EXHIBIT 99.1
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LOAN AGREEMENT
Dated as of January 24, 2006
By and Between
BEHRINGER HARVARD RIVERVIEW, LLC
And
CITIGROUP GLOBAL MARKETS REALTY CORP.
as Lender
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TABLE OF CONTENTS
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1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION...............................1
1.1 SPECIFIC DEFINITIONS.........................................1
1.2 INDEX OF OTHER DEFINITIONS..................................12
1.3 PRINCIPLES OF CONSTRUCTION..................................14
1.4 INTENTIONALLY OMITTED.......................................14
2. GENERAL LOAN TERMS...................................................14
2.1 THE LOAN....................................................14
2.2 INTEREST; MONTHLY PAYMENTS..................................15
2.2.1 GENERALLY..........................................15
2.2.2 DEFAULT RATE.......................................15
2.2.3 TAXES..............................................15
2.2.4 NEW PAYMENT DATE...................................16
2.3 LOAN REPAYMENT..............................................16
2.3.1 REPAYMENT..........................................16
2.3.2 MANDATORY PREPAYMENTS..............................16
2.3.3 DEFEASANCE.........................................17
2.3.4 OPTIONAL PREPAYMENTS...............................19
2.4 RELEASE OF PROPERTY.........................................19
2.4.1 RELEASE ON DEFEASANCE..............................19
2.4.2 RELEASE ON PAYMENT IN FULL.........................19
2.5 PAYMENTS AND COMPUTATIONS...................................19
2.5.1 MAKING OF PAYMENTS.................................19
2.5.2 COMPUTATIONS.......................................20
2.5.3 LATE PAYMENT CHARGE................................20
3. CASH MANAGEMENT AND RESERVES.........................................20
3.1 CASH MANAGEMENT ARRANGEMENTS................................20
3.2 REQUIRED REPAIRS;...........................................20
3.2.1 COMPLETION OF REQUIRED REPAIRS.....................20
3.2.2 REQUIRED REPAIRS RESERVES..........................21
3.3 TAXES AND INSURANCE.........................................21
3.4 INITIAL LEASING RESERVE.....................................22
3.5 ALCOA LEASE TERMINATION PAYMENT.............................22
3.6 OPERATING EXPENSE SUBACCOUNT................................25
3.7 CASUALTY/CONDEMNATION SUBACCOUNT............................26
3.8 SECURITY DEPOSITS...........................................26
3.9 CASH COLLATERAL SUBACCOUNT..................................26
3.10 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS............27
3.11 PROPERTY CASH FLOW ALLOCATION...............................27
3.12 INITIAL DEPOSITS INTO RESERVES..............................28
3.13 GUARANTY IN LIEU OF ROLLOVER RESERVE........................28
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4. REPRESENTATIONS AND WARRANTIES.......................................28
4.1 ORGANIZATION; SPECIAL PURPOSE...............................28
4.2 PROCEEDINGS; ENFORCEABILITY.................................29
4.3 NO CONFLICTS................................................29
4.4 LITIGATION..................................................29
4.5 AGREEMENTS..................................................29
4.6 TITLE.......................................................30
4.7 NO BANKRUPTCY FILING........................................30
4.8 FULL AND ACCURATE DISCLOSURE................................31
4.9 TAX FILINGS.................................................31
4.10 NO PLAN ASSETS..............................................31
4.11 COMPLIANCE..................................................31
4.12 CONTRACTS...................................................32
4.13 FEDERAL RESERVE REGULATIONS; INVESTMENT COMPANY ACT.........32
4.14 EASEMENTS; UTILITIES AND PUBLIC ACCESS......................32
4.15 PHYSICAL CONDITION..........................................33
4.16 LEASES......................................................33
4.17 FRAUDULENT TRANSFER.........................................33
4.18 OWNERSHIP OF BORROWER.......................................34
4.19 PURCHASE OPTIONS............................................34
4.20 MANAGEMENT AGREEMENT........................................34
4.21 HAZARDOUS SUBSTANCES........................................34
4.22 NAME; PRINCIPAL PLACE OF BUSINESS...........................35
4.23 OTHER DEBT..................................................35
4.24 INTENTIONALLY OMITTED.......................................35
4.25 INTENTIONALLY OMITTED.......................................35
4.26 NO KNOWLEDGE OF ALCOA LEASE TERMINATION.....................35
5. COVENANTS............................................................36
5.1 EXISTENCE...................................................36
5.2 TAXES AND OTHER CHARGES.....................................36
5.3 ACCESS TO PROPERTY..........................................36
5.4 REPAIRS; MAINTENANCE AND COMPLIANCE; ALTERATIONS............36
5.4.1 REPAIRS; MAINTENANCE AND COMPLIANCE................37
5.4.2 ALTERATIONS........................................37
5.5 PERFORMANCE OF OTHER AGREEMENTS.............................37
5.6 COOPERATE IN LEGAL PROCEEDINGS..............................37
5.7 FURTHER ASSURANCES..........................................37
5.8 ENVIRONMENTAL MATTERS.......................................38
5.8.1 HAZARDOUS SUBSTANCES...............................38
5.8.2 ENVIRONMENTAL MONITORING...........................38
5.9 TITLE TO THE PROPERTY.......................................40
5.10 LEASES......................................................40
5.10.1 GENERALLY..........................................40
5.10.2 MATERIAL LEASES....................................40
5.10.3 MINOR LEASES.......................................41
5.10.4 ADDITIONAL COVENANTS WITH RESPECT TO LEASES........41
5.11 ESTOPPEL STATEMENT..........................................42
5.12 PROPERTY MANAGEMENT.........................................42
5.12.1 MANAGEMENT AGREEMENT...............................42
5.12.2 TERMINATION OF MANAGER.............................43
5.13 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY....................43
5.14 ASSUMPTION IN NON-CONSOLIDATION OPINION.....................43
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5.15 CHANGE IN BUSINESS OR OPERATION OF PROPERTY.................43
5.16 DEBT CANCELLATION...........................................43
5.17 AFFILIATE TRANSACTIONS......................................43
5.18 ZONING......................................................44
5.19 NO JOINT ASSESSMENT.........................................44
5.20 PRINCIPAL PLACE OF BUSINESS.................................44
5.21 CHANGE OF NAME, IDENTITY OR STRUCTURE.......................44
5.22 INDEBTEDNESS................................................44
5.23 LICENSES....................................................45
5.24 COMPLIANCE WITH RESTRICTIVE COVENANTS, ETC..................45
5.25 ERISA.......................................................45
5.26 TRANSFERS...................................................46
5.26.1 GENERALLY..........................................46
5.26.2 INTENTIONALLY OMITTED..............................46
5.26.3 TRANSFER AND ASSUMPTION............................46
5.27 LIENS.......................................................48
5.28 DISSOLUTION.................................................48
5.29 EXPENSES....................................................48
5.30 INDEMNITY...................................................49
5.31 INTENTIONALLY OMITTED.......................................50
5.32 INTENTIONALLY OMITTED ......................................50
5.33 PATRIOT ACT COMPLIANCE......................................50
6. NOTICES AND REPORTING................................................51
6.1 NOTICES.....................................................51
6.2 BORROWER NOTICES AND DELIVERIES.............................51
6.3 FINANCIAL REPORTING.........................................51
6.3.1 BOOKKEEPING........................................51
6.3.2 ANNUAL REPORTS.....................................52
6.3.3 MONTHLY/QUARTERLY REPORTS..........................52
6.3.4 OTHER REPORTS......................................53
6.3.5 ANNUAL BUDGET......................................53
7. INSURANCE; CASUALTY; AND CONDEMNATION................................53
7.1 INSURANCE...................................................53
7.1.1 COVERAGE...........................................53
7.1.2 POLICIES...........................................56
7.2 CASUALTY....................................................57
7.2.1 NOTICE; RESTORATION................................57
7.2.2 SETTLEMENT OF PROCEEDS.............................57
7.3 CONDEMNATION................................................58
7.3.1 NOTICE; RESTORATION................................58
7.3.2 COLLECTION OF AWARD................................58
7.4 APPLICATION OF PROCEEDS OR AWARD............................58
7.4.1 APPLICATION TO RESTORATION.........................58
7.4.2 APPLICATION TO DEBT................................59
7.4.3 PROCEDURE FOR APPLICATION TO RESTORATION...........59
8. DEFAULTS.............................................................60
8.1 EVENTS OF DEFAULT...........................................60
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8.2 REMEDIES....................................................62
8.2.1 ACCELERATION.......................................62
8.2.2 REMEDIES CUMULATIVE................................62
8.2.3 SEVERANCE..........................................63
8.2.4 DELAY..............................................63
8.2.5 LENDER'S RIGHT TO PERFORM..........................63
9. SPECIAL PROVISIONS...................................................64
9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION...............64
9.1.1 GENERAL; BORROWER COOPERATION......................64
9.1.2 USE OF INFORMATION.................................64
9.1.3 BORROWER OBLIGATIONS REGARDING DISCLOSURE
DOCUMENTS..........................................65
9.1.4 BORROWER INDEMNITY REGARDING FILINGS...............65
9.1.5 INDEMNIFICATION PROCEDURE..........................65
9.1.6 CONTRIBUTION.......................................66
9.1.7 SEVERANCE OF LOAN..................................66
9.2 COSTS AND EXPENSES..........................................67
9.3 MEZZANINE LOAN..............................................67
9.4 LETTERS OF CREDIT...........................................68
10. MISCELLANEOUS........................................................68
10.1 EXCULPATION.................................................68
10.2 BROKERS AND FINANCIAL ADVISORS..............................70
10.3 RETENTION OF SERVICER.......................................71
10.4 SURVIVAL....................................................71
10.5 LENDER'S DISCRETION.........................................71
10.6 GOVERNING LAW...............................................71
10.7 MODIFICATION, WAIVER IN WRITING.............................72
10.8 TRIAL BY JURY...............................................73
10.9 HEADINGS/EXHIBITS...........................................73
10.10 SEVERABILITY................................................73
10.11 PREFERENCES.................................................73
10.12 WAIVER OF NOTICE............................................74
10.13 REMEDIES OF BORROWER........................................74
10.14 PRIOR AGREEMENTS............................................74
10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.........................74
10.16 PUBLICITY...................................................74
10.17 NO USURY....................................................75
10.18 CONFLICT; CONSTRUCTION OF DOCUMENTS.........................75
10.19 NO THIRD PARTY BENEFICIARIES................................75
10.20 YIELD MAINTENANCE PREMIUM...................................75
10.21 ASSIGNMENT..................................................76
10.22 BORROWER'S DESIGNEE.........................................76
10.23 INTENTIONALLY OMITTED.......................................76
10.24 SET-OFF.....................................................76
10.25 INTENTIONALLY OMITTED.......................................76
10.26 COUNTERPARTS................................................76
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LOAN AGREEMENT
LOAN AGREEMENT dated as of January 24, 2006 (as the same may be
modified, supplemented, amended or otherwise changed, this "AGREEMENT") by and
among BEHRINGER HARVARD RIVERVIEW, LLC, a Delaware limited liability company
("BORROWER") having an office at 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, and CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation
(together with its successors and assigns, "LENDER").
1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1 SPECIFIC DEFINITIONS. The following terms have the meanings set
forth below:
ACCEPTABLE LETTER OF CREDIT: an irrevocable, unconditional,
transferable, clean sight draft letter of credit (either an evergreen letter of
credit or one with a stated expiration date at least thirty (30) Business Days
after the Stated Maturity Date, or having a stated expiration date not less than
one year after its date of issuance, provided that such initially issued
Acceptable Letter of Credit, or any renewal thereof, is renewed or substituted
by an Acceptable Letter of Credit satisfying all of the conditions of this
definition at least thirty (30) days prior to the date on which the Acceptable
Letter of Credit, or any renewal thereof, is scheduled to expire) in favor of
Lender and entitling Lender to draw thereon in New York, New York, or Chicago,
Illinois, issued by a domestic Approved Bank or the U.S. agency or branch of a
foreign Approved Bank, and otherwise in form and substance reasonably acceptable
to Lender. If at any time the bank issuing any such Acceptable Letter of Credit
shall cease to be an Approved Bank, Lender shall have the right after twenty
(20) Business Days notice thereof to draw down the same in full and hold the
proceeds of such draw in accordance with the applicable provisions hereof unless
the Borrower shall have delivered to Lender a replacement Acceptable Letter of
Credit prior to such draw down.
ACCEPTABLE MEZZANINE LENDER: (i) any Person satisfying the
definition of "Qualified Transferee" (or any successor term) under clause (ii)
(or such corresponding subsection of any successor term) of the definition of
"Qualified Transferee" set forth in the form Intercreditor Agreement attached as
Appendix VI to the Standard & Poor's U.S. CMBS Legal and Structural Finance
Criteria published May 1, 2003, as the same may have been amended or modified
prior to the date of the Mezzanine Loan, based on the default values for minimum
total assets and capital/statutory surplus or shareholders' equity included in
the definition of "Eligibility Requirements" in such publication (or any
successor term) or (ii) any other Person that has been approved by Lender acting
reasonably, and provided, however, in the case of each of the foregoing clauses
(i) and (ii), that if the Mezzanine Loan is made after the occurrence of a
Secondary Market Transaction, such Person (1) was identified to the applicable
Rating Agencies as the proposed lender in connection with the request for a
Rating Comfort Letter referred to in Section 9.4(c), or (2) has otherwise been
approved in writing by the applicable Rating Agencies.
ADVANCE: any portion of the Principal advanced by Lender to
Borrower.
AFFILIATE: as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.
ALCOA LEASE: that certain Lease Agreement dated March 1, 1990 by
and between the Aluminum Company of America, as the predecessor-in-interest to
Alcoa, Inc., a Pennsylvania corporation ("ALCOA"), as tenant, and the Federal
Deposit Insurance Corporation, as the predecessor-in-interest to Borrower, as
landlord, as such instrument has heretofore been assigned from time to time
(including the assignment of all of the landlord's rights, title and interests
thereunder to Borrower, and all of tenant's rights, title and interests
thereunder to Alcoa) and amended from time to time by the following amendments,
which together constitute all of the amendments thereto: (i) First Amendment to
Lease Agreement dated May 31, 1995; (ii) Second Amendment to Lease Agreement
dated March 7, 1997; (iii) Third Amendment to Lease Agreement dated October 21,
1998; (iv) Fourth Amendment to Lease Agreement dated December 29, 1998; (v)
Fifth Amendment to Lease Agreement dated February 18, 1999; (vi) Sixth Amendment
to Lease Agreement dated May 26, 2000; (vii) Seventh Amendment to Lease
Agreement dated June 30, 2000; (viii) Memorandum Confirming Term dated November
8, 2000; (ix) Eighth Amendment to Lease Agreement dated November 30, 2001 (the
"8TH AMENDMENT"); (x) Letter entitled "Riverview Tower Tenant Improvement Work
Pricing Change" dated February 13, 2002; (xi) Ninth Amendment to Lease Agreement
dated May 21, 2002; (xii) Tenth Amendment to Lease Agreement dated December 5,
2002; and (xiii) Eleventh Amendment to Lease Agreement dated April 11, 2005.
ALCOA SPACE: all of the approximately 55,780 aggregate square
feet of space on the 10th, 11th, 12th and 20th floors, respectively, at the
Property that are currently leased to Alcoa pursuant to the Alcoa Lease.
ALCOA TERMINATION ESCROW AGREEMENT: the terms and conditions set
forth in Section 32 of that certain Agreement of Purchase and Sale with respect
to the Property dated August 31, 2005, entered into by and between Harvard
Property Trust, LLC, a Delaware limited liability company, as the Buyer
thereunder, and HPW Family Partnership, LLC, a Tennessee limited liability
company, Xxxxxx Family Partnership, LLC, a Tennessee limited liability company,
and Riverview Partners, LLC, a Tennessee limited liability company, collectively
as the Seller thereunder, as amended by that certain First Amendment to
Agreement of Purchase and Sale dated September 20, 2005 (which added such
Section 32 to the Agreement of Purchase and Sale), executed by (or joined in the
execution by) the foregoing parties and by Harvard REIT Operating Partnership,
together with the Amended Acceptance of Escrow and Agreement dated as of October
5, 2005, executed and delivered by Partners Title Company, as escrow agent
thereunder, all right, title and interest of the Harvard Property Trust, LLC and
Harvard REIT Operating Partnership in which Alcoa Termination Escrow Agreement
has been assigned to Borrower pursuant to that certain Assignment of Purchase
Agreement dated October 4, 2005 executed by Harvard REIT Operating Partnership,
as the assignor thereunder, and Borrower, as the assignee thereunder.
ALCOA TERMINATION ESCROW FUNDS: the funds in the amount of
$500,000 (together with any interest thereon) held by the escrow agent under the
Alcoa Termination Escrow Agreement.
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AMORTIZATION COMMENCEMENT DATE: March 11, 2011, as such date may
be changed in accordance with Section 2.2.4.
APPROVED BANK: a bank, the long term unsecured debt obligations
of which are rated at least "AA" by S&P and its successors, and the equivalent
by Fitch, Inc. and its successors and Xxxxx'x Investors Services, Inc. and its
successors (unless Lender approves in writing a financial institution other than
a bank or a lower rating, in each case in Lender's sole and absolute
discretion).
APPROVED LEASING EXPENSES: actual out-of-pocket expenses
incurred by Borrower in leasing space at the Property pursuant to Leases entered
into in accordance with the Loan Documents, including brokerage commissions
(including those paid pursuant to the Management Agreement) and tenant
improvements, which expenses (i) are (A) specifically approved by Lender in
connection with approving the applicable Lease, (B) incurred in the ordinary
course of business and on market terms and conditions in connection with Leases
which do not require Lender's approval under the Loan Documents, or (C)
otherwise approved by Lender, which approval shall not be unreasonably withheld
or delayed, and (ii) are substantiated by executed Lease documents and brokerage
agreements.
APPROVED OPERATING EXPENSES: during a Cash Trap Period,
operating expenses incurred by Borrower which (i) are within one hundred five
percent (105%) of the total amounts included in the Approved Operating Budget
for the current calendar month (or for unpaid operating expenses included in the
Approved Operating Budget for prior calendar months); provided that, for
purposes hereof, operating expenses in such Approved Operating Budget shall be
deemed to be increased from the amounts in the applicable Approved Operating
Budget to the extent that such increased amounts are at least equal to an
increase in operating revenues from the amounts in such Approved Operating
Budget or directly relate to variances in occupancy levels or emergencies or
unforeseen circumstances, (ii) are for real estate taxes, insurance premiums,
electric, gas, oil, water, sewer or other utility service to the Property, (iii)
are for property management fees payable to Manager under the Management
Agreement, such amounts not to exceed four percent (4%) of the monthly Rents
(excluding however any asset management fees payable by Borrower to Manager
pursuant to the Management Agreement; provided, however, the foregoing four
percent (4%) limitation shall not be deemed to preclude Borrower from paying any
such asset management fees pursuant to the terms of the Management Agreement
from their own funds) or (iv) have been approved by Lender, acting in a
commercially reasonably manner. Notwithstanding the foregoing, nothing herein
shall be deemed to preclude Borrower from paying any asset management fee (over
and above the amount set forth above) pursuant to the terms of the Management
Agreement from their own funds.
AVAILABLE CASH: as of each Payment Date during the continuance
of Cash Trap Period, the amount of Rents, if any, remaining in the Deposit
Account after the application of all of the payments required under clauses (i)
through (vi) of Section 3.11(a).
BEHRINGER: Behringer Harvard Holdings, LLC, a Delaware limited
liability company.
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BEHRINGER ENTITIES: collectively, Behringer, Borrower, Harvard
Fund I and Harvard REIT.
BORROWER: Behringer Harvard Riverview, LLC, a Delaware limited
liability company.
BORROWER'S DESIGNEE: the Manager or such other Person as
Borrower, with the consent of Lender (not to be unreasonably withheld), may from
time to time designate as "Borrower's Designee"; provided that there shall be
only one Borrower's Designee at any time.
BUSINESS DAY: any day other than a Saturday, Sunday or any day
on which commercial banks in New York, New York are authorized or required to
close.
CALCULATION DATE: the last day of each calendar quarter during
the Term.
CAPITAL EXPENSES: expenses that are capital in nature or
required under GAAP to be capitalized.
CASH TRAP PERIOD: shall commence, if, (i) an Event of Default
has occurred and is continuing, and shall end if such Event of Default has been
cured and no other Event of Default has occurred and is continuing, or (ii) as
of any Calculation Date, the Debt Service Coverage Ratio is less than 1.10:1,
and shall end upon Lender's determination that the Property has achieved a Debt
Service Coverage Ratio of at least 1.10:1 for two consecutive Calculation Dates,
or (iii) at any time during the Term, any of the covenants set forth in Section
5.32 are breached, and shall end upon the full compliance with such covenants,
or (iv) Borrower fails to satisfy the requirements, if and as applicable, that
are set forth in Section 3.5.
CODE: 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.
CONTROL: with respect to any Person, either (i) ownership
directly or indirectly of forty nine percent (49%) or more of all equity
interests in such Person or (ii) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership of voting securities, by contract or otherwise.
DEBT: the unpaid Principal, all interest accrued and unpaid
thereon, any Yield Maintenance Premium and all other sums due to Lender in
respect of the Loan or under any Loan Document.
DEBT SERVICE: with respect to any particular period, the
scheduled Principal and interest payments due under the Note in such period.
DEBT SERVICE COVERAGE RATIO: as of any date, the ratio
calculated by Lender of (i) the Net Operating Income for the 12-month period
ending with the most recently completed calendar month to (ii) the Debt Service
with respect to such period (but assuming, only for the purpose of calculating
the Debt Service Coverage Ratio, that the Amortization Commencement Date has
already occurred).
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DEFAULT: the occurrence of any event under any Loan Document
which, with the giving of notice or passage of time, or both, would be an Event
of Default.
DEFAULT RATE: a rate per annum equal to the lesser of (i) the
maximum rate permitted by applicable law, or (ii) five percent (5%) above the
Interest Rate (as applicable prior to the occurrence of an Event of Default),
compounded monthly.
DEFEASANCE COLLATERAL: U.S. Obligations, which provide payments
(i) on or prior to, but as close as possible to, all Payment Dates and other
scheduled payment dates, if any, under the Note after the Defeasance Date and up
to and including the Defeasance Maturity Date, and (ii) in amounts equal to or
greater than the Scheduled Defeasance Payments.
DEFEASANCE MATURITY DATE: means the Permitted Prepayment Date.
DEPOSIT BANK: JPMorgan Chase Bank, N.A., or such other bank or
depository selected by Lender in its discretion.
ELIGIBLE ACCOUNT: a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts (A) maintained with a federal or state-chartered depository institution
or trust company which complies with the definition of Eligible Institution or
(B) as to which Lender has received a Rating Comfort Letter from each of the
applicable Rating Agencies with respect to holding funds in such account, or
(ii) a segregated trust account or accounts maintained with the corporate trust
department of a federal depository institution or state chartered depository
institution subject to regulations regarding fiduciary funds on deposit similar
to Title 12 of the Code of Federal Regulations ss.9.10(b), having in either case
corporate trust powers, acting in its fiduciary capacity, and a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal and state authorities. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.
ELIGIBLE INSTITUTION: a depository institution 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 "AA" by Fitch and S&P and "Aa2" by Moody's.
ERISA: the Employment Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder.
ERISA AFFILIATE: 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 Section 414(b), (c), (m) or (o) of the
Code.
GAAP: generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
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GOVERNMENTAL AUTHORITY: any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental xxxx (xxxxxxx,
xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) now or hereafter in
existence.
GUARANTOR: Behringer Harvard REIT I, Inc.
HARVARD FUND I: individually or collectively, Behringer Harvard
Short-Term Opportunity Funds I, L.P., a Texas limited partnership and/or
Behringer Harvard Mid-Term Value Enhancement Fund I, L.P. a Texas limited
partnership and/or Behringer Harvard Strategic Opportunity Fund LLP, a Texas
limited partnership, and/or any other fund for which Behringer Harvard Holdings,
LLC, or an Affiliate of it under its Control, serves as general partner, manager
or advisor.
HARVARD REIT: individually or collectively, the Behringer
Harvard Operating Partnership I LP, a Texas limited partnership (the "HARVARD
REIT OPERATING PARTNERSHIP") and/or Behringer Harvard REIT I, Inc., a Maryland
corporation ("BEHRINGER HARVARD REIT") and/or Behringer Harvard Opportunity REIT
I, Inc., a Maryland corporation ("BEHRINGER HARVARD OPPORTUNITY REIT"), and/or
any other fund for which Behringer Harvard Holdings, LLC, or an Affiliate of it
under its Control, serves as general partner, manager or advisor.
INTEREST PERIOD: (i) the period from the date hereof through the
first day thereafter that is the 10th day of a calendar month and (ii) each
period thereafter from the 11th day of each calendar month through the 10th day
of the following calendar month; except that the Interest Period, if any, that
would otherwise commence before and end after the Maturity Date shall end on the
Maturity Date. Notwithstanding the foregoing, if Lender exercises its right to
change the Payment Date to a New Payment Date in accordance with Section 2.2.4,
then from and after such election, each Interest Period shall be the period from
the New Payment Date in each calendar month through the day in the next
succeeding calendar month immediately preceding the New Payment Date in such
calendar month.
INTEREST RATE: a rate of interest equal to 5.485% per annum (or,
when applicable pursuant to this Agreement or any other Loan Document, the
Default Rate).
KEY PRINCIPAL: Xxxxxx X. Xxxxxxxxx, an individual.
LEASES: all leases and other agreements or arrangements
heretofore or hereafter entered into providing for the use, enjoyment or
occupancy of, or the conduct of any activity upon or in, the Property or the
Improvements, including any guarantees, extensions, renewals, modifications or
amendments thereof and all additional remainders, reversions and other rights
and estates appurtenant thereunder.
LEGAL REQUIREMENTS: statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting Borrower, any Loan Document or all or part of the Property or the
construction, ownership, use, alteration or operation thereof, whether now or
hereafter enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instrument, either of record or known to Borrower,
at any time in force affecting all or part of the Property.
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LIEN: any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, easement, restrictive covenant, preference,
assignment (intended as security), security interest or any other encumbrance,
charge or transfer (intended as security) of, or any agreement to enter into or
create any of the foregoing, on or affecting all or any part of the Property or
any interest therein, or any direct or indirect interest in Borrower, including
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.
LOAN DOCUMENTS: this Agreement and all other documents,
agreements and instruments now or hereafter evidencing or securing the Loan or
pursuant to which any Person incurs, has incurred or assumes any obligation to
or for the benefit of Lender, or makes any certification, representation or
warranty to Lender in connection with the Loan, including the following, each of
which is dated as of the date hereof: (i) the Note or Notes made by Borrower to
Lender in the aggregate principal amount equal to the Loan (the "NOTE"), (ii)
the Deed of Trust, Financing Statement, Absolute Assignment of Leases and Rents,
Security Agreement and Fixture Filing made by Borrower to a trustee, in favor of
Lender which covers the Property (the "MORTGAGE"), (iii) the Absolute Assignment
of Leases and Rents from Borrower to Lender (the "ASSIGNMENT OF LEASES"), (iv)
the Assignment of Agreements, Licenses, Permits and Contracts from Borrower to
Lender, (v) the Clearing Account Agreement (the "CLEARING ACCOUNT AGREEMENTS")
among Borrower, Lender, Manager and the Clearing Bank, (vi) the Deposit Account
Agreement (the "DEPOSIT ACCOUNT AGREEMENT") among Borrower, Lender, Manager and
the Deposit Bank, and (vii) the Guaranty of Recourse Obligations made by
Guarantor (the "GUARANTY"); as each of the foregoing may be (and each of the
foregoing defined terms shall refer to such documents as they may be) amended,
restated, replaced, supplemented or otherwise modified from time to time
(including pursuant to Section 9.1.7).
MANAGEMENT AGREEMENT: the Second Amended and Restated Property
Management and Leasing Agreement between Behringer Harvard REIT I, Inc.
("BEHRINGER REIT"), a Maryland corporation and Behringer Harvard Operating
Partnership I, LP, a Texas limited partnership ("BEHRINGER HARVARD") and
Manager, pursuant to which Manager is to manage the Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time in accordance with Section 5.12.
MANAGER: HPT Management Services LP, a Texas limited
partnership, or any successor, assignee or replacement manager appointed by
Borrower in accordance with Section 5.12.
MATERIAL ALTERATION: any alteration affecting structural
elements of the Property the cost of which exceeds $250,000; provided, however,
that in no event shall (i) any Required Repairs (if any), (ii) any tenant
improvement work performed pursuant to any Lease existing on the date hereof or
entered into hereafter in accordance with the provisions of this Agreement, or
(iii) alterations performed as part of a Restoration, constitute a Material
Alteration.
MATERIAL LEASE: all Leases which individually or in the
aggregate with respect to the same tenant and its Affiliates (i) cover more than
17,000 square feet of the Improvements or
7
(ii) have a gross annual rent of more than five percent (5%) of the total annual
Rents or (iii) demise at least one full floor of the Improvements.
MATURITY DATE: the date on which the final payment of principal
of the Note (or any replacement promissory note issued in connection with a
Defeasance Event, if applicable) becomes due and payable as therein provided,
whether at the Stated Maturity Date, the Defeasance Maturity Date, by
declaration of acceleration, or otherwise.
MINOR LEASE: any Lease that is not a Material Lease.
NET OPERATING INCOME: for any period, the underwritten net cash
flow of the Property determined by Lender in its sole discretion exercised in
good faith (uniformly and consistently applied in the same manner as Lender
exercises similar discretion in other loans of this type and nature for
comparable properties) in accordance with Lender's then current underwriting
standards for loans of this type and the then current underwriting standards of
the Rating Agencies (including adjustments for a management fee equal to the
greater of the combined management fees and asset management fees paid under the
Management Agreement during such period or four percent (4%) of gross revenues,
market vacancy, bankrupt tenants which are not in full occupancy of their
respective leased premises or which have rejected their respective leases or
which are not paying rent on a current basis, leasing costs and capital items).
OFFICER'S CERTIFICATE: a certificate delivered to Lender by
Borrower, which is signed by the manager or a senior executive officer of
Borrower.
OTHER CHARGES: all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including 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.
PAYMENT DATE: the 11th day of each calendar month or, upon
Lender's exercise of its right to change the Payment Date in accordance with
Section 2.2.4, the New Payment Date (in either case, if such day is not a
Business Day, the Payment Date shall be the first Business Day thereafter). The
first Payment Date hereunder shall be March 11, 2006.
PERMITTED ENCUMBRANCES: (i) the Liens created by the Loan
Documents, (ii) all Liens and other matters disclosed in the Title Insurance
Policy, (iii) Liens, if any, for Taxes or Other Charges not yet due and payable
and not delinquent, (iv) any workers', mechanics' or other similar Liens on the
Property provided that any such Lien is bonded or discharged within 30 days
after a Borrower first receives notice of such Lien, (v) such other title and
survey exceptions as Lender approves in writing in Lender's discretion, and (vi)
Liens securing a Mezzanine Loan in accordance with Section 9.3.
PERMITTED TRANSFERS:
(i) a Lease entered into in accordance with the Loan Documents;
(ii) a Permitted Encumbrance;
8
(iii) a Transfer and Assumption pursuant to Section 5.26.3;
(iv) provided that no Event of Default shall then exist, a
Transfer of a direct or indirect interest in Borrower to any Person (including
the Transfer or issuance of publicly traded shares or of operating partnership
units in the Behringer Harvard REIT, Behringer Harvard Opportunity REIT, Harvard
Fund I or the Harvard REIT Operating Partnership, which shall be permitted
whether or not an Event of Default shall exist) provided that (A) such Transfer
shall not (x) cause the transferee (other than Key Principal), together with its
Affiliates, to acquire Control of Borrower or to increase its direct or indirect
interest in Borrower to an amount which equals or exceeds forty nine percent
(49%) or (y) result in Borrower no longer being Controlled by Key Principal, (B)
Borrower shall give Lender notice of such Transfer together with copies of all
instruments effecting such Transfer not less than 10 days prior to the date of
such Transfer (other than with respect to Transfers of "unit interests" in
Harvard Fund I), and (C) the legal and financial structure of Borrower and its
member and the single purpose nature and bankruptcy remoteness of Borrower and
its member after such Transfer, shall satisfy Lender's then current applicable
underwriting criteria and requirements;
(v) provided that no Event of Default shall then exist, a
Transfer of a direct or indirect interest in Borrower related to or in
connection with the estate planning of such transferor to (1) the spouse,
children or grandchildren of such transferor (and/or any spouse of a child or
grandchild), or any other immediate family member of such transferor, or (2) a
trust established for the benefit of any such parties, provided that (A) such
Transfer shall not cause a change in the Control of Borrower, (B) such Transfer
shall not result in a change of the day to day management and operations of the
Property, (C) Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer not less than 10 days after
the date of such Transfer and (D) the legal and financial structure of Borrower,
and the single purpose nature and bankruptcy remoteness of Borrower after such
Transfer, shall satisfy Lender's then current applicable underwriting criteria
and requirements; or
(vi) a Transfer of a direct or indirect interest in Borrower
that occurs by devise or bequest or by operation of law upon the death of a
natural person that was the holder of such interest to a member of the immediate
family of such interest holder or a trust established for the benefit of such
immediate family member, provided that (A) no such Transfer shall result in a
change of the day to day operations of the Property, (B) Borrower shall give
Lender notice of such Transfer together with copies of all instruments effecting
such Transfer not less than 30 days after the date of such Transfer, (C)
Borrower shall continue to be a Special Purpose Bankruptcy Remote Entity, (D) if
any such Transfer would result in a change of Control of Borrower and occurs
prior to the occurrence of a Secondary Market Transaction, such Transfer is
approved by Lender in writing within 30 days after any such Transfer, and (E) if
any such Transfer would result in a change of Control of Borrower and occurs
after the occurrence of a Secondary Market Transaction, Borrower, at Borrower's
sole cost and expense, shall, within 30 days after any such Transfer, (a)
deliver (or cause to be delivered) (x) a Rating Comfort Letter to Lender, and
(y) a substantive non-consolidation opinion to Lender and the Rating Agencies
with respect to Borrower and such transferee in form and substance satisfactory
to Lender and the Rating Agencies, (b) obtain the prior written consent of
Lender which shall not be unreasonably withheld, and (c) reimburse Lender for
all reasonable expenses incurred by Lender in connection with such Transfer.
9
PERSON: any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other person or entity, and any federal, state, county or municipal government
or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.
PLAN: (i) an employee benefit or other plan established or
maintained by a Borrower or any ERISA Affiliate or to which Borrower or any
ERISA Affiliate makes or is obligated to make contributions and (ii) which is
covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
PROPERTY: the parcel of real property and Improvements thereon
owned or leased by Borrower and encumbered by the Mortgage; together with all
rights pertaining to such real property and Improvements, and all other
collateral for the Loan as more particularly described in the granting clauses
of the Mortgage and referred to therein as the Property. The Property is known
as Riverview Tower, Knoxville, Tennessee.
RATING AGENCY: each of Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. ("S&P"), Xxxxx'x Investors Service,
Inc. ("XXXXX'X"), and Fitch, Inc., a division of Fitch Ratings Ltd., or any
other nationally-recognized statistical rating organization to the extent any of
the foregoing have been engaged by Lender or its designee in connection with or
in anticipation of any Secondary Market Transaction.
RATING COMFORT LETTER: a letter issued by each of the applicable
Rating Agencies which confirms that the taking of the action referenced to
therein will not result in any qualification, withdrawal or downgrading of any
existing ratings of Securities created in a Secondary Market Transaction.
RELEASE DATE: the earlier to occur of (i) the thirty-sixth
(36th) Payment Date of the Term 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 a Securitization involving this Loan.
REMIC TRUST: a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code that holds the Note.
RENTS: all rents, rent equivalents, moneys payable as damages
(including payments by reason of the rejection of a Lease in a bankruptcy
proceeding) or in lieu of rent or rent equivalents, royalties (including all oil
and gas or other mineral royalties and bonuses), income, fees, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payment and consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower, Manager or any of their agents or
employees (other than fees paid under the Management Agreements and salaries
paid to employees) from any and all sources arising from or attributable to the
Property and the Improvements, including all receivables, customer obligations,
installment payment obligations and other obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license, concession or
other grant of the right of the use and occupancy of the Property or rendering
of services by a Borrower, Manager or any of
10
their agents or employees and proceeds, if any, from business interruption or
other loss of income insurance.
SCHEDULED DEFEASANCE PAYMENTS: the Monthly Debt Service Payment
Amount and/or Monthly Interest Payment Amount (as applicable) required under the
Note for all Payment Dates occurring after the Defeasance Date but prior to the
Defeasance Maturity Date and the outstanding Principal balance on the Note as of
the Defeasance Maturity Date and all accrued and unpaid interest as of such
date.
SECURITY AGREEMENT: a security agreement in form and substance
that would be satisfactory to Lender (in Lender's sole but good faith
discretion) pursuant to which Borrower grants Lender a perfected, first priority
security interest in the Defeasance Collateral Account and the Defeasance
Collateral.
SERVICER: a servicer selected by Lender to service the Loan,
including any "master servicer" or "special servicer" appointed under the terms
of any pooling and servicing agreement or similar agreement entered into as a
result of a Secondary Market Transaction.
STATE: the state in which the Property is located.
STATED MATURITY DATE: February 11, 2016, as such date may be
changed in accordance with Section 2.2.4.
TAXES: all real estate and personal property taxes, assessments,
water rates or sewer rents, maintenance charges, impositions, vault charges and
license fees, now or hereafter levied or assessed or imposed against all or part
of the Property. TERM: the entire term of this Agreement, which shall expire
upon repayment in full of the Debt and full performance of each and every
obligation to be performed by Borrower pursuant to the Loan Documents (other
than surviving indemnity obligations with respect to matters as to which no
claim for indemnification is then pending).
TITLE INSURANCE POLICY: the ALTA mortgagee title insurance
policy in the form acceptable to Lender issued with respect to the Property and
insuring the Lien of the Mortgage.
TRANSFER: any sale, conveyance, transfer, lease or assignment,
or the entry into any agreement to sell, convey, transfer, lease or assign,
whether by law or otherwise, of, on, in or affecting (i) all or part of the
Property (including any legal or beneficial direct or indirect interest therein)
or (ii) any direct or indirect interest in Borrower (including any profit
interest).
UCC OR UNIFORM COMMERCIAL CODE: the Uniform Commercial Code as
in effect in the State or the state in which any of the Cash Management Accounts
are located, as the case may be.
U.S. OBLIGATIONS: obligations that are "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended, and, to the extent acceptable to the applicable Rating Agencies, other
non-callable government securities satisfying the REMIC Provisions (hereinafter
defined), in each case to the extent such
11
obligations are not subject to prepayment, call or early redemption. As used
herein, "REMIC PROVISIONS" mean provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of Subtitle A of the Code, and
related provisions, and temporary and final regulations and, to the extent not
inconsistent with such temporary and final regulations, proposed regulations,
and published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.
WELFARE PLAN: an employee welfare benefit plan, as defined in
Section 3(1) of ERISA.
YIELD MAINTENANCE PREMIUM: an amount which, when added to the
outstanding Principal, would be sufficient to purchase U.S. Obligations which
provide payments (a) on or prior to, but as close as possible to, all successive
scheduled payment dates under this Agreement through the Stated Maturity Date
and (b) in amounts equal to the Monthly Debt Service Payment Amount required
under this Agreement through the Stated Maturity Date together with the
outstanding principal balance of the Note as of the Stated Maturity Date
assuming all such Monthly Debt Service Payments are made (including any
servicing costs associated therewith). In no event shall the Yield Maintenance
Premium be less than zero.
1.2 INDEX OF OTHER DEFINITIONS. The following terms are defined in
the sections or Loan Documents indicated below:
"ALCOA CANCELLATION RIGHT" - 4.26
"ALCOA LEASE TERMINATION DRAW REQUIREMENTS" - 3.5
"ALCOA LEASE TERMINATION LETTER OF CREDIT" - 3.5
"ALCOA LEASE TERMINATION PAYMENT"- 3.5
"ALCOA LEASE TERMINATION SUBACCOUNT" - 3.5
"APPROVED ANNUAL BUDGET" - 6.3.5
"ANNUAL BUDGET" - 6.3.5
"APPROVED CAPITAL BUDGET" - 6.3.5
"APPROVED OPERATING BUDGET" - 6.3.5
"APPLICABLE TAXES" - 2.2.3
"AWARD" - 7.3.2
"BANKRUPTCY PROCEEDING" - 4.7
"BORROWER'S RECOURSE LIABILITIES" - 10.1
"CASH COLLATERAL SUBACCOUNT" - 3.9
"CASH MANAGEMENT ACCOUNTS" - 3.10
"CASUALTY" - 7.2.1
"CASUALTY/CONDEMNATION PREPAYMENT" - 2.3.2
"CASUALTY/CONDEMNATION SUBACCOUNT" - 3.7
"CITIGROUP GROUP" - 9.1.6
"CLEARING ACCOUNT" - 3.1
"CLEARING ACCOUNT AGREEMENT" - 1.1 (Definition of Loan Documents)
"CLEARING BANK" - 3.1
"CONDEMNATION" - 7.3.1
"DEFEASANCE COLLATERAL ACCOUNT" - 2.3.3
12
"DEFEASANCE EVENT" - 2.3.3
"DEFEASANCE DATE" - 2.3.3
"DEPOSIT ACCOUNT" - 3.1
"DEPOSIT ACCOUNT AGREEMENT" - 1.1 (Definition of Loan Documents)
"DISCLOSURE DOCUMENT" - 9.1.2
"EASEMENTS" - 4.14
"ENVIRONMENTAL LAWS" - 4.21
"EQUIPMENT" - Mortgage
"EVENT OF DEFAULT" - 8.1
"EXCHANGE ACT" - 9.1.2
"GUARANTY" - 1.1 (Definition of Loan Documents)
"HARVARD REIT OPERATING PARTNERSHIP" - 1.1 (Definition of Harvard REIT)
"HAZARDOUS SUBSTANCES" - 4.21
"IMPROVEMENTS" - Mortgage
"INDEMNIFIED LIABILITIES" - 5.30
"INDEMNIFIED PARTY(IES)" - 5.30
"INDEPENDENT DIRECTOR" - Schedule 5
"INITIAL ALCOA LEASE TERMINATION LETTER OF CREDIT" - 3.5
"INSURANCE PREMIUMS" - 7.1.2
"INSURED CASUALTY" - 7.2.2
"INTERCREDITOR AGREEMENT" - 9.3
"ISSUER" - 9.1.6
"LATE PAYMENT CHARGE" - 2.5.3
"LENDER'S CONSULTANT" - 5.8.1
"LETTER(S) OF CREDIT"- 9.4
"LICENSES" - 4.11
"LOAN" - 2.1
"MEZZANINE BORROWER"- 9.3
"MEZZANINE LENDER"- 9.3
"MEZZANINE LOAN" - 9.3
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" - 2.2.1
"MONTHLY INTEREST PAYMENT AMOUNT" - 2.2.1
"MOODY'S" - 1.1 (Definition of Rating Agency)
"MORTGAGE" - 1.1 (Definition of Loan Documents)
"NEW PAYMENT DATE" - 2.2.4
"NOTE" - 1.1 (Definition of Loan Documents)
"NOTICE" - 6.1
"OPERATING EXPENSE SUBACCOUNT" - 3.6
"PERMITTED INDEBTEDNESS" - 5.22
"PERMITTED INVESTMENTS" - Deposit Account Agreement
"PERMITTED PREPAYMENT DATE" - 2.3.4
"POLICIES" - 7.1.2
"PRINCIPAL" - 2.1
"PROCEEDS" - 7.2.2
"PROPOSED MATERIAL LEASE" - 5.10.2
"PROVIDED INFORMATION" - 9.1.1
13
"QUALIFIED CARRIER" - 7.1.1
"REGISTRATION STATEMENT" - 9.1.4
"REMEDIAL WORK" - 5.8.2
"RENT ROLL" - 4.16
"REQUIRED REPAIRS" - 3.2.1
"REQUIRED REPAIRS SUBACCOUNT" - 3.2.2
"RESTORATION" - 7.4.1
"S&P" - 1.1 (Definition of Rating Agency)
"SECONDARY MARKET TRANSACTION" - 9.1.1
"SECURITIES" - 9.1.1
"SECURITIES ACT" - 9.1.2
"SECURITY DEPOSIT SUBACCOUNT" - 3.8
"SIGNIFICANT CASUALTY" - 7.2.2
"SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY" - 5.13
"SPRINGING RECOURSE EVENT" - 10.1
"SUBACCOUNTS" - 3.1
"SUCCESSOR BORROWER" - 2.3.3
"TAX AND INSURANCE SUBACCOUNT" - 3.3
"TENANT IMPROVEMENT FUNDS" - 3.4
"TENANT IMPROVEMENT RESERVE SUBACCOUNT" - 3.4
"TI LEASES" - 3.4
"TOXIC MOLD" - 4.21
"TRANSFER AND ASSUMPTION" - 5.26.3
"TRANSFEREE BORROWER" - 5.26.3
"UNDERWRITERS" - 9.1.4
1.3 PRINCIPLES OF CONSTRUCTION. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the words "include" and "including" mean "including but not
limited to," and (v) accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
1.4 Intentionally Omitted.
2. GENERAL LOAN TERMS
2.1 THE LOAN. Subject to and upon the terms and conditions of this
Agreement, Lender agrees to make a loan to Borrower (the "LOAN") in the maximum
principal amount of up to $30,250,000.00 (the "PRINCIPAL"). The Loan shall
mature on the Stated Maturity Date or, if a Defeasance Event has occurred in
accordance with Section 2.3.3 hereof, on the Defeasance Maturity Date. Borrower
acknowledges receipt of the Principal, the proceeds of which are being and shall
be used to (i) finance the Property, (ii) fund certain of the Subaccounts and
(iii) pay transaction costs. Any excess proceeds may be used for any lawful
purpose. No amount repaid in respect of the Loan may be reborrowed.
14
2.2 INTEREST; MONTHLY PAYMENTS.
2.2.1 GENERALLY. From and after the date hereof, interest on
the unpaid Principal shall accrue at the Interest Rate and be payable as
hereinafter provided. On the date hereof, Borrower shall pay interest only on
the unpaid Principal from the date hereof through and including February 10,
2006. On March 11, 2006 and each Payment Date thereafter through and including
the Payment Date immediately preceding the Amortization Commencement Date,
Borrower shall pay interest on the unpaid Principal accrued at the Interest Rate
during the Interest Period immediately preceding such Payment Date (the "MONTHLY
INTEREST PAYMENT AMOUNT"). On the Amortization Commencement Date and each
Payment Date thereafter through and including January 11, 2016 (as such date may
be changed in accordance with Section 2.2.4), the Principal and interest thereon
at the Interest Rate shall be payable in equal monthly installments of
$171,471.59 (the "MONTHLY DEBT SERVICE PAYMENT AMOUNT"); which is based on the
Interest Rate and a 360-month amortization schedule. The Monthly Debt Service
Payment Amount due on any Payment Date shall first be applied to the payment of
interest accrued during the preceding Interest Period and the remainder of such
Monthly Debt Service Payment Amount shall be applied to the reduction of the
unpaid Principal. All accrued and unpaid interest shall be due and payable on
the Maturity Date. If the Loan is repaid on any date other than on a Payment
Date (whether prior to or after the Stated Maturity Date), Borrower shall also
pay interest that would have accrued on such repaid Principal to but not
including the next Payment Date.
2.2.2 DEFAULT RATE. After the occurrence and during the
continuance of an Event of Default, the entire unpaid Debt shall bear interest
at the Default Rate, and shall be payable upon demand from time to time, to the
extent permitted by applicable law.
2.2.3 TAXES. Any and all payments by Borrower hereunder and
under the other Loan Documents shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on Lender's income, and franchise taxes imposed on Lender by the
law or regulation of any Governmental Authority (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to in this Section 2.2.3 as "APPLICABLE TAXES"). If
Borrower shall be required by law to deduct any Applicable Taxes from or in
respect of any sum payable hereunder to Lender, the following shall apply: (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.2.3), Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Borrower shall make such
deductions and (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
Payments pursuant to this Section 2.2.3 shall be made within ten days after the
date Lender makes written demand therefor. If the amounts payable hereunder
relate to Applicable Taxes which are not of general application to lending
institutions making secured mortgage loans at such time, Borrower shall have the
option to prepay the Loan in full without any Yield Maintenance Premium unless
Lender, at its option, elects not to require Borrower to pay such Applicable
Taxes pursuant to this Section 2.2.3. Notwithstanding the foregoing, if the Loan
is transferred to a transferee which is organized under the laws of any
jurisdiction other than the United States of America or any state thereof, the
transferor shall cause such transferee,
15
concurrently with the effectiveness of such transfer, to furnish to the
transferor and Borrower either a United States Internal Revenue Service Form
4224 or United States Internal Revenue Service Form 1001 (wherein such
transferee claims entitlement to complete exemption from United States federal
withholding tax on all interest payments hereunder); provided, however, that in
the event that the transferor fails to cause the transferee to furnish either
such Form, Borrower shall deduct any Applicable Taxes to the extent required by
law and payments shall be made net of any Applicable Taxes without regard to the
provisions of clause (i) of the second sentence of this Section 2.2.3.
2.2.4 NEW PAYMENT DATE. Lender shall have the right, to be
exercised not more than once during the term of the Loan, to change the Payment
Date to a date other than the eleventh day of each month (a "NEW PAYMENT DATE"),
on 30 days' written notice to Borrower; provided, however, that any such change
in the Payment Date: (i) shall not modify the amount of regularly scheduled
monthly principal and interest payments, except that the first payment of
principal and interest payable on the New Payment Date shall be accompanied by
interest at the interest rate herein provided for the period from the Payment
Date in the month in which the New Payment Date first occurs to the New Payment
Date, (ii) shall extend the Amortization Commencement Date to the New Payment
Date occurring in the month set forth in the definition of Amortization
Commencement Date, and (iii) shall extend the Stated Maturity Date to the New
Payment Date occurring in the month set forth in the definition of Stated
Maturity Date.
2.3 LOAN REPAYMENT.
2.3.1 REPAYMENT. Borrower shall repay the entire outstanding
principal balance of the Note in full on the Maturity Date, together with
interest thereon to (but excluding) the date of repayment and any other amounts
due and owing under the Loan Documents. Borrower shall have no right to prepay
or defease all or any portion of the Principal except in accordance with Section
2.2.3, Section 2.3.2, Section 2.3.3, Section 2.3.4, Section 2.4 and Section
7.4.2 hereof. Except during the continuance of an Event of Default, all proceeds
of any repayment, including any prepayments of the Loan, shall be applied by
Lender as follows in the following order of priority: FIRST, accrued and unpaid
interest at the Interest Rate; SECOND, to Principal; and THIRD, to any other
amounts then due and owing under the Loan Documents. If prior to the Stated
Maturity Date the Debt is accelerated by reason of an Event of Default, then
Lender shall be entitled to receive, in addition to the unpaid Principal and
accrued interest and other sums due under the Loan Documents, an amount equal to
the Yield Maintenance Premium applicable to such Principal so accelerated.
During the continuance of an Event of Default, all proceeds of repayment,
including any payment or recovery on the Property (whether through foreclosure,
deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in
the Loan Documents, be applied in such order and in such manner as Lender shall
elect in Lender's discretion.
2.3.2 MANDATORY PREPAYMENTS. The Loan is subject to mandatory
prepayment in certain instances of Insured Casualty or Condemnation (each a
"CASUALTY/CONDEMNATION PREPAYMENT"), in the manner and to the extent set forth
in Section 7.4.2. Each Casualty/Condemnation Prepayment, after deducting
Lender's costs and expenses (including reasonable attorneys' fees and expenses)
in connection with the settlement or collection of the Proceeds or Award, shall
be applied in the same manner as repayments under Section 2.3.1, and
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if such Casualty/Condemnation Payment is made on any date other than a Payment
Date, then such Casualty/Condemnation Payment shall include interest that would
have accrued on the Principal prepaid to but not including the next Payment
Date. Provided that no Event of Default is continuing, any such mandatory
prepayment under this Section 2.3.2 shall be without the payment of the Yield
Maintenance Premium. Notwithstanding anything to the contrary contained herein,
each Casualty/Condemnation Prepayment shall be applied in inverse order of
maturity and shall not extend or postpone the due dates of the monthly
installments due under the Note or this Agreement, or change the amounts of such
installments. In addition, and notwithstanding anything to the contrary
contained herein or in any other Loan Document, provided no Event of Default is
continuing, no Yield Maintenance Premium shall be payable in connection with any
prepayment of the Debt required by Lender under Sections 5 and 6 of the
Mortgage.
2.3.3 DEFEASANCE.
(A) CONDITIONS TO DEFEASANCE. Provided no Event of Default
shall be continuing, Borrower shall have the right on any Payment Date after the
Release Date and prior to the Permitted Prepayment Date to voluntarily defease
the entire amount of the Principal and obtain a release of the Lien of the
Mortgage by providing Lender with the Defeasance Collateral (a "DEFEASANCE
EVENT"), subject to the satisfaction of the following conditions precedent:
(1) Borrower shall give Lender not less than thirty (30)
days prior written notice specifying a Payment Date (the "DEFEASANCE
DATE") on which the Defeasance Event is to occur.
(2) Borrower shall pay to Lender (A) all payments of
Principal and interest due on the Loan to and including the Defeasance
Date and (B) all other sums, then due under the Note, this Agreement and
the other Loan Documents;
(3) Borrower shall deposit the Defeasance Collateral into
the Defeasance Collateral Account and otherwise comply with the
provisions of subsections (b) and (c) of this Section 2.3.3;
(4) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the
Defeasance Collateral;
(5) Borrower shall deliver to Lender an opinion 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 (i) Lender has a legal and valid
perfected first priority security interest in the Defeasance Collateral
Account and the Defeasance Collateral, (ii) 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
Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance
Event will not result in a significant modification and will not be an
exchange of the Note for purposes of Section 1001 of the Code and the
Treasury Regulations thereunder, (iv) delivery of the Defeasance
Collateral and the grant of a security interest therein to
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Lender will not constitute an avoidable preference under Section 547 of
the Bankruptcy Code or applicable state law and (v) a non-consolidation
opinion with respect to the Successor Borrower;
(6) Borrower shall deliver to Lender a Rating Comfort Letter
as to the Defeasance Event;
(7) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.3.3 have
been satisfied;
(8) Borrower shall deliver a certificate of a "big four" or
other nationally recognized public accounting firm acceptable to Lender
certifying that the Defeasance Collateral will generate monthly amounts
equal to or greater than the Scheduled Defeasance Payments;
(9) Borrower shall deliver such other certificates,
opinions, documents and instruments as Lender may reasonably request;
and
(10) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Defeasance Event, including Lender's
reasonable attorneys' fees and expenses and Rating Agency fees and
expenses.
(B) DEFEASANCE COLLATERAL ACCOUNT. On or before the date on
which Borrower delivers the Defeasance Collateral, Borrower shall open at any
Eligible Institution the defeasance collateral account (the "DEFEASANCE
COLLATERAL ACCOUNT") which shall at all times be an Eligible Account. The
Defeasance Collateral Account shall contain only (i) Defeasance Collateral, and
(ii) cash from interest and principal paid on the Defeasance Collateral. All
cash from interest and principal payments paid on the Defeasance Collateral
shall be paid over to Lender on each Payment Date and applied first to accrued
and unpaid interest and then to Principal. Any cash from interest and principal
paid on the Defeasance Collateral not needed to pay accrued and unpaid interest
or Principal shall be retained in the Defeasance Collateral Account as
additional collateral for the Loan. Borrower shall cause the Eligible
Institution at which the Defeasance Collateral is deposited to enter an
agreement with Borrower and Lender, satisfactory to Lender in its sole
discretion, pursuant to which such Eligible Institution shall agree to hold and
distribute the Defeasance Collateral in accordance with this Agreement. The
Successor Borrower shall be the owner of the Defeasance Collateral Account and
shall report all income accrued on Defeasance Collateral for federal, state and
local income tax purposes in its income tax return. 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.
(C) SUCCESSOR BORROWER. In connection with a Defeasance
Event under this Section 2.3.3, Borrower shall, if required by the Rating
Agencies or if Borrower elects to do so, establish or designate a successor
entity (the "SUCCESSOR BORROWER") which shall be a Special Purpose Bankruptcy
Remote Entity and which shall be approved by the Rating Agencies. Any such
Successor Borrower may, at Borrower's option, be an Affiliate of Borrower unless
the Rating Agencies shall require otherwise. Borrower shall transfer and assign
all obligations,
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rights and duties under and to the Note, together with the Defeasance Collateral
to such Successor Borrower. Such Successor Borrower shall assume the obligations
under the Note and the Security Agreement and Borrower shall be relieved of its
obligations under such 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 Lender's attorney's fees and expenses, incurred in
connection therewith.
2.3.4 OPTIONAL PREPAYMENTS. On and after the third Payment
Date prior to the Stated Maturity Date (the "PERMITTED PREPAYMENT Date"),
Borrower shall have the right to prepay the Loan in whole (but not in part),
provided that Borrower gives Lender at least 15 days' prior written notice
thereof. If any such prepayment is not made on a Payment Date, Borrower shall
also pay interest that would have accrued on such prepaid Principal to, but not
including, the next Payment Date. Any such prepayment shall be made without
payment of the Yield Maintenance Premium.
2.4 RELEASE OF PROPERTY.
2.4.1 RELEASE ON DEFEASANCE. If Borrower has elected to
defease the Note and the requirements of Section 2.3.3 and this Section 2.4 have
been satisfied, the Property shall be released from the Lien of the Mortgage and
the Defeasance Collateral pledged pursuant to the Security Agreement shall be
the sole source of collateral securing the Note. In connection with the release
of the Lien, Borrower shall submit to Lender, not less than thirty (30) days
prior to the Defeasance Date (or such shorter time as is acceptable to Lender in
its sole 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 contain standard provisions
protecting the rights of the releasing lender. In addition, Borrower shall
provide all other documentation Lender reasonably requires 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 Mortgage, including Lender's reasonable
attorneys' fees.
2.4.2 RELEASE ON PAYMENT IN FULL. Lender shall, upon the
written request and at the expense of Borrower, upon payment in full of the Debt
in accordance herewith, release or, if requested by Borrower, assign to
Borrower's' designee (without any representation or warranty by and without any
recourse against Lender whatsoever), the Lien of the Loan Documents if not
theretofore released.
2.5 PAYMENTS AND COMPUTATIONS.
2.5.1 MAKING OF PAYMENTS. Each payment by a Borrower shall be
made in funds settled through the New York Clearing House Interbank Payments
System or other funds immediately available to Lender by 11:00 a.m., New York
City time, on the date such payment is due, to Lender by deposit to such account
as Lender may designate by written notice to Borrower. Whenever any such payment
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the first Business Day thereafter. All such payments shall
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be made irrespective of, and without any deduction, set-off or counterclaim
whatsoever and are payable without relief from valuation and appraisement laws
and with all costs and charges incurred in the collection or enforcement
thereof, including attorneys' fees and court costs.
2.5.2 COMPUTATIONS. Interest payable under the Loan Documents
shall be computed on the basis of the actual number of days elapsed over a
360-day year.
2.5.3 LATE PAYMENT CHARGE. If any regularly scheduled payment
of Principal, interest or other monthly payment or reserve or escrow deposit due
under any Loan Document is not paid by Borrower on the date on which it is due
and, subject to the last sentence of this Section 2.5.3, such failure continues
for five (5) days, 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 (the "LATE PAYMENT CHARGE"), 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.
Such amount shall be secured by the Loan Documents. With respect to the
foregoing 5 day grace period, the parties agree that such 5 day grace period
shall only be applicable no more than twice during the Term, and in all other
instances, the Late Payment Charge shall be payable in accordance with this
Section 2.5.3 with respect to any Principal, interest or other sum due under any
Loan Document which is not paid by Borrower on the date on which the same is due
(other than the balloon payment of Principal due on the Maturity Date or
acceleration of the Loan).
3. CASH MANAGEMENT AND RESERVES
3.1 CASH MANAGEMENT ARRANGEMENTS. Borrower shall cause all Rents to
be transmitted directly by tenants of the Property into a trust account (the
"CLEARING ACCOUNT") maintained by Borrower at a local bank selected by Borrower,
which shall at all times be an Eligible Institution (the "CLEARING BANK") as
more fully described in the Clearing Account Agreement. Without in any way
limiting the foregoing, all Rents received by Borrower or Manager shall be
deposited into the Clearing Account within two Business Days of receipt. Funds
deposited into the Clearing Account shall be swept by the Clearing Bank on a
daily basis into an Eligible Account at the Deposit Bank controlled by Lender
(the "DEPOSIT ACCOUNT") and applied and disbursed in accordance with this
Agreement. Funds in the Deposit Account shall be invested at Lender's discretion
only in Permitted Investments. Lender will also establish subaccounts of the
Deposit Account which shall at all times be Eligible Accounts (and may be ledger
or book entry accounts and not actual accounts) (such subaccounts are
collectively referred to herein as "SUBACCOUNTS"). The Deposit Account and any
Subaccount will be under the sole control and dominion of Lender, and Borrower
shall not have any right of withdrawal therefrom. Borrower shall pay for all
expenses of opening and maintaining all of the above accounts.
3.2 REQUIRED REPAIRS; 3.2.1 COMPLETION OF REQUIRED REPAIRS. Borrower
shall perform and complete each item of the repairs and environmental remedial
work at the Property described on Schedule 2 (the "REQUIRED REPAIRS"), if any,
within six (6) months of the date hereof or such shorter period of time for such
item set forth on Schedule 2, if any.
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3.2.2 REQUIRED REPAIRS RESERVES. On the date hereof, Borrower
shall deposit with Lender $0 and Lender shall cause such amount to be
transferred to a Subaccount (the "REQUIRED REPAIRS SUBACCOUNT"). Provided no
Event of Default shall have occurred and is continuing, Lender shall disburse
funds held in the Required Repairs Subaccount to Borrower (or at Borrower's
direction, disburse directly to the payee of the subject Required Repairs (or
portion thereof)), within 10 days after the delivery by Borrower to Lender of a
request therefor (but not more often than once per month), in increments of at
least $5,000, accompanied by the following items (which items shall be in form
and substance satisfactory to Lender): (i) an Officer's Certificate (A)
certifying that the Required Repairs or any portion thereof which are the
subject of the requested disbursement have been completed in a good and
workmanlike manner and in accordance with all applicable Legal Requirements, (B)
identifying each Person that supplied materials or labor in connection with such
Required Repairs or any portion thereof and (C) stating that each such Person
has been or, upon receipt of the requested disbursement, will be paid in full
with respect to the portion of the Required Repairs which is the subject of the
requested disbursement; (ii) copies of appropriate Lien waivers or other
evidence of payment satisfactory to Lender; (iii) with respect to any
disbursement that exceeds $50,000, at Lender's option, a title search for the
Property indicating that it is free from all Liens not previously approved by
Lender; (iv) a copy of each License required to be obtained with respect to the
portion of the Required Repairs which is the subject of the requested
disbursement; and (v) such other evidence as Lender shall reasonably request
that the Required Repairs which are the subject of the requested disbursement
have been completed and paid for. Provided no Default or Event of Default shall
have occurred and is continuing, upon Borrower's' completion of all Required
Repairs in accordance with this Section 3.2, Lender shall release any funds
remaining in the Required Repairs Subaccount, if any, to Borrower.
3.3 TAXES AND INSURANCE. Borrower shall pay to Lender on each
Payment Date (i) one-twelfth of the Taxes that Lender estimates will be payable
during the next 12 months in order to accumulate with Lender sufficient funds to
pay all such Taxes at least 30 days prior to their respective due dates and (ii)
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 with Lender sufficient funds to pay all such Insurance
Premiums at least 30 days prior to the expiration of the Policies. Such amounts
will be transferred by Lender to a Subaccount (the "TAX AND INSURANCE
SUBACCOUNT"). Provided that no monetary Event of Default or material
non-monetary Event of Default has occurred and is continuing, Lender will (a)
apply funds in the Tax and Insurance Subaccount to payments of Taxes and
Insurance Premiums required to be made by Borrower pursuant to Sections 5.2 and
7.1, provided that Borrower has promptly supplied Lender with notices of all
Taxes and Insurance Premiums due, or (b) reimburse Borrower for such amounts
upon presentation of evidence of payment; subject, however, to Borrower's' right
to contest Taxes in accordance with Section 5.2. In making any payment relating
to Taxes and Insurance Premiums, Lender may do so according to any xxxx,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), 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 Lender determines in its reasonable judgment that the funds in the
Tax and Insurance Subaccount will be insufficient to pay (or in excess of) the
Taxes or Insurance Premiums next coming due, Lender may increase (or decrease)
the monthly contribution required to be made by Borrower to the Tax and
Insurance Subaccount.
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3.4 INITIAL LEASING RESERVE. On the date hereof, Borrower shall
deposit with Lender $167,495.90 (the "TENANT IMPROVEMENT Funds") and Lender
shall transfer such amount into a Subaccount (the "TENANT IMPROVEMENT RESERVE
SUBACCOUNT"). The Tenant Improvement Funds shall be used to reimburse Borrower
and/or to pay, in the allocated amounts and in accordance with the terms and
conditions set forth in this Agreement, for the reasonable costs and expenses
incurred by Borrower in completing the tenant improvements and/or paying the
tenants under the applicable Leases allowances for tenant improvements and/or
paying leasing commissions under the applicable Leases, in each case in the
amounts allocated to, and as described for each applicable Lease, on Schedule 1
(the "TI LEASES"). Provided that no Event of Default has occurred and is
continuing, Lender shall disburse Tenant Improvement Funds held in the Tenant
Improvement Reserve Subaccount and applicable to each TI Lease (as set forth on
Schedule 1) to Borrower, within 15 days after the delivery by Borrower to Lender
of a request therefore (but not more often than once per month), in increments
of at least $5,000 (or the remaining balance of the amount allocated to the
applicable TI Lease, if less), provided: (i) Borrower shall have provided Lender
with either (1) as to leasing commissions relating to the applicable TI Lease
(as set forth on Schedule 1), reasonable evidence that such commissions have
been paid, or are then due and will be paid with proceeds of the requested
disbursement, or (2) as to leasehold improvement work or allowances therefor,
reasonable evidence (which may, if required by Lender, include a tenant estoppel
certificate from the tenant under the applicable TI Lease) indicating, as
applicable, (A) that the tenant improvements or allowances therefor have been
completed in accordance with the applicable TI Lease, (B) that the tenant under
the applicable TI Lease is then owed and entitled to payment upon the applicable
tenant allowance pursuant to the terms of such TI Lease, or (C) if the time
period upon which the applicable tenant may draw upon the applicable TI Lease
has elapsed, that such tenant is no longer entitled to obtain or require the
payment of the applicable tenant allowance under the terms of the applicable TI
Lease; and (ii) the request for disbursement is accompanied by (A) an Officer's
Certificate certifying that such funds will be used only to pay (or reimburse
Borrower for) the relevant expenditures set forth above (or, in the event of a
disbursement under clause (i)(C) above, that the condition set forth in such
clause (i)(C) has been satisfied with respect to the applicable TI Lease), and
that the same have not been the subject of a previous disbursement, and (B)
reasonably detailed supporting documentation as to the amount, necessity and
purpose therefor.
3.5 ALCOA LEASE TERMINATION PAYMENT.
(a) In the event that Alcoa exercises the Alcoa Cancellation
Right (as defined in Section 4.26 below) to terminate all or any portion of the
Alcoa Lease or reduce the Alcoa Space demised to it pursuant thereto pursuant to
the Alcoa Lease, the Alcoa Lease Termination Payment (as defined below) shall by
paid to Lender (and Borrower shall so direct Alcoa to pay the same to Lender),
and if Borrower receives the same Borrower shall immediately deposit the Alcoa
Lease Termination Payment with Lender. The "ALCOA LEASE TERMINATION PAYMENT" is
the sum of the termination fees and payments for unamortized tenant improvements
that are stipulated in the Alcoa Lease as being payable by Alcoa to Borrower
upon Alcoa's exercise of the Alcoa Cancellation Right under the applicable
circumstances of such exercise, which amount has been calculated by Borrower to
be, and is represented by Borrower to be no less than, either (i) $1,376,919.45
(as to any termination of the Alcoa Lease with respect to the entire Alcoa
Space), or (ii) $533,205.62 (as to any termination of the Alcoa Lease with
respect to only one
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entire floor comprising a part of the Alcoa Space). Lender shall transfer such
amount received by Lender into a Subaccount (the "ALCOA LEASE TERMINATION
SUBACCOUNT"). Provided that no Event of Default has occurred and is continuing,
Lender shall disburse funds held in the Alcoa Lease Termination Subaccount to
Borrower, within 15 days after the delivery by Borrower to Lender of a request
therefor (but not more often than once per month), in increments of at least
$5,000, provided that all of the following conditions precedent to each such
disbursement have been, in Lender's sole discretion, duly satisfied: (i) such
disbursement is for an Approved Leasing Expense incurred with respect to the
reletting of the space formerly leased to Alcoa under the Alcoa Lease (or if
such space is fully relet and all tenant improvement, leasing commissions and
other leasing costs and expenses are paid, then with respect to the lease or
reletting of other then-vacant space at the Property); (ii) Lender shall have
(if it desires) verified (by an inspection conducted at Borrower's expense)
performance of any construction work associated with such Approved Leasing
Expense; (iii) all space relating to the request is leased to a replacement
tenant or tenants reasonably acceptable to Lender; (iv) the term of such
replacement Lease or Leases are at least five years each; (v) the Rent due under
such Lease or Leases shall be at then market rents, but at least equal to the
then current Rent payable by Alcoa under the Alcoa Lease with respect to the
space subject thereto (or that would have been payable with respect to the space
subject thereto had the Alcoa Lease not been terminated or the space demised
pursuant thereto not been reduced); (vi) the request for disbursement is
accompanied by (A) an Officer's Certificate certifying (1) that such funds will
be used only to pay (or reimburse Borrower for) Approved Leasing Expenses and a
description thereof, (2) that all outstanding trade payables (other than those
not yet due and payable or those to be paid from the requested disbursement or
those constituting Permitted Indebtedness) have been paid in full, (3) that the
same has not been the subject of a previous disbursement, and (4) that all
previous disbursements have been used only to pay (or reimburse Borrower for)
the previously identified Approved Leasing Expenses, and (B) reasonably detailed
supporting documentation as to the amount, necessity and purpose therefor; (vii)
the Debt Service Coverage Ratio (as reasonably determined by Lender but, for
purposes of this Section only, determined on a pro forma basis for the following
12 month period by (A) taking Net Operating Income for the previous 12 month
period, (B) subtracting Rent received during such previous 12 month period
received with respect to (1) the space subject to the replacement Lease or
Leases and (2) any other portion of the Property that remains vacant, and (C)
adding all Rent required to be paid under the replacement Lease or Leases for
the following 12 month period) is at least 1.10:1; and (viii) Borrower shall
have provided Lender with tenant estoppel certificates from each such tenant
under each applicable Lease indicating that all construction to be performed and
all improvements to be installed under such Lease has been completed, that such
tenant has accepted the tenant improvements and occupied the space covered by
its Lease and has commenced paying Rent and the free rent or rent abatement
periods under such Lease has expired, and there are no defaults under such Lease
(nor does there exist any event or condition, which with the passage of time or
the giving of notice, or both, could result in such a default) (all requirements
under this Section 3.14(a) for disbursement of funds from the Alcoa Lease
Termination Subaccount to Borrower, collectively, the "ALCOA LEASE TERMINATION
DRAW REQUIREMENTS"). Any such disbursement of more than $10,000 to pay (rather
than reimburse) Approved Leasing Expenses may, at Lender's option, be made by
joint check payable to Borrower and the payee of such Approved Leasing Expenses.
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(b) (1) Notwithstanding the foregoing, provided no Event of
Default has occurred and is continuing, Borrower shall have the right, in lieu
of delivering the applicable Alcoa Lease Termination Payment pursuant to Section
3.5(a) above, to deliver to Lender on or before the date any such Alcoa Lease
Termination Payment would otherwise be required to be paid hereunder an
Acceptable Letter of Credit in favor of Lender, in an aggregate principal amount
equal to the applicable Alcoa Lease Termination Payment (such Acceptable Letter
of Credit, together with any Acceptable Letter of Credit renewing or replacing
the same provided in accordance herewith, the "ALCOA LEASE TERMINATION LETTER OF
CREDIT"), which Alcoa Lease Termination Letter of Credit shall provide that
Lender or its successors and assigns may draw the full amount thereof at any
time upon demand (and subject to no other drawing requirements or conditions)
and otherwise in form and content satisfactory to Lender. Subject to the
provisions of this Section, Lender shall retain custody of the Alcoa Lease
Termination Letter of Credit until such time as the Loan is repaid in full. If
Borrower has delivered the Alcoa Lease Termination Letter of Credit, then
provided (i) no Event of Default has occurred and is continuing, (ii) the Debt
Service Coverage Ratio (calculated by Lender as set forth further above in this
Section 3.5(a)) is at least 1.10:1, and (iii) the other Alcoa Lease Termination
Draw Requirements (applicable as if the proposed release or reduction in the
amount of the Alcoa Lease Termination Letter of Credit were a proposed draw upon
funds in the Alcoa Lease Termination Subaccount) are satisfied, the amount of
the required Alcoa Lease Termination Letter of Credit shall be reduced from time
to time, upon Borrower's written request to Lender, by an amount equal to not
more than the amount that Borrower would have been entitled to have disbursed to
it from the Alcoa Lease Termination Subaccount under Section 3.5(a) above if
Borrower had deposited the cash the Alcoa Lease Termination Payment in the Alcoa
Lease Termination Subaccount instead of providing the Alcoa Lease Termination
Letter of Credit, and provided further, that: (x) such requests may be made not
more frequently than once per month; and (y) without limiting any other
requirement hereunder, the amount of any reduction shall be in increments of
$100,000 or any whole multiple thereof. If the amount of the required Alcoa
Lease Termination Letter of Credit is reduced, Lender will cooperate with
Borrower in amending or replacing the Alcoa Lease Termination Letter of Credit
to reflect such reduced amount of the required Alcoa Lease Termination Letter of
Credit. Borrower shall pay any fees or other amounts charged by any issuing bank
with respect to any such request and shall promptly pay to Lender all costs and
expenses of Lender incurred in connection with any such request, including
Lender's reasonable attorneys' fees.
(b) (2) Lender shall have the right to draw upon the Alcoa
Lease Termination Letter of Credit in the full amount thereof upon the
occurrence of any of the following: (A) any Event of Default; or (B) the Alcoa
Lease Termination Letter of Credit is scheduled to expire within 30 days and has
not been renewed, or Lender receives a notice stating that the Alcoa Lease
Termination Letter of Credit will not be renewed (as provided for in such Letter
of Credit). The proceeds of any draw under the Alcoa Lease Termination Letter of
Credit pursuant to this Section 3.5(b)(2) shall be allocated to the Debt, in
such order and in such manner as Lender shall elect in its sole and absolute
discretion, including (if the Loan has been accelerated) to make a prepayment of
Principal (together with the applicable Yield Maintenance Premium applicable
thereto). The proceeds of any draw under the Alcoa Lease Termination Letter of
Credit pursuant to this Section 3.5(b)(2) shall be deposited by Lender into the
Alcoa Lease Termination Subaccount and shall be governed by the provisions of
Section 3.5(a), as well as the other terms and conditions of this Agreement and
the other Loan Documents.
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(c) In the event that Borrower fails to provide Lender with
either (i) the applicable Alcoa Lease Termination Payment, or (ii) the Alcoa
Lease Termination Letter of Credit, if and as applicable, on or before the date
required hereunder and otherwise in accordance with the provisions of this
Section 3.5, then in addition to Lender's other remedies hereunder and
notwithstanding any provision elsewhere in this Agreement to the contrary, such
event shall trigger a Cash Trap Period.
(d) Promptly after the Loan is repaid in full, Lender shall
surrender to Borrower (i) any Alcoa Lease Termination Letter of Credit that has
not been drawn upon in accordance herewith, and (ii) all undisbursed monies then
held in the Alcoa Lease Termination Subaccount, if any.
(e) Without limitation of any of the other provisions set
forth elsewhere in this Section 3.5, as additional security for payment of the
Debt and the performance by Borrower of all other terms, conditions and
provisions of the Loan Documents, Borrower hereby pledges and assigns to Lender,
and grants to Lender a security interest in, all of Borrower's rights, title and
interests in and to the Alcoa Termination Escrow Agreement and the Alcoa
Termination Escrow Funds, including without limitation any amounts or
disbursements made, paid or payable or to be made or paid or required to be made
or paid to Borrower (or its affiliates, Harvard Property Trust, LLC and/or
Harvard REIT Operating Partnership) under the terms of the Alcoa Termination
Escrow Agreement or which Borrower (or its affiliates, Harvard Property Trust,
LLC and/or Harvard REIT Operating Partnership) shall be entitled to receive
pursuant to the terms and conditions of the Alcoa Termination Escrow Agreement,
together with all proceeds of the foregoing. Provided no Event of Default exists
and is continuing, Alcoa Termination Escrow Funds, if any, disbursed to Borrower
pursuant to the Alcoa Termination Escrow Agreement shall be held by Borrower and
used for reletting costs with respect to the space demised under the Alcoa
Lease, or if such space is fully relet and all tenant improvement, leasing
commissions and other leasing costs and expenses are paid, then with respect to
the lease or reletting of other then-vacant space at the Property (and such
costs paid from such Alcoa Termination Escrow Funds shall not be reimburseable
from funds in the Alcoa Lease Termination Subaccount or result or qualify
Borrower to receive a reduction in the amount of the Alcoa Lease Termination
Letter of Credit), and Alcoa Termination Escrow Funds expended for such purposes
shall be deemed released from Lender's security interest. Upon the occurrence of
any Event of Default, Borrower shall direct or cause to be directed, and Lender
shall have the right to direct, the disbursement of Alcoa Termination Escrow
Funds to which the Borrower (or its affiliates, Harvard Property Trust, LLC
and/or Harvard REIT Operating Partnership) would be entitled under the Alcoa
Termination Escrow Agreement, and Borrower shall pay to Lender the balance, if
any (after any expenditures made by Borrower pursuant to the preceding
sentence), of any Alcoa Termination Escrow Funds previously disbursed to
Borrower, and such funds received by Lender shall be allocated to the Debt, in
such order and in such manner as Lender shall elect in its sole and absolute
discretion, including (if the Loan has been accelerated) to make a prepayment of
Principal (together with the applicable Yield Maintenance Premium applicable
thereto).
3.6 OPERATING EXPENSE SUBACCOUNT. On each Payment Date during the
continuance of a Cash Trap Period, a portion of Rents that have been deposited
into the Deposit Account during the immediately preceding Interest Period in an
amount equal to the monthly amount set forth in the Approved Operating Budget
for the following month (plus any other amounts requested by Borrower for such
month for payment of items constituting Approved Operating Expenses,
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which are not included in the Approved Operating Budget), shall be transferred
into a Subaccount for the purpose of payment of Approved Operating Expenses for
the month in which such Payment Date occurs (the "OPERATING EXPENSE
SUBACCOUNT"). Provided no Event of Default has occurred and is continuing,
Lender shall disburse funds held in the Operating Expense Subaccount to Borrower
(or at Borrower's direction, to the Manager), within 5 Business Days after
delivery by Borrower to Lender of a request therefor (but not more often than
weekly), in increments of at least $1,000, provided (i) such disbursement is for
an Approved Operating Expense; and (ii) such disbursement is accompanied by (A)
an Officer's Certificate certifying (1) that such funds will be used to pay
Approved Operating Expenses and a description thereof, (2) that all outstanding
trade payables (other than those not yet due and payable or those to be paid
from the requested disbursement or those constituting Permitted Indebtedness)
have been paid in full, (3) that the same has not been the subject of a previous
disbursement, and (4) that all previous disbursements have been or will be used
to pay the previously identified Approved Operating Expenses, and (B) reasonably
detailed documentation satisfactory to Lender as to the amount, necessity and
purpose therefor. Notwithstanding anything to the contrary contained herein, to
the extent that (i) Borrower has requested a disbursement of funds from the
Operating Expense Subaccount in accordance with the foregoing provisions and
(ii) at the time of such request, the funds that have been collected in the
Operating Expense Subaccount are insufficient to cover the same, then Lender
shall nonetheless disburse additional funds that are thereafter deposited into
the Operating Expense Subaccount to Borrower (without any requirement for
Borrower to submit an additional request therefor); provided that sufficient
funds have been collected in the Deposit Account to make the payments required
under clauses (i) - (v) of Section 3.11(a) on the next succeeding Payment Date.
3.7 CASUALTY/CONDEMNATION SUBACCOUNT. Borrower shall pay, or cause
to be paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation
to be transferred to a Subaccount (the "CASUALTY/CONDEMNATION SUBACCOUNT") in
accordance with the provisions of Section 7. All amounts in the
Casualty/Condemnation Subaccount shall be disbursed in accordance with the
provisions of Section 7.
3.8 SECURITY DEPOSITS. Borrower shall keep all security deposits
under Leases in accordance with applicable Legal Requirements. After the
occurrence of an Event of Default, Borrower shall, upon Lender's request, if
permitted by applicable Legal Requirements, turn over to Lender the security
deposits (and any interest theretofore earned thereon) under Leases, to be held
by Lender in a Subaccount (the "SECURITY DEPOSIT SUBACCOUNT") subject to the
terms of the Leases. Security deposits held in the Security Deposit Subaccount
will be released by Lender upon notice from Borrower together with such evidence
as Lender may reasonably request that such security deposit is required to be
returned to a tenant pursuant to the terms of a Lease or may be applied as Rent
pursuant to the rights of Borrower under the applicable Lease. Any letter of
credit or other instrument that Borrower receives in lieu of a cash security
deposit under any Lease shall (i) be maintained in full force and effect in the
full amount unless replaced by a cash deposit as hereinabove described and (ii)
if permitted pursuant to any Legal Requirements, name Lender as payee or
mortgagee thereunder (or at Lender's option, be fully assignable to Lender).
3.9 CASH COLLATERAL SUBACCOUNT. If a Cash Trap Period shall have
commenced, then on the immediately succeeding Payment Date and on each Payment
Date thereafter during the continuance of such Cash Trap Period, all Available
Cash shall be paid to Lender, which
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amounts shall be transferred by Lender into a Subaccount (the "CASH COLLATERAL
SUBACCOUNT") as cash collateral for the Debt. Any funds in the Cash Collateral
Account and not previously disbursed or applied shall be disbursed to Borrower
upon the termination of such Cash Trap Period. Lender shall have the right, but
not the obligation, at any time during the continuance of a monetary Event of
Default or material non-monetary Event of Default, in its sole and absolute
discretion to apply all sums then on deposit in the Cash Collateral Subaccount
to the Debt, in such order and in such manner as Lender shall elect in its sole
and absolute discretion, including (if the Loan has been accelerated) to make a
prepayment of Principal (together with the applicable Yield Maintenance Premium
applicable thereto). Notwithstanding anything to the contrary contained above,
Lender shall have the right, but not the obligation, in its sole and absolute
discretion from time to time, to disburse funds deposited into the Cash
Collateral Subaccount to Borrower for application to Approved Leasing Costs or
capital expenditures approved by Lender, subject to such terms and conditions as
Lender may require.
3.10 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS. As security
for payment of the Debt and the performance by Borrower of all other terms,
conditions and provisions of the Loan Documents, Borrower hereby pledges and
assigns to Lender, and grants to Lender a security interest in, all Borrower's
right, title and interest in and to all Rents and in and to all payments to or
monies held in the Clearing Account, the Deposit Account, all Subaccounts
created pursuant to this Agreement (collectively, the "CASH MANAGEMENT
ACCOUNTS"). Borrower hereby grants to Lender a continuing security interest in,
and agrees to hold in trust for the benefit of Lender, all Rents in its
possession prior to the (i) payment of such Rents to Lender or (ii) deposit of
such Rents into the Deposit Account. Borrower shall not, without obtaining the
prior written consent of Lender, further pledge, assign or grant any security
interest in any Cash Management Account, or permit any Lien to attach thereto,
or any levy to be made thereon, or any UCC Financing Statements, except those
naming Lender as the secured party, to be filed with respect thereto. This
Agreement is, among other things, intended by the parties to be a security
agreement for purposes of the UCC. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in any Cash
Management Account in any order and in any manner as Lender shall elect in
Lender's discretion without seeking the appointment of a receiver and without
adversely affecting the rights of Lender to foreclose the Lien of the Mortgage
or exercise its other rights under the Loan Documents, provided that Lender will
not apply any such sums to prepayment of Principal unless it has accelerated the
Loan. Cash Management Accounts shall not constitute trust funds and may be
commingled with other monies held by Lender. All interest which accrues on the
funds in any Cash Management Account (other than the Tax and Insurance
Subaccount) shall accrue for the benefit of Borrower and shall be taxable to
Borrower and shall be added to and disbursed in the same manner and under the
same conditions as the principal sum on which said interest accrued. Upon
repayment in full of the Debt, all remaining funds in the Subaccounts, if any,
shall be promptly disbursed to Borrower.
3.11 PROPERTY CASH FLOW ALLOCATION. (a) (a) All Rents deposited into
the Deposit Account during the immediately preceding Interest Period shall be
applied on each Payment Date as follows in the following order of priority: (i)
First, to make payments into the Tax and Insurance Subaccount as required under
Section 3.3; (ii) Second, to pay the monthly portion of the fees charged by the
Deposit Bank in accordance with the Deposit Account Agreement; (iii) Third, to
Lender to pay the Monthly Interest Payment Amount or the Monthly Debt Service
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Payment Amount, as the case may be, due on such Payment Date (plus, if
applicable, interest at the Default Rate and all other amounts, other than those
described under other clauses of this Section 3.11(a), then due to Lender under
the Loan Documents); (iv) Intentionally Omitted; (v) Intentionally Omitted; (vi)
Sixth, during the continuance of a Cash Trap Period, to make payments for
Approved Operating Expenses as required under Section 3.6; (vii) Seventh, during
the continuance of a Cash Trap Period, to make payments in an amount equal to
all remaining Available Cash on such Payment Date into the Cash Collateral
Subaccount in accordance with Section 3.9; and (viii) Lastly, except during the
continuance of a Cash Trap Period, payments to Borrower of any remaining
amounts. Notwithstanding the foregoing, except during the continuance of a Cash
Trap Period, provided that in any given Interest Period, all amounts referred to
in the foregoing clauses (i) - (v) have been paid (if and as applicable), then
at Borrower's request, the payments to Borrower under the foregoing clause
(viii) shall be made on a weekly basis.
(b) The failure of Borrower to make all of the payments
required under clauses (i) through (vii) of Section 3.11(a) in full on each
Payment Date shall constitute an Event of Default under this Agreement;
provided, however, if adequate funds are available in the Deposit Account for
such payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default.
(c) Notwithstanding anything to the contrary contained in
this Section 3.11, after the occurrence of an Event of Default, Lender may apply
all Rents deposited into the Deposit Account and other proceeds of repayment in
such order and in such manner as Lender shall elect, provided that Lender may
not apply Rents to the prepayment of principal unless the Loan has been
accelerated.
3.12 INITIAL DEPOSITS INTO RESERVES. The initial deposits required to
be made on the date hereof into the reserve accounts established under this
Article 3 are funded from the proceeds of the Loan disbursed at closing.
3.13 GUARANTY IN LIEU OF ROLLOVER RESERVE. In lieu of requiring
monthly deposits into a leasing rollover reserve, Guarantor has, pursuant to the
Guaranty, guaranteed the payment of the unpaid balance of the Debt, subject to a
maximum liability limitation (provided no Springing Recourse Event occurs) of
$700,000.
4. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as of the date hereof
that, except to the extent (if any) disclosed on Schedule 3 with reference to a
specific Section of this Article 4:
4.1 ORGANIZATION; SPECIAL PURPOSE. Borrower has been duly organized
and is validly existing and in good standing under the laws of the state of its
formation, with requisite power and authority, and all rights, licenses, permits
and authorizations, governmental or otherwise, necessary to own its properties
and to transact the business in which it is now engaged. Borrower is duly
qualified to do business and is in good standing in each jurisdiction where it
is required to
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be so qualified in connection with its properties, business and operations.
Borrower is a Special Purpose Bankruptcy Remote Entity. Without limitation of
any of the foregoing, Borrower's original operating agreement, which became
effective on or about October 3, 2005 when Borrower became a duly organized
limited liability company in accordance with the laws of the State of Delaware,
did not satisfy the requirements set forth in clauses (iii), (iv) and (v) within
the definition of Single Member Bankruptcy Remote LLC (in accordance with
Schedule 5 hereof); provided, however, that on or prior to the date of this
Agreement, Borrower amended and restated its original operating agreement, which
amended and restated operating agreement now duly satisfies all of the
requirements set forth in Schedule 5 hereof.
4.2 PROCEEDINGS; ENFORCEABILITY. Borrower has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents. The Loan Documents to which Borrower is a party have been duly
executed and delivered by Borrower and constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms, subject to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally, and general principles of equity. The
Loan Documents to which Borrower's Guarantor and/or Affiliates are a party have
been duly executed and delivered by such Guarantor and/or Affiliates party
thereto, and constitute legal, valid and binding obligations of such Guarantor
and/or Affiliates party thereto, enforceable against such Guarantor and/or
Affiliates party thereto in accordance with their respective terms, subject to
applicable bankruptcy, insolvency and similar laws affecting rights of creditors
generally, and general principles of equity. The Loan Documents are not subject
to, and Borrower has not asserted, any right of rescission, set-off,
counterclaim or defense, including the defense of usury. No exercise of any of
the terms of the Loan Documents, or any right thereunder, will render any Loan
Document unenforceable.
4.3 NO CONFLICTS. The execution, delivery and performance of the
Loan Documents by Borrower and the transactions contemplated hereby will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
(other than pursuant to the Loan Documents) upon any of the property of Borrower
pursuant to the terms of, any agreement or instrument to which Borrower is a
party or by which its property is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over Borrower or the Property.
Borrower's rights under the Licenses and the Management Agreement will not be
adversely affected by the execution and delivery of the Loan Documents,
Borrower's performance thereunder, or the recordation of the Mortgage. Any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower of the Loan Documents has been obtained and is in full
force and effect.
4.4 LITIGATION. There are no actions, suits or other proceedings at
law or in equity by or before any Governmental Authority now pending or
threatened against or affecting Borrower, the Manager or the Property, which, if
adversely determined, might materially adversely affect the condition (financial
or otherwise) or business of Borrower, Manager or the condition or ownership of
the Property.
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4.5 AGREEMENTS. Borrower is not a party to any agreement or
instrument or subject to any restriction which might adversely affect Borrower
or the Property, or Borrower's business, properties, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which Borrower is a party or by which Borrower or the Property is
bound.
4.6 TITLE. Borrower has good, marketable and indefeasible title in
fee to the real property and good title to the balance of the Property, free and
clear of all Liens except the Permitted Encumbrances. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements in
connection with the transfer of the Property to Borrower have been paid. The
Mortgage when properly recorded in the appropriate records, together with any
UCC financing statements required to be filed in connection therewith and the
other Loan Documents, will create (i) a valid, perfected first priority lien on
Borrower's interest in that portion of the Property, the Leases (to the extent
not subject to the Uniform Commercial Code) and the Rents constituting interest
in real estate or real property interests (including fixtures) and (ii) to the
extent that a security interest therein may be created under the Uniform
Commercial Code, a valid security interest in that portion of the Property, the
Leases (to the extent subject to the Uniform Commercial Code) and Rents and
other collateral for the Loan constituting personal property, which security
interest constitutes a perfected first priority security interest (a) to the
extent that a security interest therein may be perfected by the filing of a UCC
financing statement and (b) with respect to the Cash Management Accounts by
virtue of Lender's control of such Cash Management Accounts, all in accordance
with the terms of such Loan Documents, in each case subject only to any
applicable Permitted Encumbrances. All mortgage, recording, stamp, intangible or
other similar taxes required to be paid by any Person under applicable Legal
Requirements in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents have been
(or will, contemporaneously with such recordation or filing, be) paid by
Borrower. The Permitted Encumbrances do not materially adversely affect the
value, operation or use of the Property, or Borrower's ability to repay the
Loan. No Condemnation or other proceeding has been commenced or, to Borrower's
best knowledge, is contemplated with respect to all or part of the Property or
for the relocation of roadways providing access to the Property. There are no
claims for payment for work, labor or materials affecting the Property which are
or may become a Lien prior to, or of equal priority with, the Liens created by
the Loan Documents. There are no outstanding options to purchase or rights of
first refusal affecting all or any portion of the Property. The survey for the
Property delivered to Lender does not fail to reflect any material matter
affecting the Property or the title thereto. Except as shown on the survey, all
of the Improvements included in determining the appraised value of the Property
lie wholly within the boundaries and building restriction lines of the Property,
and no improvement on an adjoining property encroaches upon the Property, and no
easement or other encumbrance upon the Property encroaches upon any of the
Improvements, except those insured against by the Title Insurance Policy. Each
parcel comprising the Property is a separate tax lot and is not a portion of any
other tax lot that is not a part of the Property. To the best of Borrower's
knowledge, there are no pending or proposed special or other assessments for
public improvements or otherwise affecting the Property, or any contemplated
improvements to the Property that may result in such special or other
assessments.
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4.7 NO BANKRUPTCY FILING. Borrower is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
law or the liquidation of all or a major portion of its property (a "BANKRUPTCY
PROCEEDING"), and Borrower has no knowledge of any Person contemplating the
filing of any such petition against Borrower. In addition, neither Borrower nor
any principal nor Affiliate of Borrower has been a party to, or the subject of a
Bankruptcy Proceeding for the past ten years.
4.8 FULL AND ACCURATE DISCLOSURE. No statement of fact made by
Borrower in any of the Loan Documents contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained therein not misleading. There is no material fact presently known to
Borrower that has not been disclosed to Lender which adversely affects, or, as
far as Borrower can foresee, might adversely affect, the Property or the
business, operations or condition (financial or otherwise) of Borrower. All
financial data, including the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of Borrower and, to
Borrower's knowledge, the Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of Borrower
and the Property as of the date of such reports, and (iii) to the extent
prepared by an independent certified public accounting firm, have been prepared
in accordance with GAAP consistently applied throughout the periods covered,
except as disclosed therein. Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments, unrealized or
anticipated losses from any unfavorable commitments or any liabilities or
obligations not expressly permitted by this Agreement. Since the date of such
financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower or the Property from
that set forth in said financial statements.
4.9 TAX FILINGS. To the extent required, Borrower has filed (or has
obtained effective extensions for filing) all federal, state and local tax
returns required to be filed and 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.
4.10 NO PLAN ASSETS. As of the date hereof and throughout the Term
(i) Borrower is not and will not be an "employee benefit plan," as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, (ii) none of the assets of
Borrower constitutes or will constitute "plan assets" of one or more such plans
within the meaning of 29 C.F.R. Section 2510.3-101, (iii) Borrower is not and
will not be a "governmental plan" within the meaning of Section 3(32) of ERISA,
and (iv) transactions by or with Borrower are not and will not be subject to
state statutes regulating investment of, and fiduciary obligations with respect
to, governmental plans. As of the date hereof, neither Borrower, nor any member
of a "controlled group of corporations" (within the meaning of Section 414 of
the Code) maintains, sponsors or contributes to a "defined benefit plan" (within
the meaning of Section 3(35) of ERISA) or a "multiemployer pension plan" (within
the meaning of Section 3(37)(A) of ERISA).
4.11 COMPLIANCE. Each Borrower and, to Borrower's best knowledge, the
Property and the use thereof comply in all material respects with all applicable
Legal Requirements
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(including with respect to parking and applicable zoning and land use laws,
regulations and ordinances). Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which might materially adversely affect the condition (financial or
otherwise) or business of Borrower. The Property is used exclusively as an
office building property and other appurtenant and related uses. In the event
that all or any part of the Improvements are destroyed or damaged, said
Improvements can be legally reconstructed to their condition prior to such
damage or destruction, and thereafter exist for the same use without violating
any zoning or other ordinances applicable thereto and without the necessity of
obtaining any variances or special permits. No legal proceedings are pending or,
to the knowledge of Borrower, threatened with respect to the zoning of the
Property. Neither the zoning nor any other right to construct, use or operate
the Property is in any way dependent upon or related to any property other than
the Property. All certifications, permits, licenses and approvals, including
certificates of completion and occupancy permits required for the legal use,
occupancy and operation of the Property (collectively, the "LICENSES"), have
been obtained and are in full force and effect. The use being made of the
Property is in conformity with the certificate of occupancy issued for the
Property and all other restrictions, covenants and conditions affecting the
Property.
4.12 CONTRACTS. There are no service, maintenance or repair contracts
affecting the Property that are not terminable on one month's notice or less
without cause and without penalty or premium. All service, maintenance or repair
contracts affecting the Property have been entered into at arms-length in the
ordinary course of Borrower's business (or that of its predecessor in interest)
and provide for the payment of fees in amounts and upon terms comparable to
existing market rates.
4.13 FEDERAL RESERVE REGULATIONS; INVESTMENT COMPANY ACT. 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 that would be
inconsistent with such Regulation U or any other regulation of such Board of
Governors, or for any purpose prohibited by Legal Requirements or any Loan
Document. Borrower is not (i) an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended; (ii) 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 (iii) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
4.14 EASEMENTS; UTILITIES AND PUBLIC ACCESS. All easements, cross
easements, licenses, air rights and rights-of-way or other similar property
interests (collectively, "EASEMENTS"), if any, necessary for the full
utilization of the Improvements for their intended purposes have been obtained,
are described in the Title Insurance Policy and are in full force and effect
without default thereunder. The Property has rights of access to public ways and
is served by water, sewer, sanitary sewer and storm drain facilities adequate to
service it for its intended uses. All public utilities necessary or convenient
to the full use and enjoyment of the Property are located in the public
right-of-way abutting the Property, and all such utilities are connected so as
to serve the Property without passing over other property absent a valid
easement. All
32
roads necessary for the use of the Property for its current purpose have been
completed and dedicated to public use and accepted by all Governmental
Authorities.
4.15 PHYSICAL CONDITION. To Borrower's knowledge, the Property,
including all Improvements, parking facilities, systems, Equipment and
landscaping, are in good condition, order and repair in all material respects;
to Borrower's knowledge there exists no structural or other material defect or
damages to the Property, whether latent or otherwise. Borrower has not received
notice from any insurance company or bonding company of any defect or inadequacy
in the Property, or any part thereof, which would adversely affect its
insurability or cause the imposition of extraordinary premiums or charges
thereon or any termination of any policy of insurance or bond. No portion of the
Property is located in an area as identified by the Federal Emergency Management
Agency as an area having special flood hazards. The Improvements have suffered
no material casualty or damage which has not been fully repaired and the cost
thereof fully paid.
4.16 LEASES. The rent roll attached hereto as Schedule 6 (the "RENT
ROLL") is true, complete and correct and the Property is not subject to any
Leases other than the Leases described in the Rent Roll. Except as set forth on
the Rent Roll or tenant estoppel certificates delivered to Lender prior to the
date hereof: (i) each Lease is in full force and effect; (ii) the tenants under
the Leases have accepted possession of and are in occupancy of all of their
respective demised premises, have commenced the payment of rent under the
Leases, and there are no offsets, claims or defenses to the enforcement thereof;
(iii) all rents due and payable under the Leases have been paid and no portion
thereof has been paid for any period more than 30 days in advance; (iv) the rent
payable under each Lease is the amount of fixed rent set forth in the Rent Roll,
and there is no claim or basis for a claim by the tenant thereunder for an
adjustment to the rent; (v) to Borrower's best knowledge, no tenant has made any
claim against the landlord under any Lease which remains outstanding, there are
no defaults on the part of the landlord under any Lease, and no event has
occurred which, with the giving of notice or passage of time, or both, would
constitute such a default; (vi) to Borrower's best knowledge, there is no
present material default by the tenant under any Lease; (vii) all security
deposits under Leases are as set forth on the Rent Roll and are held consistent
with Section 3.8; (viii) Borrower is the sole owner of the entire lessor's
interest in each Lease; (ix) each Lease is the valid, binding and enforceable
obligation of Borrower and the applicable tenant thereunder; (x) to Borrower's
best knowledge, no Person has any possessory interest in, or right to occupy,
the Property except under the terms of the Lease; and (xi) each Lease is
subordinate to the Loan Documents, either pursuant to its terms or pursuant to a
subordination and attornment agreement. None of the Leases contains any option
to purchase or right of first refusal to purchase the Property or any part
thereof. Neither the Leases nor the Rents have been assigned or pledged except
to Lender, and no other Person has any interest therein except the tenants
thereunder.
4.17 FRAUDULENT TRANSFER. Borrower has not entered into the Loan or
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and Borrower has received reasonably equivalent value in exchange for
its obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower's total probable liabilities, including subordinated,
unliquidated, disputed or contingent liabilities, including the maximum amount
of its contingent
33
liabilities or its debts as such debts become absolute and matured. Borrower's
assets do not and, immediately following the execution and delivery of the Loan
Documents will not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. Borrower does not intend
to, and does not believe that it will incur debts and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
debts as they mature (taking into account the timing and amounts to be payable
on or in respect of obligations of Borrower).
4.18 OWNERSHIP OF BORROWER.
(a) The sole member of Borrower is the Harvard REIT
Operating Partnership. The only partners of the Harvard REIT Operating
Partnership are (i) the Behringer Harvard REIT (0.1% general partner), (ii) BHR
Partners, LLC, a Delaware limited liability company (in excess of 99% limited
partner), which is 100% owned by the Behringer Harvard REIT, and (iii) certain
other individual holders of equity interests (less than 1% limited partners in
the aggregate). The foregoing membership interests in Borrower, the general
partnership interests in Harvard REIT Operating Partnership, and the limited
partnership interests of BHR Partners, LLC in Harvard REIT Operating
Partnership, are all owned free and clear of all Liens, warrants, options and
rights to purchase. Borrower has no obligation to any Person to purchase,
repurchase or issue any ownership interest in it. The organizational chart
attached hereto as Schedule 4 is complete and accurate and illustrates all
Persons who have a direct or indirect ownership interest in Borrower.
4.19 PURCHASE OPTIONS. Neither the Property nor any part thereof is
subject to any purchase options or other similar rights in favor of third
parties.
4.20 MANAGEMENT AGREEMENT. The Management Agreement is in full force
and effect. There is no default, breach or violation existing thereunder, and no
event has occurred (other than payments due but not yet delinquent) that, with
the passage of time or the giving of notice, or both, would constitute a
default, breach or violation thereunder, by either party thereto. Pursuant to
the Management Agreement, Borrower has appointed the Manager as its agent for
(i) hiring, terminating (subject to the provisions thereof), overseeing and
otherwise dealing with any sub-property manager for the Property, (ii) otherwise
overseeing the operation and management of the Property, and (iii) making
decisions and otherwise interacting and dealing with Lender with respect to the
Loan, this Agreement, the other Loan Documents and the Property. Additionally,
subject to the provisions of Section 3.1 and the Clearing Account Agreement and
the Deposit Account Agreement, the Manager has control of all operating and
other bank accounts with respect to the Property.
4.21 HAZARDOUS SUBSTANCES. Except as disclosed in the environmental
assessment reports delivered to Lender in connection with the Loan, (i) the
Property is not in violation of any Legal Requirement pertaining to or imposing
liability or standards of conduct concerning environmental regulation,
contamination or clean-up, including the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Emergency Planning and Community Right-to-Know Act of 1986, the Hazardous
Substances Transportation Act, the Solid Waste Disposal Act, the Clean Water
Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking Water
Act, the
34
Occupational Safety and Health Act, any state super-lien and environmental
clean-up statutes, any local law requiring related permits and licenses and all
amendments to and regulations in respect of the foregoing laws (collectively,
"ENVIRONMENTAL LAWS"); (ii) the Property is not subject to any private or
governmental Lien or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous, toxic and/or dangerous substances,
toxic mold or fungus of a type that may pose a risk to human health or the
environment or would negatively impact the value of the Property ("TOXIC MOLD")
or any other substances or materials which are included under or regulated by
Environmental Laws (collectively, "HAZARDOUS SUBSTANCES"); (iii) to the best of
Borrower's knowledge, after due inquiry, no Hazardous Substances are or have
been (including the period prior to Borrower's acquisition of the Property),
discharged, generated, treated, disposed of or stored on, incorporated in, or
removed or transported from the Property other than in compliance with all
Environmental Laws; (iv) to the best of Borrower's knowledge, after due inquiry,
no Hazardous Substances are present in, on or under any nearby real property
which could migrate to or otherwise affect the Property; (v) to the best of
Borrower's knowledge, no Toxic Mold is on or about the Property which requires
remediation; and (vi) no underground storage tanks exist on the Property and the
Property has never been used as a landfill. There have been no environmental
investigations, studies, audits, reviews or other analyses conducted by or on
behalf of Borrower which have not been provided to Lender.
4.22 NAME; PRINCIPAL PLACE OF BUSINESS. Borrower does not use and
will not use any trade name or has done or will not do business under any name
other than its actual name set forth herein and the trade name of the Property.
The principal place of business of Borrower is its primary address for notices
as set forth in Section 6.1, and Borrower has no other place of business.
4.23 OTHER DEBT. There is no indebtedness with respect to the
Property or any excess cash flow or any residual interest therein, whether
secured or unsecured, other than Permitted Encumbrances and Permitted
Indebtedness.
4.24 Intentionally Omitted.
4.25 Intentionally Omitted.
4.26 NO KNOWLEDGE OF ALCOA LEASE TERMINATION. Alcoa has not
heretofore exercised that certain cancellation right granted to it pursuant to
the terms and conditions set forth in Paragraph 5 of the 8th Amendment to the
Alcoa Lease (the "ALCOA CANCELLATION Right") with respect to any portion of the
Alcoa Space. Borrower further represents and warrants to Lender that: (i) the
Alcoa Lease does not grant Alcoa any cancellation or termination rights
respecting all or any portion of the Alcoa Space except to the extent expressly
set forth pursuant to the terms and conditions of the Alcoa Cancellation Right;
and (ii) Borrower has not received any notice of, and is not aware of any other
Person's receipt of any notice of, Alcoa's intention to hereafter exercise the
Alcoa Cancellation Right with respect to all or any portion of the Alcoa Space,
nor does Borrower otherwise have any knowledge that Alcoa intends to hereafter
exercise the Alcoa Cancellation Right with respect to all or any portion of the
Alcoa Space.
35
All of the representations and warranties in this Article 4 and
elsewhere in the Loan Documents (i) shall survive for so long as any portion of
the Debt remains owing to Lender and (ii) shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf, provided, however, that the representations and
warranties set forth in Section 4.21 shall survive in perpetuity.
5. COVENANTS
Until the end of the Term, Borrower hereby covenants and agrees with
Lender that:
5.1 EXISTENCE. Borrower shall (i) do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently
conducted by it, (iii) obtain and maintain all Licenses, and (iv) qualify to do
business and remain in good standing under the laws of each jurisdiction, in
each case as and to the extent required for the ownership, maintenance,
management and operation of the Property.
5.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes and Other
Charges prior to delinquency, and deliver to Lender receipts for payment or
other evidence satisfactory to Lender that the Taxes and Other Charges have been
so paid prior to delinquency (provided, however, that Borrower need not pay such
Taxes nor furnish such receipts for payment of Taxes paid by Lender pursuant to
Section 3.3). Borrower shall not suffer and shall promptly cause to be paid and
discharged any Lien against the Property, and shall promptly pay for all utility
services provided to the Property. After prior notice to Lender, Borrower, at
their own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application of any Taxes or Other Charges, provided that (i) no
Event of Default has occurred and is continuing, (ii) such proceeding shall
suspend the collection of the Taxes or such Other Charges, (iii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrower is subject and shall not constitute a
default thereunder, (iv) no part of or interest in the Property will be in
imminent danger of being sold, forfeited, terminated, canceled or lost, (v)
Borrower shall have furnished such security as may be required in the
proceeding, or as may be requested by Lender, to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon, which
shall not be less than one hundred twenty five percent (125%) of the Taxes and
Other Charges being contested (less amounts then being retained in the Taxes and
Insurance Subaccount to pay such Taxes so contested), and (vi) Borrower shall
promptly upon final determination thereof pay the amount of such Taxes or Other
Charges, together with all costs, interest and penalties. Lender may, with the
prior approval of Borrower (not to be unreasonably withheld), pay over any such
security or part thereof held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established.
5.3 ACCESS TO PROPERTY. Borrower shall permit agents,
representatives, consultants and employees of Lender to inspect the Property or
any part thereof at reasonable hours upon reasonable advance notice subject to
the rights of tenants of the Property under their respective Leases.
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5.4 REPAIRS; MAINTENANCE AND COMPLIANCE; ALTERATIONS.
5.4.1 REPAIRS; MAINTENANCE AND COMPLIANCE. Borrower shall at
all times maintain, preserve and protect all franchises and trade names, and
Borrower shall cause the Property to be maintained in a good and safe condition
and repair and shall not remove, demolish or alter the Improvements or Equipment
(except for alterations performed in accordance with Section 5.4.2 and normal
replacement of Equipment with Equipment of equivalent value and functionality or
removal of Equipment that is not material to the operation or value of the
Property as an office building). Borrower shall promptly comply with all Legal
Requirements and immediately cure properly any violation of a Legal Requirement.
Borrower shall notify Lender in writing within three Business Days after
Borrower first receives notice of any such non-compliance. Borrower shall
promptly repair, replace or rebuild any part of the Property that becomes
damaged, worn or dilapidated and shall complete and pay for any Improvements at
any time in the process of construction or repair.
5.4.2 ALTERATIONS. Borrower may, without Lender's consent,
perform alterations to the Improvements and Equipment which (i) do not
constitute a Material Alteration, (ii) do not adversely affect Borrower's
financial condition or the value or Net Operating Income of the Property and
(iii) are in the ordinary course of Borrower's business. Borrower shall not
perform any Material Alteration without Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed. Lender may, as a
condition to giving its consent to a Material Alteration, require that Borrower
deliver to Lender security for payment of the cost of such Material Alteration
in an amount equal to one hundred twenty five percent (125%) of the cost of the
Material Alteration as estimated by Lender. Upon substantial completion of the
Material Alteration, Borrower shall provide evidence satisfactory to Lender that
(i) the Material Alteration was constructed in accordance with applicable Legal
Requirements and substantially in accordance with plans and specifications
approved by Lender (which approval shall not be unreasonably withheld or
delayed), (ii) all contractors, subcontractors, materialmen and professionals
who provided work, materials or services in connection with the Material
Alteration have been paid in full and have delivered unconditional releases of
lien and (iii) all material Licenses necessary for the use, operation and
occupancy of the Material Alteration (other than those which depend on the
performance of tenant improvement work) have been issued. Borrower shall
reimburse Lender upon demand for all out-of-pocket costs and expenses (including
the reasonable fees of any architect, engineer or other professional engaged by
Lender) incurred by Lender in reviewing plans and specifications or in making
any determinations necessary to implement the provisions of this Section 5.4.2.
5.5 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every term to be observed or performed by Borrower pursuant to
the terms of any agreement or instrument affecting or pertaining to the
Property, including the Loan Documents.
5.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate fully
with Lender with respect to, and permit Lender, at its option, to participate
in, any proceedings before any Governmental Authority which may in any way
affect the rights of Lender under any Loan Document.
37
5.7 FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost and
expense, (i) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the Debt and/or for the better and more effective
carrying out of the intents and purposes of the Loan Documents, as Lender may
reasonably require from time to time; and (ii) upon Lender's request therefor
given from time to time after the occurrence of any Default or Event of Default
pay for (a) reports of UCC, federal tax lien, state tax lien, judgment and
pending litigation searches with respect to Borrower and (b) searches of title
to the Property, each such search to be conducted by search firms reasonably
designated by Lender in each of the locations reasonably designated by Lender.
5.8 ENVIRONMENTAL MATTERS.
5.8.1 HAZARDOUS SUBSTANCES. So long as Borrower owns or is in
possession of the Property, Borrower shall (i) keep the Property free from
Hazardous Substances and in compliance with all Environmental Laws, (ii)
promptly notify Lender if Borrower shall become aware that (A) any Hazardous
Substance is on or near the Property, (B) the Property is in violation of any
Environmental Laws or (C) any condition on or near the Property shall pose a
threat to the health, safety or welfare of humans and (iii) remove such
Hazardous Substances and/or cure such violations and/or remove such threats, as
applicable, as required by law (or as shall be required by Lender in the case of
removal which is not required by law, but in response to the opinion of a
licensed hydrogeologist, licensed environmental engineer or other qualified
environmental consulting firm engaged by Lender ("LENDER'S CONSULTANT")),
promptly after Borrower becomes aware of same, at Borrower's sole expense.
Nothing herein shall prevent Borrower from recovering such expenses from any
other party that may be liable for such removal or cure.
5.8.2 ENVIRONMENTAL MONITORING.
(a) Borrower shall give prompt written notice to Lender of
(i) any proceeding or inquiry by any party (including any Governmental
Authority) with respect to the presence of any Hazardous Substance on, under,
from or about the Property, (ii) all claims made or threatened by any third
party (including any Governmental Authority) against Borrower or the Property or
any party occupying the Property relating to any loss or injury resulting from
any Hazardous Substance, and (iii) Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Property that
could cause the Property to be subject to any investigation or cleanup pursuant
to any Environmental Law. Upon becoming aware of the presence of mold or fungus
at the Property, Borrower shall (i) undertake an investigation to identify the
source(s) of such mold or fungus and shall develop and implement an appropriate
remediation plan to eliminate the presence of any Toxic Mold, (ii) perform or
cause to be performed all acts reasonably necessary for the remediation of any
Toxic Mold (including taking any action necessary to clean and disinfect any
portions of the Property affected by Toxic Mold, including providing any
necessary moisture control systems at the Property), and (iii) provide evidence
reasonably satisfactory to Lender of the foregoing. Borrower shall permit Lender
to join and participate in, as a party if it so elects, any legal or
administrative proceedings or other actions initiated with respect to the
Property in connection with any Environmental Law or
38
Hazardous Substance, and Borrower shall pay all reasonable attorneys' fees and
disbursements incurred by Lender in connection therewith.
(b) Upon Lender's request, at any time and from time to
time, Borrower shall provide an inspection or audit of the Property prepared by
a licensed hydrogeologist, licensed environmental engineer or qualified
environmental consulting firm approved by Lender assessing the presence or
absence of Hazardous Substances on, in or near the Property, and if Lender in
its good faith judgment determines that reasonable cause exists for the
performance of such environmental inspection or audit, then the cost and expense
of such audit or inspection shall be paid by Borrower. Such inspections and
audit may include soil borings and ground water monitoring. If Borrower fails to
provide any such inspection or audit within 30 days after such request, Lender
may order same, and Borrower hereby grants to Lender and its employees and
agents access to the Property and a license to undertake such inspection or
audit.
(c) If any environmental site assessment report prepared in
connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for any Hazardous Substance, whether such
Hazardous Substance existed prior to the ownership of the Property by Borrower,
or presently exists or is reasonably suspected of existing, Borrower shall cause
such operations and maintenance plan to be prepared and implemented at its
expense upon request of Lender, and with respect to any Toxic Mold, Borrower
shall take all action necessary to clean and disinfect any portions of the
Improvements affected by Toxic Mold in or about the Improvements, including
providing any necessary moisture control systems at the Property. If any
investigation, site monitoring, containment, cleanup, removal, restoration or
other work of any kind is reasonably necessary under an applicable Environmental
Law ("REMEDIAL WORK"), Borrower shall commence all such Remedial Work within 30
days after written demand by Lender and thereafter diligently prosecute to
completion all such Remedial Work within such period of time as may be required
under applicable law). All Remedial Work shall be performed by licensed
contractors approved in advance by Lender and under the supervision of a
consulting engineer approved by Lender. All costs of such Remedial Work shall be
paid by Borrower, including Lender's reasonable attorneys' fees and
disbursements incurred in connection with the monitoring or review of such
Remedial Work. If Borrower does not timely commence and diligently prosecute to
completion the Remedial Work, Lender may (but shall not be obligated to) cause
such Remedial Work to be performed at Borrower's expense. Notwithstanding the
foregoing, Borrower shall not be required to commence such Remedial Work within
the above specified time period: (x) if prevented from doing so by any
Governmental Authority, (y) if commencing such Remedial Work within such time
period would result in Borrower or such Remedial Work violating any
Environmental Law, or (z) if Borrower, at its expense and after prior written
notice to Lender, are contesting by appropriate legal, administrative or other
proceedings, conducted in good faith and with due diligence, the need to perform
Remedial Work. Borrower shall have the right to contest the need to perform such
Remedial Work, provided that, (1) Borrower are permitted by the applicable
Environmental Laws to delay performance of the Remedial Work pending such
proceedings, (2) neither the Property nor any part thereof or interest therein
will be sold, forfeited or lost if a Borrower fails to promptly perform the
Remedial Work being contested, and if Borrower fails to prevail in contest
Borrower would thereafter have the opportunity to perform such Remedial Work,
(3) Lender would not, by virtue of such permitted contest, be exposed to any
risk of any civil liability for which Borrower has not furnished additional
security as provided in clause (4) below, or to any risk of criminal
39
liability, and neither the Property nor any interest therein would be subject to
the imposition of any Lien for which Borrower has not furnished additional
security as provided in clause (4) below, as a result of the failure to perform
such Remedial Work and (4) Borrower shall have furnished to Lender additional
security in respect of the Remedial Work being contested and the loss or damage
that may result from Borrower's failure to prevail in such contest in such
amount as may be reasonably requested by Lender but in no event less than one
hundred twenty five percent (125%) of the cost of such Remedial Work as
estimated by Lender or Lender's Consultant and any loss or damage that may
result from Borrower's failure to prevail in such contest, which amount shall
periodically be disbursed to Borrower during the course of such Remedial Work in
accordance with the procedures and requirements set forth in clauses (i) - (v)
of Section 3.2.2 relating to the Required Repairs. Upon completion of the
Remedial Work, any unused portion of any security deposited with Lender pursuant
to this Section 5.8.2 shall promptly be released to Borrower.
(d) Borrower shall not install or permit to be installed on
the Property any underground storage tank.
(e) Intentionally Omitted.
5.9 TITLE TO THE PROPERTY. Borrower will warrant and defend the
title to the Property, and the validity and priority of all Liens granted or
otherwise given to Lender under the Loan Documents, subject only to Permitted
Encumbrances, against the claims of all Persons.
5.10 LEASES.
5.10.1 GENERALLY. Upon request, Borrower shall furnish Lender
with executed copies of all Leases then in effect (other than Leases that have
previously been furnished to Lender). All renewals of Leases and all proposed
leases shall provide for rental rates and terms comparable to existing local
market rates and shall be arm's length transactions with bona fide, independent
third-party tenants.
5.10.2 MATERIAL LEASES. Borrower shall not enter into a
proposed Material Lease or a proposed renewal, extension (other than a renewal
or extension that is being unilaterally exercised by a tenant pursuant to the
terms of an existing Lease, with respect to which Lender shall not have any
consent rights) or modification of an existing Material Lease without the prior
written consent of Lender, which consent shall not, so long as no Event of
Default is continuing, be unreasonably withheld or delayed. Prior to seeking
Lender's consent to any Material Lease, Borrower shall deliver to Lender a copy
of such proposed lease (a "PROPOSED MATERIAL LEASE") and, if such Proposed
Material Lease is based on the standard form of Lease approved by Lender,
blacklined to show changes from the standard form of Lease approved by Lender
and then being used by Borrower. Lender shall approve or disapprove each
Proposed Material Lease or proposed renewal, extension or modification of an
existing Material Lease for which Lender's approval is required under this
Agreement within 10 Business Days of the submission by Borrower to Lender of a
written request for such approval, accompanied by a final copy of the Proposed
Material Lease or proposed renewal, extension or modification of an existing
Material Lease. If requested by Borrower, Lender will grant conditional
approvals of Proposed Material Leases or proposed renewals, extensions or
modifications of existing Material Leases at any
40
stage of the leasing process, from initial "term sheet" through negotiated lease
drafts, provided that Lender shall retain the right to disapprove any such
Proposed Material Lease or proposed renewal, extension or modification of an
existing Material Lease, if subsequent to any preliminary approval material
changes are made to the terms previously approved by Lender, or additional
material terms are added that had not previously been considered and approved by
Lender in connection with such Proposed Material Lease or proposed renewal,
extension or modification of an existing Material Lease. Provided that no Event
of Default is continuing, if Borrower provides Lender with a written request for
approval (which written request shall specifically refer to this Section 5.10.2
and shall explicitly state that failure by Lender to approve or disapprove
within 10 Business Days will constitute a deemed approval) and Lender fails to
reject the request in writing delivered to Borrower within 10 Business Days
after receipt by Lender of the request, the Proposed Material Lease or proposed
renewal, extension or modification of an existing Material Lease shall be deemed
approved by Lender, and Borrower shall be entitled to enter into such Proposed
Material Lease or proposed renewal, extension or modification of an existing
Material Lease. Notwithstanding anything to the contrary in this Section 5.10,
unless expressly agreed to in writing by Lender, any approval or deemed approval
by Lender of a proposed Lease or proposed renewal, extension or modification of
an existing Lease pursuant to this Section 5.10 shall not be deemed to
constitute (in and of itself) an approval or deemed approval by Lender of any
Approved Leasing Expenses in connection therewith.
5.10.3 MINOR LEASES. Notwithstanding the provisions of Section
5.10.2 above, provided that no Event of Default is continuing, renewals,
amendments and modifications of existing Leases and proposed Leases shall not be
subject to the prior approval of Lender provided (i) the proposed Lease would be
a Minor Lease or the existing Lease as amended or modified or the renewal Lease
is a Minor Lease, (ii) the proposed Lease shall be written substantially in
accordance with the standard form of Lease which shall have been approved by
Lender, (iii) the Lease as amended or modified or the renewal Lease or series of
Leases or proposed Lease or series of Leases: (a) shall provide for net
effective rental rates comparable to existing local market rates for similarly
situated properties, (b) with respect to any new Lease with a new tenant (other
than kiosks and vending machines), shall have an initial term (together with all
renewal options) of not less than three years or greater than ten years, (c)
shall provide for automatic self-operative subordination to the Mortgage and, at
Lender's option, (x) attornment to Lender and (y) the unilateral right by
Lender, at the option of Lender, to subordinate the Lien of the Mortgage to the
Lease, and (d) shall not contain any option to purchase, any right of first
refusal to purchase, any right to terminate (except in the event of the
destruction or condemnation of substantially all of the Property), any
requirement for a non-disturbance or recognition agreement, or any other
provision which might adversely affect the rights of Lender under the Loan
Documents in any material respect. Borrower shall deliver to Lender copies of
all Leases which are entered into pursuant to the preceding sentence together
with Borrower's certification that it has satisfied all of the conditions of the
preceding sentence within ten days after the execution of the Lease.
Notwithstanding anything in this Section 5.10 to the contrary, at Borrower's
request and at Borrower's sole cost and expense, Lender shall enter into a
subordination, non-disturbance and attornment agreement on Lender's then current
form with any tenant under a Lease of at least 2,500 rentable square feet.
41
5.10.4 ADDITIONAL COVENANTS WITH RESPECT TO LEASES. Borrower
(i) shall observe and perform the material obligations imposed upon the lessor
under the Leases and shall not do or permit anything to impair the value of the
Leases as security for the Debt; (ii) shall promptly send copies to Lender of
all notices of default that Borrower shall send or receive under any Lease;
(iii) shall enforce, in accordance with commercially reasonable practices for
properties similar to the Property, the terms, covenants and conditions in the
Leases to be observed or performed by the lessees, short of termination thereof;
(iv) shall not collect any of the Rents more than one month in advance (other
than security deposits); (v) shall not execute any other assignment of lessor's
interest in the Leases or the Rents (except as contemplated by the Loan
Documents); (vi) shall not modify any Lease in a manner inconsistent with the
Loan Documents; (vii) shall not convey or transfer or suffer or permit a
conveyance or transfer of the Property so as to effect a merger of the estates
and rights of, or a termination or diminution of the obligations of, lessees
under Leases; (viii) shall not consent to any assignment of or subletting under
any Material Lease unless required in accordance with its terms without the
prior written consent of Lender, which, with respect to a subletting, may not,
so long as no Event of Default is continuing, be unreasonably withheld or
delayed; and (ix) shall not cancel or terminate any Lease or accept a surrender
thereof (except in the exercise of Borrower's commercially reasonable judgment
in connection with a tenant default under a Minor Lease or as expressly
permitted under the terms of such Lease in accordance with Section 5.10.3(d))
without the prior consent of Lender, which consent shall not, so long as no
Event of Default is continuing, be unreasonably withheld or delayed.
5.11 ESTOPPEL STATEMENT. After request by Lender, Borrower shall
within ten days furnish Lender with a statement addressed to Lender, its
successors and assigns, duly acknowledged and certified, setting forth (i) the
unpaid Principal, (ii) the Interest Rate, (iii) the date installments of
interest and/or Principal were last paid, (iv) any offsets or defenses to the
payment of the Debt, and (v) that the Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
5.12 PROPERTY MANAGEMENT.
5.12.1 MANAGEMENT AGREEMENT. Borrower shall (i) cause the
Property to be managed pursuant to the Management Agreement; (ii) promptly
perform and observe all of the covenants required to be performed and observed
by it under the Management Agreement and do all things necessary to preserve and
to keep unimpaired its rights thereunder; (iii) promptly notify Lender of any
default under the Management Agreement of which it is aware; (iv) promptly
deliver to Lender a copy of each financial statement, business plan, capital
expenditure plan, and property improvement plan and any other notice, report and
estimate received by Borrower under the Management Agreement; and (v) promptly
enforce the performance and observance of all of the covenants required to be
performed and observed by Manager under the Management Agreement. Without
Lender's prior written consent, Borrower shall not (a) surrender, terminate,
cancel, extend or renew the Management Agreement (other than extensions or
renewals pursuant to the express renewal/extension provisions set forth in the
Management Agreement on the same terms and conditions set forth therein (as in
effect on the date hereof, or as hereinafter amended or modified in accordance
with the terms and conditions set forth in this Agreement)) or otherwise replace
the Manager or enter into any other Management Agreement (except pursuant to
Section 5.12.2); (b) reduce or consent to the reduction of the term of the
Management
42
Agreement; (c) increase or consent to the increase of the amount of any charges
under the Management Agreement; (d) otherwise modify, change, supplement, alter
or amend in any material respect, or waive or release any of its rights and
remedies under, the Management Agreement; (e) suffer or permit the occurrence
and continuance of a default beyond any applicable cure period under the
Management Agreement (or any successor Management Agreement) if such default
permits the Manager to terminate the Management Agreement (or such successor
Management Agreement); or (f) suffer or permit the ownership, management or
control of the Manager to be transferred to a Person other than an Affiliate of
Behringer.
5.12.2 TERMINATION OF MANAGER. If (i) as of any Calculation
Date, Borrower fail to maintain a Debt Service Coverage Ratio of at least 1.05:1
or (ii) an Event of Default shall be continuing, or (iii) Manager is in default
under the Management Agreement, or (iv) upon the gross negligence, malfeasance
or willful misconduct of the Manager, Borrower shall, at the request of Lender,
terminate the Management Agreement and replace Manager with a replacement
manager acceptable to both Lender (in Lender's discretion) and the applicable
Rating Agencies, on terms and conditions satisfactory to both Lender and the
applicable Rating Agencies. All calculations of the Debt Service Coverage Ratio
for purposes of this Section 5.12.2 shall be subject to verification by Lender.
Borrower's failure to appoint an acceptable manager within thirty (30) days
after Lender's request of Borrower to terminate the Management Agreement shall
constitute an immediate Event of Default. Borrower may from time to time appoint
a successor manager to manage the Property, which successor manager and
Management Agreement shall be approved in writing by both Lender (in Lender's
discretion) and the applicable Rating Agencies.
5.13 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY. Borrower shall at all
times be a Special Purpose Bankruptcy Remote Entity. Borrower shall not directly
or indirectly make any change, amendment or modification to its organizational
documents, or otherwise take any action which could result in Borrower not being
a Special Purpose Bankruptcy Remote Entity. A "SPECIAL PURPOSE BANKRUPTCY REMOTE
ENTITY" shall have the meaning set forth on Schedule 5 hereto.
5.14 ASSUMPTION IN NON-CONSOLIDATION OPINION. Borrower shall conduct
its business so that the assumptions (with respect to each Person) made in that
certain substantive non-consolidation opinion letter dated the date hereof
delivered by Borrower's counsel in connection with the Loan, shall be true and
correct in all respects.
5.15 CHANGE IN BUSINESS OR OPERATION OF PROPERTY. Borrower shall not
purchase or own any real property other than the Property and shall not enter
into any line of business other than the ownership and operation of the
Property, or make any material change in the scope or nature of its business
objectives, purposes or operations, or undertake or participate in activities
other than the continuance of its present business or otherwise cease to operate
the Property as an office building, or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to the
Property).
5.16 DEBT CANCELLATION. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
43
5.17 AFFILIATE TRANSACTIONS. Other than the Management Agreement,
Borrower shall not enter into, or be a party to, any transaction with an
Affiliate of Borrower or any of the members of Borrower except in the ordinary
course of business and on terms which are fully disclosed to Lender in advance
and are no less favorable to Borrower or such Affiliate than would be obtained
in a comparable arm's-length transaction with an unrelated third party. With
respect to the foregoing, Lender hereby acknowledges that it has approved the
Management Agreement.
5.18 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 written consent of Lender.
5.19 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real property
constituting a tax lot separate from the Property, and (ii) with any portion of
the Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the Property.
5.20 PRINCIPAL PLACE OF BUSINESS. Borrower shall not change its
principal place of business or chief executive office without first giving
Lender 30 days' prior notice.
5.21 CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower shall not change
its name, identity (including its trade name or names) or Borrower's
organizational structure without notifying Lender of such change in writing at
least thirty (30) days prior to the effective date of such change and, in the
case of a change in Borrower's structure, without first obtaining the prior
written consent of Lender. Borrower shall execute and deliver to Lender, prior
to or contemporaneously with the effective date of any such change, any
financing statement or financing statement change required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Borrower intends to operate the Property, and representing and warranting that
Borrower does business under no other trade name with respect to the Property.
5.22 INDEBTEDNESS. Borrower shall not directly or indirectly create,
incur or assume any indebtedness other than the Debt and unsecured trade
payables incurred in the ordinary course of business relating to the ownership
and operation of the Property which do not exceed, at any time, a maximum amount
of three percent (3%) of the original amount of the Principal and are paid
within sixty (60) days of the date incurred or invoiced (collectively,
"PERMITTED INDEBTEDNESS"); provided, however, such three percent (3%) limitation
shall not apply to (i) any asset management or property management fee payable
pursuant to the terms of the Management Agreement or (ii) any amounts that are
payable out of the Capital Reserve Subaccount, the Rollover Reserve Subaccount
or any other reserves established under this Agreement. Notwithstanding the
foregoing, with respect to the 60-day period set forth above, Borrower may,
after prior notice to Lender, at its own expense, contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity of
44
any such Permitted Indebtedness (during which time such 60-day period shall be
tolled), provided that if Borrower desires to withhold payment of such Permitted
Indebtedness during the pendency of the contest, (i) no Event of Default has
occurred and is continuing, (ii) no part of or interest in the Property will be
in danger of being sold, forfeited, terminated, canceled or lost, (iii) Borrower
shall have furnished such security as may be required in the proceeding, or as
may be reasonably requested by Lender, to insure the payment of any such
Permitted Indebtedness, together with all interest and penalties thereon, which
security shall not be less than one hundred twenty five percent (125%) of the
Permitted Indebtedness being contested, and (iv) Borrower shall promptly upon
final determination thereof pay the amount of such Permitted Indebtedness,
together with all costs, interest and penalties, and Borrower shall be permitted
to use such security to make such payment.
5.23 LICENSES. Borrower shall not Transfer any License required for
the operation of the Property (other than in connection with a Lender-approved
Transfer and Assumption pursuant to Section 5.26.3).
5.24 COMPLIANCE WITH RESTRICTIVE COVENANTS, ETC. Borrower will not
modify, waive in any material respect or release any Easements, restrictive
covenants or other Permitted Encumbrances, or suffer, consent to or permit the
foregoing, without Lender's prior written consent, which consent may be granted
or denied in Lender's sole discretion.
5.25 ERISA.
5.25.1.1 Borrower shall not engage in any transaction which
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Agreement or the
other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under ERISA.
5.25.1.2 Borrower shall not maintain, sponsor, contribute to or
become obligated to contribute to, or suffer or permit any ERISA Affiliate of
Borrower to, maintain, sponsor, contribute to or become obligated to contribute
to, any Plan or any Welfare Plan or permit the assets of Borrower to become
"plan assets," whether by operation of law or under regulations promulgated
under ERISA.
5.25.1.3 Borrower shall deliver to Lender such certifications or
other evidence from time to time throughout the Term, as requested by Lender in
its sole discretion, that (A) Borrower is not and does not maintain 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(3) of ERISA;
(B) Borrower is not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (C) one or more of
the following circumstances is true:
(1) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(2) Less than twenty five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. ss.2510.3-101(f)(2); or
45
(3) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
ss.2510.3-101(c) or (e).
5.26 TRANSFERS.
5.26.1 GENERALLY. Borrower shall not directly or indirectly
make, suffer or permit the occurrence of any Transfer other than a Permitted
Transfer.
5.26.2 Intentionally Omitted.
5.26.3 TRANSFER AND ASSUMPTION.
(a) Subject to obtaining Lender's prior written consent,
which may be withheld in Lender's reasonable and absolute discretion, and
subject to the terms and satisfaction of all of the conditions precedent set
forth in this Section 5.26.3, Borrower shall have a the right (which may not be
exercised more than twice during the Term) to Transfer the Property to one or
more parties (the "TRANSFEREE BORROWER") and have the Transferee Borrower assume
all of Borrower's obligations under the Loan Documents, and have replacement
guarantors and indemnitors assume all of the obligations of the indemnitors and
guarantors of the Loan Documents (collectively, a "TRANSFER AND ASSUMPTION").
Borrower may make a written application to Lender for Lender's consent to the
Transfer and Assumption, subject to the conditions set forth in paragraphs (b)
and (c) of this Section 5.26.3. Together with such written application, Borrower
will pay to Lender the reasonable review fee then required by Lender. Borrower
also shall pay on demand all of the reasonable costs and expenses incurred by
Lender, including reasonable attorneys' fees and expenses, and including the
fees and expenses of Rating Agencies and other outside entities, in connection
with considering any proposed Transfer and Assumption, whether or not the same
is permitted or occurs.
(b) Lender's consent, which may be withheld in Lender's
reasonable discretion, to a Transfer and Assumption shall be subject to the
following conditions:
(1) No Event of Default has occurred and is continuing;
(2) Borrower has submitted to Lender true, correct and
complete copies of any and all information and documents of any kind
requested by Lender concerning the Property, Transferee Borrower,
replacement guarantors and indemnitors and Borrower;
(3) Evidence satisfactory to Lender has been provided
showing that the Transferee Borrower and such of its Affiliates as shall
be designated by Lender comply and will comply with Section 5.13 hereof,
as those provisions may be modified by Lender taking into account the
ownership structure of Transferee Borrower and its Affiliates;
(4) If the Loan, by itself or together with other loans, has
been the subject of a Secondary Market Transaction, then Lender shall
have received a Rating Comfort Letter from the applicable Rating
Agencies;
46
(5) If the Loan has not been the subject of a Secondary
Market Transaction, then Lender shall have determined that no rating for
any securities that would be issued in connection with such
securitization will be diminished, qualified, or withheld by reason of
the Transfer and Assumption;
(6) Borrower shall have paid all of Lender's reasonable
costs and expenses in connection with considering the Transfer and
Assumption, and shall have paid the amount requested by Lender as a
deposit against Lender's costs and expenses in connection with the
effecting the Transfer and Assumption;
(7) Borrower, the Transferee Borrower, and the replacement
guarantors and indemnitors shall have indicated in writing in form and
substance reasonably satisfactory to Lender their readiness and ability
to satisfy the conditions set forth in subsection (c) below;
(8) The identity, experience, and financial condition of the
Transferee Borrower and the replacement guarantors and indemnitors shall
be satisfactory to Lender; and
(9) The proposed property manager and proposed Management
Agreement shall be satisfactory to Lender and the applicable Rating
Agencies.
(c) If Lender consents to the Transfer and Assumption, the
Transferee Borrower and/or Borrower as the case may be, shall immediately
deliver the following to Lender:
(1) Borrower shall deliver to Lender an assumption fee in
the amount of one percent (1.00%) of the then unpaid Principal;
(2) Borrower, Transferee Borrower and the original and
replacement guarantors and indemnitors shall execute and deliver to
Lender any and all documents required by Lender, in form and substance
required by Lender, in Lender's sole discretion;
(3) Counsel to the Transferee Borrower and replacement
guarantors and indemnitors shall deliver to Lender opinions in form and
substance satisfactory to Lender as to such matters as Lender shall
require, which may include opinions as to substantially the same matters
and were required in connection with the origination of the Loan
(including a new substantive non-consolidation opinion with respect to
the Transferee Borrower);
(4) Borrower shall cause to be delivered to Lender, an
endorsement (relating to the change in the identity of the vestee and
execution and delivery of the Transfer and Assumption documents) to the
Title Insurance Policy in form and substance acceptable to Lender, in
Lender's reasonable discretion (the "ENDORSEMENT"); and
(5) Borrower shall deliver to Lender a payment in the amount
of all remaining unpaid costs incurred by Lender in connection with the
Transfer and Assumption, including but not limited to, Lender's
reasonable attorneys fees and expenses, all recording fees, and all fees
payable to the title company for the delivery to Lender of the
Endorsement.
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(d) Upon the closing of a Transfer and Assumption, Lender
shall release Borrower and Guarantor from all obligations under the Loan
Documents arising prior to and after the date of the Transfer and Assumption
(but only to the extent that such obligations of Borrower and Guarantor are
expressly assumed by the Transferee Borrower or replacement guarantor, as the
case may be, in connection with the Transfer and Assumption).
5.27 LIENS. Without Lender's prior written consent, Borrower shall
not create, incur, assume, permit or suffer to exist any Lien on all or any
portion of the Property or any direct or indirect legal or beneficial ownership
interest in Borrower, except Liens in favor of Lender and Permitted
Encumbrances, unless such Lien is bonded or discharged within 30 days after
Borrower first receives notice of such Lien (or such longer period as is
permitted under this Agreement in the event and to the extent the Lien is of a
nature which may be contested by Borrower under the provisions of this Agreement
and Borrower is in fact contesting such Lien in accordance with the express
provisions and conditions set forth in this Agreement). Notwithstanding the
foregoing, pledges of any direct or indirect legal or beneficial ownership
interest in Harvard REIT Operating Partnership shall not constitute Liens
prohibited hereunder.
5.28 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 or (iii) transfer, lease or sell, in one transaction or any
combination of transactions, all or substantially all of the property or assets
of Borrower except to the extent expressly permitted by the Loan Documents.
5.29 EXPENSES. Borrower shall reimburse Lender upon receipt of notice
for all reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with the
Loan, including (i) the preparation, negotiation, execution and delivery of the
Loan Documents and the consummation of the transactions contemplated thereby and
all the costs of furnishing all opinions by counsel for Borrower; (ii)
Borrower's and Lender's ongoing performance under and compliance with the Loan
Documents, including confirming compliance with environmental and insurance
requirements; (iii) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications of or
under any Loan Document and any other documents or matters requested by Lender;
(iv) filing and recording of any Loan Documents; (v) title insurance, surveys,
inspections and appraisals; (vi) the creation, perfection or protection of
Lender's Liens in the Property and the Cash Management Accounts (including fees
and expenses for title and lien searches, intangibles taxes, personal property
taxes, mortgage recording taxes, due diligence expenses, travel expenses,
accounting firm fees, costs of appraisals, environmental reports and Lender's
Consultant, surveys and engineering reports); (vii) enforcing or preserving any
rights in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, the Loan Documents, the Property, or any other security
given for the Loan; (viii) fees charged by Rating Agencies in connection with
any modification of the Loan requested by Borrower; and (ix) enforcing any
obligations of or collecting any payments due from Borrower under any Loan
Document or with respect to the Property or in connection with any refinancing
or restructuring of the Loan in the nature of a "work-out", or any insolvency or
bankruptcy proceedings. Any costs and expenses due and payable by Borrower
hereunder which are not paid by Borrower within ten days after demand may be
paid from any amounts in the Deposit
48
Account, with notice thereof to Borrower. The obligations and liabilities of
Borrower under this Section 5.29 shall survive the Term and the exercise by
Lender of any of its rights or remedies under the Loan Documents, including the
acquisition of the Property by foreclosure or a conveyance in lieu of
foreclosure.
5.30 INDEMNITY. Borrower shall defend, indemnify and hold harmless
Lender and each of its Affiliates and their respective successors and assigns,
including the directors, officers, partners, members, shareholders,
participants, employees, professionals and agents of any of the foregoing
(including any Servicer) and each other Person, if any, who Controls Lender, its
Affiliates or any of the foregoing (each, an "INDEMNIFIED PARTY"), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for an Indemnified Party in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not Lender shall be
designated a party thereto, court costs and costs of appeal at all appellate
levels, investigation and laboratory fees, consultant fees and litigation
expenses), that may be imposed on, incurred by, or asserted against any
Indemnified Party (collectively, the "INDEMNIFIED LIABILITIES") in any manner,
relating to or arising out of or by reason of the Loan, including: (i) any
breach by Borrower of its obligations under, or any misrepresentation by
Borrower contained in, any Loan Document; (ii) the use or intended use of the
proceeds of the Loan; (iii) any information provided by Borrower; (iv) ownership
of the Mortgage, the Property or any interest therein, or receipt of any Rents;
(v) any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (vi) any use,
nonuse or condition in, on or about the Property or on adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (vii)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Property; (viii) the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release, or threatened release
of any Hazardous Substance on, from or affecting the Property; (ix) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Substance; (x) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Substance; (xi) any violation of the Environmental Laws which is based upon or
in any way related to such Hazardous Substance, including the costs and expenses
of any Remedial Work; (xii) any failure of the Property to comply with any Legal
Requirement; (xiii) any claim by brokers, finders or similar persons claiming to
be entitled to a commission in connection with any Lease or other transaction
involving the Property or any part thereof, or any liability asserted against
Lender with respect thereto; and (xiv) the claims of any lessee of any portion
of the Property or any Person acting through or under any lessee or otherwise
arising under or as a consequence of any Lease; provided, however, that Borrower
shall not have any obligation to any Indemnified Party hereunder to the extent
that it is finally judicially determined that such Indemnified Liabilities arise
from the gross negligence, illegal acts, fraud or willful misconduct of such
Indemnified Party. Any amounts payable to any Indemnified Party by reason of the
application of this paragraph shall be payable within 10 days after demand and
shall bear interest at the Default Rate from the date due until paid. The
obligations and liabilities of Borrower under this Section 5.30 shall survive
the Term (with respect to any matter occurring or in existence prior to the end
of the Term, and thereafter with respect to third party claims, suits and
actions) and the exercise
49
by Lender of any of its rights or remedies under the Loan Documents, including
the acquisition of the Property by foreclosure or a conveyance in lieu of
foreclosure.
5.31 Intentionally Omitted.
5.32 Intentionally Omitted.
5.33 PATRIOT ACT COMPLIANCE(a) . (a) Borrower will use their good
faith and commercially reasonable efforts to comply with the Patriot Act (as
defined below) and all applicable requirements of governmental authorities
having jurisdiction over Borrower and the Property, including those relating to
money laundering and terrorism. Lender shall have the right to audit Borrower's
compliance with the Patriot Act and all applicable requirements of governmental
authorities having jurisdiction over Borrower and the Property, including those
relating to money laundering and terrorism. In the event that Borrower fails to
comply with the Patriot Act or any such requirements of governmental
authorities, then Lender may, at its option, cause Borrower to comply therewith
and any and all reasonable costs and expenses incurred by Lender in connection
therewith shall be secured by the Mortgage and the other Loan Documents and
shall be immediately due and payable. For purposes hereof, the term "PATRIOT
ACT" means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as
the same may be amended from time to time, and corresponding provisions of
future laws.
(b) Neither Borrower nor any member of Borrower nor any
partner of any such member nor any owner of a direct or indirect interest in
Borrower (a) is listed on any Government Lists (as defined below), (b) is a
person who has been determined by competent authority to be subject to the
prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations
of OFAC (as defined below) or in any enabling legislation or other Presidential
Executive Orders in respect thereof, (c) has been previously indicted for or
convicted of any felony involving a crime or crimes of moral turpitude or for
any Patriot Act Offense (as defined below), or (d) is currently under
investigation by any governmental authority for alleged criminal activity. For
purposes hereof, the term "PATRIOT ACT OFFENSE" means any violation of the
criminal laws of the United States of America or of any of the several states,
or that would be a criminal violation if committed within the jurisdiction of
the United States of America or any of the several states, relating to terrorism
or the laundering of monetary instruments, including any offense under (a) the
criminal laws against terrorism; (b) the criminal laws against money laundering,
(c) the Bank Secrecy Act, as amended, (d) the Money Laundering Control Act of
1986, as amended, or the (e) Patriot Act. "Patriot Act Offense" also includes
the crimes of conspiracy to commit, or aiding and abetting another to commit, a
Patriot Act Offense. For purposes hereof, the term "GOVERNMENT LISTS" means (i)
the Specially Designated Nationals and Blocked Persons Lists maintained by
Office of Foreign Assets Control ("OFAC"), (ii) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC that Lender notified Borrower in writing is
now included in "Governmental Lists", or (iii) any similar lists maintained by
the United States Department of State, the United States Department of Commerce
or any other government authority or pursuant to any Executive Order of the
President of the United States of America that Lender notified Borrower in
writing is now included in "Governmental Lists".
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6. NOTICES AND REPORTING
6.1 NOTICES. All notices, consents, approvals and requests required
or permitted hereunder or under any other Loan Document (a "NOTICE") shall be
given in writing and shall be effective for all purposes if either hand
delivered with receipt acknowledged, or by a nationally recognized overnight
delivery service (such as Federal Express), or by certified or registered United
States mail, return receipt requested, postage prepaid, or by facsimile and
confirmed by facsimile answer back, in each case addressed as follows (or to
such other address or Person as a party shall designate from time to time by
notice to the other party): If to Lender: Citigroup Global Markets Realty Corp.,
000 Xxxxxxxxx Xx., Xxxxx 00, Xxx Xxxx, XX 00000, Attention: Xxxx Xxxxxxx,
Telecopier (000) 000-0000, with a copy to: Sidley Austin LLP, Xxx Xxxxx Xxxxxxxx
Xx., Xxxxxxx, XX 00000, Attention: Xxxxxxx Xxxxxxx, Telecopier: (000) 000-0000;
if to Borrower: c/o the Borrower's Designee, 00000 Xxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, to the attention of Borrower, Telecopier: (000) 000-0000.
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
overnight delivery, upon the first attempted delivery on a Business Day; or in
the case of facsimile, upon the confirmation of such facsimile transmission.
6.2 BORROWER NOTICES AND DELIVERIES. Borrower shall (a) give prompt
written notice to Lender of: (i) any litigation, governmental proceedings or
claims or investigations pending or threatened against Borrower which might
materially adversely affect Borrower's condition (financial or otherwise) or
business or the Property; (ii) any material adverse change in Borrower's
condition, financial or otherwise, or of the occurrence of any Default or Event
of Default of which Borrower has knowledge; and (b) furnish and provide to
Lender all instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, reasonably requested, from time to time, by
Lender within the possession or reasonable control of Borrower. In addition,
after request by Lender (but no more frequently than twice in any year), (x)
Borrower shall furnish to Lender within ten days, a certificate addressed to
Lender, its successors and assigns reaffirming (to the best of their knowledge)
all representations and warranties of Borrower set forth in the Loan Documents
as of the date requested by Lender or, to the extent of any changes to any such
representations and warranties, so stating such changes, and (y) Borrower shall
use commercially reasonable efforts to furnish to Lender within 30 days, tenant
estoppel certificates addressed to Lender, its successors and assigns from each
tenant at each Property in form and substance reasonably satisfactory to Lender.
6.3 FINANCIAL REPORTING.
6.3.1 BOOKKEEPING. Borrower shall keep on a calendar year
basis, in accordance with GAAP (or federal income tax basis of accounting,
consistently applied), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower and all items of income and
expense and any services, Equipment or furnishings provided in connection with
the operation of the Property, whether such income or expense is realized by
Borrower, Manager or any Affiliate of Borrower. Lender shall have the right from
time to time during normal business hours upon reasonable notice to examine such
books, records and accounts relating to the Property at the office of Manager or
other Person maintaining them, and
51
to make such copies or extracts thereof as Lender shall desire. After an Event
of Default, Borrower shall pay any costs incurred by Lender to examine such
books, records and accounts, as Lender shall determine to be necessary or
appropriate in the protection of Lender's interest.
6.3.2 ANNUAL REPORTS. Borrower shall furnish to Lender
annually, within 120 days after each calendar year, a complete copy of
Borrower's annual financial statements audited (if Lender requires for such
statements for any year by notice delivered no later than October 31 of the
calendar year in question; in the absence of such Lender requirement such
statements need not be audited) by a "big four" accounting firm or another
independent certified public accountant (accompanied by an unqualified opinion
from such accounting firm or other independent certified public accountant)
reasonably acceptable to Lender, each in accordance with GAAP (or federal income
tax basis of accounting, consistently applied) and containing balance sheets and
statements of profit and loss for Borrower and the Property in such detail as
Lender may request. Each of such financial statements (x) shall be in form and
substance satisfactory to Lender, (y) shall set forth the financial condition
and the income and expenses for the Property for the immediately preceding
calendar year, including statements of annual Net Operating Income as well as
(1) a list of tenants, if any, occupying more than ten percent (10%) of the
rentable space of the Property, (2) a breakdown showing (a) the year in which
each Lease then in effect expires, (b) the percentage of rentable space covered
by such Lease, (c) the percentage of base rent with respect to which Leases
shall expire in each such year, expressed both on a per year and a cumulative
basis and (z) shall be accompanied by an Officer's Certificate certifying (1)
that such statement is true, correct, complete and accurate and presents fairly
the financial condition of the Property and has been prepared in accordance with
GAAP (or federal income tax basis of accounting, consistently applied) and (2)
whether there exists a Default or Event of Default, and if so, the nature
thereof, the period of time it has existed and the action then being taken to
remedy it.
6.3.3 MONTHLY/QUARTERLY REPORTS. Borrower shall furnish to
Lender within 30 days after the end of each calendar month or calendar quarter
(as indicated below) the following items: (i) monthly and year-to-date operating
statements, noting Net Operating Income and other information necessary and
sufficient under GAAP (or federal income tax basis of accounting, consistently
applied) to fairly represent the financial position and results of operation of
the Property during such calendar month, all in form satisfactory to Lender;
(ii) a balance sheet for such calendar month; (iii) a comparison of the budgeted
income and expenses and the actual income and expenses for each month and
year-to-date for the Property, together with a detailed explanation of any
variances of ten percent (10%) or more between budgeted and actual amounts for
such period and year-to-date; (iv) a statement of the actual Capital Expenses
made by Borrower during each calendar quarter as of the last day of such
calendar quarter; (v) intentionally omitted; (vi) an aged receivables report and
(vii) rent rolls identifying the leased premises, names of all tenants, units
leased, monthly rental and all other charges payable under each Lease, date to
which paid, term of Lease, date of occupancy, date of expiration, material
special provisions, concessions or inducements granted to tenants, and a
year-by-year schedule showing by percentage the rentable area of the
Improvements and the total base rent attributable to Leases expiring each year)
and a delinquency report for the Property. Each such statement shall be
accompanied by an Officer's Certificate certifying that to the best of such
officer's knowledge, (1) that such items are true, correct, accurate, and
complete and fairly present the financial condition and results of the
operations of Borrower and the Property in accordance with
52
GAAP (or federal income tax basis of accounting, consistently applied) (subject
to normal year-end adjustments) and (2) whether there exists a Default or Event
of Default, and if so, the nature thereof, the period of time it has existed and
the action then being taken to remedy it.
6.3.4 OTHER REPORTS. Subject to the provisions of Section
6.3.2, Borrower shall furnish to Lender, within ten Business Days after request,
such further detailed information with respect to the operation of the Property
and the financial affairs of Borrower or Manager as may be reasonably requested
by Lender or any applicable Rating Agency.
6.3.5 ANNUAL BUDGET. Borrower shall prepare and submit (or
shall cause Manager to prepare and submit) to Lender within 30 days after a Cash
Trap Period commences and by December 15th of each year thereafter during the
Term until such Cash Trap Period has ended, for approval by Lender, which
approval shall not be unreasonably withheld or delayed, a proposed pro forma
budget for the Property for the succeeding calendar year (the "ANNUAL BUDGET",
and each Annual Budget approved by Lender is referred to herein as the "APPROVED
ANNUAL BUDGET"), and, promptly after preparation thereof, any revisions to such
Annual Budget. The Annual Budget shall consist of (i) an operating expense
budget showing, on a month-by-month basis, in reasonable detail, each line item
of Borrower's anticipated operating income and operating expenses (on a cash and
accrual basis), including amounts required to establish, maintain and/or
increase any monthly payments required hereunder (and once such Annual Budget
has been approved by Lender, such operating expense budget shall be referred to
herein as the "APPROVED OPERATING BUDGET"), and (ii) a Capital Expense budget
showing, on a month-by-month basis, in reasonable detail, each line item of
anticipated Capital Expenses (and once such Annual Budget has been approved by
Lender, such Capital Expense budget shall be referred to herein as the "APPROVED
CAPITAL BUDGET"). Until such time that any Annual Budget has been approved by
Lender, the prior Approved Annual Budget shall apply for all purposes hereunder
(with such adjustments as reasonably determined by Lender (including increases
for any non-discretionary expenses)).
7. INSURANCE; CASUALTY; AND CONDEMNATION
7.1 INSURANCE.
7.1.1 COVERAGE. Borrower, at its sole cost, for the mutual
benefit of Borrower and Lender, shall obtain and maintain during the Term the
following policies of insurance:
(a) Property insurance insuring against loss or damage
customarily included under so called "all risk" or "special form" policies
including fire, lightning, vandalism, and malicious mischief, boiler and
machinery and, if required by Lender in accordance with subsections (b) or (i)
below, flood and/or earthquake coverage, and subject to subsection (j) below,
coverage for damage or destruction caused by the acts of "Terrorists" (or such
policies shall have no exclusion from coverage with respect thereto) and such
other insurable hazards as, under good insurance practices, from time to time
are insured against for other property and buildings similar to the premises in
nature, use, location, height, and type of construction. Such insurance policy
shall also insure costs of demolition and increased cost of construction (which
insurance for demolition and increased cost of construction may contain a
sub-limit satisfactory to Lender). Each such insurance policy shall (i) be in an
amount equal to one hundred percent
53
(100%) of the then replacement cost of the Improvements without deduction for
physical depreciation and in any event in such amount as is necessary so that
the insurer would not deem Borrower a co-insurer under such policies, (ii) have
deductibles no greater than the lesser of $10,000 or five percent (5%) of the
Net Operating Income per occurrence, (iii) be paid annually in advance and (iv)
contain an agreed amount replacement cost endorsement with a waiver of
depreciation, and shall cover, without limitation, all tenant improvements and
betterments that Borrower is required to insure on a replacement cost basis.
Lender shall be named Loss Payee on a Standard Mortgagee Endorsement.
(b) Flood insurance if any part of the Property is located
in an area now or hereafter designated by the Federal Emergency Management
Agency as a Zone "A" & "V" Special Hazard Area, or such other Special Hazard
Area if Lender so requires in its sole discretion. Such policy shall (i) be in
an amount equal to (A) one hundred percent (100%) of the full replacement cost
of the Improvements on the Property (without any deduction for depreciation) or
(B) such other amount as is agreed by Lender and (ii) have a maximum permissible
deductible of $3,000.
(c) Public liability insurance, including (i) "Commercial
General Liability Insurance", (ii) "Owned", "Hired" and "Non Owned Auto
Liability"; and (iii) umbrella liability coverage for personal injury, bodily
injury, death, accident and property damage, such insurance providing in
combination no less than containing minimum limits per occurrence of $1,000,000
and $2,000,000 in the aggregate for any policy year; together with at least
$10,000,000 excess and/or umbrella liability insurance for any and all claims
with no deductible. The policies described in this subsection shall also include
coverage for elevators, escalators, independent contractors, "Contractual
Liability" (covering, to the maximum extent permitted by law, Borrower's
obligation to indemnify Lender as required under this Agreement and the other
Loan Documents), "Products" and "Completed Operations Liability" coverage.
(d) Rental loss and/or business interruption insurance (i)
with Lender being named as "Lender Loss Payee", and (ii) in an amount equal to
one hundred percent (100%) of the projected Rents from the Property for not less
than a 24 month period commencing at the time of loss until repairs are
completed with reasonable speed and diligence plus a post-repair completion
extended period of indemnity such that the continued loss of income will be
insured until the Property is restored and such income returns to the same level
it was at prior to the loss, or the expiration of not less than such 24 month
period from the time of loss, whichever first occurs, and notwithstanding that
the policy may expire prior to the end of such period. The amount of such
insurance shall be increased from time to time during the Term as and when the
estimated or actual Rents increase.
(e) Comprehensive boiler and machinery insurance covering
all mechanical and electrical equipment against physical damage, rent loss and
improvements loss and covering, without limitation, all tenant improvements and
betterments that Borrower is required to insure pursuant to the Leases on a
replacement cost basis and in an amount equal to the greater of (i) $2,000,000
and (ii) one hundred percent (100%) of the full replacement cost of the
Improvements on the Property (without any deduction for depreciation).
54
(f) Worker's compensation and disability insurance with
respect to any employees of Borrower, as required by any Legal Requirement.
(g) During any period of repair or restoration, builder's
"all-risk" insurance on the so-called completed value basis in an amount equal
to not less than the full insurable value of the Property, against such risks
(including fire and extended coverage and collapse of the Improvements to agreed
limits) as Lender may request, in form and substance acceptable to Lender.
(h) Coverage to compensate for the cost of demolition and
the increased cost of construction in an amount satisfactory to Lender.
(i) Such other insurance (including environmental liability
insurance, earthquake (but only if a future seismic study indicates a PML in
excess of twenty percent (20%)) insurance, mine subsidence insurance and
windstorm insurance) as may from time to time be reasonably required by Lender
in order to protect its interests.
(j) Notwithstanding anything in subsection (a) above to the
contrary, Borrower shall be required to obtain and maintain coverage in its
property insurance Policy (or by a separate Policy) against loss or damage by
terrorist acts in an amount equal to one hundred percent (100%) of the "Full
Replacement Cost" of the Property; provided that such coverage is available. In
the event that such coverage with respect to terrorist acts is not included as
part of the "all risk" property policy required by subsection (a) above,
Borrower shall, nevertheless be required to obtain coverage for terrorism (as
stand alone coverage) in an amount equal to one hundred percent (100%) of the
"Full Replacement Cost" of the Property; provided that such coverage is
available. Notwithstanding the foregoing, with respect to any such stand-alone
policy covering terrorist acts, Borrower shall not be required to pay any
Insurance Premiums solely with respect to such terrorism coverage in excess of
the Terrorism Premium Cap (hereinafter defined); provided that if the Insurance
Premiums payable with respect to such terrorism coverage exceeds the Terrorism
Premium Cap, Lender may, at its option (1) purchase such stand-alone terrorism
Policy, with Borrower paying such portion of the Insurance Premiums with respect
thereto equal to the Terrorism Premium Cap and the Lender paying such portion of
the Insurance Premiums in excess of the Terrorism Premium Cap or (2) modify the
deductible amounts, policy limits and other required policy terms to reduce the
Insurance Premiums payable with respect to such stand-alone terrorism Policy to
the Terrorism Premium Cap. As used herein, (i) "TERRORISM PREMIUM CAP" means an
amount equal to one hundred percent (100%) of the aggregate Insurance Premiums
payable with respect to all the insurance coverage under Section 7.1.1(a) for
the last policy year in which coverage for terrorism was included as part of the
"all risk" property policy required by subsection (a) above, adjusted annually
by a percentage equal to the increase in the Consumer Price Index (hereinafter
defined) and (ii) "CONSUMER PRICE INDEX" means the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, New York Metropolitan Statistical Area, All Items (1982-84
= 100), or any successor index thereto, approximately adjusted, and in the event
that the Consumer Price Index is converted to a different standard reference
base or otherwise revised, the determination of adjustments provided for herein
shall be made with the use of such conversion factor, formula or table for
converting the Consumer Price Index as may be published by the Bureau of Labor
Statistics or, if said Bureau shall not publish the same, then
55
with the use of such conversion factor, formula or table as may be published by
Xxxxxxxx-Xxxx, Inc., or any other nationally recognized publisher of similar
statistical information; and if the Consumer Price Index ceases to be published,
and there is no successor thereto (i) such other index as Lender and Borrower
shall agree upon in writing or (ii) if Lender and Borrower cannot agree on a
substitute index, such other index, as reasonably selected by Lender. Borrower
shall obtain the coverage required under this subsection (j) from a carrier
which otherwise satisfies the rating criteria specified in Section 7.1.2 (a
"QUALIFIED CARRIER") or in the event that such coverage is not available from a
Qualified Carrier, Borrower shall obtain such coverage from the highest rated
insurance company providing such coverage.
7.1.2 POLICIES. All policies of insurance (the "POLICIES")
required pursuant to Section 7.1.1 shall: (i) be issued by companies approved by
Lender and licensed to do business in the State, with a claims paying ability
rating of "A" or better by S&P (and the equivalent by any other Rating Agency)
and a rating of A:VIII or better in the current Best's Insurance Reports; (ii)
name Lender and its successors and/or assigns as their interest may appear as
the mortgagee (in the case of property insurance), loss payee (in the case of
business interruption/loss of rents coverage) and an additional insured (in the
case of liability insurance); (iii) contain (in the case of property insurance)
a Non-Contributory Standard Mortgagee Clause and a Lender's Loss Payable
Endorsement, or their equivalents, naming Lender as the person to which all
payments made by such insurance company shall be paid; (iv) contain a waiver of
subrogation against Lender; (v) be assigned and the originals thereof delivered
to Lender, or in lieu of delivering originals of the Policies, Borrower may, on
an annual basis, deliver Xxxxx evidences of coverages or the equivalent, as
adequate proof of coverage; provided, however, if at any time, Lender requests
carrier certification of Policies, Borrower shall deliver such certification
within ten (10) days of Lender's request therefor; (vi) contain such provisions
as Lender deems reasonably necessary or desirable to protect its interest,
including (A) endorsements providing that neither Borrower, Lender nor any other
party shall be a co-insurer under the Policies, (B) that Lender shall receive at
least 30 days' prior written notice of any modification, reduction or
cancellation of any of the Policies, (C) an agreement whereby the insurer waives
any right to claim any premiums and commissions against Lender, provided that
the policy need not waive the requirement that the premium be paid in order for
a claim to be paid to the insured and (D) providing that Lender is permitted to
make payments to effect the continuation of such policy upon notice of
cancellation due to non-payment of premiums; (vii) in the event any insurance
policy (except for general public and other liability and workers compensation
insurance) shall contain breach of warranty provisions, such policy shall
provide that with respect to the interest of Lender, such insurance policy shall
not be invalidated by and shall insure Lender regardless of (A) any act, failure
to act or negligence of or violation of warranties, declarations or conditions
contained in such policy by any named insured, (B) the occupancy or use of the
premises for purposes more hazardous than permitted by the terms thereof, or (C)
any foreclosure or other action or proceeding taken by Lender pursuant to any
provision of the Loan Documents; and (viii) be satisfactory in form and
substance to Lender and approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. Borrower shall pay the premiums for such
Policies (the "INSURANCE PREMIUMS") as the same become due and payable and
furnish to Lender evidence of the renewal of each of the Policies together with
(unless such Insurance Premiums have been paid by Lender pursuant to Section
3.3) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If Borrower does not furnish such evidence
and receipts at least 30 days
56
prior to the expiration of any expiring Policy, then Lender may, but shall not
be obligated to, procure such insurance and pay the Insurance Premiums therefor,
and Borrower shall reimburse Lender for the cost of such Insurance Premiums
promptly on demand, with interest accruing at the Default Rate. Borrower shall
deliver to Lender a certified copy of each Policy within 30 days after its
effective date. Within 30 days after request by Lender, Borrower shall obtain
such increases in the amounts of coverage required hereunder as may be
reasonably requested by Lender, taking into consideration changes in the value
of money over time, changes in liability laws, changes in prudent customs and
practices, and the like.
7.2 CASUALTY.
7.2.1 NOTICE; RESTORATION. If the Property is damaged or
destroyed, in whole or in part, by fire or other casualty (a "Casualty"),
Borrower shall give prompt notice thereof to Lender. Following the occurrence of
a Casualty, Borrower, regardless of whether insurance proceeds are available
(unless Lender has breached its obligation (if any) to make such insurance
proceeds available pursuant to Section 7.4.1), shall promptly proceed to
restore, repair, replace or rebuild the Property in accordance with Legal
Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction.
7.2.2 SETTLEMENT OF PROCEEDS. If a Casualty covered by any of
the Policies (an "INSURED CASUALTY") occurs where the loss does not exceed
$250,000, provided no Event of Default has occurred and is continuing, Borrower
may settle and adjust any claim without the prior consent of Lender; provided
such adjustment is carried out in a competent and timely manner, and Borrower is
hereby authorized to collect and receipt for the insurance proceeds (the
"PROCEEDS"). In the event of an Insured Casualty where the loss exceeds $250,000
(a "SIGNIFICANT CASUALTY"), Borrower may settle and adjust any claim with the
prior written consent of Lender (which consent shall not be unreasonably
withheld or delayed) unless either (i) an Event of Default has occurred and is
continuing or (ii) the loss equals or exceeds $1,000,000, in which either such
case Lender may, in its sole discretion, settle and adjust any claim without the
consent of Borrower and agree with the insurer(s) on the amount to be paid on
the loss, and the Proceeds shall be due and payable solely to Lender and held by
Lender in the Casualty/Condemnation Subaccount and disbursed in accordance
herewith. If Borrower or any party other than Lender is a payee on any check
representing Proceeds with respect to a Significant Casualty, Borrower shall
immediately endorse, and cause all such third parties to endorse, such check
payable to the order of Lender. Borrower hereby irrevocably appoints Lender as
its attorney-in-fact, coupled with an interest, to endorse such check payable to
the order of Lender. The expenses incurred by Lender in the settlement,
adjustment and collection of the Proceeds shall become part of the Debt and
shall be reimbursed by Borrower to Lender upon demand. Notwithstanding anything
to the contrary contained herein, if in connection with a Casualty any insurance
carrier makes a payment under a property insurance Policy that Borrower proposes
be treated as business or rental interruption insurance, then, notwithstanding
any designation (or lack of designation) by the insurance carrier as to the
purpose of such payment, as between Lender and Borrower, such payment shall not
be treated as business or rental interruption insurance proceeds unless Borrower
has demonstrated to Lender's satisfaction that the remaining net Proceeds that
will be received from the property insurance carriers are sufficient to pay one
hundred percent (100%) of the cost of fully restoring the Improvements or,
57
if such net Proceeds are to be applied to repay the Debt in accordance with the
terms hereof, that such remaining net Proceeds will be sufficient to pay the
Debt in full.
7.3 CONDEMNATION.
7.3.1 NOTICE; RESTORATION. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding affecting the Property (a "CONDEMNATION") and shall deliver to
Lender copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Borrower, regardless of whether an
Award is available (unless Lender has breached its obligation (if any) to make
such Award available pursuant to Section 7.4.1), shall promptly proceed to
restore, repair, replace or rebuild the Property in accordance with Legal
Requirements to the extent practicable to be of at least equal value and of
substantially the same character (and to have the same utility) as prior to such
Condemnation.
7.3.2 COLLECTION OF AWARD. If a Condemnation occurs where the
award or payment in respect thereof (an "AWARD") does not exceed $250,000 or
which results in the taking of five percent (5%) or less of the Property,
provided no Event of Default has occurred and is continuing, Borrower may make
any compromise, adjustment or settlement in connection with such Condemnation
with the prior written consent of Lender, not to be unreasonably withheld,
provided such adjustment is carried out in a competent and timely manner, and
Borrower is hereby authorized to collect and receipt for the Award. In the event
of a Condemnation where the Award is in excess of $250,000 or which results in
the taking of more than five percent (5%) of the Property, Lender is hereby
irrevocably appointed as Borrower's attorney-in-fact, coupled with an interest,
with exclusive power to collect, receive and retain such Award and to make any
compromise, adjustment or settlement in connection with such Condemnation with
the prior consent of Borrower (unless an Event of Default is continuing, in
which case, Borrower's prior consent shall not be required), not to be
unreasonably withheld (which shall be deemed consented to if Borrower fails to
respond to any request for consent therefor within 10 days' of request).
Notwithstanding any Condemnation (or any transfer made in lieu of or in
anticipation of such Condemnation), Borrower shall continue to pay the Debt at
the time and in the manner provided for in the Loan Documents, and the Debt
shall not be reduced unless and until any Award shall have been actually
received and applied by Lender to expenses of collecting the Award and to
discharge of the Debt. Lender shall not be limited to the interest paid on the
Award by the condemning authority but shall be entitled to receive out of the
Award interest at the rate or rates provided in the Note. If the Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of such
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall be recoverable or shall have been sought, recovered or denied, to
receive all or a portion of the Award sufficient to pay the Debt. Borrower shall
cause any Award that is payable to Borrower to be paid directly to Lender.
Lender shall hold such Award in the Casualty/Condemnation Subaccount and
disburse such Award in accordance with the terms hereof.
7.4 APPLICATION OF PROCEEDS OR AWARD.
7.4.1 APPLICATION TO RESTORATION. If an Insured Casualty or
Condemnation occurs where (i) the loss is in an aggregate amount less than
twenty five percent (25%) of the
58
unpaid Principal, (ii) in the reasonable judgment of Lender, the Property can be
restored within nine months after all applicable restoration permits have been
obtained, and prior to six months before the Stated Maturity Date and prior to
the expiration of the rental or business interruption insurance with respect
thereto, to the Property's pre-existing condition and utility as existed
immediately prior to such Insured Casualty or Condemnation and to an economic
unit not less valuable and not less useful than the same was immediately prior
to the Insured Casualty or Condemnation, and after such restoration will
adequately secure the Debt, (iii) less than (x) thirty percent (30%), in the
case of an Insured Casualty or (y) fifteen percent (15%), in the case of a
Condemnation, of the rentable area of the Improvements has been damaged,
destroyed or rendered unusable as a result of such Insured Casualty or
Condemnation; (iv) Leases demising in the aggregate at least sixty five percent
(65%) of the total rentable space in the Property and in effect as of the date
of the occurrence of such Insured Casualty or Condemnation remain in full force
and effect during and after the completion of the Restoration (hereinafter
defined); and (v) no Event of Default shall have occurred and be then
continuing, then the Proceeds or the Award, as the case may be (after
reimbursement of any expenses incurred by Lender), shall be applied to pay for
or reimburse Borrower for the cost of restoring, repairing, replacing or
rebuilding the Property (the "RESTORATION"), in the manner set forth herein.
Borrower shall commence and diligently prosecute such Restoration.
Notwithstanding the foregoing, in no event shall Lender be obligated to apply
the Proceeds or Award to reimburse Borrower for the cost of Restoration unless,
in addition to satisfaction of the foregoing conditions, both (x) Borrower shall
pay (and if required by Lender, Borrower shall deposit with Lender in advance)
all costs of such Restoration in excess of the net amount of the Proceeds or the
Award made available pursuant to the terms hereof; and (y) Lender shall have
received evidence reasonably satisfactory to it that during the period of the
Restoration, the Rents will be at least equal to the sum of the operating
expenses and Debt Service, as reasonably determined by Lender.
7.4.2 APPLICATION TO DEBT. Except as provided in Section
7.4.1, any Proceeds and/or Award may, at the option of Lender in its discretion,
be applied to the payment of (i) accrued but unpaid interest on the Note, (ii)
the unpaid Principal and (iii) other charges due under the Note and/or any of
the other Loan Documents, or applied to reimburse Borrower for the cost of any
Restoration, in the manner set forth in Section 7.4.3. Any such prepayment of
the Loan shall be without any Yield Maintenance Premium, unless an Event of
Default has occurred and is continuing at the time the Proceeds are received
from the insurance company or the Award is received from the condemning
authority, as the case may be, in which event Borrower shall pay to Lender an
additional amount equal to the Yield Maintenance Premium, if any, that may be
required with respect to the amount of the Proceeds or Award applied to the
unpaid Principal. Notwithstanding anything to the contrary contained herein, if
any Proceeds or Award are not required to be made available for a Restoration
and are retained and applied by Lender toward the payment of the Debt, Borrower
may prepay the entire outstanding Principal without payment of any Yield
Maintenance Premium provided that (x) such prepayment is made within 90 days
after Lender applies such Proceeds or Award to the Debt and (y) together with
such prepayment, Borrower pay to Lender all accrued and unpaid interest and all
other sums payable under the Loan Documents.
7.4.3 PROCEDURE FOR APPLICATION TO RESTORATION. If Borrower is
entitled to reimbursement out of the Proceeds or an Award held by Lender, such
Proceeds or Award shall
59
be disbursed from time to time from the Casualty/Condemnation Subaccount upon
Lender being furnished with (i) evidence satisfactory to Lender of the estimated
cost of completion of the Restoration, (ii) a fixed price or guaranteed maximum
cost construction contract for Restoration satisfactory to Lender, (iii) prior
to the commencement of Restoration, all immediately available funds in addition
to the Proceeds or Award that in Lender's judgment are required to complete the
proposed Restoration (or such additional funds are irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose), (iv) such
architect's certificates, waivers of lien, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey, permits, approvals, licenses and
such other documents and items as Lender may reasonably require and approve in
Lender's discretion, and (v) all plans and specifications for such Restoration,
such plans and specifications to be approved by Lender in writing prior to
commencement of any work. Lender may, at Borrower's expense, retain a consultant
to review and approve all requests for disbursements, which approval shall also
be a condition precedent to any disbursement. No payment made prior to the final
completion of the Restoration shall exceed ninety percent (90%) of the value of
the work performed from time to time; funds other than the Proceeds or Award
shall be disbursed prior to disbursement of such Proceeds or Award; and at all
times, the undisbursed balance of such Proceeds or Award remaining in the hands
of Lender, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Lender by or on behalf of Borrower for that
purpose, shall be at least sufficient in the reasonable judgment of Lender to
pay for the cost of completion of the Restoration, free and clear of all Liens
or claims for Lien. Provided no Default or Event of Default then exists, any
surplus that remains out of the Proceeds held by Lender after payment of such
costs of Restoration shall be paid to Borrower. Any surplus that remains out of
the Award received by Lender after payment of such costs of Restoration shall,
in the discretion of Lender, be retained by Lender and applied to payment of the
Debt or returned to Borrower.
8. DEFAULTS
8.1 EVENTS OF DEFAULT. An "Event of Default" shall exist with
respect to the Loan if any of the following shall occur:
(a) any portion of the Debt is not paid when due or any other amount
under Section 3.11(a)(i) through (vii) is not paid in full on each Payment Date
(provided, however, if adequate funds are available in the Deposit Account for
such payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default);
(b) any of the Taxes are not paid when due (unless Lender is paying
such Taxes pursuant to Section 3.3), subject to Borrower's right to contest
Taxes in accordance with Section 5.2;
(c) the Policies are not kept in full force and effect, or are not
delivered to Lender pursuant to Section 7.1.2(v) within 10 days after request;
(d) a Transfer other than a Permitted Transfer occurs;
60
(e) any representation or warranty made by Borrower or Guarantor or
in any Loan Document, or in any report, certificate, financial statement or
other instrument, agreement or document furnished by Borrower or Guarantor in
connection with any Loan Document, shall be false or misleading in any material
respect as of the date the representation or warranty was made;
(f) Borrower or Guarantor shall (i) make an assignment for the
benefit of creditors, or (ii) shall generally not be paying its debts as they
become due;
(g) a receiver, liquidator or trustee shall be appointed for
Borrower or Guarantor; or Borrower or Guarantor shall be adjudicated a bankrupt
or insolvent; or any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state law, shall
be filed by or against, consented to, or acquiesced in by, Borrower or
Guarantor, as the case may be; or any proceeding for the dissolution or
liquidation of Borrower or Guarantor shall be instituted; provided however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower or Guarantor, as the case may be, only upon the same
not being discharged, stayed or dismissed within 60 days;
(h) Borrower breaches any covenant contained in Sections 5.12.1 (a)
- (f), 5.13, 5.15, 5.22 (other than failure to pay trade payables within 60 days
if due to lack of available funds), 5.25 or 5.28;
(i) except as expressly permitted hereunder, the alteration,
improvement, demolition or removal of all or any of portion of the Improvements
without the prior written consent of Lender (if such consent is required
pursuant to the terms of this Agreement);
(j) an Event of Default as defined or described elsewhere in this
Agreement or in any other Loan Document occurs;
(k) a default occurs under any term, covenant or provision set forth
herein or in any other Loan Document which specifically contains a notice
requirement or grace period and such notice has been given and such grace period
has expired;
(l) any of the assumptions contained in any substantive
non-consolidation opinion, delivered to Lender by Borrower's counsel in
connection with the Loan or otherwise hereunder, were not true and correct as of
the date of such opinion or thereafter became untrue or incorrect;
(m) if Key Principal fails to Control (as defined in clause (ii) of
the defined term "Control" in Section 1.1) the Manager and the day to day
management and operations of the Property (unless the Manager is replaced with a
successor manager in accordance with and subject to satisfaction of the terms
and conditions set forth in Section 5.12.2); or
(n) a default shall be continuing under any of the other terms,
covenants or conditions of this Agreement or any other Loan Document not
otherwise specified in this Section 8.1, for ten days after notice to Borrower
(and Guarantor, if applicable) from Lender, in the case of any default which can
be cured by the payment of a sum of money, or for 30 days after notice from
Lender in the case of any other default; provided, however, that if such
non-monetary
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default is susceptible of cure but cannot reasonably be cured within such 30-day
period, and Borrower (or Guarantor, if applicable) shall have commenced to cure
such default within such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, such 30-day period shall be extended
for an additional period of time as is reasonably necessary for Borrower (or
Guarantor, if applicable) in the exercise of due diligence to cure such default,
such additional period not to exceed 60 days.
8.2 REMEDIES.
8.2.1 ACCELERATION. Upon the occurrence and during the
continuance of an Event of Default (other than an Event of Default described in
paragraph (f) or (g) of Section 8.1) and at any time and from time to time
thereafter during the continuance of such Event of Default, in addition to any
other rights or remedies available to it pursuant to the Loan Documents or at
law or in equity, Lender may take such action, without notice or demand, that
Lender deems advisable to protect and enforce its rights against Borrower and in
and to the Property; including declaring the Debt to be immediately due and
payable (including unpaid interest), Default Rate interest, Late Payment
Charges, Yield Maintenance Premium and any other amounts owing by Borrower),
without notice or demand; and upon any Event of Default described in paragraph
(f) or (g) of Section 8.1, the Debt (including unpaid interest, Default Rate
interest, Late Payment Charges, Yield Maintenance Premium and any other amounts
owing by Borrower) shall immediately and automatically become due and payable,
without notice or demand, and Borrower hereby expressly waives any such notice
or demand, anything contained in any Loan Document to the contrary
notwithstanding.
8.2.2 REMEDIES CUMULATIVE. Upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Lender against Borrower under
the Loan Documents or at law or in equity may be exercised by Lender at any time
and from time to time, whether or not all or any of the Debt shall be declared,
or be automatically, due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents. Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
Lender may determine in its discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth in the Loan Documents.
Without limiting the generality of the foregoing, Borrower agrees that if an
Event of Default is continuing, (i) to the extent permitted by applicable law,
Lender is not subject to any "one action" or "election of remedies" law or rule,
and (ii) all Liens and other rights, remedies or privileges provided to Lender
shall remain in full force and effect until Lender has exhausted all of its
remedies against the Property, the Mortgage has been foreclosed, the Property
has been sold and/or otherwise realized upon in satisfaction of the Debt or the
Debt has been paid in full. To the extent permitted by applicable law, nothing
contained in any Loan Document shall be construed as requiring Lender to resort
to any particular Property or any portion of the Property for the satisfaction
of any of the Debt in preference or priority to any other portion, and Lender
may seek satisfaction out of the entire Property or any part thereof, in its
discretion.
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8.2.3 SEVERANCE. During the continuance of an Event of Default
Lender shall have the right from time to time to sever the Note and the other
Loan Documents into one or more separate notes, mortgages and other security
documents in such denominations and priorities of payment and liens as Lender
shall determine in its discretion for purposes of evidencing and enforcing its
rights and remedies. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and
execute all documents necessary or desirable to effect such severance, Borrower
ratifying all that such attorney shall do by virtue thereof.
8.2.4 DELAY. No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default, or the granting of any
indulgence or compromise by Lender shall impair any such remedy, right or power
hereunder or be construed as a waiver thereof, but any such remedy, right or
power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default shall not be construed to
be a waiver of any subsequent Default or Event of Default or to impair any
remedy, right or power consequent thereon. Notwithstanding any other provision
of this Agreement, Lender reserves the right to seek a deficiency judgment or
preserve a deficiency claim in connection with the foreclosure of the Mortgage
to the extent necessary to foreclose on all or any portion of the Property, the
Rents, the Cash Management Accounts or any other collateral.
8.2.5 LENDER'S RIGHT TO PERFORM. If Borrower fails to perform
any covenant or obligation contained herein and such failure shall continue for
a period of five Business Days after Borrower's receipt of written notice
thereof from Lender, without in any way limiting Lender's right to exercise any
of its rights, powers or remedies as provided hereunder, or under any of the
other Loan Documents, Lender may, but shall have no obligation to, perform, or
cause performance of, such covenant or obligation, and all costs, expenses,
liabilities, penalties and fines of Lender incurred or paid in connection
therewith shall be payable by Borrower to Lender upon demand and if not paid
shall be added to the Debt (and to the extent permitted under applicable laws,
secured by the Mortgage and other Loan Documents) and shall bear interest
thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have
no obligation to send notice to Borrower of any such failure. Additionally,
during the continuance of an Event of Default, Lender shall have the right, but
not the obligation, to make any Protective Advance (hereinafter defined)
(provided, however, that Lender will only make such Protective Advance from its
own funds if there are insufficient funds in the Cash Management Accounts), and
the same shall be added to the Debt (and to the extent permitted under
applicable laws, secured by the Mortgage and other Loan Documents) and shall
bear interest thereafter at the Default Rate. As used herein, "PROTECTIVE
ADVANCE" means all sums advanced for the purpose of payment of real estate taxes
(including special payments in lieu of real estate taxes), maintenance costs,
insurance premiums, operating expenses, trade payables or other items with
respect to the Property (including capital items) reasonably necessary to
protect the Property or any other security given for the Loan or to preserve any
of Lender's rights or remedies under the Loan Documents.
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9. SPECIAL PROVISIONS
9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.
9.1.1 GENERAL; BORROWER COOPERATION. Lender shall have the
right at any time and from time to time (i) to sell or otherwise transfer the
Loan or any portion thereof or the Loan Documents or any interest therein to one
or more investors, (ii) to sell participation interests in the Loan to one or
more investors or (iii) to securitize the Loan or any portion thereof in a
single asset securitization or a pooled loan securitization of rated single or
multi-class securities (the "SECURITIES") secured by or evidencing ownership
interests in the Note and the Mortgage (each such sale, assignment,
participation and/or securitization is referred to herein as a "SECONDARY MARKET
TRANSACTION"). In connection with any Secondary Market Transaction, Borrower
shall use all reasonable efforts and cooperate fully and in good faith with
Lender and otherwise assist Lender 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 such Secondary
Market Transactions, including: (a) to (i) provide such financial and other
information with respect to the Property, Borrower and their Affiliates, Manager
and any tenants of the Property, (ii) provide business plans and budgets
relating to the Property and (iii) perform or permit or cause to be performed or
permitted such site inspection, appraisals, surveys, market studies,
environmental reviews and reports, engineering reports and other due diligence
investigations of the Property, as may be reasonably requested from time to time
by Lender or the Rating Agencies or as may be necessary or appropriate in
connection with a Secondary Market Transaction or Exchange Act requirements (the
items provided to Lender pursuant to clauses (i) and (ii) of this paragraph (a)
being called the "PROVIDED INFORMATION"), together, if customary, with
appropriate verification of and/or consents to the Provided Information through
letters of auditors or opinions of counsel of independent attorneys acceptable
to Lender and the Rating Agencies; (b) at Borrower's expense, cause counsel to
render opinions as to non-consolidation (which may be an update of an existing
non-consolidation opinion) and any other opinion customary in securitization
transactions with respect to the Property, Borrower and their Affiliates, which
counsel and opinions shall be reasonably satisfactory to Lender and the Rating
Agencies; (c) make such representations and warranties as of the closing date of
any Secondary Market Transaction with respect to the Property, Borrower and the
Loan Documents as are customarily provided in such transactions and as may be
reasonably requested by Lender or the Rating Agencies and consistent with the
facts covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents; (d) provide current certificates of good standing and qualification
with respect to Borrower from appropriate Governmental Authorities; and (e)
execute such amendments to the Loan Documents and Borrower's organizational
documents, as may be requested by Lender or the Rating Agencies or otherwise to
effect a Secondary Market Transaction, provided that nothing contained in this
subsection (e) shall result in changes to Loan terms adverse to Borrower or
require Borrower to incur any additional liabilities. Borrower's cooperation
obligations set forth herein shall continue until the Loan has been paid in
full.
9.1.2 USE OF INFORMATION. Borrower understands that all or any
portion of the Provided Information and any other information and/or materials
delivered by or on behalf of Borrower, Guarantor or any of their respective
Affiliates may be included in disclosure documents in connection with a
Secondary Market Transaction, including a prospectus or private
64
placement memorandum (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"), or provided or made available to
investors or prospective investors in the Securities, the Rating Agencies, and
service providers or other parties relating to the Secondary Market Transaction.
If the Disclosure Document is required to be revised, Borrower shall cooperate
with Lender in updating the Provided Information or such other information
and/or materials for inclusion or summary in the Disclosure Document or for
other use reasonably required in connection with a Secondary Market Transaction
by providing all current information pertaining to Borrower, Manager and the
Property necessary to keep the Disclosure Document accurate and complete in all
material respects with respect to such matters.
9.1.3 BORROWER OBLIGATIONS REGARDING DISCLOSURE DOCUMENTS. In
connection with a Disclosure Document, Borrower shall, if requested by Lender,
certify in writing that Borrower has carefully examined those portions of such
Disclosure Document, pertaining to Borrower, the Property Manager and the Loan,
and that such portions do 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.
Notwithstanding anything to the contrary contained in this Section 9.1.3,
nothing contained herein shall impose liability upon a Borrower for any losses,
claims, damages or liability arising out of or based upon an untrue statement of
any material fact contained in any statement, report or document provided to
Lender on behalf of Borrower by a party who is not an Affiliate of a Borrower (a
"THIRD PARTY REPORT"), unless Borrower had actual knowledge at the time Borrower
provided such statement, report or document to Lender that such Third Party
Report contains such untrue statement.
9.1.4 BORROWER INDEMNITY REGARDING FILINGS. In connection with
filings under the Exchange Act, Borrower shall (A) indemnify any (i)
underwriter, syndicate member or placement agent (collectively, the
"UNDERWRITERS") retained by Lender or its issuing company affiliate ("ISSUER")
in connection with a Secondary Market Transaction, and (ii) the Indemnified
Parties, for any Indemnified Liabilities to which any such Underwriter or
Indemnified Party may become subject arising out of or based upon the omission
to state in the Provided Information a material fact required to be stated in
the Provided Information in order to make the statements in the Provided
Information, in light of the circumstances under which they were made not
misleading, and (B) reimburse any such Underwriter and Indemnified Party for any
legal or other expenses actually incurred by it in connection with defending or
investigating the Indemnified Liabilities. Notwithstanding anything to the
contrary contained in this Section 9.1.4, nothing contained herein shall impose
liability upon a Borrower for any Indemnified Liabilities arising out of or
based upon an untrue statement of any material fact contained in any Third Party
Report, unless Borrower had actual knowledge at the time Borrower provided such
statement, report or document to Lender that such Third Party Report contains
such untrue statement.
9.1.5 INDEMNIFICATION PROCEDURE. Promptly after receipt by any
Underwriter or Indemnified Party under Section 9.1.3 or 9.1.4 of notice of the
commencement of any action for which a claim for indemnification is to be made
against Borrower, such Underwriter or Indemnified Party shall notify Borrower in
writing of such commencement, but the omission to so notify Borrower will not
relieve Borrower from any liability that they may have to any
65
Underwriter or Indemnified Party hereunder except to the extent that failure to
notify causes prejudice to Borrower. If any action is brought against any
Underwriter or Indemnified Party, and it notifies Borrower of the commencement
thereof, Borrower 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 Underwriter or Indemnified Party promptly after
receiving the aforesaid notice of commencement, to assume the defense thereof
with counsel satisfactory to such Underwriter or Indemnified Party in its
discretion. After notice from Borrower to such Underwriter or Indemnified Party
under this Section 9.1.5, Borrower shall not be responsible for any legal or
other expenses subsequently incurred by such Underwriter or 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 Borrower and either an Underwriter or Indemnified Party, and any
Underwriter or 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 Borrower, then the
Underwriter(s) or Indemnified Party(ies) 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 Underwriter(s) or Indemnified
Party(ies). Borrower shall not be liable for the expenses of more than one
separate counsel unless there are legal defenses available to it that are
different from or additional to those available to another Underwriter or
Indemnified Party.
9.1.6 CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 9.1.3 or 9.1.4 is for any reason held to be unenforceable by an
Underwriter or Indemnified Party in respect of any Indemnified Liabilities (or
action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 9.1.3 or 9.1.4, Borrower shall contribute to the
amount paid or payable by the Underwriter or Indemnified Party as a result of
such Indemnified Liabilities (or action in respect thereof); provided, however,
that no Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the Citigroup Group's (as defined
herein below) 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 may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. For the
purposes hereof, the term "CITIGROUP GROUP" shall mean all of the following
Persons collectively: the Lender, the Issuer that is named in the Disclosure
Document or registration statement relating to a Secondary Market Transaction
(the "REGISTRATION STATEMENT"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each Person who controls
the Issuer or the Lender within the meaning of Section 15 of the Securities Act
or Section 30 of the Exchange Act.
9.1.7 SEVERANCE OF LOAN. Lender shall have the right, at any
time (whether prior to, in connection with, or after any Secondary Market
Transaction), with respect to all or any portion of the Loan, to modify, split
and/or sever all or any portion of the Loan as hereinafter provided. Without
limiting the foregoing, Lender may (i) cause the Note and the Mortgage to be
split into a first and second mortgage loan, (ii) create one or more senior and
subordinate notes
66
(I.E., an A/B or A/B/C structure), (iii) create multiple components of the Note
or Notes (and allocate or reallocate the principal balance of the Loan among
such components) or (iv) otherwise sever the Loan into two or more loans secured
by mortgages and by a pledge of partnership or membership interests (directly or
indirectly) in Borrower (I.E., a senior loan/mezzanine loan structure), in each
such case, in whatever proportion and whatever priority Lender determines;
provided, however, in each such instance the outstanding principal balance of
all the Notes evidencing the Loan (or components of such Notes) immediately
after the effective date of such modification equals the outstanding principal
balance of the Loan immediately prior to such modification and the weighted
average of the interest rates for all such Notes (or components of such Notes)
immediately after the effective date of such modification equals the interest
rate of the original Note immediately prior to such modification. If requested
by Lender, Borrower (and Borrower's constituent members, if applicable, and
Guarantor) shall execute within seven (7) Business Days after such request, such
documentation as Lender may reasonably request to evidence and/or effectuate any
such modification or severance.
9.2 COSTS AND EXPENSES. Notwithstanding anything to the contrary
contained in this Article 9, Borrower shall not be required to incur
out-of-pocket expenses in the performance of their obligations under Sections
9.1.1 (other than with respect to the delivery or update of non-consolidation
opinions), 9.1.2, 9.1.3 and 9.1.7.
9.3 MEZZANINE LOAN. Lender agrees to permit owner(s) of direct or
indirect equity interests in Borrower (the "MEZZANINE Borrower", provided
however that in no event shall any entity required hereunder to be a Special
Purpose Bankruptcy Remote Entity be a Mezzanine Borrower) to obtain a mezzanine
loan (the "MEZZANINE LOAN"), subject to satisfaction of the following conditions
(provided that no more than one Mezzanine Loan shall be permitted during the
term of the Loan):
(a) no Event of Default shall exist;
(b) the Mezzanine Loan may be secured by a pledge by
Mezzanine Borrower of such Mezzanine Borrower's direct or indirect equity
interest in Borrower, but not by the Property or any assets of Borrower or of
any other entity required hereunder to be a Single Purpose Bankruptcy Remote
Entity, and neither Borrower nor any other entity required hereunder to be a
Special Purpose Bankruptcy Remote Entity shall in any way be obligated in
connection with the Mezzanine Loan (except for non-monetary obligations
reasonably acceptable to Lender that are customary in connection with mezzanine
loans involving securitized senior loans);
(c) if a Secondary Market Transaction has occurred, Borrower
shall have obtained (and delivered to Lender) a Rating Comfort Letter with
respect to the proposed Mezzanine Loan;
(d) the Mezzanine Loan lender (the "MEZZANINE LENDER") shall
be an Acceptable Mezzanine Lender;
(e) the Mezzanine Lender shall, upon Lender's request,
execute a subordination and standstill intercreditor agreement (the
"INTERCREDITOR AGREEMENT") in form approved by Lender, which approval shall not
be unreasonably withheld, conditioned or delayed so long as the
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Intercreditor Agreement is otherwise in conformance with Rating Agency approved
forms for intercreditor agreements;
(f) the Net Operating Income of the Property, as reasonably
determined by Lender for the 12 month period then most recently ended, is
sufficient to satisfy an aggregate projected debt service coverage ratio (based
on the aggregate of the debt service on the Loan and the Mezzanine Loan) of at
least 1.10:1.00;
(g) Lender shall have approved (such approval not to be
unreasonably withheld, conditioned or delayed) the loan documents evidencing and
securing the Mezzanine Loan;
(h) the maturity of the Mezzanine Loan shall be no earlier
than the Maturity Date;
(i) the Property value, as determined by Lender based on a
FIRREA appraisal dated not more than six (6) months prior to the date of the
Mezzanine Loan and otherwise reasonably acceptable to Lender, prepared, at
Borrower's expense, on behalf of Lender by an appraiser reasonably approved by
Lender which is a member of the Appraisal Institute with substantial experience
in appraising properties similar to the Property is sufficient to satisfy an
aggregate loan-to-value ratio (based on the aggregate balances of the Loan and
the Mezzanine Loan) not in excess of 80%;
(j) Mezzanine Loan payments shall be made solely from excess
Property cash flow distributed by the Borrower to its owners after payment of
all debt service and reserve payments under the Loan and operating expenses for
the Property or from other funds of Mezzanine Borrower; and
(k) Borrower shall enter into such amendments or supplements
to the Loan Documents as Lender may require in order to establish a hard lock
box and cash management arrangement whereby Property cash flow is deposited and
applied, through Lender-controlled accounts, first to debt service and reserves
required under the Loan, then to fund operating expenses, prior to any
distributions of excess Property cash flow to the Borrower's owners for payments
upon the Mezzanine Loan.
Borrower shall pay or reimburse to Lender all Rating Agency fees and all
reasonable costs and expenses incurred by Lender, including fees and expenses of
Lender's counsel, in connection with the review and documentation concerning the
Mezzanine Loan regardless of whether such Mezzanine Loan is closed.
9.4 LETTERS OF CREDIT9.5 . Each of the letters of credit delivered
by Borrower under this Agreement (each, a "LETTER OF CREDIT"; collectively, the
"LETTERS OF CREDIT") shall be additional security for the payment of the Debt.
In the event Lender transfers any Letter of Credit to any successor or assignee
of Lender, and the issuer of the Letter of Credit charges a fee in connection
with such transfer, Borrower shall pay or reimburse Lender for such transfer
fee.
10. MISCELLANEOUS
10.1 EXCULPATION. (a) Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the
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Loan Documents by any action or proceeding wherein a money judgment shall be
sought against Borrower, 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 and rights under the 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
shall not xxx for, seek or demand any deficiency judgment against Borrower in
any such action or proceeding under or by reason of or under or in connection
with any Loan Document. The provisions of this Section shall not, however, (i)
constitute a waiver, release or impairment of any obligation evidenced or
secured by any Loan Document; (ii) impair the right of Lender to name Borrower
as a party defendant in any action or suit for foreclosure and sale under the
Mortgage; (iii) affect the validity or enforceability of any of the Loan
Documents or any guaranty made in connection with the Loan or any of the rights
and remedies of Lender thereunder; (iv) impair the right of Lender to obtain the
appointment of a receiver; (v) impair the enforcement of the Assignment of
Leases; (vi) constitute a prohibition against Lender to commence any other
appropriate action or proceeding in order for Lender to fully realize the
security granted by the Mortgage or to exercise its remedies against the
Property; or (vii) 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 loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs reasonably incurred)
(collectively, "LENDER'S Losses") arising out of or in connection with any of
the following (all such liability and obligation of Borrower for any or all of
the following being referred to herein as "BORROWER'S RECOURSE LIABILITIES"):
(a) fraud or intentional misrepresentation by Borrower, or Guarantor in
connection with obtaining the Loan; (b) physical waste of the Property or any
portion thereof (other than acts committed by a third party non-affiliated
property manager), or after an Event of Default the removal or disposal of any
portion of the Property (other than acts committed by a third party
non-affiliated property manager); (c) any Proceeds paid by reason of any Insured
Casualty or any Award received in connection with a Condemnation or other sums
or payments attributable to the Property not applied in accordance with the
provisions of the Loan Documents (other than acts committed by a third party
non-affiliated property manager) (except to the extent that Borrower did not
have the legal right, because of a bankruptcy, receivership or similar judicial
proceeding, to direct disbursement of such sums or payments); (d) all Rents of
the Property received or collected by or on behalf of Borrower after an Event of
Default and not applied to payment of Principal and interest due under the Note,
and to the payment of actual and reasonable operating expenses of the Property,
as they become due or payable (other than acts committed by a third party
non-affiliated property manager) (except to the extent that such application of
such funds is prevented by bankruptcy, receivership, or similar judicial
proceeding in which Borrower is legally prevented from directing the
disbursement of such sums); (e) misappropriation (including failure to turn over
to Lender on demand following an Event of Default) of tenant security deposits
and Rents collected in advance, or of funds held by Borrower for the benefit of
another party (other than acts committed by a third party non-affiliated
property manager); (f) the failure to pay Taxes, provided that Borrower shall
not be liable (A) to the extent funds to pay such amounts are available in the
Tax and Insurance Subaccount and Lender failed to pay same or has elected not to
pay the same pursuant to Section 3.3 or (B) Rents are insufficient to yield
sufficient funds to
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pay such amounts; (g) the breach of any representation, warranty, covenant or
indemnification in any Loan Document concerning Environmental Laws or Hazardous
Substances, including Sections 4.21 and 5.8, and clauses (viii) through (xi) of
Section 5.30; (h) the breach of the covenants set forth in Section 5.13 (other
than a breach of any of the covenants described in clauses (x) and (xxi) (with
respect to unsecured trade payables) set forth in the definition of "Special
Purpose Bankruptcy Remote Entity" on Schedule 5, if the same occurs as a result
of the economic performance of the Property); (i) Borrower or Guarantor or any
of their direct or indirect Affiliates taking any action or making any omission
intended or reasonably likely to hinder, delay, impair or prevent Lender in or
from enforcing any and all of its rights and remedies under or pursuant to the
Loan Documents or at law or in equity (unless the same is brought in good faith
and is determined in favor of Borrower or Guarantor pursuant to a final,
non-appealable judgment of a court of competent jurisdiction); (j) the
termination of the Management Agreement or the removal of the then-current
Manager as property manager thereunder without Lender's prior written consent.
(b) Notwithstanding anything to the contrary in this
Agreement 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), 1111(b) or
any other provisions of the U.S. Bankruptcy Code to file a claim for the full
amount of the Debt or to require that all collateral shall continue to secure
all of the Debt in accordance with the Loan Documents, (B) the Debt shall in all
circumstances be fully recourse to Borrower subject to a limitation upon
Borrower's recourse liability under this clause (B) of $700,000 (in addition to
any Borrower's Recourse Liabilities), and (C) Lender's agreement not to pursue
personal liability of Borrower as set forth above SHALL BECOME NULL AND VOID and
shall be of no further force and effect, and the Debt shall be fully recourse to
the Borrower in an amount equal to the greater of (x) Lender's Losses arising
out of or in connection with the following matters or (y) an amount equal to the
unpaid balance of the Debt, in the event that one or more of the following
occurs (each, a "SPRINGING RECOURSE EVENT"): (i) an Event of Default described
in Section 8.1(d) shall have occurred, (ii) the occurrence of any condition or
event described in either Section 8.1(f)(i) (with respect to Borrower only) or
Section 8.1(g) (with respect to Borrower only) (each, an "INSOLVENCY ACTION")
and, with respect to such Insolvency Action described in Section 8.1(g), either
Borrower, Guarantor or any Person owning an interest (directly or indirectly) in
Borrower or Guarantor consents to, aids, solicits, supports, or otherwise
cooperates or colludes to cause such Insolvency Action or fails to contest such
Insolvency Action, except in the event that any such party has a fiduciary or
legal duty to take such action, (iii) any involuntary bankruptcy proceeding is
brought by Borrower or Guarantor or any of their respective Affiliates against
any of them; (iv) if subsequent to the commencement of any voluntary bankruptcy
proceeding with respect to Borrower, any involuntary bankruptcy proceeding is
brought by Lender against Borrower and Borrower or Guarantor files any motion
contesting the same; or (v) Borrower, Guarantor or any of their respective
Affiliates brings or joins in any action or proceeding for the partition of the
Property or any portion thereof or interest therein.
10.2 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 Loan, other than NorthMarq
Capital, Inc., whose fee shall be paid by Borrower. Borrower shall indemnify and
hold Lender harmless from and against any and all claims, liabilities, costs and
expenses (including attorneys' fees, whether incurred in connection
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with enforcing this indemnity or defending claims of third parties) of any kind
in any way relating to or arising from a claim by any Person that such Person
acted on behalf of Borrower in connection with the transactions contemplated
herein. The provisions of this Section 10.2 shall survive the expiration and
termination of this Agreement and the repayment of the Debt.
10.3 RETENTION OF SERVICER. Lender reserves the right to retain the
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, any pooling and servicing agreement or similar agreement entered into
as a result of a Secondary Market Transaction, the Deposit Account Agreement or
otherwise, together with such other powers as are reasonably incidental thereto.
Borrower shall pay any reasonable fees and expenses of the Servicer in
connection with a release of the Property, assumption or modification of the
Loan, enforcement of the Loan Documents or any other action taken by Servicer
hereunder on behalf of Lender, to the extent such actions are permitted to be
taken pursuant to the terms of the Loan Documents, but only to the extent that
Borrower are expressly required to pay such expenses pursuant to the terms of
this Agreement. Notwithstanding anything to the contrary contained herein, to
the extent any matter described in this Agreement requires the consent or
approval of the special servicer under the pooling and servicing agreement (or
other similar agreement) entered into in connection with a Securitization, such
special servicer shall be afforded a consent period for such matter equal to the
greater of (i) the period of time given to Lender hereunder within which to
consent or approve such matter, or (ii) 15 Business Days (to the extent such 15
Business Day period is required under the terms of such pooling and servicing
agreement).
10.4 SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as any of the Debt is unpaid or such longer period if expressly set
forth in this Agreement. All Borrower's covenants and agreements in this
Agreement shall inure to the benefit of the respective legal representatives,
successors and assigns of Lender.
10.5 LENDER'S DISCRETION. Whenever pursuant to this Agreement or any
other Loan Document, Lender exercises any right given to it to approve or
disapprove, or consent or withhold consent, or any arrangement or term is to be
satisfactory to Lender or is to be in Lender's discretion, the decision of
Lender to approve or disapprove, to consent or withhold consent, or to decide
whether arrangements or terms are satisfactory or not satisfactory, or
acceptable or unacceptable or in Lender's discretion shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.
10.6 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK
AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE
STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP
TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL
RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH
THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT.
TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO ss. 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND BORROWER WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT CT CORPORATION SYSTEM, 000 XXXXXX XXXXXX, XXX XXXX,
XXX XXXX 00000 AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED
HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
BORROWER (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (i) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE
DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN
NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
10.7 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,
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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. 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 any Loan Document, Lender shall not be deemed to have waived any
right either to require prompt payment when due of all other amounts due under
the Loan Documents, or to declare an Event of Default for failure to effect
prompt payment of any such other amount.
10.8 TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE
A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY THE OTHER.
10.9 HEADINGS/EXHIBITS. The Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose. The Exhibits attached hereto, are
hereby incorporated by reference as a part of the Agreement with the same force
and effect as if set forth in the body hereof.
10.10 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.11 PREFERENCES. Upon the occurrence and continuance of an Event of
Default, Lender shall have the continuing and exclusive right to apply any and
all payments by Borrower to any portion of the Debt. To the extent Borrower
makes a payment to Lender, or Lender receives proceeds of any collateral, which
is in whole or in part 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
Debt 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. This provision shall survive the expiration or termination of this
Agreement and the repayment of the Debt.
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10.12 WAIVER OF NOTICE. Borrower shall not be entitled to any notices
of any nature whatsoever from Lender except with respect to matters for which
this Agreement or any other Loan Document specifically and expressly requires
the giving of notice by Lender to Borrower and except with respect to matters
for which Borrower is not, pursuant to applicable Legal Requirements, permitted
to waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which no Loan
Document specifically and expressly requires the giving of notice by Lender to
Borrower.
10.13 REMEDIES OF BORROWER. If a claim or adjudication is made that
Lender or any of its agents, including Servicer, has acted unreasonably or
unreasonably delayed acting in any case where by law or under any Loan Document,
Lender or any such agent, as the case may be, has an obligation to act
reasonably or promptly, Borrower agrees that neither Lender nor its agents,
including Servicer, shall be liable for any monetary damages, and Borrower's
sole remedy shall be to commence an action seeking injunctive relief or
declaratory judgment. Any action or proceeding to determine whether Lender has
acted reasonably shall be determined by an action seeking declaratory judgment.
Borrower specifically waives any claim against Lender and its agents, including
Servicer, with respect to actions taken by Lender or its agents on Borrower's
behalf.
10.14 PRIOR AGREEMENTS. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements,
understandings and negotiations among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan
Documents.
10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. Borrower hereby waives the
right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against Borrower by Lender or its agents, including
Servicer, or otherwise offset any obligations to make payments required under
the Loan Documents. Any assignee of Lender's interest in and to the Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which Borrower may otherwise have (including with respect to any future
funding obligation, if any, or any default or dispute relating thereto) against
any assignor of such documents, and no such offset, counterclaim or defense
shall be interposed or asserted by Borrower in any action or proceeding brought
by any such assignee upon such documents, and any such right to interpose or
assert any such offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.
10.16 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, the Loan, Lender or any member of
the Citigroup Group, a Loan purchaser, the Servicer or the trustee in a
Secondary Market Transaction, shall be subject to the prior written approval of
Lender; provided however, that Lender's consent shall not be required by
Borrower, Borrower's Affiliates, or any broker dealer or investor representative
related to the marketing or sale of any investment fund or investment trust
managed by Borrower's Affiliates which disclosure is required under the
Securities Act of 1933 or 1934 or to any potential purchaser of an interest in
the Property. Lender shall have the right to issue any of the foregoing without
Borrower's approval.
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10.17 NO USURY. Borrower and Lender intend at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 10.17 shall
control every other agreement in the Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Debt, or if Lender's
exercise of the option to accelerate the maturity of the Loan or any prepayment
by Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Borrower's and Lender's express intent
that all excess amounts theretofore collected by Lender shall be credited
against the unpaid Principal and all other Debt (or, if the Debt has been or
would thereby be paid in full, refunded to Borrower), and the provisions of the
Loan Documents immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of the execution of any
new document, so as to comply with applicable law, but so as to permit the
recovery of the fullest amount otherwise called for thereunder. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Debt does not
exceed the maximum lawful rate from time to time in effect and applicable to the
Debt for so long as the Debt is outstanding. Notwithstanding anything to the
contrary contained in any Loan Document, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
10.18 CONFLICT; CONSTRUCTION OF DOCUMENTS. In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that each is represented by separate counsel in connection with the
negotiation and drafting of the Loan Documents and that the Loan Documents shall
not be subject to the principle of construing their meaning against the party
that drafted them.
10.19 NO THIRD PARTY BENEFICIARIES. The Loan Documents are solely for
the benefit of Lender and Borrower and nothing contained in any Loan Document
shall be deemed to confer upon anyone other than the Lender and Borrower any
right to insist upon or to enforce the performance or observance of any of the
obligations contained therein.
10.20 YIELD MAINTENANCE PREMIUM. Borrower acknowledges that (a) Lender
is making the Loan in consideration of the receipt by Lender of all interest and
other benefits intended to be conferred by the Loan Documents and (b) if
payments of Principal are made to Lender prior to the Stated Maturity Date, for
any reason whatsoever, whether voluntary, as a result of Lender's acceleration
of the Loan after an Event of Default, by operation of law or otherwise, Lender
will not receive all such interest and other benefits and may, in addition,
incur costs. For these reasons, and to induce Lender to make the Loan, Borrower
agrees that, except as expressly provided in Section 2.2.3, Section 2.3.2,
Section 2.3.4 and Section 7.4.2 of this Agreement, all prepayments, if any,
whether voluntary or involuntary, will be accompanied by the Yield Maintenance
Premium. Such Yield Maintenance Premium shall be required whether payment is
made by Borrower, by a Person on behalf of Borrower, or by the purchaser at any
foreclosure sale, and may be included in any bid by Lender at such sale.
Borrower further
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acknowledges that (A) it is knowledgeable real estate developers and/or
investors; (B) it fully understands the effect of the provisions of this Section
10.20, as well as the other provisions of the Loan Documents; (C) the making of
the Loan by Lender at the Interest Rate and other terms set forth in the Loan
Documents are sufficient consideration for Borrower's obligation to pay a Yield
Maintenance Premium (if required); and (D) Lender would not make the Loan on the
terms set forth herein without the inclusion of such provisions. Borrower also
acknowledges that the provisions of this Agreement limiting the right of
prepayment and providing for the payment of the Yield Maintenance Premium and
other charges specified herein were independently negotiated and bargained for,
and constitute a specific material part of the consideration given by Borrower
to Lender for the making of the Loan except as expressly permitted hereunder.
10.21 ASSIGNMENT. The Loan, the Note, the Loan Documents and/or
Lender's rights, title, obligations and interests therein may be assigned by
Lender and any of its successors and assigns to any Person at any time in its
discretion, in whole or in part, whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise. Upon such assignment, all
references to Lender in this Loan Agreement and in any Loan Document shall be
deemed to refer to such assignee or successor in interest and such assignee or
successor in interest shall thereafter stand in the place of Lender. Borrower
may not assign its rights, title, interests or obligations under this Loan
Agreement or under any of the Loan Documents.
10.22 BORROWER'S DESIGNEE. Borrower hereby authorizes, designates and
directs Borrower's Designee to give Lender directions of any kind, to take the
actions or make such deliveries specified herein to be taken or delivered by
Borrower's Designee (including under Sections 5.11, 6.3 and 9.1, and including
with respect to any requisitions from any reserve accounts under Article 3) and
to give and receive notices of any kind on behalf of Borrower under this
Agreement or any of the other Loan Documents. Any notice given by Lender to
Borrower's Designee shall be deemed to have been given to each and every
Borrower.
10.23 Intentionally Omitted.
10.24 SET-OFF. IN ADDITION TO ANY RIGHTS AND REMEDIES OF LENDER
PROVIDED BY THIS LOAN AGREEMENT AND BY LAW, LENDER SHALL HAVE THE RIGHT, WITHOUT
PRIOR NOTICE TO BORROWER, ANY SUCH NOTICE BEING EXPRESSLY WAIVED BY BORROWER TO
THE EXTENT PERMITTED BY APPLICABLE LAW, UPON ANY AMOUNT BECOMING DUE AND PAYABLE
BY BORROWER HEREUNDER (WHETHER AT THE STATED MATURITY, BY ACCELERATION OR
OTHERWISE) TO SET-OFF AND APPROPRIATE AND APPLY AGAINST SUCH AMOUNT ANY AND ALL
DEPOSITS (GENERAL OR SPECIAL, TIME OR DEMAND, PROVISIONAL OR FINAL), IN ANY
CURRENCY, AND ANY OTHER CREDITS, INDEBTEDNESS OR CLAIMS, IN ANY CURRENCY, IN
EACH CASE WHETHER DIRECT OR INDIRECT, ABSOLUTE OR CONTINGENT, MATURED OR
UNMATURED, AT ANY TIME HELD OR OWING BY LENDER OR ANY AFFILIATE THEREOF TO OR
FOR THE CREDIT OR THE ACCOUNT OF BORROWER. LENDER AGREES PROMPTLY TO NOTIFY
BORROWER AFTER ANY SUCH SET-OFF AND APPLICATION MADE BY LENDER; PROVIDED THAT
THE FAILURE TO GIVE SUCH NOTICE SHALL NOT AFFECT THE VALIDITY OF SUCH SET-OFF
AND APPLICATION.
10.25 Intentionally Omitted.
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10.26 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE
COUNTERPARTS FOLLOW ON NEXT PAGE(S).]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
BEHRINGER HARVARD RIVERVIEW, LLC, a
Delaware limited liability company
By:_____________________________________
Xxxxxx X. Xxxxxxx, III, Secretary
LENDER:
CITIGROUP GLOBAL MARKETS REALTY CORP., a
New York corporation
By:_____________________________________
Name: _______________________________
Title: ______________________________
