose articles of incorporation or
organization are substantially similar to those of such SPC Party. Notwithstanding anything in
this Agreement or any other Loan Document to the contrary, the provisions applicable to an SPC
Party set forth above shall not apply to Whitestone REIT Operating Partnership, L.P.
(d) (I) In the event Borrower or the SPC Party is an Acceptable LLC, the
limited liability company agreement of Borrower or the SPC Party (as applicable) (the "LLC
Agreement") shall provide that (i) upon the occurrence of any event that causes the last
remaining member of Borrower or the SPC Party (as applicable) ("Member") to cease to be the
member of Borrower or the SPC Party (as applicable) (other than (A) upon an assignment by
Member of all of its limited liability company interest in Borrower or the SPC Party (as
applicable) and the admission of the transferee in accordance with the Loan Documents and the
DMEAST #17478116 v7 32
LLC Agreement, or (B) the resignation of Member and the admission of an additional member of
Borrower or the SPC Party (as applicable) in accordance with the terms of the Loan Documents
and the LLC Agreement), any natural person duly designated under the applicable organizational
documents shall, without any action of any other Person and simultaneously with the Member
ceasing to be the member of Borrower or the SPC Party (as applicable) automatically be
admitted to Borrower or the SPC Party (as applicable) as a member with a 0% economic interest
("Special Member") and shall continue Borrower or the SPC Party (as applicable) without
dissolution and (ii) Special Member may not resign from Borrower or the SPC Party (as
applicable) or transfer its rights as Special Member unless a successor Special Member has been
admitted to Borrower or the SPC Party (as applicable) as a Special Member in accordance with
requirements of Delaware or Maryland law (as applicable). The LLC Agreement shall further
provide that (i) Special Member shall automatically cease to be a member of Borrower or the
SPC Party (as applicable) upon the admission to Borrower or the SPC Party (as applicable) of the
first substitute member, (ii) Special Meinber shall be a member of Borrower or the SPC Party (as
applicable) that has no interest in the profits, losses and capital of Borrower or the SPC Party (as
applicable) and has no right to receive any distributions of the assets of Borrower or the SPC
Party (as applicable), (iii) pursuant to the applicable provisions of the limited liability company
act of the State of Delaware or Maryland (as applicable, the "Act"), Special Member shall not be
required to make any capital contributions to Borrower or the SPC Party (as applicable) and shall
not receive a limited liability company interest in Borrower or the SPC Party (as applicable), (iv)
Special Member, in its capacity as Special Member, may not bind Borrower or the SPC Party (as
applicable) and (v) except as required by any mandatory provision of the Act, Special Member,
in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to
any action by, or matter relating to, Borrower or the SPC Party (as applicable) including, without
limitation, the merger, consolidation or conversion of Borrower or the SPC Party (as applicable).
In order to implement the admission to Borrower or the SPC Party (as applicable) of Special
Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its
admission to Borrower or the SPC Party (as applicable) as Special Member, Special Member
shall not be a member of Borrower or the SPC Party (as applicable).
(II) The LLC Agreement shall further provide that (i) upon the occurrence of
any event that causes the Member to cease to be a member of Borrower or the SPC Party (as
applicable) to the fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the continued
membership of Member in Borrower or the SPC Party (as applicable) agree in writing (A) to
continue Borrower or the SPC Party (as applicable) and (B) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute member of
Borrower or the SPC Party (as applicable) effective as of the occurrence of the event that
terminated the continued membership of Member in Borrower or the SPC Party (as applicable),
(ii) any action initiated by or brought against Member or Special Member under any laws
relating to bankruptcy, insolvency or creditors' rights ("Creditors' Rights Laws") shall not
cause Member or Special Member to cease to be a member of Borrower or the SPC Party (as
applicable) and upon the occurrence of such an event, the business of Borrower or the SPC Party
(as applicable) shall continue without dissolution and (iii) each of Member and Special Member
waives any right it might have to agree in writing to dissolve Borrower or the SPC Party (as
applicable) upon the occurrence of any action initiated by or brought against Member or Special
DMEAST #17478116 v7 33
Member under any Creditors' Rights Laws, or the occurrence of an event that causes Member or
Special Member to cease to be a member of Borrower or the SPC Party (as applicable).
(e) Intentionally Omitted.
(f) Intentionally Omitted.
(g) Not later than ninety (90) days after and as of the end of each fiscal year
and at any other time upon request from Lender, Borrower shall provide an Officer's Certificate
certifying as to Borrower's continued compliance with the terms of this Section 3.1.24 and the
terms of the Cash Management Agreement. Additionally, Borrower shall provide Lender with
such other evidence of Borrower's compliance with this Section 3.1.24, and the terms of the
Cash Management Agreement as Lender may reasonably request from time to time.
3.1.25. Tax Filings. To the extent required, Borrower has timely filed (or has obtained
effective extensions for filing) all federal, state and local tax returns required to be filed and have
paid or made adequate provision for the payment of all federal, state and local taxes, charges and
assessments payable by Borrower. Borrower believes that its tax returns (if any) properly reflect
the income and taxes of Borrower for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax authority upon
audit.
3.1.26. Solvency. Borrower (a) has. not entered into the transaction or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor and (b) received
reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving
effect to the Loan, the fair saleable value of Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed Borrower's total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities. The fair saleable value
of Borrower's assets is and will, immediately following the making of the Loan, be greater than
Borrower's probable liabilities, including the maximum amount of its contingent liabilities on its
debts as such debts become absolute and matured. Borrower's assets do not and, immediately
following the making of the Loan will not, constitute umeasonably small capital to carry out its
business as conducted or as proposed to be conducted. Borrower does not intend to, and does
not believe that it will, incur Indebtedness and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower and the amounts
to be payable on or in respect of obligatjons of Borrower). No petition in bankruptcy has been
filed against Borrower or any Constituent Member of Borrower, and neither Borrower nor any
Constituent Member of Borrower has ever made an assignment for the benefit of creditors or
taken advantage of any insolvency act for the benefit of debtors.
3.1.27. Federal Reserve Regulations. No part of the proceeds of the Loan will be used
for the purpose of purchasing or acquiring any "margin stock" within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System or for any other purpose which
would be inconsistent with such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions
of this Agreement or the other Loan Documents.
DMEAST #17478116 v7 34
3.1.28. Organizational Chart. The organizational chart attached as Schedule III hereto,
relating to Borrower and certain Affiliates thereof and other parties, is true, complete and correct
on and as of the date hereof.
3.1.29. Bank Holding Company. Borrower is not a "bank holding company" or a direct
or indirect subsidiary of a "bank holding company" as defined in the Bank Holding Company
Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal
Reserve System.
3.1.30. Investment Company Act. Borrower is not (1) an "investment company'' or a
company "controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended; (2) a "holding company" or a "subsidiary company'' of a
"holding company" or an "affiliate" of either a "holding company'' or a "subsidiary company''
within the meaning of the Public Utility Holding Company Act of 1935, as amended; or
(3) subject to any other federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
3.1.31. No Bankruptcy Filing. Borrower has not filed, and is not contemplating the
filing of a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of its assets or property, and Borrower does not have any knowledge of any Person
contemplating the filing of any such petition against it.
.3.1.32. Full and Accurate Disclosure. No information contained in this Agreement, the
other Loan Documents, or any written statement furnished by or on behalf of Borrower pursuant
to the terms of this Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made. There is no fact or circumstance presently
known to Borrower which has not been disclosed to Lender and which is reasonably likely to
have a Material Adverse Effect.
3.1.33. Foreign Person. Borrower is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
3.1.34. No Change in Facts or Circumstances; Disclosure. There has been no material
adverse change in any condition, fact, circumstance or event that would make the financial
statements, rent rolls, reports, certificates or other documents submitted in connection with the
Loan inaccurate, incomplete or otherwise misleading in any material respect or that otherwise
may cause a Material Adverse Effect.
3.1.35. Management Agreement. The Management Agreement is in full force and
effect and there is no default thereunder by any party thereto and no event has occurred that, with
the passage of time and/or the giving of notice would constitute a default thereunder. The
Management Agreement was entered into on commercially reasonable terms.
3.1.36. Perfection of Accounts.
(a) This Agreement, together with the other Loan Documents, create a valid
and continuing security interest (as defined in the Uniform Commercial Code) in the Accounts
DMEAST #00000000 v7 35
(as defined in the Cash Management Agreement) in favor of Lender, which security interest is
prior to all other Liens, other than Permitted Encumbrances, and is enforceable as such against
creditors of and purchasers from Borrower. Other than in connection with the Loan Documents
and except for Permitted Encumbrances, Borrower has not sold or otherwise conveyed the
Accounts;
(b) The Accounts constitute "deposit accounts" or "securities accounts"
within the meaning of the Uniform Commercial Code, as set forth in the Cash Management
Agreement.
3.1.37. Intentionally Omitted.
3.1.38. Material Agreements. With respect to each Material Agreement, Borrower
hereby represents that (a) each Material Agreement is in full force and effect and has not been
amended, restated, replaced or otherwise modified (except, in each case, as expressly set forth
herein), (b) there are no defaults under any Material Agreement by Borrower or, to Borrower's
knowledge, by any party thereto and, to Borrower's knowledge, no event has occurred which,
but for the passage of time, the giving of notice, or both, would constitute a default under any
Material Agreement, (c) all payments and other sums due and payable by Borrower under the
Material Agreements have been paid in full, (d) no party to any Material Agreement has
commenced any action or given or received any notice for the purpose of terminating any
Material Agreement, and (e) the representations made in any estoppel or similar document
delivered with respect to any Material Agreement in connection with the Loan are true, complete
and correct in all material respects and are hereby incorporated by reference as if fully set forth
herein.
3.1.39. Illegal Activity/Forfeiture.
(a) No portion of the Property has been or will be purchased, improved,
equipped or furnished with proceeds of any illegal activity and to the best of Borrower's
knowledge, there are no illegal activities or activities relating to controlled substances at the
Property.
(b) There has not been and shall never be committed by Borrower or any
other person in occupancy of or involved with the operation or use of the Property any act or
omission affording the federal government or any state or local government the right of forfeiture
as against the Property or any part thereof or any monies paid in performance of Borrower's
obligations under this Agreement, the Note, the Security Instrument, or the other Loan
Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any
act or omission affording such right of forfeiture.
3.1.40. Guarantor and Sponsor Representations. Borrower hereby represents and
warrants that, as of the date hereof and continuing thereafter for the term of the Loan, the
representations and warranties set forth in Subsections 3.1.1 through 3.1.6, 3.1.8, 3.1.10, 3.1.15,
3.1.25, 3.1.26, 3.1.28, 3.1.31 through 3.1.34, 3.1.39(b), 3.1.41 and 3.1.42 herein are true and
correct with respect to Guarantor and Sponsor, as the same are applicable to such party.
DMEAST #17478116 v7 36
Wherever the term "Borrower" is used in each of the foregoing Subsections it shall be deemed to
be "Guarantor" and "Sponsor," with respect to each such party.
3.1.41. Embargoed Person. As of the date hereof and at all times throughout the term of
the Loan, including after giving effect to any transfers of interests permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower, Sponsor or Guarantor constitute
property of, or are beneficially owned, directly or indirectly, by any person, entity or country
which is a sanctioned person, entity or country under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the
Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder (including regulations administered by the Office of Foreign Assets Control
("OFAC") of the U.S. Department of the Treasury and the Specially Designated Nationals List
maintained by OFAC) with the result that the investment in Borrower, Sponsor and/or
Guarantor, as applicable (whether directly or indirectly), is prohibited by Legal Requirements or
the Loan made by Lender is in violation of Legal Requirements ("Embargoed Person");
(b) unless expressly waived in writing by Lender, no Embargoed Person has any interest of any
nature whatsoever in Borrower, Sponsor or Guarantor, as applicable, with the result that the
investment in Borrower, Sponsor and/or Guarantor, as applicable (whether directly or indirectly),
is prohibited by Legal Requirements or the Loan is in violation of Legal Requirements; and (c) to
the best knowledge of Borrower, none of the funds of Borrower, Sponsor or Guarantor, as
applicable, have been derived from any unlawful activity with the result that the investment in
Borrower, Sponsor and/or Guarantor, as applicable (whether directly or indirectly), is prohibited
by Legal Requirements or the Loan is in violation of Legal Requirements. Borrower covenants
and agrees that in the event Borrower receives any notice that Borrower, Sponsor or Guarantor
(or any of their respective beneficial owners, affiliates or participants) or any Person that has an
interest in the Property is designated as an Embargoed Person, Borrower shall immediately
notify Lender in writing. At Lender's option, it shall be an Event of Default hereunder if
Borrower, Guarantor, Sponsor or any other party to the Loan is designated as an Embargoed
Person. Notwithstanding the foregoing, for so long as Whitestone REIT is a publicly traded real
estate investment trust, the provisions of this Section 3 .1.41 shall not apply to the shareholders of
Whitestone REIT and any violation of this Section 3.1.41 by any shareholder of Whitestone
REIT shall not be a default under this Agreement.
3.1.42. Patriot Act.
(a) All capitalized words and phrases and all defined terms used in the USA
Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes and all orders,
rules and regulations of the United States government and its various executive departments,
agencies and offices related to the subject matter of the Patriot Act (collectively referred to in
this Section only as the "Patriot Act") are incorporated into this Section. Borrower hereby
represents and warrants that Borrower, Sponsor and Guarantor and each and every Person
affiliated with Borrower, Sponsor and/or Guarantor or that to Borrower's knowledge has an
economic interest in Borrower, or, to Borrower's knowledge, that has or will have an interest in
the transaction contemplated by this Agreement or in the Property or will participate, in any
manner whatsoever, in the Loan, is: (i) in full compliance with all applicable requirements of the
Patriot Act and any regulations issued thereunder; (ii) operated under policies, procedures and
practices, if applicable, that are in compliance with the Patriot Act and available to Lender for
DMEAST #17478116 v7 37
their review and inspection during normal business hours and upon reasonable prior notice;
(iii) not in receipt of any notice from the Secretary of State or the Attorney General of the United
States or any other department, agency or office of the United States claiming a violation or
possible violation of the Patriot Act; (iv) not a person who has been determined by competent
authority to be subject to any of the prohibitions contained in the Patriot Act; and (v) not owned
or controlled by or now acting and or will in the future act for or on behalf of any person who
has been determined to be subject to the prohibitions contained in the Patriot Act. Borrower
covenants and agrees that in the event Borrower receives any notice that Borrower, Sponsor or
Guarantor (or any of their respective beneficial owners, affiliates or participants) or any Person
that has an interest in the Property is indicted, arraigned, or custodially detained on charges
involving money laundering or predicate crimes to money laundering, Borrower shall
immediately notify Lender. At Lenders' option, it shall be an Event of Default hereunder if
Borrower, Guarantor, Sponsor or any other party to the Loan is indicted, arraigned or custodially
detained on charges involving money laundering or predicate crimes to money laundering.
Notwithstanding the foregoing, for so long as Whitestone REIT is a publicly traded real estate
investment trust, the provisions of this Section 3.1.42 shall not apply to the shareholders of
Whitestone REIT and any violation of this Section 3.1.42 by any shareholder of Whitestone
REIT shall not be a default under this Agreement
(b) The Patriot Act requires all financial institutions to obtain, verify and
record certain information that identifies individuals or business entities which open an
"account" with such financial institution. Consequently, Lender may from time-to-time request,
and the Borrower shall provide to Lender, the Borrower's name, address, tax identification
number and/or such other identification information as shall be necessary for Lender to comply
with federal law. An "account" for this purpose may include, without limitation, a deposit
account, cash management service, a transaction or asset account, a credit account, a loan or
other extension of credit, and/or other financial services product.
3.1.43. Intentionally Omitted.
3.1.44. Survival of Representations. The representations and warranties set forth in
Section 3.1 above shall survive for so long as any amount remains payable to Lender under this
Agreement or any of the other Loan Documents.
ARTICLE IV.
BORROWER COVENANTS
Section 4.1. Borrower Affirmative Covenants. Borrower hereby covenants and
agrees with Lender that:
4.1.1. Existence; Compliance with Legal Requirements. Borrower, Guarantor, and
Sponsor shall do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, Licenses, permits, trade names, and franchises, and comply
with all Legal Requirements applicable to it and the Property. Borrower, Guarantor, and
Sponsor shall continue to comply with Legal Requirements relating to OF AC, Embargoed
Persons and the Patriot Act; including without limitation, the provisions of Sections 3.1.41 and
DMEAST #17478116 v7 38
3.1.42 hereof (subject to the express limitations contained therein with respect to shareholders of
Whitestone REIT), throughout the term of the Loan.
4.1.2. Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges now
or hereafter levied or assessed or imposed against the Property or any part thereof prior to
delinquency; provided, however, Borrower's obligation to directly pay Taxes shall be suspended
for so long as Borrower complies with the terms and provisions of Section 6.2 hereof. Borrower
shall furnish to Lender receipts for the payment of the Taxes and the Other Charges prior to the
date the same shall become delinquent; provided, however, that Borrower is not required to
furnish such receipts for payment of Taxes in the event that such Taxes have been paid by
Lender pursuant to Section 6.2 hereof. Borrower shall not permit or suffer and shall promptly
discharge any lien or charge against the Property (except for Permitted Encumbrances), and shall
promptly pay for all utility services provided to the Property. After prior notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding, conducted in good
faith and with due diligence, the amount or validity of any Taxes or Other Charges, provided that
(i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall
be permitted under and be conducted in accordance with all applicable statutes, laws and
ordinances; (iii) neither the Property nor any part thereof or interest therein will be in danger of
being sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon final
determination thereof pay the amount of any such Taxes or Other Charges, together with all
costs, interest and penalties which may be payable in connection therewith; (v) such proceeding
shall suspend the collection of Taxes or Other Charges from the Property; and (vi) Borrower
shall deposit with Lender such security as may be required in the proceeding, or as may be
requested by Lender, in an amount equal to one hundred twenty-five percent (125%) of the
contested amount, to insure the payment of any such Taxes or Other Charges, together with all
interest and penalties thereon. Lender may pay over any such security held by Lender to the
claimant entitled thereto at any time when, in the reasonable judgment of Lender, the entitlement
of such claimant is established.
4.1.3. Litigation. Borrower shall give prompt notice to Lender of any litigation or
governmental proceedings pending or threatened in writing against the Property, Borrower, any
SPC Party, Sponsor, or any Guarantor which might cause a Material Adverse Effect.
4.1.4. Access to Property. Subject to the terms of the applicable Leases, Borrower
shall permit agents, representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice.
4.1.5. Further Assurances; Supplemental Mortgage Mfidavits. Borrower shall, at
Borrower's sole cost and expense:
(a) execute and deliver to Lender such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable, to evidence,
preserve and/or protect the collateral at any time securing or intended to secure the obligations of
Borrower under the Loan Documents, as Lender may reasonably require; and
(b) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the intents and
DMEAST #17478116 v7 39
purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require
from time to time.
4.1.6. Financial Reporting.
(a) Borrower shall keep and maintain or will cause to be kept and maintained
proper and accurate books and records, in accordance with GAAP (or such other accounting
method reasonably approved by Lender), reflecting the financial affairs of Borrower. Lender
shall have the right from time to time during normal business hours upon reasonable notice to
Borrower to examine such books and records at the office of Borrower or other Person
maintaining such books and records and to make such copies or extracts thereof as Lender shall
desire.
(b) Borrower shall furnish Lender annually, within ninety (90) days following
the end of each Fiscal Year, a complete copy of Borrower's annual financial statements audited
by a "Big Four" accounting firm or other independent certified public accountant acceptable to
Lender prepared in accordance with GAAP (or such other accounting method reasonably
approved by Lender), covering the Property, including statements of income and expense and
cash flow for Borrower and the Property and a balance sheet for Borrower; provided, however,
that such financial statements shall not be required to be audited except upon Lender's request
after the occurrence of an Event of Default. Such statements shall set forth Adjusted Net Cash
Flow, Operating Income and Operating Expenses and each of the components thereof.
Borrower's annual financial statements shall be accompanied by a certificate executed by the
chief financial officer of Borrower stating that such annual financial statement presents fairly the
financial condition and the results of operations of Borrower and the Property. Together with
Borrower's annual financial statements, Borrower shall furnish to Lender (i) an Officer's
Certificate certifying as of the date thereof whether to the best of Borrower's knowledge there
exists an event or circumstance which constitutes a Default or Event of Default by Borrower
under the Loan Documents and if such Default or Event of Default exists, the nature thereof, the
period of time it has existed and the action then being taken to remedy the same, (ii) an annual
summary of any and all Capital Expenditures made at the Property during the prior twelve (12)
month period; (iii) a calculation reflecting the Actual Debt Service Coverage Ratio for the prior
twelve (12) month period, and (iv) the Officer's Certificate described in Section 3.1.24(g) hereof.
(c) After Securitization, Borrower will furnish Lender on or before the forty-
fifth (45th) day after the end of each fiscal quarter (based on Borrower's Fiscal Year), the
following items:
(i) a current balance sheet of Borrower and quarterly and year to date
statements of income and expense and cash flow prepared for such quarter with
respect to the Property, and for the corresponding quarter of the previous year,
and a statement of revenues and expenses for the year to date, and a statement of
Adjusted Net Cash Flow for such quarter.
(ii) an Officer's Certificate from the chief financial officer of
Borrower, certifying to the best of the signer's knowledge: (A) that such
statements referred to in (i) above are true, correct, accurate and complete in all
DMEAST #17478116 v7 40
material respects and fairly present the financial condition and results of the
operations of Borrower and the Property in accordance with GAAP, as
applicable:, (B) that as of the date of such Officer's Certificate, no Default exists
under this Agreement or any other Loan Document or, if so, specifying the nature
and status of each such Default and the action then being taken by Borrower or
proposed to be taken to remedy such Default, and (C) a calculation reflecting the
Actual Debt Service Coverage Ratio for the prior twelve (12) month period.
(iii) a current rent roll for the Property; and
(iv) a comparison of the budgeted income and expenses and the actual
income and expenses for such quarter and year to date for the Property, together
with a detailed explanation of any variances of more than five percent (5%)
between budgeted and actual amounts for such period and year to date.
(d) Prior to Securitization, Borrower will furnish Lender on or before the
thirty-fifth (35th) day after the end of each calendar month, the following items:
(i) a current balance sheet of Borrower and monthly and year-to-date
statements of income and expense and cash flow prepared for such month with
respect to the Property, and for the corresponding month of the previous year, and
a statement of revenues and expenses for the year-to-date, and a statement of
Adjusted Net Cash Flow for such month.
(ii) an Officer's Certificate from the chief financial officer of
Borrower, certifying to the best of the signer's knowledge: (A) that such
statements referred to in (i) above are true, correct, accurate and complete in all
material respects and fairly present the financial condition and results of the
operations of Borrower and the Property in accordance with GAAP as applicable;
and (B) that as of the date of such Officer's Certificate, no Default exists under
this Agreement or any other Loan Document or, if so, specifying the nature and
status of each such Default and the action then being taken by Borrower or
proposed to be taken to remedy such Default; and
(iii) a current rent roll for the Property.
(e) Borrower shall submit the Annual Budget to Lender not later than thirty
(30) days prior to the commencement of each Fiscal Year. Lender shall have the right to approve
each Annual Budget acting in its reasonable discretion. Annual Budgets approved by Lender
shall hereinafter be referred to as an "Approved Annual Budget." In the event that Borrower
incurs an extraordinary operating expense or extraordinary capital expenditure not set forth in the
Annual Budget (each, an "Extraordinary Expense"), then Borrower shall promptly deliver to
Lender a reasonably detailed explanation of such proposed Extraordinary Expense for Lender's
approval, not to be unreasonably withheld, conditioned, or delayed.
(f) Borrower shall furnish to Lender any notice received from a Tenant
threatening non-payment of Rent or other default, alleging or acknowledging a default by
landlord, requesting a termination of a Lease or a material modification of any Lease or notifying
DMEAST #17478116 v7 41
Borrower of the exercise or non-exercise of any option provided for in such Tenant's Lease, or
any other similar material correspondence received by Borrower from Tenants during the subject
fiscal quarter.
(g) Borrower shall deliver to Lender, within ten (10) Business Days of the
receipt thereof by Borrower, a copy of all reports prepared by Manager pursuant to the
Management Agreement, including, without limitation, any inspection reports.
(h) Borrower shall furnish to Lender, within five (5) Business Days after
request (or as soon thereafter as may be reasonably possible), such further detailed information
with respect to the operation of the Property and the financial affairs of Borrower as may be
reasonably requested by Lender, including, without limitation, a comparison of the budgeted
income and expenses and the actual income and expenses for a quarter and year to date for the
Property, together with a detailed explanation of any variances of more than the greater of ten
percent (10%) and $5,000 between budgeted and actual amounts for such period and year to
date.
(i) Borrower acknowledges the importance to Lender of the timely delivery
of each of the items required by this Section 4.1.6 (each, a "Required Financial Item" and
collectively, the "Required Financial Items"). In the event Borrower fails to deliver to Lender
any of the Required Financial Items within the time frame specified herein (each such event, a
"Reporting Failure"), in addition to constituting a default hereunder and without limiting
Lender's other rights and remedies with respect to the occurrence of such a default, Borrower
shall pay to Lender the sum of $1,500.00 per occurrence for each Reporting Failure. It shall
constitute a further Event of Default hereunder if any such payment is not received by Lender
within thirty (30) days of the date on which such payment is due, and Lender shall be entitled to
the exercise of all of its rights and remedies provided hereunder.
4.1.7. Title to the Property. Borrower will warrant and defend the validity and priority
of the Lien of the Security Instrument on the Property against the claims of all Persons
whomsoever, subject only to Permitted Encumbrances.
4.1.8. Estoppel Statement.
(a) After request by Lender, Borrower shall within five (5) Business Days
furnish Lender with a statement, duly acknowledged and certified, stating (i) the unpaid principal
amount of the Note, (ii) the Interest Rate of the Note, (iii) the date installments of interest and/or
principal were last paid, (iv) any offsets or defenses to the payment of the Debt, if any, and
(v) that this Agreement and the other Loan Documents have not been modified or if modified,
giving particulars of such modification.
(b) After request by Borrower, provided no Event of Default exists, Lender
shall within ten (10) Business Days furnish Borrower with a statement, duly acknowledged and
certified, stating (i) the unpaid principal amount of the Note, (ii) the Interest Rate of the Note,
(iii) the date installments of interest and/or principal were last paid and (iv) whether or not
Lender has sent any notice of default under the Loan Documents which remains uncured in the
opinion of Lender.
DMEAST #17478116 v7 42
(c) Borrower shall use diligent, good faith efforts to deliver to Lender, upon
request, an estoppel certificate from each party under each Material Agreement and each Tenant
under any Lease (provided that Borrower shall only be required to use commercially reasonable
efforts to obtain an estoppel certificate from any Tenant not required to provide an estoppel
certificate under its Lease); provided that such certificate may be in the form required under such
Material Agreement or Lease; provided, further, that Borrower shall not be required to deliver
such certificates more frequently than two (2) times in any calendar year (other than in
connection with an Event of Default or a Securitization).
4.1.9. Leases.
(a) All Leases and all renewals, extensions, amendments, assignments and
subleases and modifications of Leases executed after the date hereof shall (i) provide for rental
rates comparable to existing local market rates for similar properties, (ii) be on commercially
reasonable terms, (iii) provide that such Lease is subordinate to the Security Instrument and that
the lessee will attorn to Lender and any purchaser at a foreclosure sale, (iv) not contain any terms
which would materially adversely affect Lender's rights under the Loan Documents, (v) be
written substantially in accordance with the standard form of Lease which shall have been
approved by Lender (subject to any commercially-reasonable changes made in the course of
negotiations with the applicable Tenant), (vi) not be to an Affiliate of Borrower or any Borrower
Party, and (vii) not contain any option to purchase, any right of first refusal to purchase, or any
right to terminate (except in the event of the destruction or condemnation of substantially all of
. the Property). All Major Leases and all renewals, extensions, amendments, assignments and
subleases (other than assignments or subleases expressly permitted under any Major Lease
pursuant to a unilateral right of the Tenant thereunder not requiring the consent of Borrower) and
modifications thereof executed after the date hereof shall be subject to Lender's prior approval,
which approval shall not be unreasonably withheld, conditioned, or delayed.
(b) Borrower (i) shall observe and perform the obligations imposed upon the
lessor under the Leases in a commercially reasonable manner; (ii) shall enforce the terms,
covenants and conditions contained in the Leases upon the part of the lessee thereunder to be
observed or performed in a commercially reasonable manner; provided, however, Borrower shall
not terminate or accept a surrender of a Major Lease without Lender's prior approval; (iii) shall
not collect any of the Rents more than one (1) month in advance (other than security deposits);
(iv) shall not execute any assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change any Lease so as to
change the amount of or payment date for rent, change the expiration date, grant any option for
additional space or term, materially reduce the obligations of the lessee or increase the
obligations of lessor; (vi) shall hold all security deposits under all Leases in accordance with
Legal Requirements; and (vii) shall not permit or consent to any assignment or sublease of any
Major Lease without Lender's prior written approval (other than assignments or subleases
expressly permitted under any Major Lease pursuant to a unilateral right of the Tenant
thereunder not requiring the consent of Borrower) such approval not to be unreasonably
withheld, conditioned, or delayed. Upon request, Borrower shall furnish Lender with executed
copies of all Leases.
DMEAST #17478116 v7 43
(c) Borrower agrees to promptly furnish to Lender all material written
correspondence received from Tenants (including notices of default) or prospective Tenants
concerning existing and/or prospective Leases, and notwithstanding anything contained herein to
the contrary, Borrower shall not willfully withhold from Lender any information regarding
renewal, extension, amendment, modification, waiver of provisions of, termination, rental
reduction of, surrender of space of, or shortening of the term of, any Lease during the term of the
Loan. Borrower further agrees to provide Lender with written notice of a Tenant "going dark"
under such Tenant's Lease within five (5) Business Days after such Tenant "goes dark" and
Borrower's failure to provide such notice shall constitute an Event of Default.
(d) Borrower shall notify Lender in writing, within two (2) Business Days
following receipt thereof, of Borrower's receipt of any Lease Termination Fee paid by any
Tenant under any Lease, and Borrower further covenants and agrees that Borrower shall deposit
such Lease Termination Fee with Lender in accordance with Section 6.6 hereof.
(e) Notwithstanding anything to the contrary contained herein, to the extent
Lender's prior approval is required for any leasing matters set forth in this Section 4.1.9, Lender
shall have ten (10) Business Days from receipt of written request and all required information
and documentation relating thereto in which to approve or disapprove such matter, provided that
such request to Lender is marked in bold lettering with the following language: "LENDER'S
RESPONSE IS REQUIRED WITHIN TEN (1 0) BUSINESS DAYS OF RECEIPT OF THIS
NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE
UNDERSIGNED AND LENDER" and the envelope containing the request must be marked
"PRIORITY". In the event that Lender fails to respond to the leasing matter in question within
such time, Lender's approval shall be deemed given for all purposes. Borrower shall provide
Lender with such information and documentation as may be reasonably required by Lender,
including, without limitation, lease comparables and other market information as reasonably
required by Lender.
4.1.10. Alterations. Lender's prior approval shall be required in connection with any
alterations to any Improvements (except tenant improvements under any Lease approved by
Lender), (a) that may have a Material Adverse Effect, (b) the cost of which (including any
related alteration, improvement or replacement) is reasonably anticipated to exceed the
Alteration Threshold or (c) that are structural in nature, which approval may be granted or
withheld in Lender's sole discretion. If the total unpaid amounts incurred and to be incurred
with respect to such alterations to the Improvements shall at any time exceed the Alteration
Threshold, Borrower shall promptly deliver to Lender as security for the payment of such
amounts and as additional security for Borrower's obligations under the Loan Documents any of
the following: (i) cash, (ii) Letters of Credit, (iii) U.S. Obligations, (iv) other securities
acceptable to Lender, such approval by Lender may include (pursuant to the Prudent Lender
Standard) a Rating Agency Confirmation, or (v) a completion bond, acceptable to Lender, such
approval by Lender may include (pursuant to the Prudent Lender Standard) a Rating Agency
Confirmation. Such security shall be in an amount equal to the excess of the total unpaid
amounts incurred and to be incurred with respect to such alterations to the Improvements (other
than such amounts to be paid or reimbursed by Tenants under the Leases) over the Alteration
Threshold. Except as expressly set forth above, Lender's prior approval is not required for
alterations to any Improvements.
DMEAST #17478116 v7 44
4.1.11. Intentionally omitted.
4.1.12. Material Agreements. Borrower shall (i) promptly perform and/or observe, in
all material respects, all of the covenants and agreements required to be performed and observed
by it under the Material Agreements and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify Lender of any material default
under the Material Agreements of which it is aware; (iii) promptly deliver to Lender a copy of
each financial statement, business plan, capital expenditures plan, material notice, material report
and material estimate received by it under the Material Agreements; (iv) enforce the performance
and observance of all of the covenants and agreements required to be performed and/or observed
under the Material Agreements in a commercially reasonable manner; (v) cause the Property to
be operated, in all material respects, in accordance with the Material Agreements; and (vi) not,
without the prior written consent of Lender, such consent to be unreasonably withheld,
conditioned, or delayed, (A) enter into any new Material Agreement or execute modifications to ·
any existing Material Agreements, (B) surrender, terminate or cancel any Material Agreement,
(C) reduce or consent to the reduction of the term of the Material Agreements, (D) increase or
consent to the increase of the amount of any charges under the Material Agreements in any
material respect, (E) otherwise modify, change, supplement, alter or amend, or waive or release
any of its rights and remedies under, the Material Agreements in any material respect or (F)
following the occurrence and during the continuance of an Event of Default, make any major
decisions, grant any material approvals or otherwise take any material action under the Material
Agreements.
4.1.13. Performance by Borrower. Borrower shall in a timely manner observe, perform
and fulfill each and every covenant, term and provision of each Loan Document executed and
delivered by Borrower, and shall not enter into or otherwise suffer or permit any amendment,
waiver, supplement, termination or other modification of any Loan Document executed and
delivered by Borrower without the prior consent of Lender.
4.1.14. Costs of Enforcement/Remedying Defaults. In the event (a) that the Security
Instrument is foreclosed in whole or in part or the Note or any other Loan Document is put into
the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any
Lien or mortgage prior to or subsequent to the Security Instrument, (c) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Borrower or Guarantor or an
assignment by Borrower or Guarantor for the benefit of its creditors, or (d) Lender shall remedy
or attempt to remedy any Event of Default hereunder, Borrower shall be chargeable with and
agrees to pay all costs incurred by Lender as a result thereof, including costs of collection and
defense (including reasonable attorneys', experts', consultants' and witnesses' fees and
disbursements) in connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable on demand, together with
interest thereon from the date incurred by Lender at the Default Rate, and together with all
required service or use taxes.
4.1.15. Business and Operations. Borrower will continue to engage in the businesses
currently conducted by it as and to the extent the same are necessary for the ownership and
leasing of the Property. Borrower will qualify to do business and will remain in good standing
under the laws of each jurisdiction as and to the extent the same are required for the ownership
DMEAST #17478116 v7 45
and leasing of the Property. Borrower shall at all times cause the Property to be maintained as a
rental office building.
4.1.16. Loan Fees. Borrower shall pay all fees and costs (including, without limitation,
all origination and commitment fees) required of Borrower pursuant to the terms of that certain
application letter between Whitestone REIT and Xxxxxx Xxxxxxx Mortgage Capital Holdings
LLC, dated August 9, 2013.
4.1.17. Intentionally Omitted.
4.1.18. Intentionally Omitted.
4.1.19. Required Repairs. Borrower shall perform the repairs at the Property as set forth
on Schedule II hereto (such repairs hereinafter referred to as "Required Repairs") and shall
complete each of the Required Repairs on or before the respective deadline for each repair as set
forth on Schedule II.
4.1.20. Maintenance of Property. Borrower shall cause the Property to be maintained
in good and safe working order and repair, reasonable wear and tear excepted, and in keeping
with the condition and repair of properties of a similar use, value, age, nature and construction.
Borrower shall not use, maintain or operate the Property in any manner that constitutes a public
or private nuisance or that makes void, voidable, or cancelable, or increases the premium of, any
insurance then in force with respect thereto. Borrower shall from time to time make, or cause to
be made, all reasonably necessary and desirable repairs, renewals, replacements, betterments and
improvements to the Property. Borrower shall not make any change in the use of the Property
that would materially increase the risk of fire or other hazard arising out of the operation of the
Property, or do or permit to be done thereon anything that may in any way impair the value of
the Property in any material respect or the Lien of the Security Instrument. Borrower shall not,
without the prior written consent of Lender, permit any drilling or exploration for or extraction,
removal, or production of any minerals from the surface or the subsurface of the Property,
regardless of the depth thereof or the method of mining or extraction thereof.
4.1.21. Permitted Equipment Leases. Borrower shall comply with all terms and
provisions of each Permitted Equipment Lease in all material respects and shall keep all
Permitted Equipment Leases in full force and effect (except for worn out or obsolete items
replaced by Borrower) so long as any portion of the Debt remains outstanding. Any security
interest arising from the Permitted Equipment Leases shall be limited solely to the collateral
leased therein.
Section 4.2. Borrower Negative Covenants. Borrower covenants and agrees with
Lender that:
4.2.1. Due on Sale and Encumbrance; Transfers of Interests.
(a) Except as otherwise expressly permitted pursuant to and in accordance
with the terms of Article 8 hereof, without the prior written consent of Lender, neither Borrower
nor any other Person having a direct or indirect ownership or beneficial interest in Borrower
shall sell, convey, mortgage, grant, bargain, encumber, pledge, Lien, assign or transfer any
DMEAST #17478116 v7 46
interest, direct or indirect, in a Restricted Party, the Property or any part thereof, whether
voluntarily or involuntarily, in violation of the covenants and conditions set forth in the Security
Instrument and this Agreement (collectively, "Prohibited Transfer").
(b) A Prohibited Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for
a price to be paid in installments; (ii) an agreement by Borrower leasing all or a substantial part
of the Property for other than actual occupancy by a Tenant thereunder or a sale, assignment or
other transfer of, or the grant of a security interest in, Borrower's right, title and interest in and to
any Leases or any Rents; (iii) if a Restricted Party is a corporation, any merger, consolidation or
Sale or Pledge of such corporation's stock or the creation or issuance of new stock in one or a
series of transactions; (iv) if a Restricted Party is a limited or general partnership or joint venture,
any merger or consolidation or the change, removal, resignation or addition of a general partner
or the Sale or Pledge of the partnership interest of any general or limited partner or any profits or
proceeds relating to such partnership interests or the creation or issuance of new limited
partnership interests; (v) if a Restricted Party is a limited liability company, any merger or
consolidation or the change, removal, resignation or addition of a managing member or non
member manager (or if no managing member, any member) or the Sale or Pledge of the
membership interest of any member or any profits or proceeds relating to such membership
interest; (vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation or the
Sale or Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance
of new legal or beneficial interests; (vii) the removal or the resignation of Manager (including,
without limitation, an Affiliated Manager) other than in accordance with Section 7.3 hereof;
(viii) any action for partition of the Property (or any portion thereof or interest therein) or any
similar action instituted or prosecuted by Borrower or by any other person or entity, pursuant to
any contractual agreement or other instrument or under applicable law (including, without
limitation, common law) and/or (ix) any other action instituted by (or at the behest of) Borrower
or its Affiliates or consented to or acquiesced in by Borrower or its Affiliates which results in a
termination of any REA or any Material Agreements, which termination causes a Material
Adverse Effect.
(c) Lender reserves the right to condition the consent to a Prohibited Transfer
requested hereunder upon (a) a modification of the terms hereof and an assumption of this
Agreement and the other Loan Documents as so modified by the proposed Prohibited Transfer,
(b) payment of a transfer fee of 1% of outstanding principal balance of the Loan and all of
Lender's expenses incurred in connection with such Prohibited Transfer, (c) if required by
Lender, receipt of a Rating Agency Confirmation with respect to the Prohibited Transfer, (d) the
proposed transferee's continued compliance with the covenants set forth in this Agreement,
including, without limitation, the covenants in Sections 3.1.24 and 4.2.11 hereof, (e) omitted,
(f) the ability of the transferee to satisfy Lender's then current underwriting standards, (g) an
opinion satisfactory to Lender that the Prohibited Transaction will not cause an Adverse REMIC
Event and/or (h) such other conditions and/or legal opinions as Lender shall determine in its sole
discretion to be in the interest of Lender. All expenses incurred by Lender shall be payable by
Borrower whether or not Lender consents to the Prohibited Transfer. Lender shall not be
required to demonstrate any actual impairment of its security or any increased risk of default
hereunder in order to declare the Debt immediately due and payable upon a Prohibited Transfer
DMEAST #17478116 v7 47
without Lender's consent. This provision shall apply to every Prohibited Transfer, whether or
not Lender has consented to any previous Prohibited Transfer.
4.2.2. Intentionally Omitted.
4.2.3. Dissolution. Borrower shall not (i) engage in any dissolution, liquidation or
consolidation or merger with or into any other business entity, (ii) engage in any business
activity not related to the ownership and operation of the Property, (iii) transfer, lease or sell, in
one transaction or any combination of transactions, all or substantially all of the property or
assets of Borrower except to the extent expressly permitted by the Loan Documents, or
(iv) cause, permit or suffer any SPC Party to (A) dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which such SPC Party would be dissolved, wound
up or liquidated in whole or in part, or (B) amend, modify, waive or terminate the certificate of
incorporation or bylaws of such SPC Party, in each case without obtaining the prior consent of
Lender.
4.2.4. Change in Business. Borrower shall not enter into any line of business other
than the ownership and operation of the Property.
4.2.5. Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any
claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by
any Person, except for adequate consideration and in the ordinary course of Borrower's business.
4.2.6. Distributions. Borrower agrees that there shall be no distributions· to any of its
direct or indirect owners (legal or beneficial) until Borrower satisfies all of its then current due
and payable obligations hereunder and under the other Loan Documents, including without
limitation, Borrower's obligation to pay Debt Service, deposits into Reserve Funds, maintenance
costs, and Operating Expenses.
4.2.7. Zoning. Borrower shall not initiate or consent to any zoning reclassification of
any portion of the Property or seek any variance under any existing zoning ordinance or use or
permit the use of any portion of the Property in any manner that could result in such use
becoming a non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
4.2.8. Intentionally omitted.
4.2.9. No Joint Assessment. Borrower shall not suffer, permit or initiate the joint
assessment of the Property (i) with any other real property constituting a tax lot separate from the
Property, and (ii) with any portion of the Property which may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the Property.
4.2.10. Principal Place of Business. Borrower shall not (i) change its principal place of
business or name from the address and name set forth in the introductory paragraph hereof
without, in each instance, (A) without first giving Lender thirty (30) days' prior notice and
(B) taking all action required by Lender for the purpose of perfecting or protecting the Lien and
security interest of Lender created pursuant to this Agreement and the other Loan Documents or
DMEAST #17478116 v7 48
(ii) change its organizational structure without (A) obtaining the prior written consent of Lender
and (B) taking all action required by Lender for the purpose of perfecting or protecting the Lien
and security interest of Lender created pursuant to this Agreement and the other Loan
Documents. At the request of Lender, Borrower shall execute a certificate in form reasonably
satisfactory to Lender listing the trade names under which Borrower intends to operate the
Property, and representing and warranting that Borrower does business under no other trade
name with respect to the Property.
4.2.11. ERISA.
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender of any of its
rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a
statutory or administrative exemption) prohibited transaction under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or constitute a violation of any state
statute, regulation or ruling impacting a Defined Benefit Plan or a governmental plan.
(b) Borrower shall deliver to Lender such certifications or other evidence
from time to time throughout the term of the Loan, as requested by Lender in its sole discretion,
that (A) Borrower is not an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a "governmental plan" within the meaning of Section 3(32) of
ERISA; (B) Borrower is not subject to any state statute, regulation or ruling regulating
investments of, or fiduciary obligations with respect to, governmental plans; and (C) one or more
of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered securities, within
the meaning of 29 C.F.R. §2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower is held by "benefit plan investors" within the
meaning of 29 C.F.R. §2510.3-101(£)(2), as modified by ERISA Section 3(42),
disregarding the value of any equity interests in Borrower held by (I) a person
(other than a benefit plan investor) who has discretionary authority or control with
respect to the assets of Borrower, (II) any person who provides investment advice
for a fee (direct or indirect) with respect to the assets of Borrower, or (III) any
affiliate of a person described in the immediately preceding clause (I) or (II);
(iii) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of29 C.F.R. §2510.3-101(c) or (e);
(iv) The assets of Borrower are not otherwise "plan assets" of one or
more "employee benefit plans" (as defined in Section 3(3) of ERISA) subject to
Title I of ERISA, within the meaning of 29 C.F.R. §2510.3-101., as modified by
ERISA Section 3(42); or
(v) If a state statute, regulation or ruling does apply to transactions by
or with Borrower regulating investments of, or fiduciary obligations with respect
DMEAST #17478116 v7 49
to, governmental plans, no transactions contemplated by the Loan Documents will
violate such statute, regulation or ruling.
(c) Borrower shall not maintain, sponsor, contribute to or become obligated to
contribute to, or suffer or permit any Employee Benefit Affiliate of Borrower to, maintain,
sponsor, contribute to or become obligated to contribute to, any Defined Benefit Plan or a
Multiemployer Plan or permit the assets of Borrower to (i) become "plan assets", whether by
operation of law or under regulations promulgated under ERISA or (ii) become subject to any
state statute, regulation or ruling regulating investments of, or fiduciary obligations with respect
to, governmental plans.
4.2.12. Intentionally Omitted.
4.2.13. Intentionally Omitted.
ARTICLEV.
INSURANCE, CASUALTY AND CONDEMNATION
Section 5.1. Insurance.
5.1.1. Insurance Policies.
(a) Borrower shall obtain and maintain, or cause to be maintained, insurance
for Borrower and the Property providing at least the following coverages:
(i) comprehensive all risk insurance, including the peril of windstorm,
on the Improvements and the personal property at the Property, and contingent
liability from Operation of Building Laws, Demolition Costs and Increased Cost
of Construction Endorsements (if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or uses), in
each case (A) in an amount equal to one hundred percent (100%) of the "Full
Replacement Cost," which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation; (B) containing an agreed
amount endorsement with respect to the Improvements and personal property at
the Property waiving all co-insurance provisions; and (C) providing for no
deductible in excess of Twenty Five Thousand and No/100 Dollars ($25,000) for
all such insurance coverage, except for perils of windstorm, earthquake and flood,
which deductible shall not exceed five percent (5%) of total insurable value per
loss. In addition, Borrower shall obtain: (x) if any portion of the Improvements is
currently or at any time in the future located in a federally designated "special
flood hazard area," flood hazard insurance in an amount equal to the maximum
amount of such insurance available under the National Flood Insurance Act of
1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance
Reform Act of 1994, as each may be amended or such greater amount as Lender
shall require; and (y) earthquake insurance in amounts and in form and substance
satisfactory to Lender in the event the Property is located in an area with a high
degree of seismic activity, provided that the insurance pursuant to clauses (x)and
DMEAST #17478116 v7 50
(y) hereof shall be on terms consistent with the comprehensive all risk insurance
policy required under this subsection (i).
(ii) commercial general liability insurance against claims for personal
injury, bodily injury, death or property damage occurring upon, in or about the
Property, such insurance (A) to be on the so-called "occurrence" form with a
combined limit, excluding umbrella coverage, of not less than Two Million and
No/100 Dollars ($2,000,000) and a per occurrence limit of no less than
$1 ,000,000; (B) to continue at not less than the aforesaid limit until required to be
changed by Lender by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards:
(1) premises and operations; (2) products and completed operations on an "if any"
basis; (3) independent contractors; ( 4) blanket contractual liability for all
insurable contracts; and (5) contractual liability covering the indemnities
contained in Section 11.13 hereof to the extent the same is available;
(iii) business income insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for in
subsection (i) above for a period commencing at the time of loss for such length
of time as it takes to repair or replace with the exercise of due diligence and
dispatch; (C) containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and Personal Property
has been repaired, the continued loss of income will be insureq until such income
either returns to the same level it was at prior to the loss, or the expiration of
twelve (12) months from the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) in an amount equal to
one hundred percent (100%) of the projected gross income from the Property for a
period from the date of loss to a date (assuming total destruction) which is twelve
(12) months from the date that the Property is repaired or replaced and operations
are resumed. The amount of such business income insurance shall be determined
prior to the date hereof and at least once each year thereafter based on Borrower's
reasonable estimate of the gross income from the Property for the succeeding
twelve (12) month period. All proceeds payable to Lender pursuant to this
subsection shall be held by Lender and shall be applied to the obligations secured
by the Loan Documents from time to time due and payable hereunder and under
the Note; provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to pay the obligations secured by the Loan
Documents on the respective dates of payment provided for in the Note and the
other Loan Documents except to the extent such amounts are actually paid out of
the proceeds of such business income insurance;
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if the
Property coverage form does not otherwise apply, (A) owner's contingent or
protective liability insurance covering claims not covered by or under the terms or
provisions of the above mentioned commercial general liability insurance policy;
DMEAST #17478116 v7 51
and (B) the insurance provided for in subsection (i) above written in a so-called
builder's risk completed value form (1) on a non-reporting basis, (2) against all
risks insured against pursuant to subsection (i) above, (3) including permission to
occupy the Property, and (4) with an agreed amount endorsement waiving
co-insurance provisiOns;
(v) workers' compensation, subject to the statutory limits of the State,
and employer's liability insurance with a limit of at least one Million and No/100
Dollars ($1 ,000,000) per accident and per disease per employee, and one Million
and No/100 Dollars ($1,000,000) for disease aggregate in respect of any work or
operations on or about the Property, or in connection with the Property or its
operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with the
commercial property insurance policy required under subsection (i) above;
(vii) umbrella liability insurance in addition to primary coverage in an
amount not less than Five Million and No/100 Dollars ($5,000,000) per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above and (viii) below;
(viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence, including umbrella coverage, of One Million and No/100 Dollars
($1,000,000);
(ix) so-called "dramshop" insurance or other liability insurance
required in connection with the sale of alcoholic beverages, if applicable;
(x) insurance against employee dishonesty, if applicable, in an amount
not less than one (1) month of gross revenue from the Property and with a
deductible not greater than Ten Thousand and No/100 Dollars ($10,000), if
applicable;
(xi) if "acts of terrorism" or other similar acts or events or "fire
following" are hereafter excluded from Borrower's comprehensive all risk
insurance policy or policies required under Sections 5.l.l(a)(i) and 5.l.l(a)(iii)
above, Borrower shall obtain an endorsement to such policy or policies, or a
separate policy from an insurance provider which maintains at least an investment
grade rating from (1) S&P (that is, "BBB"), and (2) if Fitch and/or Xxxxx'x has
been designated by Lender in connection with the Securitization and such Rating
Agency also rates the insurer, Fitch (that is, "BBB") and Xxxxx'x (that is,
"Baa3"), as applicable, insuring against all such excluded acts or events and "fire
following," to the extent such policy or endorsement is available, in an amount
determined by Lender in its sole discretion (but in no event more than an amount
equal to the sum of 100% of the "Full Replacement Cost" and twelve (12) months
DMEAST #17478116 v7 52
business interruption insurance); provided, such endorsement or policy shall be in
form and substance satisfactory to Lender. Notwithstanding the foregoing, for so
long as the Terrorism Risk Insurance Act of 2002, as extended and modified by
the Terrorism Risk Insurance Program Reauthorization Act of 2007 ("TRIPRA")
is in effect (including any extensions thereof or if another federal governmental
program is in effect relating to "acts of terrorism" which provides substantially
similar protections as TRIPRA), Lender shall accept terrorism insurance which
covers against "covered acts" as defined by TRIPRA (or such other program) as
full compliance with this Section 5.1.1(a)(xi) as it relates to the risks that are
required to be covered hereunder but only in the event that TRIPRA (or such
other program) continues to cover both domestic and foreign acts of terrorism;
and
(xii) upon sixty (60) days' notice, such other reasonable insurance and
in such reasonable amounts as Lender from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for property similar to the Property located in or around the region in
which the Property is located.
(b) All insurance provided for in Section 5.1.1(a) above shall be obtained
under valid and enforceable policies (collectively, the "Policies" or, in the singular, the "Policy")
and, to the extent not specified above, shall be subject to the approval of Lender as to
.deductibles, loss payees and insureds. Not less than ten (10) days prior to the expiration dates of
the Policies theretofore furnished to Lender, certificates of insurance satisfactory to Lender
evidencing the Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by Borrower to
Lender.
(c) Any blanket insurance Policy (which may include coverage required under
Section 5.1.1(a)(xi)) above) shall provide the same protection as would a separate Policy
insuring only the Property in compliance with the provisions of Section 5.1.1(a) above. Without
limitation of any provision hereof, (i) Lender's consent required hereunder with respect to any
blanket policy shall include the schedule of locations and values with respect to the same and
(ii) any blanket Policy shall specifically allocate to the Property the amount of coverage from
time to time required hereunder.
(d) All Policies of insurance provided for or contemplated by Section 5 .1.1 (a)
above shall be primary coverage and, except for the Policy referenced in Section 5.1.1(a)(v)
above, shall name Borrower as the insured and Lender and its successors and/or assigns as the
additional insured, as its interests may appear, and in the case of property damage, boiler and
machinery, flood, earthquake and terrorism insurance, shall contain a so-called New York
standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder
shall be payable to Lender. Borrower shall not procure or permit any of its constituent entities to
procure any other insurance coverage which would be on the same level of payment as the
Policies or would adversely impact in any way the ability of Lender or Borrower to collect any
proceeds under any of the Policies.
DMEAST #17478116 v7 53
(e) All Policies of insurance provided for in Section 5 .1.1 (a) above, except for
the Policies referenced in Section 5.1.1(a)(v) and (a)(viii) above, shall contain clauses or
endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for Borrower,
or of any Tenant or other occupant, or failure to comply with the provisions of
any Policy, which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of the insurance
insofar as Lender is concerned;
(ii) the Policy shall not be canceled without at least thirty (30) days'
written notice to Lender and any other party named therein as an additional
insured and, if obtainable by Borrower using commercially reasonable efforts,
shall not be materially changed (other than to increase the coverage provided
thereby) without such a thirty (30) day notice;
(iii) Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments thereunder; and
(iv) the Policies shall not exclude coverage for acts of terror or similar
acts of sabotage.
(f) If at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall have the· right, without notice to
Borrower, to take such action as Lender deems necessary to protect its interest in the Property,
including, without limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate and all premiums or other expenses incurred by Lender in
connection with such action or in obtaining such insurance and keeping it in effect shall be paid
by Borrower to Lender upon demand and until paid shall be secured by the Security Instrument
and shall bear interest at the Default Rate.
(g) In the event of foreclosure of the Security Instrument or other transfer of
title to the Property in extinguishment in whole or in part of the Debt, all right, title and interest
of Borrower in and to the Policies that are not blanket Policies then in force concerning the
Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer of title.
5.1.2. Insurance Company. The Policies shall be issued by financially sound and
responsible insurance companies authorized to do business in the State and having an insurer
financial strength rating of "A-" or better by S&P and Fitch and an insurer financial strength
rating of "A3" by Moody's. If a Securitization occurs, (i) the foregoing required insurance
company rating by a Rating Agency not designated by Lender in connection with such
Securitization shall be disregarded, and (ii) if the insurance company complies with the aforesaid
S&P required rating (and S&P is designated by Lender in connection with such Securitization)
and the other Rating Agencies designated by Lender in connection with such Securitization do
not rate the insurance company, such insurance company shall be deemed acceptable by such
Rating Agency not rating such insurance company. Notwithstanding the foregoing, Borrower
DMEAST #17478116 v7 54
shall be permitted to (1) maintain the Policies with insurance companies which do not meet the
foregoing requirements (an "Otherwise Rated Insurer"), provided Borrower obtains a "cut
through" endorsement (that is, an endorsement which permits recovery against the provider of
such endorsement) with respect to any Otherwise Rated Insurer from an insurance company
which meets the following insurer financial strength ratings: (x) "A" by S&P and Fitch, and
(y) "A2" by Moody's (the "Other Required Ratings"), and/or (2) maintain insurance required
hereunder from an Otherwise Rated Insurer provided the parent of such Otherwise Rated Insurer,
which owns at least fifty one percent (51%) of such Otherwise Rated Insurer, maintains such
Other Required Ratings and such Otherwise Rated Insurer is otherwise approved by the Rating
Agencies (such approval may be conditioned on items required by the Rating Agencies including
a requirement that the parent guarantee the obligations of such Otherwise Rated Insurer).
Section 5.2. Casualty and Condemnation.
5.2.1. Casualty. If the Property shall sustain a Casualty, Borrower shall give prompt
notice of such Casualty to Lender and shall promptly commence and diligently prosecute to
completion the repair and restoration of the Property as nearly as possible to the condition the
Property was in immediately prior to such Casualty (a "Restoration") and otherwise in
accordance with Section 5.3, it being understood, however, that Borrower shall not be obligated
to restore the Property to the precise condition of the Property prior to such Casualty provided
the Property is restored, to the extent practicable, to be of at least equal value and of substantially
the same character as prior to the Casualty. Borrower shall pay all costs of such Restoration
whether or not such costs are covered by insurance. Lender may, but shall not be obligated to,
make proof of loss if not made promptly by Borrower. In the event of a Casualty where the loss
does not exceed Restoration Threshold, Borrower may settle and adjust such claim; provided that
(a) no Event of Default has occurred and is continuing and (b) such adjustment is carried out in a
commercially reasonable and timely manner. In the event of a Casualty where the loss exceeds
the Restoration Threshold or if an Event of Default then exists, Borrower may settle and adjust
such claim only with the consent of Lender (which consent shall not be umeasonably withheld or
delayed) and Lender shall have the opportunity to participate, at Borrower's cost, in any such
adjustments. Notwithstanding any Casualty, Borrower shall continue to pay the Debt at the time
and in the manner provided for its payment in the Note and in this Agreement.
5.2.2. Condemnation. Borrower shall give Lender prompt notice of any actual or
threatened Condemnation by any Governmental Authority of all or any part of the Property and
shall deliver to Lender a copy of any and all papers served in connection with such proceedings.
Provided no Event of Defqult has occurred and is continuing, in the event of a Condemnation
where the amount of the taking does not exceed the Restoration Threshold, Borrower may settle
and compromise such Condemnation; provided that the same is effected in a commercially
reasonable and timely manner. In the event of a Condemnation where the amount of the taking
exceeds the Restoration Threshold or if an Event of Default then exists, Borrower may settle and
compromise the Condemnation only with the consent of Lender (which consent shall not be
unreasonably withheld or delayed) and Lender shall have the opportunity to participate, at
Borrower's cost, in any litigation and settlement discussions in respect thereof and Borrower
shall from time to time deliver to Lender all instruments requested by Lender to permit such
participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on
DMEAST #17478116 v7 55
or defense of any such proceedings. Notwithstanding any Condemnation, Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment in the Note and
in this Agreement. Lender shall not be limited to the interest paid on the Award by any
Governmental Authority but shall be entitled to receive out of the Award interest at the rate or
rates provided herein or in the Note. If the Property or any portion thereof is taken by any
Governmental Authority, Borrower shall promptly commence and diligently prosecute the
Restoration of the Property and otherwise comply with the provisions of Section 5.3 hereof. If
the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the
Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have
been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the
Debt.
5.2.3. Casualty Proceeds. Notwithstanding the last sentence of Section 5.1.1(a)(iii)
above and provided no Event of Default exists hereunder, proceeds received by Lender on
account of the business interruption insurance specified in Section 5.1.1 (a)(iii) above with
respect to any Casualty shall be deposited by Lender directly into the Deposit Account (as
defined in the Cash Management Agreement) but (a) only to the extent it reflects a replacement
for (i) lost Rents that would have been due under Leases existing on the date of such Casualty,
and/or (ii) lost Rents under Leases that had not yet been executed and delivered at the time of
such Casualty which Borrower has proven to the insurance company would have been due under
such Leases (and then only to the extent such proceeds disbursed by the insurance company
reflect a replacement for such past due Rents) and (b) only to the extent necessary to fully make
the disbursements required by Section 5(b )(i) through (viii) of the Cash Management Agreement.
All other such proceeds shall be held by Lender and disbursed in accordance with Section 5.3
hereof.
Section 5.3. Delivery of Net Proceeds.
5.3.1. Minor Casualty or Condemnation. If a Casualty or Condemnation has occurred
to the Property and the Net Proceeds shall be less than the Restoration Threshold and the costs of
completing the Restoration shall be less than the Restoration Threshold, and provided the
conditions set forth in Section 5.3.2(a)(i) through ill below have been met, the Net Proceeds will
be disbursed by Lender to Borrower. Promptly after receipt of the Net Proceeds, Borrower shall
commence and satisfactorily complete with due diligence the Restoration in accordance with the
terms of this Agreement. If any Net Proceeds are received by Borrower and may be retained by
Borrower pursuant to the terms hereof, such Net Proceeds shall, until completion of the
Restoration, be held in trust for Lender and shall be segregated from other funds of Borrower to
be used to pay for the cost of Restoration in accordance with the terms hereof.
5.3.2. Major Casualty or Condemnation.
(a) If a Casualty or Condemnation has occurred to the Property and the Net
Proceeds are equal to or greater than the Restoration Threshold or the costs of completing the
Restoration is equal to or greater than the Restoration Threshold, Lender shall make the Net
Proceeds available for the Restoration, provided that each of the following conditions are met:
(i) no Event of Default shall have occurred and be continuing;
DMEAST #17478116 v7 56
(ii) (A) in the event the Net Proceeds are insurance proceeds, less than
thirty percent (30%) of each of the (i) fair market value of the Property as
reasonably determined by Lender and (ii) rentable area of the Property has been
damaged, destroyed or rendered unusable as a result of such Casualty or (B) in the
event the Net Proceeds are an Award, less than fifteen percent (15%) of each of
the (i) fair market value of the Property as reasonably determined by Lender, and
(ii) rentable area of the Property has been taken, and such land is located along the
perimeter or periphery of the Property, and no portion of the Improvements is the
subject of the Condemnation;
(iii) Leases requiring payment of annual rent equal to eighty percent
(80%) of the Operating Income received by Borrower during the twelve (12)
month period immediately preceding the Casualty or Condemnation and all Major
Leases and any REAs shall remain in full force and effect during and after the
completion of the Restoration without abatement of rent beyond the time required
for Restoration, notwithstanding the occurrence of such Casualty or
Condemnation;
(iv) Borrower shall commence the Restoration as soon as reasonably
practicable (but in no event later than sixty (60) days after such Casualty or
Condemnation, whichever the case may be, occurs) and shall diligently pursue the
same to satisfactory completion;
(v) Lender shall be satisfied that any operating deficits and all
payments of principal and interest under the Note will be paid during the period
required for Restoration from (A) the Net Proceeds, or (B) other funds of
Borrower;
(vi) Lender shall be satisfied that the Restoration will be completed on
or before the earliest to occur of (A) the date six (6) months prior to the Maturity
Date, (B) the earliest date required for such completion under the terms of any
Major Lease, Material Agreement and REA, (C) such time as may be required
under applicable Legal Requirements in order to repair and restore the Property to
the condition it was in immediately prior to such Casualty or to as nearly as
possible the condition it was in immediately prior to such Condemnation, as
applicable or (D) the expiration of the insurance coverage referred to in Section
5.l.l(a)(iii);
(vii) the Property and the use thereof after the Restoration will be in
compliance with and permitted under all applicable Legal Requirements and in
material compliance with any Major Lease or Material Agreement;
(viii) the Restoration shall be done and completed by Borrower in an
expeditious and diligent fashion and in compliance with all applicable Legal
Requirements and the requirements in material compliance with any Major Lease
or Material Agreement;
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(ix) such Casualty or Condemnation, as applicable, does not result in
the loss of access to the Property or the related Improvements; and
(x) with respect to a Condemnation, Lender shall be satisfied that
making the Net Proceeds available for Restoration shall be permitted pursuant to
REMIC Requirements.
(b) The Net Proceeds shall be paid directly to Lender and held by Lender in
an interest-bearing account and, until disbursed in accordance with the provisions of this Section
5.3.2, shall constitute additional security for the Debt. The Net Proceeds including all interest
earned thereof, shall be disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all
requirements set forth in Section 5.3.2(a) hereof have been satisfied, (B) all materials installed
and work and labor performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the Restoration have been paid for in full, and
(C) there exist no notices of pendency, stop orders, mechanic's or materialman's liens or notices
of intention to file same, or any other liens or encumbrances of any nature whatsoever on the
Property arising out of the Restoration which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance Policy.
(c) All plans and specifications required in connection with the Restoration
shall be subject to prior approval of Lender and an independent architect selected by Lender (the
"Casualty Consultant"). The plans and specifications shall require that the Restoration be
completed in a first-class workmanlike manner at least equivalent to the quality and character of
the original work in the Improvements (provided, however, that in the case of a partial
Condemnation, the Restoration shall be done to the extent reasonably practicable after taking
into account the consequences of such partial Condemnation), so that upon completion thereof,
the Property shall be at least equal in value and general utility to the Property prior to the damage
or destruction; it being understood, however, that Borrower shall not be obligated to restore the
Property to the precise condition of the Property prior to such Casualty provided the Property is
restored, to the extent practicable, to be of at least equal value and of substantially the same
character as prior to the Casualty. Borrower shall restore all Improvements such that when they
are fully restored and/or repaired, such Improvements and their contemplated use fully comply
with all applicable material Legal Requirements and the material requirements of any Major
Lease. The identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been engaged, shall be subject to
approval of Lender and the Casualty Consultant. All costs and expenses incurred by Lender in
connection with recovering, holding and advancing the Net Proceeds for the Restoration
including, without limitation, reasonable attorneys' fees and disbursements and the Casualty
Consultant's fees and disbursements, shall be paid by Borrower.
(d) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time to time for work
in place as part of the Restoration, as certified by the Casualty Consultant, less the Casualty
Retainage. The term "Casualty Retainage" shall mean, as to each contractor, subcontractor or
materialman engaged in the Restoration, an amount equal to ten percent (10%) of the costs
DMEAST #17478116 v7 58
actually incurred for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage shall in no event,
and notwithstanding anything to the contrary set forth above in this Section 5.3.2(d), be less than
the amount actually held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty
Consultant certifies to Lender that the Restoration has been completed in accordance with the
provisions of this Section 5.3.2(d) and that all approvals necessary for there-occupancy and use
of the Property have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have been paid in full or
will be paid in full out of the Casualty Retainage; provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty Consultant
certifies to Lender that the contractor, subcontractor or materialman has satisfactorily completed
all work and has supplied all materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor
or materialman as may be reasonably requested by Lender or by the title company issuing the
Title Insurance Policy, and Lender receives an endorsement to the Title Insurance Policy
insuring the continued priority of the lien of the Security Instrument and evidence of payment of
any premium payable for such endorsement. If required by Lender, the release of any such
portion of the Casualty Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor, subcontractor or
materialman.
(e) Lender shall not be obligated to make disbursements of the Net Proceeds
more frequently than once every calendar month.
(f) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the opinion of Lender in consultation with the Casualty Consultant, be sufficient to pay in
full the balance of the costs which are estimated by the Casualty Consultant to be incurred in
connection with the completion of the Restoration, Borrower shall deposit the deficiency (the
"Net Proceeds Deficiency") with Lender before any further disbursement of the Net Proceeds
shall be made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and
shall be disbursed for costs actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to
this Section 5.3.2 shall constitute additional security for the Debt.
(g) The excess, if any, of the Net Proceeds and the remaining balance, if any,
of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with the provisions of this Section
5.3.2, and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing under any of the Loan
Documents; provided, however, the amount of such excess returned to Borrower in the case of a
Condemnation shall not exceed the amount of Net Proceeds Deficiency deposited by Borrower
with the balance being applied to the Debt in the manner provided for in Section 5.3.2(h) hereof.
DMEAST #17478116 v7 59
(h) All Net Proceeds not required (i) to be made available for the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pursuant to Section 5.3.2(g) hereof may
be retained and applied by Lender toward the payment of the Debt, whether or not then due and
payable, in such order, priority and proportions as Lender in its sole discretion shall deem proper,
or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower for
such purposes as Lender shall designate.
5.3.3. REMIC Compliance. Notwithstanding the foregoing or anything herein to the
contrary, if the Loan is included in a REMIC Trust and, after giving effect to any release of any
portion of the real property relating to the Property following a Casualty or Condemnation, the
Loan would fail to satisfy any REMIC Requirements as the result of such release, then Borrower
shall, within five (5) days of demand by Lender (but in any event prior to, and as a precondition
to, any release of any portion of the Property), prepay the principal balance of the Loan by an
amount sufficient to satisfy REMIC Requirements (such payment, the "Condemnation
Payment").
ARTICLE VI.
RESERVE FUNDS
Section 6.1. Intentionally Omitted.
Section 6.2. Tax Funds.
6.2.1. Deposits of Tax Funds. On the Closing Date, Borrower shall deposit with
Lender the amount of $354,315.75 and there shall be deposited on each Monthly Payment Date
an amount equal to one-twelfth of the Taxes that Lender estimates will be payable during the
next ensuing twelve (12) months in order to accumulate sufficient funds to pay all such Taxes at
least ten (10) days prior to their respective due dates. Amounts deposited pursuant to this
Section 6.2.1 are referred to herein as the "Tax Funds." If at any time Lender reasonably
determines that the Tax Funds will not be sufficient to pay the Taxes, Lender shall notify
Borrower of such determination and the monthly deposits for Taxes shall be increased by the
amount that Lender estimates is sufficient to make up the deficiency at least ten (10) days prior
to the respective due dates for the Taxes; provided that if Borrower receives notice of any
deficiency after the date that is ten (10) days prior to the date that Taxes are due, Borrower will
deposit such amount within one (1) Business Day after its receipt of such notice.
6.2.2. Release of Tax Funds. Lender shall have the right to apply the Tax Funds to
payments of Taxes. In making any payment relating to Taxes, Lender may do so according to
any xxxx, statement or estimate procured from the appropriate public office (with respect to
Taxes) without inquiry into the accuracy of such xxxx, statement or estimate or into the validity of
any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount of the Tax
Funds shall exceed the amounts due for Taxes, Lender shall, in its sole discretion, return any
excess to Borrower or credit such excess against future payments to be made to the Tax Funds.
Any Tax Funds remaining after the Debt has been paid in full shall be returned to Borrower.
DMEAST #17478116 v7 60
Section 6.3. Insurance Funds.
6.3.1. Deposits of Insurance Funds. On the Closing Date, Borrower shall deposit with
Lender the amount of $0 and there shall be deposited on each Monthly Payment Date an amount
equal to one-twelfth of the Insurance Premiums that Lender estimates will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in order to
accumulate sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to
the expiration of the Policies (the "Monthly Insurance Deposit"). Amounts deposited pursuant
to this Section 6.3.1 are referred to herein as the "Insurance Funds." If at any time Lender
reasonably determines that the Insurance Funds will not be sufficient to pay the Insurance
Premiums, Lender shall notify Borrower of such determination and the monthly deposits for
Insurance Premiums shall be increased by the amount that Lender estimates is sufficient to make
up the deficiency at least thirty (30) days prior to expiration of the Policies.
Notwithstanding the forgoing, Borrower shall not be required to make the Monthly
Insurance Deposit as set forth above provided (i) no Event of Default shall have occurred and be
continuing, (ii) the liability and casualty Policies maintained by Borrower covering the Property
are part of a blanket or umbrella policy approved by Lender in its reasonable discretion, pursuant
to Section 5.1.1(c) hereof, including, without limitation, approval of the schedule of locations
and values, (iii) Borrower provides Lender evidence of renewal of such Policy pursuant to
Section 5 .1.1 (b) hereof, and (iv) Borrower provides Lender paid receipts for the payment of the
Insurance Premiums by no later than ten (10) days prior to the expiration dates of the Policies.
Borrower shall immediately commence making all Monthly Insurance Deposits, as required by
Lender pursuant to this Section 6.3.1, within five (5) days of receipt of notice from Lender of
Borrower's failure to comply with items (i), (ii), (iii) or (iv) above, which such notice shall
instruct Borrower to immediately commence making all Monthly Insurance Deposits, including,
without limitation, an up-front payment as determined by Lender to cause the Insurance Funds
(together with the anticipated Monthly Insurance Deposits) to be sufficient to pay the Insurance
Premiums when due.
6.3.2. Release of Insurance Funds. Lender shall have the right to apply the Insurance
Funds to payment of Insurance Premiums. In making any payment relating to Insurance
Premiums, Lender may do so according to any xxxx, statement or estimate procured from the
insurer or its agent, without inquiry into the accuracy of such xxxx, statement or estimate. If the
amount of the Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender
shall, in its sole discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Insurance Funds. Any Insurance Funds remaining after the Debt has .
been paid in full shall be returned to Borrower.
Section 6.4. Capital Expenditure Funds.
6.4.1. Deposits of Capital Expenditure Funds. Borrower shall deposit with Lender on
each Monthly Payment Date an amount equal to $3,592.00 for annual Capital Expenditures
approved by Lender, which approval shall not be unreasonably withheld or delayed. Amounts
deposited pursuant to this Section 6.4.1 are referred to herein as the "Capital Expenditure
Funds." Lender may reassess its estimate of the amount necessary for Capital Expenditures
from time to time and, and may require Borrower to increase the monthly deposits required
DMEAST #17478116 v7 61
pursuant to this Section 6.4.1 upon thirty (30) days' notice to Borrower if Lender determines in
its reasonable discretion that an increase is necessary to maintain proper operation of the
Property.
6.4.2. Release of Capital Expenditure Funds.
(a) Lender shall disburse Capital Expenditure Funds only for Capital
Expenditures.
(b) Lender shall disburse to Borrower the Capital Expenditure Funds (or any
portion thereof) upon satisfaction by Borrower of each of the following conditions: (i) Borrower
shall submit a request for payment to Lender at least ten ( 10) days prior to the date on which
Borrower requests such payment be made and specifies the Capital Expenditures to be paid,
(ii) on the date such request is received by Lender and on the date such payment is to be made,
no Event of Default shall exist and remain uncured, (iii) Lender shall have received a certificate
from Borrower (A) stating that the items to be funded by the requested disbursement are Capital
Expenditures, (B) stating that all Capital Expenditures at the Property to be funded by the
requested disbursement have been completed in a good and workmanlike manner and in
accordance with all applicable Legal Requirements and any Major Lease and Material
Agreement, such certificate to be accompanied by a copy of any license, permit or other approval
required by any Governmental Authority in connection with the Capital Expenditures,
(C) identifying each Person that supplied materials or labor in connection with the Capital
Expenditures to be funded by the requested disbursement, and (D) stating that each such Person
has been paid in full or will be paid in full upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to Lender, (iv) at
Lender's option, a title search for the Property indicating that the Property is free from all Liens,
claims and other encumbrances not previously approved by Lender, and (v) at Lender's option, if
the cost of any individual Capital Expenditure exceeds $25,000, Lender shall have received a
report satisfactory to Lender in its reasonable discretion from an architect or engineer approved
by Lender in respect of such architect or engineer's inspection of the required repairs, and
(vi) Lender shall have received such other evidence as Lender shall reasonably request that the
Capital Expenditures at the Property to be funded by the requested disbursement have been
completed and are paid for or will be paid upon such disbursement to Borrower. Lender shall
not be required to disburse Capital Expenditure Funds more frequently than once each calendar
month, nor in an amount less than the Minimum Disbursement Amount (or a lesser amount if the
total amount of Capital Expenditure Funds is less than the Minimum Disbursement Amount, in
which case only one disbursement of the amount remaining in the account shall be made).
(c) Nothing in this Section 6.4.2 shall (i) make Lender responsible for making
or completing the Capital Expenditures Work; (ii) require Lender to expend funds in addition to
the Capital Expenditure Funds to complete any Capital Expenditures Work; (iii) obligate Lender
to proceed with the Capital Expenditures Work; or (iv) obligate Lender to demand from
Borrower additional sums to complete any Capital Expenditures Work.
(d) Borrower shall permit Lender and Lender's agents and representatives
(including, without limitation, Lender's engineer, architect, or inspector) or third parties to enter
onto the Property during normal business hours (subject to the rights of Tenants under their
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Leases) to inspect the progress of any Capital Expenditures Work and all materials being used in
connection therewith and to examine all plans and shop drawings relating to such Capital
Expenditures Work. Borrower shall use commercially reasonable efforts to cause all contractors
and subcontractors to cooperate with Lender or Lender's representatives or such other Persons
described above in connection with inspections described in this Section 6.4.2(d).
(e) If a disbursement will exceed $50,000, Lender may require an inspection
of the Property at Borrower's expense prior to making a disbursement of Capital Expenditure
Funds in order to verify completion of the Capital Expenditures Work for which reimbursement
is sought. Lender may require that such inspection be conducted by an appropriate independent
qualified professional selected by Lender and may require a certificate of completion by an
independent qualified professional architect acceptable to Lender prior to the disbursement of
Capital Expenditure Funds. Borrower shall pay the expense of the inspection as required
hereunder, whether such inspection is conducted by Lender or by an independent qualified
professional architect.
(f) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance, builder's
risk, and public liability insurance and other insurance to the extent required under applicable
law in connection with Capital Expenditures Work. All such policies shall be in form and
amount reasonably satisfactory to Lender.
Section 6.5. Ongoing Rollover Funds.
6.5.1. Deposits of Ongoing Rollover Funds. Borrower shall deposit with Lender
(x) $0.00 on the date hereof and (y) on each Monthly Payment Date the sum of $26,413.00, for
tenant improvements and leasing commissions that may be incurred following the date hereof;
provided, however, that Borrower shall not be required to make any monthly deposits pursuant to
this Section 6.5.1 to the extent that $1,000,000 shall be on deposit with Lender as Ongoing
Rollover Funds (as defined below) (the "Rollover Reserve Cap"). In the event Lender shall
disburse to Borrower any Ongoing Rollover Funds in accordance with the terms of this
Agreement, Borrower shall thereafter make additional monthly deposits under this Section 6.5.1
until the amount on deposit with Lender as Ongoing Rollover Funds shall equal the Rollover
Reserve Cap. Amounts deposited pursuant to this Section 6.5.1 are referred to herein as the
"Ongoing Rollover Funds."
6.5.2. Release of Ongoing Rollover Funds. Lender shall disburse to Borrower the
Ongoing Rollover Funds (or any portion thereof) upon satisfaction by Borrower of each of the
following conditions: (i) Borrower shall submit a request for payment to Lender at least ten
(10) days prior to the date on which Borrower requests such payment be made and specifies the
tenant improvement costs and leasing commissions to be paid, (ii) on the date such request is
received by Lender and on the date such payment is to be made, no Event of Default shall exist
and remain uncured, (iii) Lender shall have reviewed and approved the Lease in respect of which
Borrower is obligated to pay or reimburse certain tenant improvement costs and leasing
commissions, (iv) Lender shall have received and approved a budget for tenant improvement
costs and a schedule of leasing commissions payments and the requested disbursement will be
used to pay all or a portion of such costs and payments, (v) Lender shall have received a
DMEAST #17478116 v7 63
certificate from Borrower (A) stating that all tenant improvements at the Property to be funded
by the requested disbursement have been completed in good and workmanlike manner and in
accordance with all applicable federal, state and local laws, rules and regulations, such certificate
to be accompanied by a copy of any license, permit or other approval by any Governmental
Authority required in connection with such tenant improvements, (B) identifying each Person
that supplied materials or labor in connection with the tenant improvements to be funded by the
requested disbursement, and (C) stating that each such Person has been paid in full or will be
paid in full upon such disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (vi) at Lender's option, a title search for the Property
indicating that the Property is free from all Liens, claims and other encumbrances not previously
approved by Lender, and (vii) Lender shall have received such other evidence as Lender shall
reasonably request that the tenant improvements at the Property to be funded by the requested
disbursement have been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to disburse Ongoing Rollover Funds more frequently
than once each calendar month, nor in an amount less than the Minimum Disbursement Amount
(or a lesser amount if the total amount of Ongoing Rollover Funds is less than the Minimum
Disbursement Amount, in which case only one disbursement of the amount remaining in the
account shall be made).
Section 6.6. Lease Termination Rollover Funds.
6.6.1. Deposits of Lease Termination Rollover Funds. In the event that Borrower
receives a fee, payment or other compensation from any Tenant relating to or in exchange for the.
termination of such Tenant's Lease (a "Lease Termination Fee") Borrower shall immediately
deposit such Lease Termination Fee with Lender, to be utilized for tenant improvements and
leasing commissions that may be incurred with respect to the space relating to such Lease
Termination Fee (a "Termination Space") and, in the event that there is a Rent Deficiency (as
hereinafter defined) for the Termination Space from and after the date that the Lease for the
Termination Space was terminated, in replacement of Rent. Amounts deposited pursuant to this
Section 6.6.1 are referred to herein as the "Lease Termination Rollover Funds." For the
avoidance of doubt, any amounts deposited under this Section 6.6.1 shall not be credited
towards, and shall be in addition to, the Rollover Reserve Cap.
6.6.2. Release of Lease Termination Rollover Funds.
(a) Lender shall disburse to Borrower the Lease Termination Rollover Funds
(or any portion thereof) upon satisfaction by Borrower of each of the following conditions:
(i) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date
on which Borrower requests such payment be made and (A) specifies the tenant improvement
costs and leasing commissions to be paid for the Termination Space or (B) specifies the amount
by which the rent expected to be obtained by Borrower for the Termination Space during the
next succeeding calendar month pursuant to the Lease or Leases for such Termination Space (a
"Replacement Lease") is less than the amount of monthly rent received from the previous
Tenant in the Termination Space pursuant to its Lease prior to such termination (the "Rent
Deficiency"), (ii) on the date such request is received by Lender and on the date such payment is
to be made, no Event of Default shall exist and remain uncured, (iii) Lender shall have reviewed
and, to the extent required hereby, approved the Replacement Lease in respect of which
DMEAST #17478116 v7 64
Borrower is obligated to pay or reimburse certain tenant improvement costs and leasing
commissions, (iv) with respect to any Lease Termination Rollover Funds to be released by
Lender for tenant improvements or leasing commissions pursuant to a Replacement Lease,
Lender shall have received a budget for tenant improvement costs and a schedule of leasing
commissions payments and the requested disbursement will be used to pay all or a portion of
such costs and payments, (v) with respect to any Lease Termination Rollover Funds to be
released by Lender for tenant improvements or leasing commissions pursuant to a Replacement
Lease, Lender shall have received a certificate from Borrower (A) stating that all tenant
improvements at the Property to be funded by the requested disbursement have been completed
in good and workmanlike manner and in accordance with all applicable federal, state and local
laws, rules and regulations, such certificate to be accompanied by a copy of any license, permit
or other approval by any Governmental Authority required in connection with the Capital
Expenditures, (B) identifying each Person that supplied materials or labor in connection with the
tenant improvements to be funded by the requested disbursement, and (C) stating that each such
Person has been paid in full or will be paid in full upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to Lender, (vi) with
respect to any Lease Termination Rollover Funds to be released by Lender for tenant
improvements or leasing commissions pursuant to a Replacement Lease, at Lender's option, a
title search for the Property indicating that the Property is free from all Liens, claims and other
encumbrances not previously approved by Lender and (vii) with respect to any Lease
Termination Rollover Funds to be released by Lender for tenant improvements or leasing
commissions pursuant to a Replacement Lease, Lender shall have received such other evidence
as Lender shall reasonably request that the tenant improvements at the Property to be funded by
the requested disbursement have been completed and are paid for or will be paid upon such
disbursement to Borrower. Lender shall not be required to disburse Lease Termination Rollover
Funds more frequently than once each calendar month, unless such requested disbursement is in
an amount greater than the Minimum Disbursement Amount (or a lesser amount if the total
amount of Lease Termination Rollover Funds is less than the Minimum Disbursement Amount,
in which case only one disbursement of the amount remaining in the account shall be made). All
Rent Deficiency disbursements made by Lender shall be deposited into the Deposit Account as if
such sums were received by Borrower as Rent during the calendar month after such request is
made by Borrower.
(b) Notwithstanding the foregoing, upon receipt by Lender of evidence that,
with respect to any new Replacement Lease with a term of at least five (5) years, all tenant
improvements required to be completed by Borrower pursuant to the Replacement Lease, if any,
have been completed and all leasing commissions required to be paid by Borrower with respect
to the Replacement Lease, if any, have been paid, and provided no Event of Default then exists,
Lender shall disburse to Borrower the Lease Termination Rollover Funds on deposit with respect
to such Termination Space provided that the rent to be obtained by Borrower for such
Termination Space during the next succeeding sixty (60) calendar months pursuant to the
respective Replacement Lease is equal to or greater than the sum of the monthly rent last
received from the previous Tenant in such Termination Space pursuant to its Lease multiplied by
sixty (60).
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Section 6.7. Unfunded Rollover Funds.
6.7.1. Deposits of Unfunded Rollover Funds. Borrower shall deposit with Lender
$0.00 on the date hereof (the "Unfunded Rollover Funds"). For the avoidance of doubt, any
amounts deposited under this Section 6.7.1 shall not be credited towards and shall be in addition
to the Rollover Reserve Cap.
6.7.2. Release of Unfunded Rollover Funds. Lender shall disburse to Borrower the
Unfunded Rollover Funds (or any portion thereof) upon satisfaction by Borrower of each of the
following conditions: (i) Borrower shall submit a request for payment to Lender at least ten (10)
days prior to the date on which Borrower requests such payment be made and specifies (x) the
tenant improvement costs and leasing commissions to be paid or (y) rent concessions to be
reimbursed, as applicable, (ii) on the date such request is received by Lender and on the date
such payment is to be made, no Event of Default shall exist and remain uncured,. (iii) Lender
shall have reviewed and approved the Lease in respect of which Borrower is obligated to pay or
reimburse certain tenant improvement costs and leasing commissions, or of which contains rent
concessions, as applicable, (iv) to the extent the request relates to tenant improvements costs or
leasing commissions, Lender shall have received and approved a budget for tenant improvement
costs and a schedule of leasing commissions payments and the requested disbursement will be
used to pay all or a portion of such costs and payments, (v) to the extent the request relates to
tenant improvement costs or leasing commissions, Lender shall have received a certificate from
Borrower (A) stating that all tenant improvements at the Property to be funded by the requested
disbursement have .been completed in good and workmanlike manner and in accordance with all
applicable federal, state and local laws, rules and regulations, such certificate to be accompanied
by a copy of any license, permit or other approval by any Governmental Authority required in
connection with such tenant improvements, (B) identifying each Person that supplied materials
or labor in connection with the tenant improvements to be funded by the requested disbursement,
and (C) stating that each such Person has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other evidence of payment
satisfactory to Lender, (vi) at Lender's option, a title search for the Property indicating that the
Property is free from all Liens, claims and other encumbrances not previously approved by
Lender, (vii) to the extent the request relates to reimbursement of rent concession amounts,
Lender shall have received a certificate from Borrower stating that the rent concession period
under the applicable Lease, for which Borrower is seeking reimbursement, has expired and
Lender shall have received such other evidence with respect thereto as Lender shall reasonably
request, and (viii) to the extent the request relates to tenant improvements costs or leasing
commissions,Lender shall have received such other evidence as Lender shall reasonably request
that the tenant improvements at the Property to be funded by the requested disbursement have
been completed and are paid for or will be paid upon such disbursement to Borrower. Lender
shall not be required to disburse Unfunded Rollover Funds more frequently than once each
calendar month, nor in an amount less than the Minimum Disbursement Amount (or a lesser
amount if the total amount of Unfunded Rollover Funds is less than the Minimum Disbursement
Amount, in which case only one disbursement of the amount remaining in the account shall be
made).
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Section 6.8. Application of Reserve Funds.
Upon the occurrence of an Event of Default, Lender, at its option, may withdraw the
Reserve Funds and apply the Reserve Funds to the items for which the Reserve Funds were
established or to payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender's right to withdraw and apply the Reserve Funds shall be
in addition to all other rights and remedies provided to Lender under the Loan Documents.
Section 6.9. Security Interest in Reserve Funds and Interest on Reserve Funds.
6.9.1. Grant of Security Interest. Borrower shall be the owner of the Reserve Funds.
Borrower hereby pledges, assigns and grants a security interest to Lender, as security for
payment of the Debt and the performance of all other terms, conditions and covenants of the
Loan Documents on Borrower's part to be paid and performed, in all of Borrower's right, title
and interest in and to the Reserve Funds. The Reserve Funds shall be under the sole dominion
and control of Lender.
6.9.2. Interest on Reserve Funds. Interest accrued, if any, on the Reserve Funds may
be retained by Lender and shall not be required to be remitted either to Borrower or to the
applicable Reserve Fund. Notwithstanding the foregoing, Funds deposited in the Interest
Bearing Reserve Funds shall be held in an interest-bearing business savings account. In no event
shall Lender or any Servicer be required to select any particular interest-bearing account or the
account that yields the highest rate of interest, provided that selection of the account shall be
consistent with the general standards at the time being utilized by Lender or such Servicer, as
applicable, in establishing similar accounts for loans of comparable type. All such interest that
so becomes part of the applicable Interest Bearing Reserve Funds shall be disbursed in
accordance with the disbursement procedures contained herein applicable to such Interest
Bearing Reserve Fund; provided, however, that Lender may, at its election, retain any such
interest for its own account during the occurrence and continuance of an Event of Default.
6.9.3. Income Taxes. Borrower shall report on its federal, state and local income tax
returns all interest or income accrued on the Reserve Funds.
6.9.4. Prohibition Against Further Encumbrance. Borrower shall not, without the
prior consent of Lender, further pledge, assign or grant any security interest in the Reserve Funds
or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any
UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with
respect thereto.
6.9.5. Reserve Fund Indemnification. Borrower shall indemnify Lender and hold
Lender harmless from and against any and all Losses arising from or in any way connected with
the Reserve Funds, the sums deposited therein or the performance of the obligations for which
the Reserve Funds were established, except to the extent arising from the gross negligence or
willful misconduct of Lender, its agents or employees. Borrower shall assign to Lender all rights
and claims Borrower may have against all Persons supplying labor, materials or other services
which are to be paid from or secured by the Reserve Funds; provided, however, that Lender may
not pursue any such right or claim unless an Event of Default has occurred and remains uncured.
DMEAST #17478116 v7 67
6.9.6. Reserve Fund Fees and Expenses. Borrower acknowledges and agrees that it
solely shall be, and shall at all times remain, liable to Lender or Servicer for all fees, charges,
costs and expenses in connection with the Reserve Funds, this Agreement and the enforcement
hereof, including, without limitation, any monthly or annual fees or charges as may be assessed
by Lender or Servicer in connection with the administration of the Reserve Funds and the
reasonable fees and expenses of legal counsel to Lender and Servicer as needed to enforce,
protect or preserve the rights and remedies of Lender and/or Servicer under this Agreement.
Section 6.10. Intentionally Omitted.
ARTICLE VII.
PROPERTY MANAGEMENT
Section 7.1. The Management Agreement.
Borrower shall cause Manager to manage the Property in accordance with the
Management Agreement. Borrower shall (i) diligently perform and observe all of the terms,
covenants and conditions of the Management Agreement on the part of Borrower to be
performed and observed, (ii) promptly notify Lender of any notice to Borrower of any default by
Borrower in the performance or observance of any of the terms, covenants or conditions of the
Management Agreement on the part of Borrower to be performed and observed, and
(iii) promptly deliver to Lender a copy of each financial statement, business plan, capital
expenditures plan, report and estimate received by it under the Management Agreement; and
(iv) promptly enforce the performance and observance of all of the covenants required to be
performed and observed by Manager under the Management Agreement. If Borrower shall
default in the performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Borrower to be performed or observed, then, without
limiting Lender's other rights or remedies under this Agreement or the other Loan Documents,
and without waiving or releasing Borrower from any of its obligations hereunder or under the
Management Agreement, Lender shall have the right, but shall be under no obligation, to pay any
sums and to perform any act as may be appropriate to cause all the material terms, covenants and
conditions of the Management Agreement on the part of Borrower to be performed or observed.
Section 7.2. Prohibition Against Termination or Modification.
Borrower shall not surrender, terminate, cancel, modify, renew or extend the
Management Agreement, or enter into any other agreement relating to the management or
operation of the Property with Manager or any other Person, or consent to the assignment by the
Manager of its interest under the Management Agreement, or waive or release any of its rights
and remedies under the Management Agreement, in each case without the express consent of
Lender, which consent shall not be unreasonably withheld; provided, however, with respect to a
new manager such consent may be conditioned upon Borrower delivering a Rating Agency
Confirmation as to such new manager and management agreement. If at any time Lender
consents to the appointment of a new manager, such new manager and Borrower shall, as a
condition of Lender's consent, execute a subordination of management agreement in the form
then used by Lender.
DMEAST #17478116 v7 68
Section 7 .3. Replacement of Manager.
Lender shall have the right, pursuant to the terms of the Assignment of Management
Agreement, to require Borrower to replace the Manager with a new manager, which shall be a
Qualified Manager, chosen by Borrower and approved by Lender.
ARTICLE VIII.
PERMITTED TRANSFERS
Section 8.1. Permitted Transfer of the Property.
Notwithstanding anything to the contrary contained herein or in the Security Instrument,
until the date which is thirty (30) days following the issuance of Securities involving the Loan or
any portion thereof (the "Permitted Transfer Date"), a one-time sale, conveyance or transfer of
the Property in its entirety and in a single transaction (hereinafter, a "Property Sale") shall be
permitted only with the prior written consent of Lender, which consent may be withheld by
Lender in its sole and absolute discretion. From and after the Permitted Transfer Date, Lender
shall not unreasonably withhold consent to two (2) Property Sales. With respect to any such
Property Sale, Lender shall not require a modification of the material economic terms hereof
(other than a corresponding increase in Borrower's deposits of Tax Funds pursuant to Section
6.2.1 hereof in the event such Property Sale results in an increase in the real property tax
assessment by the applicable taxing authority), provided that each of the following terms and
conditions are satisfied:
(a) no Event of Default has occurred and is continuing;
(b) Borrower gives Lender written notice of the terms of such prospective
Property Sale not less than thirty (30) days before the date on which such Property Sale is
scheduled to close and, concurrently therewith, gives Lender all such information concerning the
proposed transferee of the Property (hereinafter, "Buyer") as Lender would reasonably require in
evaluating an initial extension of credit to a borrower and pays as a condition to evaluating any
requested consent to a transfer, a cash deposit with Lender in an amount equal to Lender's
anticipated costs and expenses in evaluating any such requests for such consent. Lender shall
have the right to approve or disapprove the proposed Buyer (such approval to be in Lender's sole
and absolute discretion prior to the Permitted Transfer Date and such approval not to be
unreasonably withheld on and after the Permitted Transfer Date). In determining whether to give
or withhold its approval of the proposed Buyer, Lender shall consider Buyer's experience and
track record in owning and operating facilities similar to the Property, Buyer's financial strength,
Buyer's general business standing and Buyer's relationships and experience with contractors,
vendors, tenants, lenders and other business entities; provided, however, that, notwithstanding
Lender's agreement to consider the foregoing factors in determining whether to give or withhold
such approval, such approval shall be given or withheld based on what Lender determines to be
commercially reasonable and, if given, may be given subject to such conditions as Lender may
deem reasonably appropriate;
(c) Borrower pays Lender, concurrently with the closing of such Property
Sale, (i) a non-refundable assumption fee in an amount equal to all out-of-pocket costs and
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expenses, including, without limitation, reasonable attorneys' fees, incurred by Lender in
connection with the Property Sale plus an amount equal to one-half percent (0.5%) of the then
outstanding principal balance of the Note, and (ii) all costs and expenses of all third parties and
Rating Agencies in connection with the Property Sale;
(d) Buyer assumes and agrees to pay the Debt as and when due (subject to the
provlSlons of Section 11.22 hereof) and, prior to or concurrently with the closing of such
Property Sale, Buyer and its constituent partners, members or shareholders as Lender may
reasonably require execute, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate said assumption,
including, without limitation, the execution and delivery by an Affiliate of such Buyer,
acceptable to Lender, of a recourse guaranty and environmental indemnity in form and substance
identical to the Guaranty and the Environmental Indemnity, respectively, together with such
legal opinions, certifications, and acknowledgements as may be reasonably requested by Lender;
(e) Borrower and Buyer, without any cost to Lender, furnish any information
requested by Lender for the preparation of, and shall authorize Lender to file, new financing
statements and financing statement amendments and other documents to the fullest extent
permitted by applicable law, and shall execute any additional documents reasonably requested by
Lender;
(f) Borrower delivers to Lender, without any cost or expense to Lender, such
endorsements to Lender's title insurance policy, hazard insurance endorsements or certificates
and other similar materials as Lender may reasonably deem necessary at the time of the Property
Sale, all in form and substance reasonably satisfactory to Lender, including, without limitation,
an endorsement or endorsements to Lender's title insurance policy or policies insuring the lien of
the Security Instrument insuring that fee title to the Property is vested in Buyer;
(g) Buyer furnishes, if Buyer is a corporation, partnership or other entity, all
appropriate papers evidencing Buyer's capacity and good standing, and the qualification of the
signers to execute the assumption of the Debt, which papers shall include certified copies of all
documents relating to the organization and formation of Buyer and of the entities, if any, which
are partners or members of Buyer. Buyer and such constituent partners, members or
shareholders of Buyer (as the case may be), as Lender shall require, shall be single purpose,
"bankruptcy remote" entities which satisfy the requirements of Section 3.1.24 hereof and the
requirements of the Rating Agencies (provided, however, such Buyer shall not be a Delaware
Statutory Trust or tenancy-in-common), and whose formation documents shall be approved by
counsel to Lender;
(h) Buyer assumes the obligations of Borrower under any management
agreements pertaining to the Property or assigns to Lender as additional security any new
management agreement entered into in connection with such Property Sale, which such new
management agreement and the new manager thereunder shall each comply with the
requirements of Article 7 hereof;
(i) Buyer furnishes opinions of counsel satisfactory to Lender and its counsel
(A) that Buyer's formation documents provide for the matters described in subparagraph (g)
DMEAST #17478116 v7 70
above, (B) that the assumption of the indebtedness evidenced hereby has been duly authorized,
executed and delivered, and that the Note, the Security Instrument, this Agreement, the
assumption agreement and the other Loan Documents are valid, binding and enforceable against
Buyer in accordance with their terms, (C) that the transfer and assumption by Buyer will not
constitute a "significant modification" of the Loan under Section 1001 of the Code or otherwise
cause a tax to be imposed on a "prohibited transaction" by any REMIC Trust, and (D) with
respect to such other matters as Lender may reasonably request;
(j) If required by Lender, Lender receives a Rating Agency Confirmation
with respect to the Property Sale and the transactions contemplated hereby; and
(k) Borrower's obligations under the contract of Property Sale pursuant to
which the Property Sale is proposed to occur are expressly subject to the satisfaction of the terms
and conditions of this Section.
Notwithstanding the foregoing, Lender shall not be required to consent to any Property
Sale occurring prior to a Securitization or participation of the Loan if the consideration to be paid
by Buyer as determined by Lender is less than the appraised value of the Property as determined
by Lender in connection with the underwriting of the Loan.
Section 8.2. Permitted Transfers of Equity Interests.
Notwithstanding the restrictions contained in Section 4.2.1 hereof or in Article 6 of the
Security Instrument, the following transfers shall be permitted without Lender's consent: (a) a
transfer (but not a pledge) by devise or descent or by operation of law upon the death of a
member, partner or shareholder of a Restricted Party, (b) the transfer (but not the pledge), in one
or a series of transactions, of the stock, partnership interests or membership interests (as the case
may be) in a Restricted Party, (c) a merger in which Whitestone REIT or Whitestone REIT
Operating Partnership, LP is the surviving entity, or (d) the sale, transfer or issuance of shares of
common stock in any Restricted Party that is a publicly traded entity, provided such shares of
common stock are listed on the New York Stock Exchange or another nationally recognized
stock exchange; provided, however, with respect to the transfers listed in clauses (a), (b) or (c)
above, (A) Lender shall receive not less than thirty (30) days prior written notice of such
transfers, (B) no such transfers shall result in a change in Control of Sponsor, Guarantor, or
Affiliated Manager, (C) after giving effect to such transfers, Sponsor shall (I) own at least a 51%
direct or indirect equity ownership interest in each of Borrower and any SPC Party; (II) Control
Borrower and any SPC Party; and (III) control the day-to-day operation of the Property, (D) the
Property shall continue to be managed by a Qualified Manager, (E) in the case of the transfer of
any direct equity ownership interests in Borrower or in any SPC Party, such transfers shall be
conditioned upon continued compliance with the relevant provisions of Section 3.1.24 hereof,
and (F) such transfers shall be conditioned upon Borrower's ability to, after giving effect to the
equity transfer in question, (I) remake the representations contained herein relating to ERISA
matters and the Patriot Act, OFAC and matters concerning Embargoed Persons (and, upon
Lender's request, Borrower shall deliver to Lender (x) an Officer's Certificate containing such
updated representations effective as of the date of the consummation of the applicable equity
transfer, and (y) searches, acceptable to Lender, for any entity or individual owning, directly or
indirectly, 20% or more of the interests in the Borrower as a result of such transfer), and (II)
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continue to comply with the covenants contained herein relating to ERISA matters and the
Patriot Act, OFAC, and matters concerning Embargoed Persons. Notwithstanding anything to
the contrary in this Agreement or any other Loan Document, the following transfers are
permitted without Lender's prior written consent and without complying with the provisions of
this Section 8.2: (i) the issuance or transfer of shares of common stock or other equity interests in
Whitestone REIT or other beneficial interest or other forms of securities, including all varieties
of convertible debt, equity or other securities, and (ii) the issuance or transfer of limited
partnership interests in Whitestone REIT Operating Partnership, L.P., provided that (A) no such
transfers shall result in a change in Control of Sponsor, Guarantor, or Affiliated Manager,
(B) after giving effect to such transfers, Sponsor shall (I) own at least a 51% direct or indirect
equity ownership interest in each of Borrower and any SPC Party; (II) Control Borrower and any
SPC Party; and (III) control the day-to-day operation of the Property, (C) the Property shall
continue to be managed by a Qualified Manager, (D) intentionally omitted, and (E) such
transfers shall be conditioned upon Borrower's ability to, after giving effect to the equity transfer
in question, (I) remake the representations contained herein relating to ERISA matters and the
Patriot Act, OF AC and matters concerning Embargoed Persons (and, upon Lender's request,
Borrower shall deliver to Lender (x) an Officer's Certificate containing such updated
representations effective as of the date of the consummation of the applicable equity transfer, and
(y) searches, acceptable to Lender, for any entity or individual owning, directly or indirectly,
20% or more of the interests in the Borrower as a result of such transfer), and (II) continue to
comply with the covenants contained herein relating to ERISA matters and the Patriot Act,
OF AC, and matters concerning Embargoed Persons.
ARTICLE IX.
SALE AND SECURITIZATION OF LOAN
Section 9.1. Sale of Loan and Securitization.
(a) Lender shall have the right (i) to sell or otherwise transfer the Loan or any
portion thereof as a whole loan, (ii) to sell participation interests in the Loan or (iii) to securitize
the Loan or any portion thereof in a single asset securitization or a pooled loan securitization.
(The transaction referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to collectively
as "Secondary Market Transactions" and the transactions referred to in clause (iii) shall
hereinafter be referred to as a "Securitization." Any certificates, notes or other securities issued
in connection with a Securitization are hereinafter referred to as "Securities.")
(b) If requested by Lender, Borrower shall assist Lender, at Borrower's
expense, in satisfying the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in connection with any
Secondary Market Transactions, including, without limitation, to:
(i) (A) provide updated financial and other information with respect
to the Property, the business operated at the Property, Borrower, Guarantor,
Sponsor, and the Manager, (B) provide updated budgets relating to the Property
and (C) provide updated appraisals, market studies, environmental reviews (Phase
I' s and, if appropriate, Phase II' s), property condition reports and other due
diligence investigations of the Property (the "Updated Information"), together,
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if customary, with appropriate verification of the Updated Information through
letters of auditors or opinions of counsel acceptable to Lender and the Rating
Agencies;
(ii) provide opinions of counsel, which may be relied upon by Lender,
the Rating Agencies and their respective counsel, agents and representatives, as to
non-consolidation, fraudulent conveyance, matters of Delaware and federal
bankruptcy law relating to single-member limited liability companies, and true
sale or any other opinion customary in Secondary Market Transactions or
required by the Rating Agencies with respect to the Property and Borrower and
Affiliates, which counsel and opinions shall be satisfactory in form and substance
to Lender and the Rating Agencies;
(iii) provide updated, as of the closing date of the Secondary Market
Transaction, representations and warranties made in the Loan Documents and
such additional representations and warranties as the Rating Agencies may
require;
(iv) execute such amendments to the Loan Documents and Borrower or
any SPC Party's organizational documents as may be reasonably requested by
Lender or requested by the Rating Agencies or otherwise to effect the
Securitization including, without limitation, bifurcation of the Loan into two or
more components and/or separate notes and/or creating a senior/subordinate note
structure (any of the foregoing, a "Loan Bifurcation"); provided, however, that
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would (A) change the interest rate, the stated maturity
or the amortization of principal as set forth herein or in the Note, or (B) modify or
amend any other material economic term of the Loan Agreement or the Note,
except in connection with a Loan Bifurcation which may result in varying fixed
interest rates and amortization schedules, but which shall have the same initial
weighted average coupon of the original Note. In the event Borrower fails to
execute and deliver such documents to Lender within ten (10) Business Days
following such request by Lender, Borrower hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in its
name and stead to make and execute all documents necessary or desirable to
effect such transactions, Borrower ratifying all that such attorney shall do by
virtue thereof. It shall be an Event of Default under this Agreement, the Note, the
Security Instrument and the other Loan Documents if Borrower fails to comply
with any of the terms, covenants or conditions of this Section 9.1(b)(iv) after
expiration of ten ( 1 0) Business Days after written notice thereof; and
(v) at any time prior to a Secondary Market Transaction, execute such
amendments to the Loan Documents as requested by the Lender, in its discretion,
to extend the Maturity Date to a Monthly Payment Date no more than three (3)
months beyond the initial Maturity Date set forth herein (the "Extended
Maturity Date"). In connection with such amendment, the defined term
"Maturity Date" shall then be replaced with the term "Extended Maturity Date,"
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the time period in clause (i) of the definition of "Release Date" shall be extended
by the same period between the initial Maturity Date and the Extended Maturity
Date, and the "Permitted Prepayment Date" shall be extended by the same period
between the initial Maturity Date and the Extended Maturity Date together with
such corresponding changes to other defined terms herein as reasonably requested
by Lender.
(c) If, at the time one or more Disclosure Documents are being prepared for a
Securitization, Lender expects that Borrower alone or Borrower and one or more Affiliates of
Borrower collectively, or the Property alone or the Property and Related Properties collectively,
will be a Significant Obligor, Borrower shall furnish to Lender upon request (i) the selected
financial data or, if applicable, net operating income, required under Item 1112(b)(l) of
Regulation AB, if Lender expects that the principal amount of the Loan together with any
Related Loans as of the cut-off date for such Securitization may, or if the principal amount of the
Loan together with any Related Loans as of the cut-off date for such Securitization and at any
time during which theLoan and any Related Loans are included in a Securitization does, equal
or exceed ten percent (1 0%) (but less than twenty percent (20%)) of the aggregate principal
amount of all mortgage loans included or expected to be included, as applicable, in the
Securitization or (ii) the financial statements required under Item 1112(b)(2) of Regulation AB,
if Lender expects that the principal amount of the Loan together with any Related Loans as of the
cut-off date for such Securitization may, or if the principal amount of the Loan together with any
Related Loans as of the cut-off date for such Securitization and at any time during which the
Loan and any Related Loans are included in a Securitization does, equal or exceed twenty
percent (20%) of the aggregate principal amount of all mortgage loans included or expected to be
included, as applicable, in the Securitization. Notwithstanding anything in Section 4.1.6 above
to the contrary, such financial data or financial statements shall be furnished to Lender
(A) within ten (10) Business Days after notice from Lender in connection with the preparation of
Disclosure Documents for the Securitization, (B) not later than thirty (30) days after the end of
each fiscal quarter of Borrower and (C) not later than seventy-five (75) days after the end of each
fiscal year of Borrower; provided, however, that Borrower shall not be obligated to furnish
financial data or financial statements pursuant to clauses (B) or (C) of this sentence with respect
to any period for which a filing pursuant to the Exchange Act in connection with or relating to
the Securitization (an "Exchange Act Filing") is not required. If requested by Lender, Borrower
shall use commercially reasonable efforts to furnish to Lender financial data and/or financial
statements for any tenant of the Property if, in connection with a Securitization, Lender expects
there to be, with respect to such tenant or group of affiliated tenants, a concentration within all of
the mortgage loans included or expected to be included, as applicable, in the Securitization such
that such tenant or group of affiliated tenants would constitute a Significant Obligor.
(d) All financial data and financial statements provided by Borrower
hereunder pursuant to Section 9.1(c) and@ hereof shall be prepared in accordance with GAAP,
and shall meet the requirements of Regulation AB and other applicable legal requirements. All
financial statements referred to in Section 9.1(c) above shall be audited by independent
accountants of Borrower acceptable to Lender in accordance with Regulation AB and all other
applicable legal requirements, shall be accompanied by the manually executed report of the
independent accountants thereon, which report shall meet the requirements of Regulation AB
and all other applicable legal requirements, and shall be further accompanied by a manually
DMEAST #17478116 v7 74
executed written consent of the independent accountants, in form and substance acceptable to
Lender, to the inclusion of such financial statements in any Disclosure Document and any
Exchange Act Filing and to the use of the name of such independent accountants and the
reference to such independent accountants as "experts" in any Disclosure Document and
Exchange Act Filing, all of which shall be provided at the same time as the related financial
statements are required to be provided. All financial data and financial statements (audited or
unaudited) provided by Borrower under Section 9 .1( c) hereof shall be accompanied by an
Officer's Certificate which shall state that such financial statements meet the requirements set
forth in the first sentence of this Section 9.1 (d).
(e) If requested by Lender, Borrower shall provide Lender, promptly upon
request, with any other or additional financial statements, or financial, statistical or operating
information, as Lender shall determine to be required pursuant to Regulation AB or any
amendment, modification or replacement thereto or other legal requirements in connection with
any Disclosure Document or any Exchange Act Filing or as shall otherwise be reasonably
requested by Lender.
(f) In the event Lender determines, in connection with a Securitization, that
the financial data and financial statements required in order to comply with Regulation AB or
any amendment, modification or replacement thereto or other legal requirements are other than
as provided herein, then notwithstanding the provisions of Section 9.l(c) and@ hereof, Lender
may request, and Borrower shall promptly provide, such other financial statements as Lender
determines to be necessary or appropriate for such compliance.
Section 9.2. Securitization Indemnification.
(a) Borrower understands that information provided to Lender by Borrower
and its agents, counsel and representatives may be included in disclosure documents in
connection with the Securitization, including, without limitation, an offering circular, a
prospectus, prospectus supplement, private placement memorandum or other offering document
(each, a "Disclosure Document") and may also be included in filings with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and may
be made available to investors or prospective investors in the Securities, the Rating Agencies,
and service providers relating to the Securitization.
(b) Borrower shall provide in connection with each of (i) a preliminary and a
final private placement memorandum or (ii) a preliminary and final prospectus or prospectus
supplement, as applicable, an agreement (A) certifying that Borrower has examined such
Disclosure Documents specified by Lender and that each such Disclosure Document, as it relates
to Borrower, Borrower Affiliates, the Property, Manager, Sponsor, Guarantor, and all other
aspects of the Loan (the "Relevant Sections"), does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 9.2, Lender hereunder shall include its officers and
directors), the Affiliate of Xxxxxx Xxxxxxx that has filed the registration statement relating to the
Securitization (the "Registration Statement"), each of its directors, each of its officers who
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have signed the Registration Statement and each Person that controls the Affiliate within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the
"Xxxxxx Xxxxxxx Group"), and Xxxxxx Xxxxxxx, and any other placement agent or underwriter
with respect to the Securitization, each of their respective directors and each Person who controls
Xxxxxx Xxxxxxx or any other placement agent or underwriter within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act (collectively, the "Underwriter Group")
for any losses, claims, damages or liabilities (collectively, the "Liabilities") to which Lender, the
Xxxxxx Xxxxxxx Group or the Underwriter Group may become subject insofar as the Liabilities
arise out of or are based upon any untrue statement or alleged untrue statement of any material
fact furnished by Borrower contained in the Relevant Sections or arise out of or are based upon
the omission or alleged omission by Borrower to state therein a material fact required to be stated
in the Relevant Sections or necessary in order to make the statements in the Relevant Sections, in
light of the circumstances under which they were made, not misleading and (C) agreeing to
reimburse Lender, the Xxxxxx Xxxxxxx Group and/or the Underwriter Group for any legal or
other expenses reasonably incurred by Lender, the Xxxxxx Xxxxxxx Group and the Underwriter
Group in connection with investigating or defending. the Liabilities; provided, however, that
Borrower will be liable in any such case under clauses (B) or (C) above only to the extent that
any such loss claim, damage or liability arises out of or is based upon any such untrue statement
or omission made therein in reliance upon and in conformity with information furnished to
Lender by or on behalf of Borrower in connection with the preparation of the Disclosure
Document or in connection with the underwriting or closing of the Loan, including, without
limitation, financial statements of Borrower, operating statements and rent rolls with respect to
the Property (collectively, the "Provided Information"). The indemnification provided in
clauses (B) and (C) above shall be effective whether or not the indemnification agreement
described above is provided to Borrower or Guarantor; provided, however, such indemnity shall
be limited to the Provided Information and shall only be effective to the extent that Lender
accurately states the Provided Information in the applicable Disclosure Document. The aforesaid
indemnity agreement will be in addition to any liability which Borrower may otherwise have.
(c) In connection with Exchange Act Filings, Borrower shall (i) indemnify
Lender, the Xxxxxx Xxxxxxx Group and the Underwriter Group for Liabilities to which Lender,
the Xxxxxx Xxxxxxx Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact furnished by Borrower in the Relevant Sections of the Disclosure Document or
upon the omission or alleged omission to state in the Disclosure Document a material fact
required to be stated in the Disclosure Document in order to make the statements in the
Disclosure Document related to Relevant Sections, in light of the circumstances under which
they were made, not misleading and (ii) reimburse Lender, the Xxxxxx Xxxxxxx Group or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Xxxxxx
Xxxxxxx Group or the Underwriter Group in connection with defending or investigating the
Liabilities.
(d) Promptly after receipt by an indemnified party under this Section 9.2 of
notice of the commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 9.2, notify the
indemnifying party in writing of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any liability which the
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indemnifying party may have to any indemnified party hereunder except to the extent that failure
to notify causes prejudice to the indemnifying party. In the event that any action is brought
against any indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled, jointly with any other indemnifying party, to
participate therein and, to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party. After notice
from the indemnifying party to such indemnified party under this Section 9.2, such indemnified
party shall pay for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded that there are any
legal defenses available to it and/or other indemnified parties that are different from or additional
to those available to the indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assert such legal defenses and to otherwise participate in the defense
of such action on behalf of such indemnified party at the cost of the indemnifying party. The
indemnifying party shall not be liable for the expenses of more than one separate counsel unless
an indemnified party shall have reasonably concluded that there may be legal defenses available
to it that are different from or additional to those available to another indemnified party.
(e) In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 9.2(b) or(£} hereof is for any reason held
to be unenforceable as to an indemnified party in respect of any losses, claims, damages or
liabilities (or action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 9 .2(b) or (£} hereof, the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such losses, claims, damages or
liabilities (or action in respect thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section ll(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are entitled, the following
factors shall be considered: (i) Xxxxxx Xxxxxxx'x and Borrower's relative knowledge and access
to information concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and Borrower hereby agree that it
would not be equitable if the amount of such contribution were determined by pro rata or per
capita allocation.
(f) Borrower shall indemnify Lender and its officers, directors, partners,
employees, representatives, agents and Affiliates against any Losses to which Lender or its
officers, directors, partners, employees, representatives, agents and Affiliates, may become
subject in connection with any indemnification to the Rating Agencies in connection with
issuing, monitoring or maintaining the Securities insofar as the Losses arise out of or are based
upon any untrue statement of any material fact in any information provided by or on behalf of
Borrower to the Rating Agencies (the "Covered Rating Agency Information") or arise out of
or are based upon the omission to state a material fact in the Covered Rating Agency Information
required to be stated therein or necessary in order to make the statements in Covered Rating
Agency Information, in light of the circumstances under which they were made, not misleading.
DMEAST #17478116 v7 77
(g) The liabilities and obligations of both Borrower and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction and discharge of
the Debt.
Section 9.3. Intentionally Omitted.
Section 9.4. Mezzanine Option.
Without limiting Lender's rights to implement a Loan Bifurcation, Lender shall have the
right (the "Mezzanine Option") at any time to divide the loan into two parts, a mortgage loan
and a mezzanine loan, provided, that (i) the total loan amounts for such mortgage loan and such
mezzanine loan shall equal the then outstanding principal amount of the Loan immediately prior
to Lender's exercise of the Mezzanine Option, and (ii) the weighted average interest rate of such
mortgage loan and mezzanine loan shall initially equal the Interest Rate. Borrower shall
cooperate with Lender in Lender's exercise of the Mezzanine Option in good faith and in a
timely manner, which such cooperation shall include, but not be limited to, (i) executing such
amendments to the Loan Documents and Borrower or any SPC Party's organizational documents
as may be reasonably requested by Lender or requested by the Rating Agencies, (ii) creating a
single purpose, bankruptcy remote entity satisfying the requirements of Section 3.1.24 hereof
and of the Rating Agencies (the "Mezzanine Borrower"), which such Mezzanine Borrower
shall (A) own, directly or indirectly, 100% of the equity ownership interests in Borrower (the
"Equity Collateral"), and (B) together with such constituent equity owners of such Mezzanine
Borrower as may be designated by Lender, execute such agreements, instruments and other
documents as may be required by Lender in connection with the mezzanine loan (including,
without limitation, a promissory note evidencing the mezzanine loan and a pledge and security
agreement pledging the Equity Collateral to Lender as security for the mezzanine loan); and
(iii) delivering such opinions, title endorsements, UCC title insurance policies and other
materials as may be required by Lender or the Rating Agencies.
Section 9.5. Reserves/Escrows.
In the event that Securities are issued in connection with the Loan, all funds held by
Lender in escrow or pursuant to reserves in accordance with this Agreement and the other Loan
Documents shall be deposited in "eligible accounts" at "eligible institutions" and, to the extent
applicable, invested in "permitted investments" as then defined and required by the Rating
Agencies.
Section 10.1. Event of Default.
ARTICLE X.
DEFAULTS
(a) Each of the following events shall constitute an event of default hereunder
(an "Event of Default"):
(i) if Borrower shall fail to (i) pay when due (A) any sums which by
the express terms of this Agreement and the other Loan Documents require
immediate or prompt payment without any grace period or (B) sums which are
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payable on the Maturity Date, or (ii) pay within five (5) days when due (A) any
monthly installment of principal and/or interest due under the Note and any
amount required to be paid into the Reserve Funds or (B) any other sums payable
under the Note, this Agreement or any of the other Loan Documents;
(ii) if any of the Taxes or Other Charges are not paid pnor to
delinquency;
(iii) if the Policies are not kept in full force and effect or if evidence of
the same is not delivered to Lender as provided in Section 5.l.l(b) hereof;
(iv) if Borrower breaches or permits or suffers a breach of Sections
4.2.1 hereof, or Article 6 of the Security Instrument;
(v) if any representation or warranty made by Borrower herein or in
any other Loan Document, or in any report, certificate, financial statement or
other instrument, agreement or document furnished to Lender shall have been
false or misleading in any material respect as of the date the representation or
warranty was made;
(vi) if Borrower, any SPC Party, Sponsor or Guarantor shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for Borrower,
any SPC Party, Sponsor or Guarantor or if Borrower, any SPC Party, Sponsor or
Guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower, any SPC Party, Sponsor or Guarantor, or if any
proceeding for the dissolution or liquidation of Borrower, any SPC Party, Sponsor
or Guarantor shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
Borrower, any SPC Party, Sponsor or Guarantor, upon the same not being
discharged, stayed or dismissed within forty-five (45) days;
(viii) if the Property becomes subject to any mechanic's, materialman's
or other Lien other than a Lien for local real estate taxes and assessments not then
due and payable and the Lien shall remain undischarged of record (by payment,
bonding or otherwise) for a period of thirty (30) days after Borrower becomes
aware of such Lien;
(ix) if Borrower attempts to assign its rights under this Agreement or
any of the other Loan Documents or any interest herein or therein in
contravention of the Loan Documents;
(x) omitted;
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(xi) if (A) Borrower violates or does not comply with any of the
provisions of Section 4.1.6 hereof, or (B) Borrower or any SPC Party breaches
any representation, warranty or covenant contained in Section 3 .1.24 hereof;
(xii) if Borrower, Guarantor, or Sponsor fails to comply with the
covenants as to the Patriot Act, OF AC, and Embargoed Persons as set forth in
Section 4.1.1 hereof;
(xiii) if Borrower breaches any of the negative covenants contained in
Section 4.2.11 hereof;
(xiv) omitted;
(xv) if Guarantor breaches in any material respect any covenant,
warranty or representation contained in the Guaranty;
(xvi) if (A) Borrower shall fail (beyond any applicable notice or grace
period) to pay any rent, additional rent or other charges payable under any
Material Agreement as and when payable thereunder, (B) Borrower defaults
under any Material Agreements beyond the expiration of applicable notice and
grace periods, if any, thereunder, (C) any of the Material Agreements are
amended, supplemented, replaced, restated or otherwise modified in any material
respect without Lender's prior written consent or if Borrower consents to a
transfer of any party's interest thereunder without Lender's prior written consent,
or (D) any Material Agreement and/or the estate created thereunder is canceled,
rejected, terminated, surrendered or expires pursuant to its terms, unless in such
case Borrower enters into a replacement thereof in accordance with the applicable
terms and provisions hereof.
(xvii) if Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement not specified in Subsections
(i) to xvi above, for ten (10) days after notice to Borrower from Lender, in the
case of any Default which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such thirty (30) day period and provided
further that Borrower shall have commenced to cure such Default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to cure
the same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed sixty (60) days; or
(xviii) if there shall be default under any of the other Loan Documents
beyond any applicable cure periods contained in such Loan Documents, whether
as to any Borrower Party or the Property, or if any other such event shall occur or
condition shall exist, if the effect of such event or condition is to accelerate the
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maturity of any portion of the Debt or to permit Lender to accelerate the maturity
of all or any portion of the Debt.
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi) or (vii) above with respect to the Borrower and/or SPC Party
only) and at any time thereafter Lender may, in addition to any other rights or remedies available
to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such
action, without notice or demand, that Lender deems advisable to protect and enforce its rights
against Borrower and in and to the Property, including, without limitation, declaring the Debt to
be immediately due and payable, and Lender may enforce or avail itself of any or all rights or
remedies provided in the Loan Documents against Borrower and the Property, including, without
limitation, all rights or remedies available at law or in equity; and upon any Event of Default
described in clauses (vi) or (vii) above with respect to the Borrower and/or SPC Party only, the
Debt and all other obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand, and
Borrower hereby expressly waives any such notice or demand, anything contained herein or in
any other Loan Document to the contrary notwithstanding.
Section 10.2. Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or more of the
rights, powers, privileges and other remedies available to Lender against Borrower under this
Agreement or any of the other Loan Documents executed and delivered by, or applicable to,
Borrower or at law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and whether or not
Lender shall have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to the Property. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as Lender may
determine in its sole discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract
or as set forth herein or in the other Loan Documents. Without limiting the generality of the
foregoing, if an Event of Default is continuing (i) Lender is not subject to any "one action" or
"election of remedies" law or rule, and (ii) all liens and other rights, remedies or privileges
provided to Lender shall remain in full force and effect until Lender has exhausted all of its
remedies against the Property and the Security Instrument has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full.
(b) Lender shall have the right from time to time to partially foreclose the
Security Instrument in any manner and for any amounts secured by the Security Instrument then
due and payable as determined by Lender in its sole discretion including, without limitation, the
following circumstances: (i) in the event Borrower defaults beyond any applicable grace period
in the payment of one or more scheduled payments of principal and interest, Lender may
foreclose the Security Instrument to recover such delinquent payments, or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender
may foreclose the Security Instrument to recover so much of the principal balance of the Loan as
Lender may accelerate and such other sums secured by the Security Instrument as Lender may
DMEAST #17478116 v7 81
elect. Notwithstanding one or more partial foreclosures, the Property shall remain subject to the
Security Instrument to secure payment of sums secured by the Security Instrument and not
previously recovered.
(c) Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other security documents
(the "Severed Loan Documents") in such denominations as Lender shall determine in its sole
discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder.
Borrower shall execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and substance reasonably
satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and execute all
documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any
such documents under such power until three (3) days after notice has been given to Borrower by
Lender of Lender's intent to exercise its rights under such power. Except as may be required in
connection with a Securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be
obligated to pay any costs or expenses incurred in connection with the preparation, execution,
recording or filing of the Severed Loan Documents, and (ii) the Severed Loan Documents shall
not contain any representations, warranties or covenants not contained in the Loan Documents
and any such representations and warranties contained in the Severed Loan Documents will be
given by Borrower only as of the Closing Date.
(d) Any amounts recovered from the Property or any other collateral for the
Loan after an Event of Default may be applied by Lender toward the payment of any interest
and/or principal of the Loan and/or any other amounts due under the Loan Documents in such
order, priority and proportions as Lender in its sole discretion shall determine.
Section 10.3. Right to Cure Defaults.
Lender may, but without any obligation to do so and without notice to or demand on
Borrower and without releasing Borrower from any obligation hereunder or being deemed to
have cured any Event of Default hereunder, make, do or perform any obligation of Borrower
hereunder in such manner and to such extent as Lender may deem necessary. Lender is
authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action
or proceeding to protect its interest in the Property for such purposes, and the cost and expense
thereof (including reasonable attorneys' fees to the extent permitted by law), with interest as
provided in this Section 10.3, shall constitute a portion of the Debt and shall be due and payable
to Lender upon demand. All such costs and expenses incurred by Lender in remedying such
Event of Default or such failed payment or act or in appearing in, defending, or bringing any
action or proceeding shall bear interest at the Default Rate, for the period after such cost or
expense was incurred into the date of payment to Lender. All such costs and expenses incurred
by Lender together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by the liens, claims and security interests
provided to Lender under the Loan Documents and shall be immediately due and payable upon
demand by Lender therefore.
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Section 10.4. Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement shall be cumulative and
not exclusive of any other right, power or remedy which Lender may have against Borrower
pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies may be pursued singly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's sole discretion.
No delay or omission to exercise any remedy, right or power accruing upon an Event of Default
shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any
such remedy, right or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair
any remedy, right or power consequent thereon.
ARTICLE XI.
MISCELLANEOUS
Section 11.1. Successors and Assigns.
All covenants, promises and agreements in this Agreement, by or on behalf of Borrower,
shall inure to the benefit of the legal representatives, successors and assigns of Lender.
Section 11.2. Lender's Discretion.
Whenever pursuant to this Agreement Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of
Lender and shall be final and conclusive. Prior to a Securitization, whenever pursuant to this
Agreement the Rating Agencies are given any right to approve or disapprove, or any
arrangement or term is to be satisfactory to the Rating Agencies, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory, based upon Lender's determination of Rating Agency criteria, shall be substituted
therefore.
Section 11.3. Governing Law.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF
TEXAS, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN
THE STATE OF TEXAS, AND THE PROCEEDS OF THE LOAN DELIVERED
PURSUANT HERETO WERE DISBURSED TO THE STATE OF TEXAS, WHICH
STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSIDP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND
IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
DMEAST #17478116 v7 83
WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES
OF AMERICA.
(b) ANY LEGAL SIDT, ACTION OR PROCEEDING AGAINST
LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR
STATE COURT IN XXX XXXX XX XXX XXXX, XXXXXX XX XXX XXXX,
PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW AND BORROWER WAIVES ANY OBJECTIONS WIDCH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF
ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUIT, ACTION OR PROCEEDING. BORROWER HEREBY IRREVOCABLY
CONSENTS:
TO SERVICE OF PROCESS BY MAIL, PERSONAL SERVICE, OR IN ANY
OTHER METHOD PERMITTED BY APPLICABLE LAW, AT THE ADDRESS
SPECIFIED IN SECTION 11.6 HEREOF, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF
SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER
PROVIDED HEREIN SHALL .BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS HEREUNDER.
Section 11.4. Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement or of any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed
by the party against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given. Except as otherwise
expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any
other or future notice or demand in the same, similar or other circumstances.
Section 11.5. Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any right, power,
remedy or privilege hereunder, or under any other Loan Document, shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise,
or the exercise of any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under this Agreement
or any other Loan Document, Lender shall not be deemed to have waived any right either to
require prompt payment when due of all other amounts due under this Agreement or the other
DMEAST #17478116 v7 84
Loan Documents, or to declare a default for failure to effect prompt payment of any such other
amount. Lender shall have the right to waive or reduce any time periods that Lender is entitled
to under the Loan Documents in its sole and absolute discretion.
Section 11.6. Notices.
All notices, demands, requests, consents, approvals or other communications (any of the
foregoing, a "Notice") required, permitted, or desired to be given hereunder shall be in writing
sent by telefax (with answer back acknowledged) or by registered or certified mail, postage
prepaid, return receipt requested, or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such other address as such
party may hereafter specify in accordance with the provisions of this Section 11.6. Any Notice
shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed,
(b) on the date of sending by telefax if sent during business hours on a Business Day (otherwise
on the next Business Day), (c) on the date of delivery by hand if delivered during business hours
on a Business Day (otherwise on the next Business Day), and (d) on the next Business Day if
sent by an overnight commercial courier, in each case addressed to the parties as follows:
If to Lender:
with a copy to:
If to Borrower:
with a copy to:
Xxxxxx Xxxxxxx Mortgage Capital Holdings LLC
0000 Xxxxxxxx
Xxx X xxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No. 212.507.4859
Xxxxxxx Xxxxx LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xx Xxxxxx
Facsimile No. 215.864.8999
Whitestone Uptown Tower LLC
c/o Whitestone REIT
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxx
Xxxx Xxxxxxx
Facsimile No. 713.465.8847
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: X. Xxxxxxxx Xxxxxxx, V
Facsimile No. 901.543.5999
Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days written notice of such change to the other parties in accordance with the
provisions of this Section 11.6. Notices shall be deemed to have been given on the date as set
DMEAST #17478116 v7 85
forth above, even if there is an inability to actually deliver any such Notice because of a changed
address of which no Notice was given, or there is a rejection or refusal to accept any Notice
offered for delivery. Notice for any party may be given by its respective counsel. Additionally,
Notice from Lender may also be given by Servicer and Lender hereby acknowledges and agrees
that Borrower shall be entitled to rely on any Notice given by Servicer as if it had been sent by
Lender.
Section 11.7. Trial by Jury.
BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT
SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING
IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH
IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
Section 11.8. Headings.
The Article and/or Section headings and the Table of Contents in this Agreement are
included herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 11.9. Severability.
Wherever possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 11.10. Preferences.
Lender shall have the continuing and exclusive right to apply or reverse and reapply any
and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the
extent Borrower makes a payment or payments to Lender, which payment or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been received by
Lender.
DMEAST #17478116 v7 86
Section 11.11. Waiver of Notice.
Borrower shall not be entitled to any notices of any nature whatsoever from Lender
except with respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to Borrower and except
with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive
any notice from Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by Lender to
Borrower.
Section 11.12. Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its agents have acted
unreasonably or unreasonably delayed acting in any case where, by law or under this Agreement
or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, neither Lender nor its agents shall be liable for any monetary damages,
and Borrower's sole remedy shall be limited to commencing an action seeking injunctive relief
or declaratory judgment. Any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
Section 11.13. Expenses; General Indemnity; Mortgage Tax Indemnity; Employee
Benefit Indemnity; Duty to Defend; Survival.
11.13.1. Expenses. Borrower shall pay or, if Borrower fails to pay, reimburse
Lender upon receipt of written notice from Lender, for all reasonable costs and expenses
(including reasonable attorneys' fees and disbursements and any Rating Agency fees and
disbursements) incurred by Lender in connection with (i) the ongoing performance of and
compliance with agreements and covenants of any Borrower Party contained in this Agreement
and the other Loan Documents including, without limitation, confirming compliance with
environmental and insurance requirements; (ii) Lender's ongoing performance of and
compliance with all agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date; (iii) the
negotiation, preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Borrower; (iv) the filing and recording fees and expenses,
title insurance and reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred, in creating and perfecting the Liens in favor
of Lender pursuant to this Agreement and the other Loan Documents; (v) enforcing or preserving
any rights, in response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation or otherwise, in each case against, under or affecting Borrower,
this Agreement, the other Loan Documents, the Property, or any other security given for the
Loan; and (vi) enforcing any obligations of or collecting any payments due from the Borrower
Parties under this Agreement, the other Loan Documents or with respect to the Property or in
connection with any "special servicing" of the Loan (including, without limitation, any costs and
expenses incurred in connection with transferring the Loan to a special servicer) or restructuring
of the credit arrangements provided under this Agreement in the nature of a "work out" or of any
DMEAST #17478116 v7 87
insolvency or bankruptcy proceedings (including, without limitation, loan servicing or special
servicing fees, loan advances, and "work-out" and/or liquidation fees); provided, however, that
Borrower shall not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender.
Any costs due and payable to Lender may be paid to Lender pursuant to the Cash Management
Agreement.
11.13.2. General Indemnity. Borrower shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless Lender Indemnitees (defined below) from and
against any and all claims, suits, liabilities (including, without limitation, strict liabilities),
actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive
damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature
(including but not limited to reasonable attorneys' fees and other costs of defense) (collectively,
the "Losses") that may be imposed upon or incurred by or asserted against any Lender
Indemnitees and directly or indirectly arising out of or in any way relating to any one or more of
the following: (a) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan Documents;
(b) the use or intended use of the proceeds of the Loan; (c) ownership of the Security Instrument,
the Property or any interest therein or receipt of any Rents; (d) any amendment to, or
restructuring of, the Debt, and the Note, this Agreement, the Security Instrument, or any other
Loan Documents; (e) any and all lawful action that may be taken by Lender in connection with
the enforcement of the provisions of this Agreement, the Security Instrument, the Note or any of
the other Loan Documents, whether or not suit is filed in connection with same, or in connection
with Borrower, any guarantor or indemnitor and/or any partner, joint venturer or shareholder
thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or
similar proceeding; (f) any accident, injury to or death of persons or loss of or damage to
property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (g) any use, nonuse or
condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (h) any failure on the part of
Borrower to perform or be in compliance with any of the terms of the Security Instrument;
(i) performance of any labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (j) the failure of any person to file timely with the
Internal Revenue Service an accurate Form 1099-S, Proceeds from Real Estate Transactions, or
Form 0000-X, Xxxxxxxxx for Recipients of Proceeds from Real Estate Broker and Barter
Exchange Transactions, which may be required in connection with the Security Instrument, or to
supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in
connection with which the Security Instrument is made; (k) any failure of the Property to be in
compliance with any Legal Requirements; (1) the enforcement by any Lender Indemnitees of the
provisions of this Section 11.13; (m) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants, or agreements contained in any Lease; (n) the
payment of any commission, charge or brokerage fee to anyone claiming through Borrower
which may be payable in connection with the funding of the Loan; or (o) any misrepresentation
made by Borrower in this Agreement, the Security Instrument or any other Loan Document;
provided, however, that Borrower shall not have any obligation to the Lender Indemnitees
DMEAST #17478116 v7 88
hereunder to the extent that such Losses arise from the gross negligence, illegal acts, fraud or
willful misconduct of the Lender Indemnitees. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all Losses incurred by the
Lender Indemnitees. Any amounts payable to Lender by reason of the application of this Section
11.13 shall become immediately due and payable and shall bear interest at the Default Rate from
the date loss or damage is sustained by Lender Indemnitees until paid.
For purposes of this Section 11.13, the term "Lender Indemnitees" shall mean Lender
and any Person who is or will have been involved in the origination of the Loan, any Person who
is or will have been involved in the servicing of the Loan secured hereby, any Person in whose
name the encumbrance created by the Security Instrument is or will have been recorded, persons
and entities who may hold or acquire or will have held a full or partial interest in the Loan
secured hereby (including, but not limited to, investors or prospective investors in the Securities,
as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest
in the Loan secured hereby for the benefit of third parties) as well as the respective directors,
officers, shareholders, partners, employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other Person who holds or acquires or will have held
a participation or other full or partial interest in the Loan, whether during the term of the Loan or
as a part of or following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial portion of Lender's
assets and business).
11.13.3. Mortgage Tax Indemnity. Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless each Lender Indemnitee from and against
any and all Losses imposed upon or incurred by or asserted against any Lender Indemnitee and
directly or indirectly arising out of or in any way relating to (i) any tax on the making and/or
recording of the Security Instrument, the Note or any of the other Loan Documents, or (ii) any
transfer tax incurred by any Lender Indemnitee in connection with the exercise of remedies
hereunder, under the Security Instrument or under any other Loan Documents.
11.13.4. Employee Benefit Plans Indemnity. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless each Lender Indemnitee from and
against any and all Losses (including, without limitation, reasonable attorneys' fees and costs
incurred in the investigation, defense, and settlement of Losses incurred in correcting any
prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, in Lender's sole discretion)
that Lender may incur, directly or indirectly, as a result of a default under Sections 3.1.8 and/or
4.2.11 hereof.
11.13.5. Duty to Defend; Attorney's Fees and Other Fees and Expenses. Upon
written request by any Lender Indemnitee, Borrower shall defend such Lender Indemnitees (if
requested by any Lender Indemnitee, in the name of the Lender Indemnitee) by attorneys and
other professionals approved by the Lender Indemnitees. Notwithstanding the foregoing, any
Lender Indemnitees may, in their sole discretion, engage their own attorneys and other
DMEAST #17478116 v7 89
professionals to defend or assist them, and, at the option of Lender Indemnitees, their attorneys
shall control the resolution of any claim or proceeding. Upon demand, Borrower shall pay or, in
the sole discretion of the Lender lndemnitees, reimburse, the Lender lndemnitees for the
payment of reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
11.13.6. Survival. The obligations and liabilities of Borrower under this Section
11.13 shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment,
entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of
foreclosure of the Security Instrument, except with respect to Losses arising as a result of a first
event occurring after the date on which Lender (or the applicable Lender Indemnitee) acquires
title to or possession of the Property via foreclosure, deed in lieu of foreclosure, or otherwise;
provided that such losses are not the result of an action or inaction by Borrower, its Affiliates or
any of their respective authorized agents or employees.
11.13.7. Environmental Indemnity. Simultaneously herewith, Borrower and
Guarantor have executed and delivered the Environmental Indemnity to Lender, which
Environmental Indemnity is not secured by the Security Instrument.
Section 11.14. Schedules Incorporated. The Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set forth in the body
hereof.
Section 11.15. Offsets, Counterclaims and Defenses. Any assignee of Lender's interest
in and to this Agreement and the other Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to such documents which Borrower may
otherwise have against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any such unrelated
offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by
Borrower.
Section 00.00.Xx Joint Venture or Partnership; No Third Party Beneficiaries.
(a) Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing herein or
therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lender or to grant Lender any interest in the Property other
than that of mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and nothing contained in this Agreement or the other Loan Documents shall be
deemed to confer upon anyone other than Lender any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein. All conditions
to the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for
the benefit of Lender and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that Lender will refuse to
DMEAST #17478116 v7 90
make the Loan in the absence of strict compliance with any or all thereof and no other Person
shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole discretion, Lender
deems it advisable or desirable to do so.
Section 11.17.Publicity.
All news releases, publicity or advertising by Borrower or its Affiliates through any
media intended to reach the general public which refers to the Loan Documents or the financing
evidenced by the Loan Documents, to Lender, Xxxxxx Xxxxxxx Mortgage Capital Holdings LLC,
or any of their Affiliates shall be subject to the prior approval of Lender.
Section 11.18. Waiver of Marshalling of Assets.
To the fullest extent permitted by law, Borrower, for itself and its successors and assigns,
waives all rights to a marshalling of the assets of Borrower, Borrower's members or partners and
others with interests in Borrower, and of the Property, and shall not assert any right under any
laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters whatsoever to defeat,
reduce or affect the right of Lender under the Loan Documents to a sale of the Property for the
collection of the Debt without any prior or different resort for collection or of the right of Lender
to the payment of the Debt out of the net proceeds of the Property in preference to every other
claimant whatsoever.
Section 11.19. Waiver of Offsets/Defenses/Counterclaims.
Borrower hereby waives the right to assert a counterclaim, other than a compulsory
counterclaim, in any action or proceeding brought against it by Lender or its agents or otherwise
to offset any obligations to make the payments required by the Loan Documents. No failure by
Lender to perform any of its obligations hereunder shall be a valid defense to, or result in any
offset against, any payments which Borrower is obligated to make under any of the Loan
Documents.
Section 11.20. Conflict; Construction of Documents; Reliance.
In the event of any conflict between the provisions of this Agreement and any of the other
Loan Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by competent counsel in connection with the
negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall
not be subject to the principle of construing their meaning against the party which drafted same.
Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own
judgment and advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate
of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights
or remedies available to it under any of the Loan Documents or any other agreements or
instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on the basis of the
DMEAST #17478116 v7 91
foregoing with respect to Lender's exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive with the
business of Borrower or its Affiliates.
Section 11.21. Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the transactions
contemplated by this Agreement other than Xxxx Xxxxx of HFF, L.P. ("Broker"). Borrower
shall indemnify, defend and hold Lender Indemnitees harmless from and against any and all
claims, liabilities, costs and expenses of any kind (including Lender Indemnitee's attorneys' fees
and expenses) in any way relating to or arising from a claim by any Person that such Person
acted on behalf of Borrower or Lender in connection with the transactions contemplated herein.
The provisions of this Section 11.21 shall survive the expiration and termination of this
Agreement and the payment of the Debt
Section 11.22. Exculpation.
Subject to the qualifications below, Lender shall not enforce the liability and obligation
of Borrower to perform and observe the obligations contained in the Note, this Agreement, the
Security Instrument or the other Loan Documents by any action or proceeding wherein a money
judgment or any deficiency judgment or other judgment establishing personal liability shall be
sought against Borrower or any principal, director, officer, employee, beneficiary, shareholder,
partner, member, trustee, agent, or affiliate of Borrower (but specifically excluding Guarantor) or
any legal representatives, successors or assigns of any of the foregoing (collectively, the
"Exculpated Parties"), except that Lender may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Lender to enforce and
realize upon its interest under the Note, this Agreement, the Security Instrument and the other
Loan Documents, or in the Property, the Rents, or any other collateral given to Lender pursuant
to the Loan Documents; provided, however, that, except as specifically provided herein, any
judgment in any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Property, in the Rents and in any other collateral given to
Lender, and Lender, by accepting the Note, this Agreement, the Security Instrument and the
other Loan Documents, shall not xxx for, seek or demand any deficiency judgment against
Borrower or any of the Exculpated Parties, in any such action or proceeding under or by reason
of or under or in connection with the Note, this Agreement, the Security Instrument or the other
Loan Documents. The provisions of this Section shall not, however, (a) constitute a waiver,
release or impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Security Instrument; (c) affect the validity or enforceability of any
indemnity, guaranty, or similar instrument made in connection with the Loan or any of the rights
and remedies of Lender thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of the assignment of leases and rents contained in the
Security Instrument; (f) impair the right of Lender to enforce the provisions of the Environmental
Indemnity or of Section 4.1.6(h) hereof; (g) constitute a prohibition against Lender to seek a
deficiency judgment against Borrower in order to fully realize on any security given by Borrower
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in connection with the Loan or to commence any other appropriate action or proceeding in order
for Lender to exercise its remedies against such security; or (h) constitute a waiver of the right of
Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to
the extent of any Losses incurred by Lender (including attorneys' fees and costs reasonably
incurred) arising out of or in connection with any of the following:
(i) fraud or willful misrepresentation by Borrower, any of the
Exculpated Parties or any Borrower Party in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower, any of the
Exculpated Parties or any Borrower Party in connection with the Loan;
(iii) the breach beyond any applicable notice and cure periods expressly
contained in the Environmental Indemnity or in any other Loan Document, of any
representation, warranty, covenant or indemnification provision in the
Environmental Indemnity or in any other Loan Document concerning
environmental laws, hazardous substances and asbestos and any indemnification
of Lender with respect thereto in any such document;
(iv) waste to the Property (or any portion thereof) caused by intentional
acts or intentional omissions of Borrower, any Exculpated Party, or any Borrower
Party, or the removal or disposal of any portion of the Property after an Event of
Default;
(v) the misapplication, misappropriation or conversion by Borrower,
any of the Exculpated Parties or the Borrower Parties, to the extent actually
received by Borrower, any of the Exculpated Parties or the Borrower Parties, of
(A) any insurance proceeds paid by reason of any loss, damage or destruction to
the Property, (B) any Awards or other amounts received in connection with the
Condemnation of all or a portion of the Property, or (C) any Rents following an
Event of Default or (D) any Tenant security deposits or Rents collected in
advance;
(vi) any Personal Property of Borrower taken from the Property by or
on behalf of Borrower, any of the Exculpated Parties or any Borrower Parties, and
not replaced with Personal Property of the same utility and of the same of greater
value;
(vii) any act of arson by Borrower, any of the Exculpated Parties, or any
Borrower Parties;
(viii) any fees or comrmss1ons paid by Borrower or on behalf of
Borrower after the occurrence of an Event of Default to any Exculpated Party or
any Borrower Party in violation of the terms of the Note, this Agreement, the
Security Instrument or the other Loan Documents;
(ix) failure to pay Taxes, charges for labor or materials, or other
charges that can create Liens on any portion of the Property (unless such Taxes
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and charges are the subject of a bona fide dispute in which Borrower is contesting
the amount or validity thereof in accordance with the terms of this Agreement)
and/or the failure to pay Insurance Premiums in accordance with the terms hereof;
(x) any security deposits, advance deposits or any other deposits
collected with respect to the Property which are not delivered to Lender upon a
foreclosure of the Property or action in lieu thereof, except to the extent any such
security deposits were applied in accordance with the terms and conditions of any
of the Leases prior to the occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof;
(xi) any failure by Borrower to permit on-site inspections of the
Property as required by, and subject to the terms of, this Agreement and/or the
other Loan Documents;
(xii) any failure of Borrower to appoint a new property manager upon
the request of Lender as required by the terms of this Agreement and/or the other
Loan Documents;
(xiii) Borrower's breach of, or failure to comply with, the
representations, warranties and covenants contained in Sections 4.1.5 and/or
4.1.9(c) hereof;
(xiv) Borrower's indemnification of Lender Indemnitees set forth m
Sections 9.2, 11.13.3, and 11.13.4 hereof;
(xv) any litigation or other legal proceeding related to the Debt filed by
Borrower, any Borrower Party or any Exculpated Party that delays, opposes,
impedes, obstructs, hinders, enjoins or otherwise interferes with or frustrates the
efforts of Lender to exercise any rights and remedies available to Lender as
provided herein and in the other Loan Documents;
(xvi) the seizure or forfeiture of the Property, or any portion thereof, or
Borrower's interest therein, resulting from criminal wrongdoing by Borrower, any
of the Exculpated Parties, or any Borrower Parties;
(xvii) Borrower's failure to make the Condemnation Payment, if
required, pursuant to Section 5.3.3 hereof; and/or
(xviii) a casualty affecting the Property, which results in Losses to Lender
because of (1) the Property is non-conforming or legal non-conforming under the
applicable zoning laws, ordinances and/or regulations in the jurisdiction in which
the Property is located ("Zoning Code"), and (2) the affected Improvements
cannot be rebuilt to their pre-casualty condition under the terms of the Zoning
Code other than as a result of changes to the Zoning Code as in effect as of the
date hereof, and (3) the Net Proceeds available to Lender under the terms of the
Security Instrument are insufficient to repay the Debt in full or Borrower does not
otherwise repay the Debt in full.
DMEAST #17478116 v7 94
Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan
Documents, (A) Lender shall not be deemed to have waived any right which Lender may have
under Section 506(a), 506(b), llll(b) or any other provisions of the Bankruptcy Code to file a
claim for the full amount of the Debt or to require that all collateral shall continue to secure all of
the Debt owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to Borrower in the event that: (i) the first full monthly payment of principal and
interest under this Agreement and the Note is not paid when due; (ii) Borrower fails to comply
with the provisions of Section 4.2.1 hereof or Article 8 hereof; (iii) Borrower fails to comply
with any provision of Section 3.1.24 hereof; (iv) Borrower fails to comply with the Cash
Management Agreement relating to the institution of cash management generally; (v) Borrower
or any SPC Party files a voluntary petition under the Bankruptcy code or any other Federal or
state bankruptcy or insolvency law; (vi) an Affiliate, officer, director, or representative which
Controls, directly or indirectly, Borrower or any SPC Party, files, or joins in the filing of, an
involuntary petition against Borrower or any SPC Party under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning
creditors for any involuntary petition against Borrower or any SPC Party from any Person;
(vii) Borrower or any SPC Party files an answer consenting to or otherwise acquiescing in or
joining in any involuntary petition filed against it, by any other Person under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition from any Person; (viii) any Affiliate,
officer, director, or representative which Controls Borrower or any SPC Party consents to or
acquiesces in or joins in an application for the appointment of a custodian, receiver, trustee, or
examiner for Borrower or any SPC Party or any portion of the Property; (ix) Borrower or any
SPC Party makes an assignment for the benefit of creditors, or admits, in writing or in any legal
proceeding, its insolvency or inability to pay its debts as they become due; (x) there is
substantive consolidation of Borrower (or any Restricted Party) with any other Person in
connection with any federal or state bankruptcy proceeding involving the Guarantor or any of its
Affiliates, (xi) Borrower (or any Restricted Party) contests or opposes any motion made by
Lender to obtain relief from the automatic stay or seeks to reinstate the automatic stay in the
event of any federal or state bankruptcy or insolvency proceeding involving the Guarantor or its
Affiliates; or (xii) Borrower (or any Restricted Party) accepts from any Guarantor or Guarantor
solicits or provides any debtor-in-possession financing to Borrower in the event Borrower (or
any Restricted Party) is the subject of a bankruptcy or insolvency proceeding.
The obligations and liabilities of Borrower under this Section 11.22 shall fully survive
indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of
foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the
Security Instrument.
DMEAST #17478116 v7 95
Section 11.23. Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such parties,
whether oral or written, including, without limitation, the application letter dated August 9, 2013
(as amended) between Borrower and Lender, are superseded by the terms of this Agreement and
the other Loan Documents.
Section 11.24. Servicer.
(a) At the option of Lender, the Loan may be serviced by a servicer (the
"Servicer") selected by Lender and Lender may delegate all or any portion of its responsibilities
under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing
agreement (the "Servicing Agreement") between Lender and Servicer. Borrower shall be
responsible for any reasonable set-up fees or any other initial costs relating to or arising under
the Servicing Agreement; provided, however, that Borrower shall not be responsible for payment
of the monthly servicing fee due to the Servicer under the Servicing Agreement. Servicer shall,
however, be entitled to reimbursement of costs and expenses as and to the same extent (but
without duplication) as Lender is entitled thereto under the applicable provisions of this
Agreement and the other Loan Documents.
(b) Upon notice thereof from Lender, Servicer shall have the right to exercise
all rights of Lender and enforce all obligations of Borrower pursuant to the provisions of this
Agreement, the Note and the other Loan Documents.
(c) Provided Borrower shall have been given notice of Servicer's address by
Lender, Borrower shall deliver to Servicer duplicate originals of all notices and other instruments
which Borrower may or shall be required to deliver to Lender pursuant to this Agreement, the
Note and the other Loan Documents (and no delivery of such notices or other instruments by
Borrower shall be of any force or effect unless delivered to Lender and Servicer as provided
above).
Section 11.25.Joint and Several Liability.
If more than one Person has executed this Agreement as "Borrower," the representations,
covenants, warranties and obligations of all such Persons hereunder shall be joint and several.
Section 11.26. Creation of Security Interest.
Notwithstanding any other provision set forth in this Agreement, the Note, the Security
Instrument or any of the other Loan Documents, Lender may at any time create a security
interest in all or any portion of its rights under this Agreement, the Note, the Security Instrument
and any other Loan Document (including, without limitation, the advances owing to it) in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
DMEAST #17478116 v7 96
Section 11.27.Assignments and Participations.
(a) The Lender may assign to one or more Persons all or a portion of its rights
and obligations under this Loan Agreement.
(b) Lender may sell participations to one or more Persons in or to all or a
portion of its rights and obligations under this Loan Agreement; provided, however, that
(i) Lender's obligations under this Loan Agreement shall remain unchanged, (ii) Lender shall
remain solely responsible to the other parties hereto for the performance of such obligations,
(iii) Lender shall remain the holder of any Note for all purposes of this Loan Agreement and
(iv) Borrower shall continue to deal solely and directly with Lender in connection with Lender's
rights and obligations under and in respect of this Loan Agreement and the other Loan
Documents.
(c) Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.27, disclose to the assignee or
Participant or proposed assignee or Participant, as the case may be, any information relating to
Borrower or any of its Affiliates or to any aspect of the Loan that has been furnished to the
Lender by or on behalf of the Borrower or any of its Affiliates.
(d) Upon such assignment the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such assignment, have the rights and obligations of
Lender under this Agreement.
(e) In connection with any Secondary Market Transaction, including, without
limitation, any assignment or participation pursuant to this Section 11.27, at the request of
Lender, Borrower shall (i) appoint, as its agent, a registrar and transfer agent (the "Register")
reasonably acceptable to Lender which shall maintain, subject to such reasonable regulations as
it shall provide, such books and records as are necessary for the registration and transfer of the
Note in a manner that shall cause the Note to be considered to be in registered form for purposes
of Section 163(f) of the Code, and (ii) otherwise cooperate with Lender in order to cause the
Note to be in registered form pursuant to Section 163(f) of the Code. The option to convert the
Note into registered form once exercised may not be revoked. Any agreement setting out the
rights and obligation of the Register shall be subject to the reasonable approval of Lender.
Borrower may revoke the appointment of any particular person as Register, effective upon the
effectiveness of the appointment of a replacement Register, reasonably acceptable to Lender.
The Register shall not be entitled to any fee from Borrower or Lender or any other lender in
respect of transfers of the Note and other Loan Documents.
Section 11.28. Set-Off. In addition to any rights and remedies of Lender provided by
this Loan Agreement and by law, the Lender shall have the right, without prior notice to
Borrower, any such notice being expressly waived by Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by Borrower hereunder (whether at
the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against
such amount any and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or
DMEAST #17478116 v7 97
owing by Lender or any Affiliate thereof to or for the credit or the account of Borrower. Lender
agrees promptly to notify Borrower after any such set-off and application made by Lender;
provided that the failure to give such notice shall not affect the validity of such set-off and
application.
Section 11.29. State-Specific Provisions. IN ACCORDANCE WITH SECTION
26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, TIDS AGREEMENT
AND THE OTHER DOCUMENTS EVIDENCING, SECURING OR PERTAINING TO
ALL OR ANY PORTION OF THE LOAN, REPRESENT THE FINAL AGREEMENT
BETWEEN BORROWER AND LENDER AS TO THE SUBJECT MATTER THEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH
PARTIES.
[NO FURTHER TEXT ON THIS PAGE]
DMEAST #17478116 v7 98
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year first above written.
LENDER:
XXXXXX XXXXXXX MORTGAGE
CAPITAL HOLDINGS LLC, a New York
limited liability company
[Signatures continue on next page.]
[Signature Page to Loan Agreement]
,?'-· ·-f
/
··~ _,_..
Xxxxxxx Xxxxxxx
Vice President
BORROWER:
WHITESTONE UPTOWN TOWER, LLC, a Delaware
limited liability company
By: Whitestone REIT Operating Partnership, L.P.,
a Delaware limited partnership
Its: Sole Member
By: Whitestone REIT,
a Maryland real estate investment trust
Its: General Partner /
By: Q:-:-~-z::_:s-::;
- £1 I I
Name: v-a ~ Y, b4-.t!.
Title: ot--t 111£_/! o,.?.t!'.(,4-rr.J (f.- o,;r:../t&£ ,((_
[Signature Page to Loan Agreement]
DMEAST #17478116 v7
SCHEDULE I
RENT ROLL
SCH. I-1
Rent Roll- Occupancy Summary
/\s of Date: 09/24/2013 Show Excluded Units; No Show All Amounts: tl!onthly
Property: UPTOWN TOWER- 525 - 525
Unit
1000, 115
0000
0000
0000
110
1100
1160
120
1210
1230
1250
lease Name
NEW lJFESTYLES, INC.
DISPUTE MEDIATION, I
WATERS, HARDY & CO.
Universal Protection
Xxxxx X. Xxxxx
Xxxxxxxxx/Xxxxx/Drak
Lease Type
Office net
Office net
Office net
Office net
Office net
Office net
XXXXXX XXXXXXX PROPE Office net
Victory Telecom Office net
ABDELHADI & ASSOCIAT Office net
Xxxxxxxxx Xxxxxxxx, Office net
CAPSTONE UNDERWRITER Office net
1255 Law Office of Xxxx A Office net
1260 Xxxxxxxxxx Xxxxxxxx, Office net
150 EXECUTIVE SNACK SHOP Office net
160 UBERTY MUTUALINSUR Office net
170 SOUTHWEST SEARCH, L Office net
210, 215, 260, .ElJGIBILITY SERVICES Office net
265, 285
225 XXXX X. XXXX XX. Office net
230 The Xxxxxxx Law Arm Office net
235 WHITESTONE REIT Office net
240
250
300
360
370
380
400
405
410
420
Whitestone Reit
XXXXX XXXX
XXXXX LAW, P.C.
Office net
Office net
Office net
DALLAS ANESTHESIOLOG Office net
LAW OFFICE OF XXXX J Office net
XXXX ENGINEERING, IN Office net
VEHICLE ACCEPTANCE C Office net
Maxim Healthcare Ser Office net
Madefey & Company Office net
Berlof & Xxxxxx, P.C Office net
Lease
From
05/05/1998
11/01/2008
08/22/2002
05/31/2011
09/29/2011
03/14/1994
Lease
To
12/31/2018
11/30/2019
11/30/2014
11/30/2018
02/28/2017
04/30/2016
06/01/2003 07/31/2015
04/01/2013 08/31/2016
07/01/2007 08/31/2017
08/01/2010 10/31/2013
04/06/2001 10/31/2016
12/31/2009 10/31/2015
06/01/2011 08/31/2014
10/30/1998 12/31/2016
12/01/2012 11/30/2017
12/06/2000 06/30/2018
06/06/2000 06/30/2018
04/08/2002 12/31/2014
12/12/2011 04/30/2014
12/01/2008 11/30/2013
06/01/2009
02/10/2003 07/31/2015
08/01/2009 06/30/2018
06/01/2008 12/31/20 18
08/01/2009
08/15/2006 05/30/2014
04/14/2004 07/31/2015
05/01/2009 05/31/2014
12/31/2010 12/31/2017
07/20/1999
Term
{Months)
248
133
148
91
66
266
146
41
122
39
187
71
39
219
60
000
000
000
29
60
150
107
127
94
136
61
85
Area
7,387
5,421
3,496
3,709
1,681
. 13,870
1,037
2,014
2,598
1,773
5,152
3,672
2,500
1,499
1,328
4,902
11,873
1,231
1,166
669
1,316
1,531
4,488
2,342
2,355
2,059
4,246
4,226
3,083
1,574
Base Rent
0.00
9,035.00
5,972.33
0.00
2,451.46
16,181.67
1,555.50
2,853.17
4,005.23
2,733.38
8,925.00
5,967.00
3,750.00
1,311.63
1,992.00
7,148.50
17,314.79
2,051.67
1,578.96
14.00
2,083.00
2,424.08
6,545.00
3,513.00
3,532.50
2,959.82
6,457.46
7,395.50
4,239.13
2,033.08
Rent
Per Area
0.00
1.67
1.71
0,00
1.46
1.17
1.50
1.42
1.54
1.54
1.73
1.63
1.50
.0.88
1.50
1.46
1.46
1.67
1.35
0.02
1.58
1.58
1.46
1.50
1.50
1.44
1.52
1.75
1.38
1.29
Recovery
Per Area
0.00
0.00
0.00
O.Xx
X.D3
0.04
0.00
0.00
0.06
0.00
0.00
0.00
0.03
0.04
0.00
0.00
o.oo
0.04
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.03
0.02
Mise
Per Area
0.00
0.00
0.00
0.00
0.00
o.oo
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Total
Per Area
0.00
1.67
1.71
0.01
1.49
1.20
1.50
1.42
1.60
1.54
1.73
1.63
1.53
0.91
1.50
1.46
1.46
1.70
1.35
0.02
1.58
1.58
1.46
1.50
1.50
1.44
1.52
1.75
1.40
1.31
Page 1
Deposit
12,935.25
10,164.38
4,370.00
2,769.25
2,661.58
0.00
1,425.88
2,056.58
4,784.85
2,733.38
5,8.02.42
6,120.00
3,750.00
1,100.00
0.00
o.oo
13,547.80
1,641.33
2,269.33
0.00
0.00
2,000.00
2,000.00
3,805.75
3,532.50
2,917.00
2,743.00
0.00
0.00
1,249.33
Tuesday - >tember 24, 2013
l~s of Date: 09/24/2013 Show Excluded Units: No Show All Amounts: IVJonthly
430
450
515
518
520
530,550
580
600
610
630
650, 670
700
702
705
710
750
760
770
800
850
870,870A
900
910
920
945
950
ROOF3
ROOFS
1030
1150
1165
1170
1200
INTEGRATED SERVICES Office net
XXXXXXX & ASSOCIATES Office net
Naturopathic Health Office net
J HUNTER & ASSOCIATE Office net
UPTOWN PSYCHOTHERAPY Office net
MOSAIC FAMILY SERVIC Office net
YWCA OF METRO DALLAS Office net
Whitestone Executive Office net
THE XXXXXXXXX CENTER Office net
Quest XXX, Inc Office net
SCOmE X. XXXXX Office net
Royal Palms Travel, Office net
Universal Managers I Office net
The Guarantee Compan Office net
SILVER SCREEN TELE-R Office net
ALZHEIMER$ DISEASE A Office net
Colliers Internation Office net
Home Savings of Amer Office net
XXXXXXX LICENSING, I Office net
XXXXXXX CORPORATION Office net
Xxx X. Xxxxxx XX, At Office net
TECON CORPORATION Office net
The XxXxxx Law Firm Office net
ICA INC. Office net
Xxxxxxxx, Xxxx & Ass Office net
Bluebonnet Hospice C Office net
METRO PCS TEXAS, LLC Office net
COGENT COMMUNICATION Office net
VACANT N/A
XXXXXX
XXXXXX
XXXXXX
XXXXXX
N/A
N/A
N/A
N/A
Rent Roil - 0(, "HlCY Summary
06/01/2003
01/14/2008
09/20/2000
07/01/2012
11/29/2001
04/02/2002
12/30/2004
07/01/2009
09/15/2007
01/01/2012
10/09/2001
10/01/2011
08/26/2011
12/01/2012
04/01/2007
09/01/2005
10/04/2010
03/08/2011
07/01/2008
12/10/2001
12/01/2010
07/11/2003
03/15/2013
09/01{2008
11/15/2012
09(27/2010
11/01]2007
06/30/2017
06/13/2015
09/30/2016
09/30/2015
02/28/2017
08/31/2016
10/31/2013
08/31/2014
02/28/2015
04/30/2015
12/31/2013
01{31/2016
08/31/2014
05/31/2015
03/03/2016
05/07/2014
09/30/2015
09/14/2014
04/30/2016
08/31/2016
08/31/2018
12/31/2013
04/15/2018
12/26/2014
10/31/2017
01/01/1900 12/31/2017
169
90
193
39
000
000
000
84
38
163
27
38
89
117
66
39
87
154
65
158
66
64
66
52
120
1416
2,901
6,032
1,814
622
765
8,849
7,451
12,850
2,972
916
2,311
2,078
1,218
1,063
4,733
7,074
3,371
2,375
2,607
13,751
2,926
5,817
1,854
4,075
1,499
3,265
3,230
1,525
5,467
2,727
4,291.06
10,304.67
2,532.05
933.00
1,179.38
12,904.80
11,486.96
16,062.50
4,891.42
1,335.84
3,947.96
3,117.00
1,700.17
1,550.21
7,243.41
12,379.50
5,337.42
3,513.02
4,127.75
21,772.42
3,077.25
8,967.88
2,781.00
6,621.88
2,248.50
4,965.53
2,086.70
500.00
0.00
0.00
0.00
0.00
0.00
1.48
1.71
1.40
1.50
1.54
1.46
1.54
1.25
1.65
1.46
1.71
1.50
1.40
1.46
1.53
1.75
1.58
1.48
1.58
1.58
1.05
1.54
1.50
1.63
1.50
1.52
0.00
0.00
0.00
0.00
0.06
0.00
0.04
0.06
0.06
0.00
0.00
0.00
0.00
0.14
0.00
0.04
0.03
0.04
0.00
0.00
0.00
0.04
o.oo
0.00
0.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.24
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.54
1.95
1.43
1.56
1.60
1.46
1.54
1.25
1.65
1.60
1.73
1.54
1.42
1.49
1.53
1.75
1.58
1.52
1.58
1.58
1.07
1.55
1.50
1.63
1.50
1.52
0.00
0.00
0.00
0,00
Page 2
3,848.92
10,556.00
2,012.50
933.00
1,147.50
7,366.06
0.00
0,00
3,271.42
1,374.00
3,225.77
2,056.58
1,700.17
0.00
4,098.25
9,137.25
5,618.34
3,513.03
5,082.50
22,918.00
2,240.42
0.00
3,012.75
6,621.88
0.00
5,101.57
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Tuesday ~ ·tember 24, 2013
As of Date: 09/24/2013 Show Excluded Units: 1\lo Show All Amounts: fVIonthly
Page 3
1210A VACANT N/A 518 0.00 0.00 0.00 0.00 0.00 0.00
1270 VACANT N/A 2,973 0.00 0.00 0.00 0.00 0.00 0.00
165 VACANT N/A - 373 0.00 0.00 0.00 0.00 0.00 0.00
000 XXXXXX X/X - 1,228 0.00 0.00 o.oo 0.00 0.00 0.00
255 VACANT N/A 2,265 0.00 0.00 0.00 0.00 0.00 0.00
303 VACANT N/A 0.00 0.00
305 VACANT N/A 1,188 0.00 0.00 0.00 0.00 0.00 0.00
310 VACANT N/A 1,975 0.00 0.00 0.00 0.00 0.00 0.00
320 VACANT N/A 1,848 0.00 0.00 0.00 0.00 0.00 o.oo
330 VACANT N/A 1,336 0.00 0.00 0.00 0.00 0.00 0.00
340 VACANT N/A 1,334 0.00 0.00 0.00 0,00 0.00 0.00
350 VACANT N/A 2,532 0.00 0.00 o.oo 0.00 0.00 0.00
555 VACANT N/A 2,576 0.00 0.00 0.00 0.00 0.00 0.00
640 VACANT N/A 2,250 0.00 0.00 0.00 0.00 0.00 0.00
640A VACANT N/A 696 0.00 0.00 0.00 0.00 0.00 0.00
860 VACANT N/A 2,544 0.00 0.00 0.00 0.00 0.00 0.00
905 VACANT N/A 2,543 0.00 0.00 0.00 0.00 0.00 0.00
930 VACANT N/A 2,421 0.00 0.00 0,00 0.00 0.00 0.00
A VACANT N/A 73 0.00 0.00 0.00 0.00 0.00 0.00
PLUG VACANT N/A - 552 0.00 0.00 0.00 0.00 0.00 0.00
Summary
Total Total Total Total
Rent Recovery Mist Charges Total
Total Units Pertentage Total Area Percentage Total Base Rent Per Area Per Area Per Area Per Area Deposit
Occupied 66 72.53% 209,387 ·82.58% 297,883.14 1.42 0.01 0.01 1.44 201,215.52
Vacant 25 27.47% 44,174 17.42% 0.00 0.00 0.00 0.00 0.00 0.00
Totals 91 253,561 297,883.14 1.17 0.01 0.01 1.19 201,215.52
Rent Roll - Or· ''lncy Summary Tuesday ~ 'tember 24, 2013
Required Repair
Replace building
perimeter sealant
DMEAST #17478116 v7
SCHEDULE II
REQUIRED REPAIRS
Deadline Deposit Amount
November 26,2013 N/A
SCH. II-1
DMEAST #17478116 v7
SCHEDULE III
ORGANIZATIONAL CHART
SCH. III-1
Whitestone REIT, a Maryland
real estate investment trust Limited Partners
~LP
12292124.1
Whitestone REIT Operating
Partnership, L.P., a Delaware
limited partnership
100%
Whitestone Uptown Tower,
LLC, a Delaware limited liability
company
DMEAST #17478116 v7
SCHEDULE IV
[Intentionally omitted]
SCH. N-1
DMEAST #17478116 v7
SCHEDULEV
[Intentionally Omitted]
SCH. V-1
DMEAST #17478116 v7
SCHEDULE VI
[Intentionally Omitted]
SCH. VI-1
OM EAST #17 478116 v7
SCHEDULE VII
INTENTIONALLY OMITTED
SCH. VIII-1
