AMENDED AND RESTATED LOAN AGREEMENT by and among THE ENTITIES SIGNATORY TO THIS AGREEMENT, collectively, as Borrower, and GRAMERCY WAREHOUSE FUNDING I LLC, as Lender, $90,286,551 Floating Rate Mortgage Loan Dated: as of April 29, 2009
Exhibit
10.144
AMENDED
AND RESTATED
by and
among
THE
ENTITIES SIGNATORY TO THIS AGREEMENT,
collectively,
as Borrower,
and
GRAMERCY
WAREHOUSE FUNDING I LLC,
as
Lender,
$90,286,551
Floating Rate Mortgage Loan
Dated: as
of April 29, 2009
TABLE
OF CONTENTS
Page
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ARTICLE I DEFINITIONS |
6
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ARTICLE
II LOAN TERMS; REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BORROWER
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28
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Section
2.01.The Loan
|
28
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Section 9.04.Transfer of Projects; Loan Assumption |
83
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ii
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Section 17.09.Overriding Provision |
105
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Section 18.06.Duplicate Originals |
106
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iii
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EXHIBITS
|
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EXHIBIT
A
|
Description
of Projects
|
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EXHIBIT
B
|
Summary
of Reserves
|
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EXHIBIT
B-1
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Square
Footages of the Projects
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EXHIBIT
D
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Initial
Allocated Loan Amount
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EXHIBIT
E
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Environmental
Reports
|
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EXHIBIT
F
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List
of Permitted Fund Managers
|
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EXHIBIT
G
|
Schedule
of Liabilities (Section 2.02(g)(xii))
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EXHIBIT
H
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Schedule
of Outstanding Work Obligations under Space Leases (Section
2.05(o)(iv))
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EXHIBIT
I
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Schedule
of Collective Bargaining Agreements (Section 2.02(u))
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EXHIBIT
J
|
Form
of Cash Flow Statement (Section 2.09(c))
|
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EXHIBIT
K
|
Organizational
Chart
|
iv
AMENDED
AND RESTATED
This
AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”) is made
as of April 29, 2009, by and between THE ENTITIES SIGNATORY TO THIS AGREEMENT,
each of which is a Delaware limited liability company and each of which has its
chief executive office at c/o Xxxx-Xxxx Realty Corporation, 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxxxx X. Xxxxx (collectively,
hereinafter referred to as “Borrower”), jointly
and severally, and GRAMERCY WAREHOUSE FUNDING I LLC, a Delaware limited
liability company, having an address at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxx Xxxxx (hereinafter referred
to as “Lender”).
W I T N E S S E T H
:
WHEREAS, on May 9, 2006 (the
“Original
Date”), Lender and Borrower entered into that certain Loan Agreement,
dated the Original Date (the “Original Loan Agreement”) pursuant
to which Lender made a loan (the “Loan”) in the
principal amount of $90,286,551 (the “Loan Amount”) to
Borrower evidenced by a Note made by Borrower to Lender also dated the Original
Date for an original principal amount equal to the Loan Amount (the “Original Note”) and
secured by, among other things, those certain Mortgages, Assignments of Leases
and Rents, Security Agreements and Fixture Filings, by Borrower for the benefit
of Lender (collectively, the “Mortgages”), each
dated as of the Original Date (the Original Loan Agreement together with the
Mortgages, the Original Note, the Guaranty (as defined in the Original Loan
Agreement) and the other documents executed in connection therewith, being
collectively referred to as the “Original Loan Documents”);
WHEREAS, the maturity of the
Loan and the Note has previously been extended for a period of one (1) year from
May 9, 2008 to May 9, 2009; and
WHEREAS, Borrower and Lender
desire to amend the Original Loan Agreement to reflect, among other things, a
further extension of the maturity of the Loan and the amendment of certain terms
of the Loan intended to apply during the extension, all as more particularly set
forth herein; and
WHEREAS, Borrower and Lender
intend these Recitals to be a material part of this Agreement;
NOW THEREFORE, in
consideration of the extension of the maturity of the Loan and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
5
ARTICLE
I
DEFINITIONS
Certain
Definitions.
For all
purposes of this Agreement, except as otherwise expressly provided or unless the
context clearly indicates a contrary intent:
(i) the
capitalized terms defined in this Article I shall have the meanings assigned to
them herein, and include the plural as well as the singular;
(ii) any
capitalized terms used but not defined in this Article I shall have the meanings
assigned to them in the Note;
(iii) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with GAAP; and
(iv) the
words “herein”, “hereof”, and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
section or other subdivision.
“401K Plan Assets”
shall mean only those specific assets that are required to be transferred, and
are actually so transferred, by Borrower, in its capacity as an employer, to a
separate trust account maintained for the benefit of its employees that are
participating in a so-called 401K plan, by reason of the deferral of
compensation otherwise payable to such employees participating in such
plan.
“75 Agreement” shall
mean that certain agreement between Lender and the JV Member relating to the
payment to Lender of certain distributions of cash flow from the 75
Property.
“75 Property” shall
mean the property owned by 75 Xxxxxxxxxx SPE LLC and located at 00 Xxxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxxxx.
“Acceptable Substitute
Guarantor” shall have the meaning ascribed thereto in the definition of
Permitted Entity Transfers.
“ACH” shall have the
meaning set forth in Section 5.01 hereof.
“Actual Net Cash Flow”
shall mean Net Operating Income from all of the Projects, computed on a trailing
twelve (12)–month basis by Borrower subject to the review and approval of Lender
in its reasonable discretion.
“Affiliate” of any
specified Person shall mean any other Person directly or indirectly Controlling
or Controlled by or under direct or indirect common Control with such specified
Person.
6
“Allocated Loan
Amount” shall mean the portion of the Loan Amount allocated, for purposes
of a Release, to each Project, as set forth on Exhibit D hereto, as
the same shall be increased from time to time by the pro rata share (determined
in the manner set forth in the definition of Principal Amount) of the amounts
added to the Principal Amount on account of CD Interest and Shortfall
Interest. For the avoidance of doubt, each Allocated Loan Amount
shall be increased once only, in accordance with this definition, by reason of
any addition thereto of the pro rata share of the amounts added to the Principal
Amount on account of any particular items of CD Interest and Shortfall Interest,
notwithstanding the context of any provision of this Agreement that makes
reference to Allocated Loan Amounts that also provides for such
increase.
“Annual Budget” shall
mean an annual budget submitted by Borrower to Lender in accordance with the
terms of Section 2.09 hereof.
“Appraisal” shall mean
the appraisal(s) of the Projects and all supplemental reports or updates thereto
previously delivered to Lender in connection with the Loan, and any new or
updated appraisal(s) prepared after the Original Date pursuant to the terms
hereof, all of which shall conform to the standards set forth in the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as
amended.
“Approved Annual
Budget” shall mean each Annual Budget approved by Lender in accordance
with terms hereof.
“Approved Management
Agreement” shall mean that certain Leasing and Management Agreement
(a/k/a Property Management Agreement), dated as of May 9, 2006, between
Borrower, among others, as Owners, and The Xxxx Company, L.L.C., as
Manager.
“Approved Manager
Standard” shall mean the standard of business operations, practices and
procedures customarily employed by entities (together with their Affiliates)
having a senior executive with at least seven (7) years’ experience in the
management of commercial office buildings which manage not less than five (5)
properties having an aggregate leasable square footage of not less than ten (10)
million leasable square feet.
“Approved Payables”
shall have the meaning set forth in Section 5.05(d) hereof.
“Architect” shall have
the meaning set forth in Section 3.04(b)(i) hereof.
“Assignment” shall
mean, collectively, the Assignments of Leases and Rents and Security Deposits
dated as of the Original Date relating to the Projects given by Borrower to
Lender.
“Available Cash” shall
have the meaning set forth in the Note.
“Bank” shall mean the
bank, trust company, savings and loan association or savings bank designated by
Lender, in its sole and absolute discretion, in which the Central Account shall
be located.
“Bankruptcy Code”
shall mean 11 U.S.C. §101 et seq., as amended from time to time.
7
“Basic Carrying Costs”
shall mean the sum of the following costs associated with the
Projects: (a) Impositions and (b) insurance premiums which, for the
purposes of this Agreement, shall be equal to the product of (i) $0.25 and (ii)
the annual amount of the gross rentable square footage of each Project, as set
forth on Exhibit
B-1. Lender reserves the right to adjust the amount of the
annual insurance premiums included in the Basic Carrying Costs if, in Lender’s
reasonable judgment, after prior notice to and discussion with Borrower, the
amount being escrowed would be insufficient to purchase the insurance coverage
on the Projects that is required under this Agreement.
“Basic Carrying Costs Escrow
Account” shall mean the Escrow Account maintained pursuant to Section
5.06 hereof.
“Basic Carrying Costs Monthly
Installment” shall mean Lender’s estimate of one-twelfth (1/12th) of the
annual amount for Basic Carrying Costs. “Basic Carrying Costs Monthly
Installment” shall also include, if required by Lender, a sum of money which,
together with such monthly installments, will be sufficient to make the payment
of each such Basic Carrying Cost at least thirty (30) days prior to the date
initially due. Should such Basic Carrying Costs not be ascertainable
at the time any monthly deposit is required to be made, the Basic Carrying Costs
Monthly Installments shall be determined by Lender in its reasonable discretion
on the basis of the aggregate Basic Carrying Costs for the prior Fiscal Year or
month or the prior payment period for such cost. As soon as the Basic
Carrying Costs are fixed for the then current Fiscal Year, month or period, the
next ensuing Basic Carrying Costs Monthly Installment shall be adjusted to
reflect any deficiency or surplus in prior monthly payments. If at
any time during the term of the Loan Lender reasonably determines that there
will be insufficient funds in the Basic Carrying Costs Escrow Account to make
payments when they become due and payable, Lender shall have the right to adjust
the Basic Carrying Costs Monthly Installment such that there will be sufficient
funds to make such payments.
“Basic Carrying Costs
Sub-Account” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 into which the Basic Carrying Costs Monthly
Installment shall be deposited.
“Borrower” shall mean
Borrower named herein and any successor to the obligations of
Borrower.
“Budget” shall have
the meaning set forth in Section 5.07 hereof.
“Business Day” shall
mean any day other than (a) a Saturday or Sunday, or (b) a day on which banking
and savings and loan institutions in the State of New York are authorized or
obligated by law or executive order to be closed, or at any time during which
the Loan is an asset of a Secondary Market Transaction, the cities, states
and/or commonwealths used in the comparable definition of “Business Day” in the
Secondary Market Transaction documents.
“By-Laws” shall have
the meaning set forth in Section 2.12.
8
“Capital Expenditures”
shall mean for any period, the amount expended for items capitalized under GAAP
including expenditures for building improvements or major repairs, leasing
commissions and tenant improvements.
“Cash Collateral
Sub-Account” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 hereof into which all remaining Available
Cash shall be deposited pursuant to Section 5.05(a)(vi) hereof.
“Cash Collateral Escrow
Account” shall mean the Escrow Account maintained pursuant to Section
5.11 hereof.
“Cash Expenses” shall
mean for any period, the Operating Expenses for the Projects as set forth in an
Approved Annual Budget to the extent that such expenses are actually incurred or
to be incurred by Borrower minus payments into the Basic Carrying Costs
Sub-Account, the Debt Service Payment Sub-Account and the Recurring Replacement
Reserve Sub-Account.
“CCEA Disbursements”
shall have the meaning set forth in Section 5.11(b).
“Central Account”
shall mean an Eligible Account, maintained at the Bank, in the name of Lender or
its successors or assigns (as secured party) as may be designated by
Lender.
“Clearing Account”
shall mean, collectively, the Eligible Accounts, maintained at the Clearing
Bank, in the name of Lender or its successors or assigns (as secured party) as
may be designated by Lender.
“Clearing Account
Agreement” shall mean collectively, those certain Clearing Account
Agreements by and among Borrower, Lender and Clearing Bank dated as of the
Original Date.
“Clearing Bank” shall
mean Bank of America.
“Closing Date” shall
mean the date of the Original Note.
“Code” shall mean the
Internal Revenue Code of 1986, as amended and as it may be further amended from
time to time, any successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto.
“Condemnation
Proceeds” shall mean all of the proceeds in respect of any Taking or
purchase in lieu thereof.
“Condominium” shall
have the meaning set forth in Section 2.12.
“Condominium Act”
shall have the meaning set forth in Section 2.12.
“Contractual
Obligation” shall mean, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which
such Person is a party or by which it or any of the property owned by it is
bound.
9
“Control” means, when
used with respect to any specific Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person whether through ownership of voting securities,
beneficial interests, by contract or otherwise. The definition is to
be construed to apply equally to variations of the word “Control” including
“Controlled,” “Controlling” or “Controlled by”.
“Creditor” shall have
the meaning set forth in Section 2.04(b).
“Credit Tenant” shall
mean a tenant under a Space Lease which has a long term unsecured senior debt
rating of (a) BBB- or better as issued by Standard & Poor’s or (b) Baa3 or
better as issued by Xxxxx’x.
“Current Month” shall
mean each Interest Accrual Period.
“Debt” shall mean the
outstanding principal amount set forth in, and evidenced by, this Agreement and
the Note together with all interest accrued and unpaid thereon and all other
sums due to Lender in respect of the Loan under the Note, this Agreement, the
Mortgages or any other Loan Document, including, but not limited to Shortfall
Interest, CD Interest and Participation Interest (as defined in the
Note).
“Debtor” shall have
the meaning set forth in Section 2.04(b).
“Debt Service” shall
mean the amount of interest and principal payments due and payable in accordance
with the Note during an applicable period.
“Debt Service Coverage
Ratio” shall mean the quotient obtained by dividing (a) Available
Cash on any Payment Date by (b) the Debt Service due on said date.
“Debt Service Payment
Sub-Account” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 hereof into which the Required Debt Service
Payment shall be deposited.
“Declaration” shall
have the meaning set forth in Section 2.12.
“Default” shall mean
any Event of Default or event which would constitute an Event of Default if all
requirements in connection therewith for the giving of notice, the lapse of
time, and the happening of any further condition, event or act, had been
satisfied.
“Default Rate” shall
mean the lesser of (a) the highest rate allowable at law and (b) three percent
(3%) above the interest rate set forth in the Note.
“Default Rate
Interest” shall mean, to the extent the Default Rate becomes applicable,
interest in excess of the interest which would have accrued on (a) the principal
amount of the Loan which is outstanding from time to time and (b) any accrued
but unpaid interest, if the Default Rate was not applicable.
“Development Laws”
shall mean all applicable subdivision, zoning, environmental protection,
wetlands protection, or land use laws or ordinances, and any and all applicable
rules and regulations of any Governmental Authority promulgated thereunder or
related thereto.
10
“Disclosure Document”
shall have the meaning set forth in Section 17.02 hereof.
“Eligible Account”
shall mean a segregated account which is either (a) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the long term unsecured debt obligations of which are rated by each of
the Rating Agencies (or, if not rated by Fitch, Inc. (“Fitch”), otherwise
acceptable to Fitch, as confirmed in writing that such account would not, in and
of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to any certificates issued in connection with a
Secondary Market Transaction) in its highest rating category at all times (or,
in the case of the Basic Carrying Costs Escrow Account, the long term unsecured
debt obligations of which are rated at least “AA” (or its
equivalent)) by each of the Rating Agencies (or, if not rated by Fitch,
otherwise acceptable to Fitch, as confirmed in writing that such account would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any certificates issued in connection with a
Secondary Market Transaction) or, if the funds in such account are to be held in
such account for less than thirty (30) days, the short term obligations of which
are rated by each of the Rating Agencies (or, if not rated by Fitch, otherwise
acceptable to Fitch, as confirmed in writing that such account would not, in and
of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to any certificates issued in connection with a
Secondary Market Transaction) in its highest rating category at all times or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution is
subject to regulations substantially similar to 12 C.F.R. § 9.10(b), having in
either case a combined capital and surplus of at least $100,000,000 and subject
to supervision or examination by federal and state authority, or otherwise
acceptable (as evidenced by a written confirmation from each Rating Agency that
such account would not, in and of itself, cause a downgrade, qualification or
withdrawal of the then current ratings assigned to any certificates issued in
connection with a Secondary Market Transaction) to each Rating Agency, which may
be an account maintained by Lender or its agents. Eligible Accounts
shall bear interest (other than the Basic Carrying Costs Sub-Account and Basic
Carrying Costs Escrow Account) 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. The title of each Eligible Account shall indicate that the
funds held therein are held in trust for the uses and purposes set forth
herein.
“Eligibility
Requirements” means, with respect to any Person, that such Person (i) has
total assets (in name or under management) in excess of $600,000,000 and (except
with respect to a pension advisory firm or similar fiduciary) capital/statutory
surplus or shareholder’s equity of $250,000,000 and (ii) is regularly engaged in
the business of making or owning commercial real estate loans (including
mezzanine loans) or operating commercial properties.
“Engineer” shall have
the meaning set forth in Section 3.04(b)(i) hereof.
11
“Environmental Indemnity
Agreement” shall mean that certain Hazardous Substances Indemnity
Agreement dated as of the Original Date by and among Borrower and Guarantor in
favor of Lender.
“Environmental Report”
shall mean the environmental audit report(s) for the Projects and any
supplements or updates thereto, previously delivered to Lender in connection
with the Loan, which documents are set forth on Exhibit E attached
hereto.
“Environmental
Statute” shall mean any applicable local, state or federal
law, rule or regulation pertaining to environmental regulation, contamination or
clean up, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 X.X.X. §0000 et seq. and 40
CFR §302.1 et seq.), the Resource Conservation and Recovery Act of 1976 (42
X.X.X. §0000 et seq.), the Federal Water Pollution Control Act (33 X.X.X. §0000
et seq. and 40 CFR §116.1 et seq.), those relating to lead based
paint, and the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.),
and the regulations promulgated pursuant to said laws, all as
amended.
“Equipment” shall have
the meaning set forth in each of the Mortgages.
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated thereunder. Section references to
ERISA are to ERISA, as in effect at the date of this Agreement and, as of the
relevant date, any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
“ERISA Affiliate”
shall mean any corporation or trade or business that is a member of any group of
organizations (a) described in Section 414(b) or (c) of the Code of which
Borrower or Guarantor is a member and (b) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Borrower or
Guarantor is a member.
“Escrow Account” shall
mean each of the Basic Carrying Costs Escrow Account, the Recurring Replacement
Reserve Escrow Account, the Reletting Reserve Escrow Account, the Accrued Lease
Liability Escrow Account and the Cash Collateral Escrow Account, each of which
shall be an Eligible Account or book entry sub-account of an Eligible
Account.
“Event of Default”
shall have the meaning set forth in Section 13.01 hereof.
“Exchange Act” shall
have the meaning set forth in Section 17.02 hereof.
“Expense Schedule”
shall have the meaning set forth in Section 5.05(d) hereof.
“Extraordinary
Expense” shall mean an extraordinary operating expense or capital expense
(i.e., an amount in excess of $50,000 for an individual project and an amount in
excess of $150,000 in the aggregate) not set forth in the Approved Annual Budget
or allotted for in the Recurring Replacement Reserve Sub-Account.
12
“First Interest Accrual
Period” shall have the meaning set forth in the Note.
“Fiscal Operating
Month” shall mean the period that commences on an Expense Schedule
Submission Date and ends on the day immediately preceding the succeeding Expense
Schedule Submission Date.
“Fiscal Year” shall
mean the twelve (12) month period commencing on January 1 and ending on December
31 during each year of the term of the Loan, or such other fiscal year of
Borrower as Borrower may select from time to time with the prior written consent
of Lender, which shall not be unreasonably withheld, conditioned or
delayed.
“Fixtures” shall have
the meaning set forth in the Mortgages.
“GAAP” shall mean
generally accepted accounting principles in effect from time to time in the
United States of America, consistently applied.
“Governmental
Authority” shall mean, with respect to any Person, any U.S. federal or
State government or other political subdivision thereof and any entity,
including any regulatory or administrative authority or court, exercising
executive, legislative, judicial, regulatory or administrative or quasi
administrative functions of or pertaining to government, and any arbitration
board or tribunal, in each case having jurisdiction over such applicable Person
or such Person’s property and any stock exchange on which shares of capital
stock of such Person are listed or admitted for trading.
“Guarantor” shall mean
(i) Xxxx-Xxxx Realty L.P., (ii) only with respect to the period of time from the
Original Date until but not including the date of this Agreement, XX Xxxxx
Operating Partnership, L.P., and (iii) any other Person hereafter guaranteeing,
in whole or in part, the obligations of Borrower under the Loan
Documents.
“Guaranty” shall mean
the guaranties executed by Guarantor with respect to the Loan, including that
certain Guaranty made by Guarantor and the Environmental Indemnity Agreement, as
the same have been reaffirmed and modified by that certain Reaffirmation of
Guarantees, dated as of the date hereof, made by Xxxx-Xxxx Realty, L.P., in
favor of Lender, and, if applicable, the guaranties executed and delivered by
any successor guarantor, which guaranties shall be in the form of the Guaranty
executed and delivered on the Original Date, as heretofore modified, mutatis
mutandis.
“Hazardous Material”
shall mean all hazardous, toxic or harmful substances, wastes,
materials, pollutants or contaminants (including, without limitation, asbestos,
lead based paint, polychlorinated biphenyls, petroleum products, flammable
explosives, radioactive materials, infectious substances or raw materials which
include hazardous constituents) or any other substances or materials which are
included under or regulated by Environmental Statutes.
“Impositions” shall
mean all taxes (including, without limitation, all real estate, ad valorem,
sales (including those imposed on lease rentals), use, single business, gross
receipts, value added, intangible, transaction, privilege or license or similar
taxes), assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of the
Loan), ground rents, water, sewer or other rents and charges, excises, levies,
fees (including, without limitation, license, permit, inspection, authorization
and similar fees), and all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character in respect of the Projects and/or any Rent (including all
interest and penalties thereon), which at any time prior to, during or in
respect of the term hereof may be assessed or imposed on or in respect of or be
a lien upon (a) Borrower (including, without limitation, all franchise, single
business or other taxes imposed on Borrower for the privilege of doing business
in the jurisdictions in which the Projects or any other collateral delivered or
pledged to Lender in connection with the Loan are located) or Lender, (b) the
Projects or any part thereof or any Rents therefrom or any estate, right, title
or interest therein, or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Projects, or any
part thereof, or the leasing or use of the Projects, or any part thereof, or the
acquisition or financing of the acquisition of the Projects, or any part
thereof, by Borrower.
13
“Improvements” shall
have the meaning set forth in the Mortgages.
“Indemnified Parties”
shall have the meaning set forth in Section 12.01 hereof.
“Independent” shall
mean, when used with respect to any Person, a Person who (a) is in fact
independent, (b) does not have any direct financial interest or any material
indirect financial interest in Borrower, or in any Affiliate of Borrower or any
constituent partner, shareholder, member or beneficiary of Borrower, (c) is not
connected with Borrower or any Affiliate of Borrower or any constituent partner,
shareholder, member or beneficiary of Borrower as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions and (d) is not a member of the immediate family of a Person defined in
(b) or (c) above. Whenever it is herein provided that any Independent
Person’s opinion or certificate shall be provided, such opinion or certificate
shall state that the Person executing the same has read this definition and is
Independent within the meaning hereof.
“Initial Engineering
Deposit” shall equal the amount set forth on Exhibit B attached
hereto and made a part hereof.
“Initial Reletting Reserve
Deposit” shall equal the amount set forth on Exhibit B attached
hereto and made a part hereof.
“Insolvency Opinion”
shall have the meaning set forth in Section 2.02(g)(xix) hereof.
“Institutional Lender”
shall mean any of the following Persons: (a) any bank, savings and
loan association, savings institution, trust company or national banking
association, acting for its own account or in a fiduciary capacity, (b) any
charitable foundation, (c) any insurance company or pension and/or annuity
company, (d) any fraternal benefit society, (e) any pension, retirement or
profit sharing trust or fund within the meaning of Title I of ERISA or for which
any bank, trust company, national banking association or investment adviser
registered under the Investment Advisers Act of 1940, as amended, is acting as
trustee or agent, (f) any investment company or business development company, as
defined in the Investment Company Act of 1940, as amended, (g) any small
business investment company licensed under the Small Business Investment Act of
1958, as amended, (h) any broker or dealer registered under the Securities
Exchange Act of 1934, or any investment adviser registered under the Investment
Adviser Act of 1940, as amended, (i) any government, any public employees’
pension or retirement system, or any other government agency supervising the
investment of public funds, or (j) any other entity all of the equity owners of
which are Institutional Lenders; provided that each of said Persons shall have
net assets in excess of $1,000,000,000 and a net worth in excess of
$500,000,000, be in the business of making commercial mortgage loans, secured by
properties of like type, size and value as the Projects and have a long term
credit rating which is not less than “BBB-” (or its
equivalent) from the Rating Agency.
14
“Insurance Proceeds”
shall mean all of the proceeds received under the insurance policies required to
be maintained by Borrower pursuant to Article III hereof.
“Insurance
Requirements” shall mean all terms of any insurance policy required by
this Agreement, all requirements of the issuer of any such policy, and all
regulations and then current standards applicable to or affecting each Project
or any use or condition thereof, which may, at any time, be recommended by the
Board of Fire Underwriters, if any, having jurisdiction over any Project, or
such other Person exercising similar functions.
“Interest Accrual
Period” shall have the meaning set forth in the Note.
“Interest Rate” shall
have the meaning set forth in the Note.
“Intra-Obligor Loan”
and “Intra-Obligor
Loans” shall have the meanings set forth in Section 2.04(b).
“Intra-Obligor Loan
Amount” shall have the meaning set forth in Section 2.04(b).
“Issuer” shall have
the meaning set forth in Section 17.03 hereof.
“Issuer Group” shall
have the meaning set forth in Section 17.03 hereof.
“JV Member” shall mean
Xxxx-Xxxxx-Xxxx LLC, a Delaware limited liability company. Lender
acknowledges that the name of JV Member may be changed, provided that written
notice of such change is given to Lender within ten (10) Business Days after
such change is effected.
“Late Charge” shall
have the meaning set forth in Section 13.09 hereof.
“Lease Termination
Payments” shall mean all funds received by Borrower from tenants in
connection with the cancellation of any Leases, including, but not limited to,
any cancellation fees, penalties, tenant improvements, leasing commissions or
other charges.
“Leases” shall have
the meaning set forth in the Mortgages.
“Legal Requirement”
shall mean as to any Person, the certificate of incorporation, by laws,
certificate of limited partnership, agreement of limited partnership or other
organization or governing documents of such Person, and any law, statute, order,
ordinance, judgment, decree, injunction, treaty, rule or regulation (including,
without limitation, Environmental Statutes, Development Laws and Use
Requirements) or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
15
“Lender” shall mean
the Lender named herein and its successors or assigns.
“Liabilities” shall
have the meaning set forth in Section 12.01 hereof.
“LIBOR Margin” shall
have the meaning set forth in the Note.
“LIBOR Rate” shall
have the meaning set forth in the Note.
“Loan” shall have the
meaning set forth in the Recitals hereto.
“Loan Amount” shall
have the meaning set forth in the Recitals hereto.
“Loan Documents” shall
mean this Agreement, the Note, the Mortgages, the Clearing Account Agreement,
the Guaranty, the Environmental Indemnity Agreement, the Assignment and any and
all other agreements, instruments, certificates or documents executed and
delivered by Borrower or any Affiliate of Borrower in connection with the
Loan.
“Loan Year” shall mean
each 365 day period (or 366 day period if the month of February in a leap year
is included) commencing on the first day of the month following the Closing Date
(provided,
however, that the first Loan Year shall also include the period from the
Closing Date to the end of the month in which the Closing Date
occurs).
“Lockout Date” shall
mean November 9, 2006.
“Loss Proceeds” shall
mean, collectively, all Insurance Proceeds and all Condemnation
Proceeds.
“Major Space Lease”
shall mean any Space Lease of a tenant and/or Affiliate of such tenant where
such tenant and/or such Affiliate (a) leases, in the aggregate, the greater of
(y) 15,000 gross rentable square feet of space in a Project, and (z) ten (10%)
of the gross rentable square feet of space in a Project, or (b) is an Affiliate
of Borrower or Guarantor.
“Management Agreement”
shall have the meaning set forth in Section 7.02 hereof.
“Manager” shall mean
the Person(s), other than Borrower, which manages one or more Projects on behalf
of Borrower. Since the Original Date, the Projects have been managed
by The Xxxx Company LLC, an Affiliate of MCRLP.
“Manager
Certification” shall have the meaning set forth in Section 2.09(d)
hereof.
16
“Material Adverse
Effect” shall mean any event or condition that has a material adverse
effect on (a) the Projects, unless the context otherwise requires, considered in
the aggregate, (b) the business, prospects, profits, management, operations or
condition (financial or otherwise) of Borrower, unless the context otherwise
requires, considered in the aggregate, (c) the enforceability, validity and, if
applicable, perfection or priority of the lien of any Loan Document or (d) the
ability of Borrower to perform any material obligations under any Loan
Document.
“Maturity”, when used
with respect to the Note, shall mean the Maturity Date set forth in the Note or
such other date pursuant to the Note on which the final payment of principal,
and premium, if any, on the Note becomes due and payable as therein or herein
provided, whether at Stated Maturity or by declaration of acceleration, or
otherwise.
“Maturity Date” shall
mean the Maturity Date set forth in the Note.
“MCC” shall mean
Xxxx-Xxxx Realty Corporation, a Maryland corporation.
“MCRLP” shall mean
Xxxx-Xxxx, X.X., a Delaware limited partnership.
“Mortgage” shall mean
one of, and “Mortgages” shall
mean, collectively, the Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filings dated as of the Original Date from each Borrower
encumbering the Project that such Borrower owns.
“Multiemployer Plan”
shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to
which contributions have been, or were required to have been, made by Borrower,
Guarantor or any ERISA Affiliate and which is covered by Title IV of
ERISA.
“Net Capital
Expenditures” shall mean for any period the amount by which Capital
Expenditures during such period exceeds reimbursements for such items during
such period from any fund established pursuant to the Loan
Documents.
“Net Operating Income”
shall mean in each Fiscal Year or portion thereof during the term hereof,
Operating Income less Operating Expenses.
“Net Sales Proceeds”
shall mean , with respect to any Project sold (or to be sold), (a) the purchase
price for such Project actually received by the Borrower or the Estimated Sale
Price (as defined in the Note), as the case may be, less (b) the sum of all
reasonable and customary costs and expenses incurred (or estimated to be
incurred) by Borrower, including, without limitation, attorneys’ fees and
disbursements and brokerage fees, if applicable as such costs and expenses are
evidenced, in the
case of an actual sale, by a settlement statement signed by the applicable
Borrower and the purchaser of such Project and/or by separate paid invoices, and
which costs and expenses shall not exceed, in the aggregate, 6% of the Estimated
Sale Price or the actual purchase price for such Project, as the case may
be.
“Note” shall mean the
Original Note identified in the recitals hereto, as the same has been amended
and restated concurrently herewith.
17
“OFAC List” means the
list of specially designated nationals and blocked persons subject to financial
sanctions that is maintained by the U.S. Treasury Department, Office of Foreign
Assets Control and accessible through the internet website
xxx.xxxxx.xxx/xxxx/x00xxx.xxx.
“Officer’s
Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed on behalf of Borrower by an authorized representative of
Borrower which states that the items set forth in such certificate are true,
accurate and complete in all material respects.
“Operating Expenses”
shall mean, in each Fiscal Year or portion thereof during the term hereof or
other period of determination, all expenses directly attributable to the
operation, repair and/or maintenance of the Projects constituting security for
the Debt including, without limitation, (a) electric, gas, oil, water, sewer or
other utility services, (b) asset and property management fees and construction
management fees which are due and to be paid to an Affiliate of Borrower, at the
rates in effect pursuant to the Approved Management Agreement, (c) leasing fees
paid to an Affiliate of Borrower, at the rates in effect pursuant to the
Approved Management Agreement, (d) costs attributable to the operation, repair
and maintenance of the systems for heating, ventilating and air conditioning the
Improvements and actually paid for by Borrower and (e) the reasonable fees
charged by the Bank in accordance with the Deposit Account Agreement, it being
agreed by Borrower that the fees currently imposed by the Bank thereunder are
reasonable. Operating Expenses shall not include Impositions,
insurance premiums, interest, principal and premium, if any, due under the Note
or otherwise in connection with the Debt, income taxes, any capital improvement
costs, any non-cash charge or expense such as depreciation or amortization or
any item of expense otherwise includable in Operating Expenses which is paid
directly by any tenant except real estate taxes paid directly to any taxing
authority by any tenant. In the event that the Manager is required,
due to an emergency or other circumstances, to advance funds on behalf of
Borrower for the payment of costs and expenses which, if paid by Borrower, would
constitute Operating Expenses, then the reimbursement by Borrower of the Manager
for such costs and expenses paid by the Manager on behalf of Borrower shall
constitute Operating Expenses.
“Operating Income”
shall mean, in each Fiscal Year or portion thereof during the term hereof or
other period of determination, all revenue derived by Borrower arising from the
Projects, including, without limitation, rental revenues (whether denominated as
basic rent, additional rent, escalation payments, electrical payments or
otherwise) and other fees and charges payable pursuant to Leases or otherwise in
connection with the Projects, and business interruption, rent or other similar
insurance proceeds. Operating Income shall not include (a) Insurance
Proceeds (other than proceeds of rent, business interruption or other similar
insurance allocable to the applicable period) and Condemnation Proceeds (other
than Condemnation Proceeds arising from a temporary taking or the use and
occupancy of all or part of a Project allocable to the applicable period), or
interest accrued on such Condemnation Proceeds, (b) proceeds of any financing,
(c) proceeds of any sale, exchange or transfer of a Project or any part thereof
or interest therein, (d) capital contributions or loans to Borrower or an
Affiliate of Borrower, (e) any item of income otherwise includable in Operating
Income but paid directly by any tenant to a Person other than Borrower except
for real estate taxes paid directly to any taxing authority by any tenant, (f)
any other extraordinary, non-recurring revenues, (g) Rent paid by or on behalf
of any lessee under a Space Lease in whole or partial consideration for the
termination of any Space Lease, with the exception of the Amortized Termination
Payment Amount (as defined below), which shall be included in Operating Income
or (h) sales tax rebates from any Governmental Authority. For the
purposes of this Agreement, the “Amortized
Termination Payment Amount” shall mean that portion of such termination
payment which is equal to the product of (i) the allocable monthly amount of
such termination payment, which itself is equal to the quotient obtained by
dividing (A) the total amount of such termination payment by (B) the number of
months remaining in what was the unexpired term of the Space Lease in
question (i.e., prior to
termination) and (ii) the number of months of such unexpired term that occur
during the applicable Fiscal Year or portion thereof with respect to which such
calculation is being made.
18
“Partners” shall have
the meaning set forth in Section 18.32.
“Payment Date” shall
have the meaning set forth in the Note.
“PBGC” shall mean the
Pension Benefit Guaranty Corporation established under ERISA, or any successor
thereto.
“Permitted
Encumbrances” shall have the meaning set forth in Section 2.05(a)
hereof.
“Permitted Entity
Transfers” shall mean:
(i) (A)
the sale of securities evidencing ownership of MCC listed and traded on any
public exchange and/or (B) Transfers (in one or more transactions) of limited
partnership interests in Xxxx SLG NJ Operating Partnership, L.P. comprising not
more than 4% in the aggregate of the total indirect ownership interest in
Borrower and/or (C) Transfers of limited partnership interests in MCRLP
provided, that (1) such Transfers described in clauses (B) and (C) of this
subsection (i), shall not result in either (I) a change in Control of Borrower
(it being agreed that, for the purposes of this definition of Permitted Entity
Transfers, a “change of Control of Borrower” will not be deemed to have occurred
provided that, after any such Transfer, MCC retains Control of Borrower), or
(II) the transferee, together with its Affiliates, increasing its direct or
indirect interest in Borrower, to an amount which equals or exceeds 49% of the
direct or indirect ownership interests in Borrower;
(ii) any
transaction in the nature of a reorganization, restructuring, sale, merger or
combination involving MCC, provided, that, with
respect to any such reorganization, restructuring, sale, merger or combination,
(1) after giving effect thereto, (A) Borrower is Controlled, directly or
indirectly, by MCC (or any Affiliate of MCC which is Controlled by MCC) and (B),
MCC shall not have Transferred more than 49%, in the aggregate, of its direct or
indirect interests in Borrower, unless, if the requirements of clause (A) and/or
(B) are not satisfied, (x) the surviving entity of such transaction, which is
the transferee of the direct or indirect interests in Borrower, shall be a
Qualified Transferee, (y) to the extent that the same will result in a change in
Control of Borrower or results in the transferee, together with its Affiliates,
increasing its direct or indirect interest in Borrower to an amount which equals
or exceeds 49% of the ownership interests in Borrower, Borrower shall have
delivered to Lender, at least ten (10) Business Days prior to the effective date
of the transactions resulting in such change in Control or increase in ownership
interests, a new Insolvency Opinion reflecting the same, in form, content and
substance, and issued by legal counsel, reasonably acceptable to Lender and the
Rating Agency, if required by the Rating Agency; and (z) the entity which is
proposed to succeed MCRLP as Guarantor under the Guaranty has, at the time such
new Guaranty is executed and delivered, and maintains while the applicable
Guaranty is effective, a net worth of not less than $250,000,000.00 (of which
$50,000,000.00 consists of liquid assets) (such entity described in this clause
(z), an “Acceptable
Substitute Guarantor”);
19
(iii) A
one-time Transfer by SLG to MCC (and/or to its Affiliates owning direct or
indirect interests in Borrower) of one hundred percent (100%) percent of all
SLG’s direct or indirect interests in Borrower, (for purposes of which no new
Insolvency Opinion shall be required); and
(iv) Transfers
by MCC to its Affiliates, provided that, at all times after such Transfer, such
Affiliate remains Controlled by such transferor and such transferor owns,
directly or indirectly, at least 25% of such Affiliate that is the transferee of
such interests.
In
addition, in connection with any transaction that would otherwise constitute a
Permitted Entity Transfer, it shall be a condition precedent to the consummation
thereof that (a) at the time of consummation thereof, there shall exist no
Default or Event of Default (provided that the conditions set forth in this
clause (a) and clause (c) below shall not apply with respect to a Permitted
Entity Transfer described in subsection (i) above, but not otherwise described
in subsection (ii) above), i.e., sales of
publicly traded securities may be consummated without prior notice and
notwithstanding the existence of a Default or Event of Default, unless such
sales are being consummated in connection with a reorganization, restructuring,
sale, merger or combination described in subsection (ii) above, (b) to the
extent that any such Transfer causes the transferee, 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 49% of the ownership
interests in Borrower, Borrower shall have delivered to Lender, at least ten
(10) Business Days prior to the effective date of any such Transfer, a new
Insolvency Opinion reflecting such Transfer, in form, content and substance, and
issued by legal counsel, reasonably acceptable to Lender and the Rating
Agencies; (c) Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer not less than ten (10) days
prior to the date of such Transfer and (d) Borrower and Sole Member shall
continue to comply with requirements of Sections 2.02(g), 2.02(t) and 2.02(w)
hereof.
“Permitted Fund
Manager” means any Person that on the date of determination is one of the
entities listed on Exhibit F or any
other nationally-recognized manager of investment funds investing in debt or
equity interests relating to commercial real estate, provided such entity is (i)
investing through a fund with committed capital of at least $250,000,000 and
(ii) not subject to a Proceeding.
“Permitted
Investments” shall mean any one or more of the following obligations or
securities payable on demand or having a scheduled maturity on or before the
Business Day preceding the date upon which such funds are required to be drawn,
and having at all times the required ratings, if any, provided for in this
definition, unless each Rating Agency shall have confirmed in writing to Lender
that a lower rating would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any
Securities (the “Certificates”): (a)
any Money Market Account (but not any Money Market Account structured as a
regulated investment company as defined under Section 851 of the Code) so long
as the Fund is rated “AAA M” or “AAA M-G” by each Rating Agency (or, if not
rated by any Rating Agency other than S&P, otherwise acceptable to such
Rating Agency or Agencies, as applicable, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any Securities); and (b)
provided the requirements of Section 5.16 hereof are and remain satisfied, such
other obligations as are acceptable as Permitted Investments to each Rating
Agency, as confirmed in writing to Lender, that such obligations would not, in
and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to any Securities; provided, however,
that (i) the investments must have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (ii) if rated by Standard
& Poor’s, the investments must not have an “r” highlighter
affixed to their rating, (iii) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (iv)
such investments must not be subject to liquidation prior to their maturity; and
provided, further, that, with respect to each investment described above, in the
judgment of Lender, such instrument continues to qualify as a “cash flow
investment” pursuant to Code Section 860G(a)(6) earning a passive return in the
nature of interest and that no instrument or security shall be a Permitted
Investment if (y) such instrument or security evidences a right to receive only
interest payments or (z) the right to receive principal and interest payments
derived from the underlying investment provides a yield to maturity in excess of
120% of the yield to maturity at par of such underlying
investment. Without limiting the foregoing, a Permitted Investment
shall not include any obligation or investment that does not constitute cash, a
cash item or Government securities within the meaning of Section 856(c)(4)(A) of
the Code.
20
“Permitted Transfers”
shall mean: (i) Space Leases entered into in accordance with Section
7.01 hereof; (ii) a Permitted Encumbrance; (iii) provided that no Default or
Event of Default shall then exist, a Transfer of up to 49%, in the aggregate, of
the direct or indirect interests in Borrower or Sole Member to any Person
provided that (A) such Transfer shall not (x) cause the transferee, together
with its Affiliates, to acquire Control of Borrower or Sole Member or to
increase its direct or indirect interest in Borrower or Sole Member to an amount
which equals or exceeds 49% of the ownership interest in the Borrower or Sole
Member or (y) result in Borrower or Sole Member no longer being Controlled by
either (1) MCC or (2) MCC sharing Control with a Qualified Transferee, (B)
after giving effect to such Transfer, MCC (together with unrelated limited
partners in Xxxx SLG NJ Operating Partnership, L.P. (“NJOP”) owning, for
this purpose, not more than 4% of such equity interests), shall continue to own
more than 50% of all equity interests (direct or indirect) in Borrower and Sole
Member and there shall not be a change in Control of the Borrower or Sole
Member, (C) Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer not less than ten (10) days
prior to the date of such Transfer and (D) Borrower and Sole Member shall
continue to comply with requirements of Sections 2.02(g), 2.02(t) and 2.02(w)
hereof; (iv) a Permitted Entity Transfer or (v) a Release pursuant to Section
15.02.
“Person” shall mean
any individual, corporation, limited liability company, partnership, joint
venture, estate, trust, unincorporated association, 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.
21
“Plan” shall mean an
employee benefit or other plan established or maintained by Borrower, Guarantor
or any ERISA Affiliate during the five-year period ended prior to the date of
this Agreement or to which Borrower, Guarantor or any ERISA Affiliate makes, is
obligated to make or has, within the five year period ended prior to the date of
this Agreement, been required to make contributions (whether or not covered by
Title IV of ERISA or Section 302 of ERISA or Section 401(a) or 412 of the Code),
other than a Multiemployer Plan.
“Principal Amount”
shall mean in the aggregate the Loan Amount plus amounts added thereto pursuant
to Section 2.1(e) of the Note on account of CD Interest and/or Shortfall
Interest (as each such term is defined in the Note), if any, and shall mean,
with respect to each Project, the Allocated Loan Amount for the Project
(specified on Exhibit D hereto ) plus a pro-rata share (based upon the Allocated
Loan Amount for such Project relative to the sum of the Allocated Loan Amounts
for all Projects) of the amounts added to the Loan Amount on account of CD
Interest and Shortfall Interest. For the avoidance of doubt, the
Principal Amount shall be increased once only, pursuant to this Loan Agreement,
on account of each particular item of CD Interest or Shortfall Interest that has
been capitalized, notwithstanding that the context of any provision of this
Agreement that makes reference to the Principal Amount also provides for such
increase.
“Principal Payments”
shall mean all payments of principal, if any, made pursuant to the terms of the
Note.
“Proceeding” shall
mean any case, proceeding or other action under any existing or future law of
any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors.
“Prohibited Person”
means any Person identified on the OFAC List or any other Person with whom a
U.S. Person may not conduct business or transactions by prohibition of Federal
law or Executive Order of the President of the United States of
America.
“Project” shall mean
one of, and “Projects” shall mean
the collective group of, the parcels of real property and Improvements thereon
owned by a Borrower and encumbered by a Mortgage, together with all rights
pertaining to such real property and Improvements, and all other collateral for
the Loan applicable to such parcels of real property and Improvements,
respectively, as more particularly described in the granting clauses of the
Mortgages and referred to therein as the Mortgaged Property. Each
Project, as identified by its street address, and the applicable Borrower that
is the owner of each Project is set forth on Exhibit A attached
hereto. Any reference to “the Projects” shall
be deemed to be a reference to the Projects, as a collective whole, and to the
all of the Projects on an individual basis.
“Property Agreements”
shall mean all agreements, grants of easements and/or rights-of-way, reciprocal
easement agreements, permits, declarations of covenants, conditions and
restrictions, disposition and development agreements, planned unit development
agreements, management or parking agreements, party wall agreements or other
instruments affecting a Project, which, either individually or in the aggregate
with all other agreements affecting a particular Project, are material in
nature, but not including any brokerage agreements, management agreements,
service contracts, Space Leases or the Loan Documents.
22
“Provided Information”
shall have the meaning set forth in Section 17.01 hereof.
“Qualified Transferee”
means one or more of the following:
(A) a
real estate investment trust, bank, saving and loan association, investment
bank, insurance company, trust company, commercial credit corporation, pension
plan, pension fund or pension advisory firm, mutual fund, government entity or
plan, provided that any such Person referred to in this clause (A) satisfies the
Eligibility Requirements;
(B) an
investment company, money management firm or “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, as amended, or
an institutional “accredited investor” within the meaning of Regulation D under
the Securities Act of 1933, as amended, provided that any such Person referred
to in this clause (B) satisfies the Eligibility Requirements;
(C) an
institution substantially similar to any of the foregoing entities described in
clauses (A) or (B) that satisfies the Eligibility Requirements;
(D) any
entity Controlling, Controlled by, under common Control with, any of the
entities described in clause (A), (B), (C) or (F) of this
definition;
(E) [RESERVED];
(F) an
investment fund, limited liability company, limited partnership or general
partnership where a Permitted Fund Manager or an entity that is otherwise a
Qualified Transferee under clauses (A), (B), (C) or (D) of this definition acts
as the general partner, managing member or fund manager and at least 50% of the
equity interests in such investment vehicle are owned, directly or indirectly,
by one or more entities that are otherwise Qualified Transferees under clauses
(A), (B), (C) or (D) of this definition; provided, however, that so long as the
organizational documents of the applicable investment fund, limited liability
company, limited partnership or general partnership vest all managerial control
in a Permitted Fund Manager, then the other Persons owning equity interests in
such investment vehicle shall not be required to satisfy the conditions set
forth in clause (ii) of the definition of “Eligibility Requirements” relating to
the nature of their business experience but shall nonetheless be required to
satisfy the conditions set forth in clause (i) of the definition of “Eligibility
Requirements”;
(G) any
Person which is a Qualified Transferee (pursuant to the foregoing clauses) but
is acting in any agency capacity in connection with a lending syndicate, so long
as at least fifty-one percent (51%) or more of the lenders in the lending
syndicate (by then current loan balance) are Qualified Transferees (pursuant to
the foregoing clauses); or
(H) any
other Person for which the Rating Agencies have issued a Rating Comfort
Letter.
23
Solely
for purposes of this definition of Qualified Transferee, “Control” shall mean
the ownership, directly or indirectly, in the aggregate of more than fifty
percent (50%) of the beneficial ownership interests of an entity and the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through the
ability to exercise voting power, by contract or otherwise. “Controlled by,”
“Controlling” and “under common Control with” shall have the respective
correlative meaning thereto. For purposes of this definition, if more
than one Qualified Transferee owns (directly or indirectly), more than fifty
percent (50%) of the beneficial ownership interests of an entity and one or more
of the Qualified Transferees possess the power to direct or cause the direction
of the management or policies of the entity, whether through the ability to
exercise voting power, by contract or otherwise, even though each such Qualified
Transferee individually owns less than fifty percent (50%) of such beneficial
interests, such entity shall be deemed to be “Controlled” by a Qualified
Transferee.
“Rating Agency” shall
mean Standard & Poor’s Ratings Services, Inc., a division of The XxXxxx-Xxxx
Company, Inc. (“Standard &
Poor’s”), Fitch and Xxxxx’x Investors Service, Inc. (“Moody’s”),
collectively, and any successor to any of them; provided, however,
that at any time after a Secondary Market Transaction, “Rating Agency” or
“Rating
Agencies” shall mean those of the foregoing rating agencies that from
time to time rate the securities issued in connection with such Secondary Market
Transaction.
“Rating Comfort
Letter” shall mean a letter issued by each of the applicable Rating
Agencies which confirms that the taking of the action referenced therein will
not result in any qualification, withdrawal or downgrading of any existing
ratings of Securities created in a Secondary Market Transaction.
“Recurring Replacement
Expenditures” shall mean expenditures related to capital repairs,
replacements and improvements performed at the Projects from time to
time.
“Recurring Replacement
Monthly Installment” shall mean the amount per month set forth on Exhibit B attached
hereto and made a part hereof, it being agreed that no Recurring Replacement
Monthly Installment shall be payable with respect to a Project after the same
has been Released.
“Recurring Replacement
Reserve Escrow Account” shall mean the Escrow Account maintained pursuant
to Section 5.08 hereof relating to the payment of Recurring Replacement
Expenditures.
“Recurring Replacement
Reserve Sub-Account” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 hereof into which the Recurring Replacement
Monthly Installment shall be deposited.
“Registration
Statement” shall have the meaning set forth in Section 17.03
hereof.
“Release” and “Released” shall have
the meanings set forth in Section 15.02.
“Release Amount” shall
mean, with respect to each Project that is Released from the lien of the
Mortgage pursuant to Section 15.02 hereof, the Allocated Loan Amount for the
Project (specified on Exhibit D hereto)
plus a pro-rata share (determined in the manner set forth in the definition of
Principal Amount) of the amounts added to the Loan Amount through and including
the date of the Release on account of CD Interest and/or Shortfall Interest (as
defined in the Note), if any, plus the Participation Interest payable with
respect to the Project pursuant to Section 2.8 of the Note.
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“Reletting
Expenditures” shall mean all reasonable and actual out-of-pocket
expenditures payable to bona-fide third parties or to the Manager incurred by
Borrower relating to reletting of space at the Projects and in connection with
any brokerage commissions due and payable (including override commissions), or
any improvements and replacements required to be made by Borrower (or reasonable
and actual out-of-pocket expenditures paid to tenants in connection with any
improvements and replacements made by tenants at the Projects) under the terms
of any Lease to prepare the relevant space for occupancy by the tenant
thereunder (including performing base building standard work for such
space).
“Reletting Reserve Escrow
Account” shall mean the Escrow Account maintained pursuant to Section
5.07 hereof relating to the payment of Reletting Expenditures and which shall be
initially funded with the Initial Reletting Reserve Deposit.
“Reletting Reserve Monthly
Installment” shall mean the amount set forth on Exhibit B attached
hereto and made a part hereof, it being agreed that no Recurring Replacement
Monthly Installment shall be payable with respect to a Project after the same
has been Released.
“Reletting Reserve
Sub-Account” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 hereof into which the Reletting Reserve
Monthly Installment shall be deposited.
“REMIC” shall mean a
“real estate mortgage investment conduit” within the meaning of Section 860D of
the Code.
“Rents” shall mean all
rents, rent equivalents, moneys payable as damages (including payments by reason
of the rejection of a Lease in a proceeding under the Bankruptcy Code) or in
lieu of rent or rent equivalents, Lease Termination Payments, 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 or any of its agents or
employees from any and all sources arising from or attributable to the Projects
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 Projects and Insurance
Proceeds, if any, from business interruption or other loss of income
insurance.
“Rent Roll” shall have
the meaning set forth in Section 2.05(o) hereof.
“Required Debt Service
Payment” shall mean, as of any Payment Date, interest on the Principal
Amount at the Current Pay Rate specified in the Note.
25
“Required Special Servicer
Rating” means (i) a rating of “CSS1” in the case of Fitch, Inc., (ii) on
the Standard & Poor’s list of approved special servicers in the case of
Standard & Poor’s and (iii) in the case of Moody’s, such special servicer is
acting as special servicer in a commercial mortgage loan securitization that was
rated by Moody’s within the twelve (12) month period prior to the date of
determination, and Moody’s has not downgraded or withdrawn the then-current
rating on any class of commercial mortgage securities or placed any class of
commercial mortgage securities on watch citing the continuation of such special
servicer as special servicer of such commercial mortgage
securities.
“Retention Amount”
shall have the meaning set forth in Section 3.04(b)(vii) hereof.
“Scheduled Release
Date” shall have the meaning set forth in Section 15.04
hereof.
“Secondary Market
Transaction” shall have the meaning set forth in Section 17.01
hereof.
“Securities” shall
have the meaning set forth in Section 17.01 hereof.
“Securities Act” shall
have the meaning set forth in Section 17.02 hereof.
“Security Deposit
Account” shall have the meaning set forth in Section 5.01
hereof.
“Single Purpose
Entity” shall mean a corporation, partnership, joint venture, limited
liability company, trust or unincorporated association, which is formed or
organized solely for the purpose of holding, directly, an ownership interest in
a Project, does not engage in any business unrelated to such Project, does not
have any assets other than those related to its interest in such Project or any
indebtedness other than as permitted by this Agreement or the other Loan
Documents, has its own separate books and records and has its own accounts, in
each case which are separate and apart from the books and records and accounts
of any other Person, holds itself out as being a Person separate and apart from
any other Person and which otherwise satisfies the criteria of the Rating
Agency, as in effect on the Closing Date, for a special-purpose
bankruptcy-remote entity.
“SLG” shall mean XX
Xxxxx Realty Corp., a Maryland corporation.
“Sole Member” shall
mean Xxxx SLG NJ Mezz LLC, a Delaware limited liability company.
“Solvent” shall mean,
as to any Person, that (a) the sum of the assets of such Person, at a fair
valuation, exceeds its liabilities, including contingent liabilities, (b) such
Person has sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (c) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, “debt” means any
liability on a claim, and “claim” means (a) a right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) a right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured. With respect to any such
contingent liabilities, such liabilities shall be computed in accordance with
GAAP at the amount which, in light of all the facts and circumstances existing
at the time, represents the amount which can reasonably be expected to become an
actual or matured liability.
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“Space Leases” shall
mean any Lease or sublease thereunder (including, without limitation, any Major
Space Lease) or any other agreement providing for the use and occupancy of a
portion of a Project, as the same may be amended, renewed or
supplemented.
“Special Transfer”
shall have the meaning set forth in Section 9.04 hereof.
“Standard Lease Form”
shall mean, as the context shall require, either of the two (2) standard forms
of Lease submitted to Lender, in connection with the closing of the Loan, and
identified by Borrower as Borrower’s standard forms of Lease.
“State” shall mean any
of the states which are members of the United States of America.
“Stated Maturity”,
when used with respect to the Note or any installment of interest and/or
principal payment thereunder, shall mean the date specified in the Note as the
fixed date on which a payment of all or any portion of principal and/or interest
is due and payable.
“Sub-Accounts” shall
have the meaning set forth in Section 5.02 hereof.
“Substantial Casualty”
shall have the meaning set forth in Section 3.04 hereof.
“Taking” shall mean a
condemnation or taking pursuant to the lawful exercise of the power of eminent
domain.
“TRIA” shall mean the
Terrorism Risk Insurance Act of 2002, as the same may be amended or otherwise
modified.
“Total GLA” shall mean
the total gross leasable area of the Projects, including all Space
Leases.
“Transfer” shall mean
the conveyance, assignment, sale, mortgaging, encumbrance, pledging,
hypothecation, granting of a security interest in, granting of options with
respect to, or other disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) all or any portion of any legal or beneficial
interest (a) in all or any portion of any Project or (b) in any Person having a
legal or beneficial ownership in Borrower, and shall also include, without
limitation to the foregoing, the following: an installment sales
agreement wherein Borrower agrees to sell a Project or any part thereof or any
interest therein for a price to be paid in installments; an agreement by
Borrower leasing all or substantially all of a Project to one or more Persons
pursuant to a single or related transactions, or a sale, assignment or other
transfer of, or the grant of a security interest in, Borrower’s right, title and
interest in and to any Leases or any Rent; any instrument subjecting a Project
to a condominium regime or transferring ownership to a cooperative corporation;
and the dissolution or termination of Borrower or the merger or consolidation of
Borrower with any other Person.
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“UCC” shall mean the
Uniform Commercial Code as in effect in the State in which the Project is
located.
“Underwriters” shall
have the meaning set forth in Section 17.03 hereof.
“Underwriter Group”
shall have the meaning set forth in Section 17.03 hereof.
“Unscheduled Payments”
shall mean (a) all Loss Proceeds that Borrower has elected or is required to
apply to the repayment of the Debt pursuant to this Agreement, the Note or any
other Loan Documents, (b) any funds representing a voluntary or involuntary
principal prepayment other than scheduled Principal Payments and (c) any Net
Proceeds.
“Use Requirements”
shall mean any and all building codes, permits, certificates of occupancy or
compliance, laws, regulations, or ordinances (including, without limitation,
health, pollution, fire protection, medical and day-care facilities, waste
product and sewage disposal regulations), restrictions of record, easements,
reciprocal easements, declarations or other agreements affecting the use of a
Project or any part thereof.
“Welfare Plan” shall
mean an employee welfare benefit plan as defined in Section 3(1) of ERISA
established or maintained by Borrower, Guarantor or any ERISA Affiliate or that
covers any current or former employee of Borrower, Guarantor or any ERISA
Affiliate.
“Work” shall have the
meaning set forth in Section 3.04(a)(i) hereof.
ARTICLE
II
LOAN TERMS; REPRESENTATIONS,
WARRANTIES
AND COVENANTS OF
BORROWER
Section
2.01. The Loan.
(a)
Lender made the Loan to Borrower on the Original Date, and Borrower acknowledges
receipt of the Loan and that the proceeds of the Loan were used to (i) refinance
the debt encumbering the Projects prior to the Original Date, (ii) fund certain
of the Escrow Accounts, and (iii) pay transaction costs. No excess
proceeds may be distributed to the direct or indirect members of
Borrower. No amount repaid in respect of the Loan may be
reborrowed.
(b) As a
result of the amendment and restatement of the Original Note and the Original
Loan Agreement referred to in the recitals to this Agreement, Borrower is
currently obligated to repay the Debt at the time and in the manner now provided
in the Note, this Agreement and the other Loan Documents, all in lawful money of
the United States of America in immediately available funds.
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Section
2.02. Representations, Warranties
and Covenants of Borrower.
Borrower
hereby represents, warrants and covenants to Lender (each of which
representations shall, as the context requires, refer to each entity comprising
Borrower and to each Project and shall be deemed made by each such Borrower with
respect to each such Project:
(a) Organization and
Authority. (1) Borrower (i) is a limited liability company,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (ii) has all requisite power and authority and
all necessary licenses and permits to own and operate the Project and to carry
on its business as now conducted and as presently proposed to be conducted and
(iii) is duly qualified, authorized to do business and in good standing in the
jurisdiction where the Project is located and in each other jurisdiction where
the conduct of its business or the nature of its activities makes such
qualification necessary. Sole Member is a limited liability company,
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation.
(2) The
organizational structure chart attached hereto as Exhibit K is complete
and accurate as of the date hereof and sets forth all Persons who have a direct
or indirect ownership interest in Borrower.
(b) Power. Borrower
and Sole Member have full power and authority to execute, deliver and perform,
as applicable, the Loan Documents to which it is a party, to make the borrowings
thereunder, to execute and deliver the Note and to grant to Lender a first,
prior, perfected and continuing lien on and security interest in the Project,
subject only to the Permitted Encumbrances.
(c) Authorization of
Borrowing. The execution, delivery and performance of the Loan
Documents to which Borrower is a party, the making of the borrowings thereunder,
the execution and delivery of the Note, the grant of the liens on the Projects
pursuant to the Loan Documents to which Borrower is a party and the consummation
of the Loan are within the powers of Borrower and have been duly authorized by
Borrower by all requisite action (and Borrower hereby represents that no
approval or action of any member, limited partner or shareholder, as applicable,
of Borrower is required to authorize any of the Loan Documents to which Borrower
is a party, other than those which have been obtained) and will constitute the
legal, valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their terms, except as enforcement may be stayed or limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity (whether considered in
proceedings at law or in equity) and will not (i) violate any provision of its
partnership agreement or partnership certificate or certificate of incorporation
or by-laws, or operating agreement, or articles of organization, as applicable,
or, to its knowledge, any law, judgment, order, rule or regulation of any court,
arbitration panel or other Governmental Authority, domestic or foreign, or other
Person affecting or binding upon Borrower or the Projects, or (ii) violate any
provision of any indenture, agreement, mortgage, deed of trust, contract or
other instrument to which Borrower or Sole Member is a party or by which any of
their respective property, assets or revenues are bound, or be in conflict with,
result in an acceleration of any obligation or a breach of or constitute (with
notice or lapse of time or both) a default or require any payment or prepayment
under, any such indenture, agreement, mortgage, deed of trust, contract or other
instrument, or (iii) result in the creation or imposition of any lien, except
those in favor of Lender as provided in the Loan Documents to which it is a
party.
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(d) Consent. Neither
Borrower nor Sole Member is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority or other agency in connection with or as a condition to
the execution, delivery or performance of this Agreement, the Note or the other
Loan Documents which has not been so obtained or filed.
(e) Interest
Rate. The rate of interest paid under the Note and the method
and manner of the calculation thereof do not violate any usury or other law or
applicable Legal Requirement.
(f) Other
Agreements. Borrower is not a party to nor is otherwise bound
by any agreements or instruments which, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect. Neither Borrower
nor Sole Member is in violation of its organizational documents or other
restriction or any agreement or instrument by which it is bound, or any
judgment, decree, writ, injunction, order or award of any arbitrator, court or
Governmental Authority, or any Legal Requirement, in each case, applicable to
Borrower or the Projects, except for such violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
(g) Maintenance of
Existence. Borrower is familiar with all of the
criteria of the Rating Agency required to qualify as a special-purpose
bankruptcy-remote entity and Borrower, at all times since its formation has been
a duly formed and existing entity and shall preserve and keep in full force and
effect its existence as a Single Purpose Entity.
(i) Borrower
at all times since its organization has complied, and will continue to comply in
all material respects (it being agreed that all of the SPE Provisions, as
defined below, are material in nature), with the provisions of its certificate
and agreement of partnership or certificate of incorporation and by-laws or
articles of organization and operating agreement, as applicable, and the laws of
its jurisdiction of organization relating to partnerships, corporations or
limited liability companies, as applicable.
(ii) Borrower
has done or caused to be done and will do all things necessary to observe
organizational formalities and preserve its existence and Borrower will not
amend, modify or otherwise change in any material respect (it being agreed that
any amendment, modification or change which affects any provision relating to
the nature of the entity as a special-purpose, bankruptcy-remote entity (an
“SPE
Provision”) is per se material in nature) the certificate and agreement
of partnership or certificate of incorporation and by-laws or articles of
organization and operating agreement, as applicable, or other organizational
documents of Borrower without the prior written consent of Lender, which shall
not be unreasonably withheld, conditioned or delayed, unless it relates to any
SPE Provision.
30
(iii) Borrower
has at all times accurately maintained, and will continue to accurately
maintain, its financial statements, accounting records and other partnership,
company or corporate documents separate from those of any other Person and
Borrower will file its own tax returns or, if Borrower is part of a consolidated
group for purposes of filing tax returns, Borrower will be shown as separate
members of such group. Borrower has not at any time since its
formation commingled, and will not commingle, its assets with those of any other
Person and will maintain its assets in such a manner such that it will not be
costly or difficult to segregate, ascertain or identify its assets from those of
any other Person. Borrower will not permit any Affiliate independent
access to its bank accounts. Borrower has at all times since its
formation accurately maintained and utilized, and will continue to accurately
maintain and utilize, its own separate bank accounts, payroll and separate books
of account, stationery, invoices and checks.
(iv) Borrower
has at all times paid, and will continue to pay, its liabilities only from its
own assets and shall allocate and charge fairly and reasonably any overhead
which Borrower shares with any other Person, including, without limitation, for
office space and services performed by any employee of another
Person.
(v) Borrower
has at all times identified itself, and will continue to identify itself, in all
dealings with the public, under its own name and as a separate and distinct
entity and shall correct any known misunderstanding regarding its status as a
separate and distinct entity. Borrower has not at any time identified
itself, and will not identify itself, as being a division of any other
Person.
(vi) Borrower
intends to remain adequately capitalized in order to meet its obligations under
Article V of this Agreement.
(vii) Borrower
(A) has not owned, does not own and will not own any assets or property other
than the Projects and any incidental personal property necessary for the
ownership, management or operation of the Projects, (B) has not engaged and will
not engage in any business other than the ownership, management and operation of
the Projects, (C) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (W) obligations owed to tenants under Space Leases, (X) the Loan, and (Y)
unsecured trade debt which (1) is not evidenced by a note, (2) is incurred in
the ordinary course of the operation of the Projects, (3) does not exceed either
four (4%) percent of the Allocated Loan Amount, with respect to any particular
Project, or $4,000,000.00, in the aggregate, with respect to all Projects (it
being agreed that “unsecured trade debt” shall not include obligations for the
payment of tenant improvement costs and leasing commissions in connection with
Space Leases) and (4) which is, unless being contested in accordance with the
terms of this Agreement, paid prior to the earlier to occur of the sixtieth
(60th) day after the date incurred and the date when due, (D) has not and will
not pledge its assets for the benefit of any other Person, and (E) has not made
and will not make any loans other than Intra-Obligor Loans or advances to any
Person (including any Affiliate).
(viii) Borrower
will not (i) change its name, or (ii) change its principal place of business
unless, as to this clause (ii), it has given Lender not less than thirty (30)
days prior written notice of its intention to change its principal place of
business and of the address of such new principal place of
business.
31
(ix) Borrower
does not have, and will at no time have, any subsidiaries.
(x) Borrower
will preserve and maintain its existence as a Delaware limited liability company
and all material rights, privileges, tradenames and franchises.
(xi) Borrower
will not merge or consolidate with, or sell all or substantially all of its
assets to any Person, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution). Borrower will
not acquire any business or assets from, or capital stock or other
ownership interest of, or be a party to any acquisition of, any
Person.
(xii) Borrower
has not at any time since its formation assumed, guaranteed or held itself out
to be responsible for, and will not assume, guarantee or hold itself out to be
responsible for the liabilities or the decisions or actions respecting the daily
business affairs of its partners, shareholders or members or any predecessor
company, corporation or partnership, each as applicable, any Affiliates, or any
other Persons. Borrower has not at any time since its formation
acquired, and will not acquire, obligations or securities of its partners or
shareholders, members or any predecessor company, corporation or partnership,
each as applicable, or any Affiliates. Borrower has not at any time
since its formation made, and will not make, loans to its partners, members or
shareholders or any predecessor company, corporation or partnership, each as
applicable, or any Affiliates of any of such Persons other than Intra-Obligor
Loans. Except as set forth on Exhibit G attached
hereto, Borrower has no known contingent liabilities nor does it have any
material financial liabilities under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which such Person is a party
or by which it is otherwise bound other than under the Loan
Documents.
(xiii) Borrower
has not at any time since its formation entered into and was not a party to,
and, will not enter into or be a party to, any transaction with its Affiliates,
members, partners or shareholders, as applicable, or any Affiliates thereof
except in the ordinary course of business of Borrower on terms which are no less
favorable to Borrower than would be obtained in a comparable arm’s length
transaction with an unrelated third party.
(xiv) Sole
Member will at all times comply, and will cause Borrower to comply, with each of
the representations, warranties, and covenants contained in this Section 2.02(g)
as if such representation, warranty or covenant was made directly by Sole
Member.
(xv) Borrower
shall at all times cause there to be at least two duly appointed non-member
managers of Borrower (each, an “Independent
Manager”), For purposes hereof, “Independent Manager”
shall mean a natural person who, for the five-year period prior to his or her
appointment as Independent Manager has not been, is not now, and during the
continuation of his or her service as Independent Manager is not: (i)
an employee, director, stockholder, partner, trustee, attorney, counsel or
officer of the Borrower or any of its Affiliates (other than his or her service
as an Independent Manager); (ii) a creditor, customer or supplier of or other
person who derives any of its revenues from its activities with the Borrower or
any of its Affiliates; (iii) any member of the Immediate Family of a person
described in (i) or (ii); or (iv) a Person Controlling or under common Control
with any Person excluded from serving as Independent Manager under (i) or
(ii). A natural person who satisfies the foregoing definition other
than subparagraph (ii) shall not be disqualified from serving as an Independent
Manager of the Borrower if such individual is an Independent Manager provided by
a nationally-recognized company that provides professional Independent Managers
(a “Professional
Independent Manager”) and other corporate services in the ordinary course
of its business. A natural person who otherwise satisfies the
foregoing definition other than subparagraph (i) by reason of being an
Independent Manager of a “special purpose entity” affiliated with the Borrower
shall not be disqualified from serving as an Independent Manager of the Borrower
if such individual is either (i) a Professional Independent Manager or (ii) the
fees that such individual earns from serving as Independent Manager of
Affiliates of the Borrower constitute in the aggregate less than five percent
(5%) of such individual’s annual income. Notwithstanding the
immediately preceding sentence, an Independent Manager may not simultaneously
serve as Independent Manager of the Borrower and an Independent Manager of a
special purpose entity that owns a direct or indirect equity interest in the
Borrower or a direct or indirect interest in any co-borrower with the
Borrower. For purposes of this paragraph, a “special purpose entity”
is an entity whose organizational documents contain restrictions on its
activities and impose requirements intended to preserve the such entity’s
separateness that are substantially similar to the requirements of a Single
Purpose Entity.
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(xvi) Borrower
shall not cause or permit the board of managers or other governing board or body
of Borrower to take any action which, under the terms of Borrower’s articles of
organization or operating agreement requires a vote of the board of managers or
other governing board or body of Borrower unless at the time of such action
there shall be at least two members who are Independent Managers.
(xvii) Borrower
shall pay the salaries of its own employees and maintain a sufficient number of
employees in light of their contemplated business operations.
(xviii) Borrower
shall conduct its business so that the assumptions made with respect to Borrower
in that certain opinion letter relating to substantive non-consolidation dated
as of the Original Date (the “Insolvency Opinion”)
delivered in connection with the Loan shall be true and correct in all respects
material to such Insolvency Opinion.
(h) No
Defaults. No Default or Event of Default exists or would occur
as a result of the consummation of the transactions contemplated by the Loan
Documents. Borrower is not in default in the payment or performance
of any of its Contractual Obligations in any material respect.
33
(i) Consents and
Approvals. Borrower has obtained or made all necessary (i)
consents, approvals and authorizations, and registrations and filings of or with
all Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, creditors, lessors and other
nongovernmental Persons, in each case, which are required to be obtained or made
by Borrower in connection with the execution and delivery of, and the
performance by Borrower of its obligations under, the Loan
Documents.
(j) Investment Company Act
Status, etc. Borrower is not (i) an “investment company,” or a
company “controlled” by an “investment company,” as such terms are defined in
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.
(k) Compliance with
Law. Borrower is in compliance in all material respects with
all Legal Requirements to which it or any Project is subject, including, without
limitation, all Environmental Statutes, the Occupational Safety and Health Act
of 1970, the Americans with Disabilities Act, ERISA and all material building
department requirements for each of the Projects. No portion of any
Project has been or will be purchased, improved, fixtured, equipped or furnished
with proceeds of any illegal activity and, to the best of Borrower’s knowledge,
no illegal activities are being conducted at or from any Project.
(l) Financial
Information. Borrower has, as of the date of this Agreement,
delivered to Lender the financial statements for the Projects and Borrower for
(A) calendar year 2008, (B) January 2009 and (C) February 2009, and
Borrower has no knowledge that the information contained in those statements is
not accurate in any material respect.
(m) Transaction Brokerage
Fees. Borrower has not dealt with any financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement or the Original Loan
Agreement. All brokerage fees, commissions and other expenses payable
in connection with the transactions contemplated by the Loan Documents have been
paid in full by Borrower contemporaneously with the execution of the Loan
Documents and the funding of the Loan. Borrower hereby agrees to
indemnify and hold Lender harmless for, from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from (i) a claim by any Person that such Person acted on behalf of Borrower in
connection with the transactions contemplated herein or (ii) any breach of the
foregoing representation. The provisions of this subsection (m) shall
survive the repayment of the Debt.
(n) Federal Reserve
Regulations. No part of the proceeds of the Loan will be used
for the purpose of purchasing or acquiring any “margin stock” within the meaning
of Regulations T, U or X of the Board of Governors of the Federal Reserve System
or for any other purpose which would be inconsistent with such Regulations T, U
or X or any other Regulations of such Board of Governors, or for any purposes
prohibited by Legal Requirements or by the terms and conditions of the Loan
Documents.
34
(o) Pending
Litigation. Except as disclosed in the Form 10-K filed by MCC
on February 12, 2009, as amended by Form 10-K/A filed March 6, 2009, there are,
as of the date of this Agreement, no actions, suits or proceedings pending or,
to the best knowledge of Borrower, threatened against or affecting Borrower,
MCC, the Guarantors or the Projects in any court or before any Governmental
Authority which if adversely determined either individually or collectively has
or is reasonably likely to have a Material Adverse Effect.
(p) Solvency; No
Bankruptcy. Each of Borrower and Sole Member is free from
bankruptcy, reorganization or arrangement proceedings or a general assignment
for the benefit of creditors and is not contemplating the filing of a petition
under any state or federal bankruptcy or insolvency laws or the liquidation of
all or a major portion of such Person’s assets or property and Borrower has no
knowledge of any Person contemplating the filing of any such petition against it
or Sole Member. None of the transactions contemplated hereby will be
or have been made with an intent to hinder, delay or defraud any present or
future creditors of Borrower and Borrower has received reasonably equivalent
value in exchange for its obligations under the Loan
Documents. Borrower’s assets do not, and immediately upon
consummation of the transaction contemplated in the Loan Documents will not,
constitute unreasonably small capital to carry out its business as presently
conducted or as proposed to be conducted. Borrower does not intend
to, nor believe that it will, incur debts and liabilities beyond its ability to
pay such debts as they may mature.
(q) [Reserved.]
(r) Tax
Filings. Borrower and Sole Member have filed 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 and Sole Member. Borrower and Sole
Member believe that their respective tax returns properly reflect the income and
taxes of Borrower and Sole Member for the periods covered thereby, subject only
to reasonable adjustments required by the Internal Revenue Service or other
applicable tax authority upon audit.
(s) Not Foreign
Person. Borrower is not a “foreign person” within the meaning
of §1445(f)(3) of the Code.
(t) ERISA.
(i) Except
with respect to the 401K Plan Assets, if any, the assets of Borrower are not and
will not become treated as “plan assets”, whether by operation of law or under
regulations promulgated under ERISA. Each Plan and Welfare Plan, and,
to the actual knowledge of Borrower, each Multiemployer Plan, is in compliance
in all material respects with, and has been administered in all material
respects in compliance with, its terms and the applicable provisions of ERISA,
the Code and any other applicable Legal Requirement, and no event or condition
has occurred and is continuing as to which Borrower would be under an obligation
to furnish a report to Lender under clause (ii)(A) of this
Section. Other than an application for a favorable determination
letter with respect to a Plan, there are no pending issues or claims before the
Internal Revenue Service, the United States Department of Labor or any court of
competent jurisdiction related to any Plan or Welfare Plan under which Borrower
or any ERISA Affiliate, directly or indirectly (through an indemnification
agreement or otherwise), could be subject to any material risk of liability
under Section 409 or 502(i) of ERISA or Section 4975 of the Code. No
Welfare Plan provides or will provide benefits, including, without limitation,
death or medical benefits (whether or not insured) with respect to any current
or former employee of Borrower or any ERISA Affiliate beyond his or her
retirement or other termination of service other than (A) coverage mandated by
applicable law, (B) death or disability benefits that have been fully provided
for by fully paid up insurance or (C) severance benefits.
35
(ii) Borrower
will furnish to Lender as soon as possible, and in any event within ten (10)
days after Borrower knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan, Welfare Plan or
Multiemployer Plan has occurred or exists, an Officer’s Certificate setting
forth details respecting such event or condition and the action, if any, that
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC (or any
other relevant Governmental Authority) by Borrower or an ERISA Affiliate with
respect to such event or condition, if such report or notice is required to be
filed with the PBGC or any other relevant Governmental Authority:
(iii) any
reportable event, as defined in Section 4043 of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within
thirty (30) days of the occurrence of such event (provided that a failure to
meet the minimum funding standard of Section 412 of the Code and of Section 302
of ERISA, including, without limitation, the failure to make on or before its
due date a required installment under Section 412(m) of the Code and of Section
302(e) of ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code), and any request for a
waiver under Section 412(d) of the Code for any Plan;
(iv) the
distribution under Section 4041 of ERISA of a notice of intent to terminate any
Plan or any action taken by Borrower or an ERISA Affiliate to terminate any
Plan;
(v) the
institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by PBGC with respect to such Multiemployer
Plan;
(vi) the
complete or partial withdrawal from a Multiemployer Plan by Borrower or any
ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by Borrower or any ERISA Affiliate of notice
from a Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
36
(vii) the
institution of a proceeding by a fiduciary of any Multiemployer Plan against
Borrower or any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within thirty (30) days;
(viii) the
adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA, would result in the loss of tax-exempt status of
the trust of which such Plan is a part if Borrower or an ERISA Affiliate fails
to timely provide security to the Plan in accordance with the provisions of said
Sections; or
(ix) the
imposition of a lien or a security interest in connection with a
Plan.
(x) Borrower
shall not knowingly engage in or permit any transaction in connection with which
Borrower or any ERISA Affiliate could be subject to either a civil penalty or
tax assessed pursuant to Section 502(i) or 502(l) of ERISA or Section 4975 of
the Code, permit any Welfare Plan to provide benefits, including without
limitation, medical benefits (whether or not insured), with respect to any
current or former employee of Borrower or any ERISA Affiliate beyond his or her
retirement or other termination of service other than (A) coverage mandated by
applicable law, (B) death or disability benefits that have been fully provided
for by paid up insurance or otherwise or (C) severance benefits, permit the
assets of Borrower to become “plan assets”, except with respect to 401K Plan
Assets, if any, whether by operation of law or under regulations promulgated
under ERISA or adopt, amend (except as may be required by applicable law) or
increase the amount of any benefit or amount payable under, or permit any ERISA
Affiliate to adopt, amend (except as may be required by applicable law) or
increase the amount of any benefit or amount payable under, any employee benefit
plan (including, without limitation, any employee welfare benefit plan) or other
plan, policy or arrangement, except for increases that, in the aggregate, do not
result in a material increase in benefits expense to Borrower or any ERISA
Affiliate.
(u) Labor
Matters. No organized work stoppage or labor strike is pending
or, to Borrower’s actual knowledge, threatened by employees or other laborers at
any Project and neither Borrower nor Manager (with respect to any Project) (i)
is involved in or, to Borrower’s actual knowledge, threatened with any labor
dispute, grievance or litigation relating to labor matters involving any
employees and other laborers at any Project, including, without limitation,
violation of any federal, state or local labor, safety or employment laws
(domestic or foreign) and/or charges of unfair labor practices or discrimination
complaints; (ii) has, to Borrower’s actual knowledge, engaged in any unfair
labor practices within the meaning of the National Labor Relations Act or the
Railway Labor Act; or (iii) is a party to, or bound by, any collective
bargaining agreement or union contract with respect to employees and other
laborers at any Project and no such agreement or contract is currently being
negotiated by Borrower, Manager or any of their Affiliates (with respect to any
Project), except as set forth in Schedule I attached
hereto.
37
(v) Borrower’s Legal
Status. Borrower’s exact legal name that is indicated on the
signature page hereto, organizational identification number and place of
business or, if more than one, its chief executive office, as well as Borrower’s
mailing address, if different, which were identified by Borrower to Lender and
contained in this Agreement, are true, accurate and complete as of the date of
this Agreement. Borrower (i) will not change its name, its place of
business or, if more than one place of business, its chief executive office, or
its mailing address or organizational identification number if it has one
without giving Lender at least thirty (30) days prior written notice of such
change, (ii) if Borrower does not have an organizational identification number
and later obtains one, Borrower shall promptly notify Lender of such
organizational identification number and (iii) Borrower will not change its type
of organization, jurisdiction of organization or other legal
structure.
(w) Compliance with
Anti-Terrorism, Embargo and Anti-Money Laundering Laws. None
of (i) Borrower, Sole Member, any Guarantor, or, to Borrower’s knowledge, any
Person who owns any direct or indirect equity interest (other than publicly held
shares in MCC) in or Controls Borrower, Sole Member or any Guarantor currently
is, as of the date of this Agreement, identified on the OFAC List or otherwise
qualifies as a Prohibited Person, and Borrower has implemented procedures,
approved by Sole Member, to ensure that no Person who now or hereafter owns an
equity interest (other than publicly held shares in MCC) in Borrower or Sole
Member is a Prohibited Person or Controlled by a Prohibited Person, and (ii)
Borrower, Sole Member, or any Guarantor are in violation of any Legal
Requirements relating to anti-money laundering or anti-terrorism, including,
without limitation, Legal Requirements related to transacting business with
Prohibited Persons or the requirements of the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, U.S. Public Law 107-56, and the related regulations issued thereunder,
including temporary regulations, all as amended from time to time. To
the best of Borrower’s knowledge, (i) no tenant at any Project currently is
identified on the OFAC List or otherwise qualifies as a Prohibited Person, and
(ii) no tenant at any Project is owned or Controlled, directly or indirectly, by
a Prohibited Person. Borrower has determined that Manager has
implemented procedures, approved by Borrower, to ensure that no tenant at any
Project is a Prohibited Person or owned or Controlled by a Prohibited
Person.
Section
2.03. Further Acts,
etc.
Borrower
will, at the cost of Borrower, and without expense to Lender, execute and
deliver to Lender upon demand 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 shall, from
time to time, reasonably require, provided that the same does not (y) increase
the rights of Lender or (z) increase the obligations or decrease the rights of
Borrower or Guarantor under the Loan Documents. Borrower hereby
authorizes Lender, if Borrower fails to execute within five (5) Business Days
after request, to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments to evidence
more effectively the liens of the Mortgages upon the
Projects. Borrower grants to Lender an irrevocable power of attorney
coupled with an interest for the purpose of, protecting, perfecting, preserving
and realizing upon the interests granted pursuant to the Mortgages or to effect
the intent of this Agreement, all as fully and effectually as Borrower might or
could do; provided, however, that Lender will not exercise such powers of
attorney unless (i) Borrower fails to execute any of the foregoing within five
(5) Business Days after it receives written request from Lender to do so, or
(ii) an Event of Default then exists; and Borrower hereby ratifies all that
Lender shall lawfully do or cause to be done by virtue hereof. Upon
receipt of an affidavit of an officer of Lender as to the loss, theft,
destruction or mutilation of the Note or any other Loan Document which is not of
public record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other applicable Loan Document, Borrower will
issue, in lieu thereof, a replacement Note or other applicable Loan Document,
dated the date of such lost, stolen, destroyed or mutilated Note or other Loan
Document in the same principal amount thereof and otherwise of like
tenor.
38
Section
2.04. Cross Default; Cross
Collateralization.
(a) Each
Borrower acknowledges that Lender has made the Loan to Borrowers upon the
security of their collective interest in the Projects and in reliance upon the
aggregate of the Projects taken together being of greater value as collateral
security than the sum of the Projects taken separately. Each Borrower
agrees that the Mortgages are and will be cross-collateralized and
cross-defaulted with each other so that (i) an Event of Default under any of the
Mortgages shall constitute an Event of Default under the other Mortgages which
secures the Note; (ii) an Event of Default under the Note or this Agreement
shall constitute an Event of Default under each Mortgage; and (iii) each
Mortgage shall constitute security for the Note as if a single blanket lien were
placed on all of the Projects as security for the Note. Each Borrower
covenants and agrees that in the case of an Event of Default (i) Lender shall
have the right to pursue all of its rights and remedies in one proceeding, or
separately and independently in separate proceedings from time to time, as
mortgagee, in its sole and absolute discretion, shall determine from time to
time, (ii) Lender is not required to either marshal assets, sell any individual
Project in any inverse order of alienation, or be subject to any “one action” or
“election of remedies” law or rule, (iii) the exercise by Lender of any remedies
against any one Project will not impede Lender from subsequently or
simultaneously exercising remedies against any other Project and (iv) 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
Projects and all Projects have been foreclosed, sold and/or otherwise realized
upon in satisfaction of the Loan.
(b) Each
Borrower hereby acknowledges and agrees that, by virtue of the foregoing
provisions of subsection (a), each Borrower has a direct and material interest
in preventing the occurrence of an Event of Default under any of the Loan
Documents. Accordingly, each Borrower is willing to continue to make
or receive loans (each an “Intra-Obligor Loan”,
and collectively, the “Intra-Obligor Loans”)
in order to provide for the payment of all amounts due under the Loan Documents
and, in so doing, to avoid an Event of Default thereunder. In the
event and to the extent that the proceeds from any of the Projects or any other
collateral granted to Lender by any Borrower (the “Creditor”) are
applied to any payments due with respect to the Projects or other collateral
owned by any other Borrower (the “Debtor”) from and
after the Original Date, then the Creditor shall be deemed to have made an
Intra-Obligor Loan to Debtor in the amount of such proceeds so applied (the
“Intra-Obligor Loan
Amount”). Such Intra-Obligor Loan shall be deemed to be made
on a non-recourse basis and shall be repaid out of the future proceeds of the
Project or other collateral owned by the Debtor, together with interest thereon
at a rate to be agreed upon from time to time by each Borrower.
39
(c) All
Intra-Obligor Loans deemed to be made under this Agreement shall be evidenced by
this Agreement, shall be an obligation of the Debtor which owes such
Intra-Obligor Loan solely by its execution of this Agreement and shall not be
evidenced by any separate instrument. Each party hereby waives
presentment, notice of dishonor, protest and notice of non-payment or
non-performance with respect to each Intra-Obligor Loan for which it is liable
under this Agreement. Interest and principal on Intra-Obligor Loans
shall be paid solely out of Net Proceeds from the Project or other property
owned by the Debtor and shall be subject in all cases to the terms and
conditions of the Loan Documents, and the payments from such sources shall be
the sole and exclusive remedy available to any Creditor during the term of the
Loan. Each such payment of principal or interest on Intra-Obligor
Loans shall be subordinate and subject to the prior payment of all amounts
payable under the Loan Documents. To the extent such sources of
payment are insufficient to pay interest and principal on any Intra-Obligor
Loan, the Creditor owed such Intra-Obligor Loan shall not have any claim against
the Debtor which owes such Intra-Obligor Loan for such amounts or lien on or
security interest in any of the assets of such Debtor and no further or
additional recourse shall be available against the Debtor. All
payments received on account of any Intra-Obligor Loan under this Agreement
shall be credited first to interest, then to principal. Accrued but
unpaid interest shall not be compounded.
Section
2.05. Representations and
Warranties as to the Projects.
Borrower
represents and warrants with respect to the Projects as of the date hereof,
except as otherwise indicated below (each of which representations shall, as the
context requires, refer to each entity comprising Borrower and to each Project
and shall be deemed made by each such Borrower with respect to each such
Project) as follows:
(a) Lien
Priority. The Mortgages are a valid and enforceable first
liens on the Projects, free and clear of all encumbrances and liens having
priority over the liens of the Mortgages, except for the items set forth as
exceptions to or subordinate matters in the title insurance policies insuring
the liens of the Mortgages, none of which, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Mortgages, materially affect the value or marketability of any Project,
materially impair the use or operation of any Project for the use currently
being made thereof or materially impair Borrower’s ability to pay its
obligations in a timely manner (such items, being the “Permitted
Encumbrances”).
(b) Title. Borrower
has, subject only to the Permitted Encumbrances, good, insurable and marketable
fee simple title to the Projects (including, without limitation, the
Improvements and Fixtures with respect thereto) and to all easements and rights
benefiting the Projects and has the right, power and authority to mortgage,
encumber, give, grant, bargain, sell, alien, enfeoff, convey, confirm, pledge,
assign, and hypothecate the Projects. For so long as all or any
portion of the Debt remains outstanding, Borrower will preserve its interest in
and title to the Projects and will warrant and defend the same to Lender against
any and all claims made by, through or under Borrower and will warrant and
defend the validity and priority of the lien and security interest created
herein against the claims of all Persons whomsoever claiming by, through or
under Borrower. The foregoing warranty of title shall survive the
foreclosure of any or all of the Mortgages and shall inure to the benefit of and
be enforceable by Lender in the event Lender acquires title to the Project(s)
pursuant to any foreclosure. In addition, there are no outstanding
options to purchase or rights of first refusal to purchase any Project or
Borrower’s ownership thereof.
40
(c) Taxes and
Impositions. All taxes and other Impositions and governmental
assessments due and owing in respect of, and affecting, the Projects have been
paid. Borrower has paid all Impositions which constitute special
governmental assessments in full, except for those assessments which are
permitted by applicable Legal Requirements to be paid in installments, in which
case all installments which are due and payable have been paid in
full. There are no pending, or to Borrower’s best knowledge, proposed
special or other assessments for public improvements or otherwise affecting any
Project, nor are there any contemplated improvements to any Project that may
result in such special or other assessments.
(d) Casualty; Flood
Zone. Each Project is in good repair and free and clear of any
damage, destruction or casualty (whether or not covered by insurance) that would
materially affect the value of such Project or the use for which such Project
was intended, there exists no structural or other material defects or damages in
or to any Project and Borrower has not received any written notice from any
insurance company or bonding company of any material defect or inadequacies in
any Project, or any part thereof, which would materially and adversely affect
the insurability of the same or cause the imposition of extraordinary premiums
or charges thereon or of any termination or threatened termination of any policy
of insurance or bond. No portion of any Project is located in an
“area of special flood hazard,” as that term is defined in the regulations of
the Federal Insurance Administration, Department of Housing and Urban
Development, under the National Flood Insurance Act of 1968, as amended (24 CFR
§ 1909.1) or Borrower has obtained the flood insurance required by Section
3.01(a)(vi) hereof. No Project lies in a 100 year flood plain that has been
identified by the Secretary of Housing and Urban Development or any other
Governmental Authority or, if it does, Borrower has obtained the flood insurance
required by Section 3.01(a)(vi) hereof.
(e) Completion;
Encroachment. All Improvements necessary for the efficient use
and operation of the Projects have been completed and, except as shown on the
surveys, none of said Improvements lie outside the boundaries and building
restriction lines applicable to any Project. Except as set forth in
each title insurance policy insuring the lien of each Mortgage, no improvements
on adjoining properties encroach upon any Project.
(f) Separate
Lot. Each Project is taxed separately without regard to any
other real estate and constitute a legally subdivided lot under all applicable
Legal Requirements (or, if not subdivided, no subdivision or platting of any
Project is required under applicable Legal Requirements), and for all purposes
may be mortgaged, encumbered, conveyed or otherwise dealt with as an independent
parcel. No Project benefits from any tax abatement or
exemption.
(g) Use. The
existence of all Improvements, the present use and operation thereof and the
access of the Projects and the Improvements to all of the utilities and other
items referred to in paragraph (k) below are in compliance in all material
respects with all Leases affecting the Projects and all applicable Legal
Requirements, including, without limitation, Environmental Statutes, Development
Laws and Use Requirements. Borrower has not received any notice from
any Governmental Authority alleging any material uncured violation relating to
any Project of any applicable Legal Requirements.
41
(h) Licenses and
Permits. Borrower currently holds and will continue to hold
all certificates of occupancy, licenses, registrations, permits, consents,
franchises and approvals of any Governmental Authority or any other Person which
are material for the lawful occupancy and operation of the Projects or which are
material to the ownership or operation of the Projects or the conduct of
Borrower’s business. All such certificates of occupancy, licenses,
registrations, permits, consents, franchises and approvals are current and in
full force and effect.
(i) Environmental
Matters. Borrower has received and reviewed the Environmental
Report and has no reason to believe that the Environmental Report contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein or herein, in light of the
circumstances under which such statements were made, not
misleading.
(j) Property
Proceedings. Except as disclosed in the Form 10-K filed by MCC
on February 12, 2009, as amended by Form 10-K/A filed on March 6, 2009, there
are, as of the date of this Agreement, no actions, suits or proceedings pending
or, to Borrower’s actual knowledge after due inquiry and investigation,
threatened in any court or before any Governmental Authority or arbitration
board or tribunal (i) relating to (A) the zoning of a Project or any part
thereof, (B) any certificates of occupancy, licenses, registrations, permits,
consents or approvals issued with respect to a Project or any part thereof, (C)
the condemnation of a Project or any part thereof, or (D) the condemnation or
relocation of any roadways abutting a Project required for access or the denial
or limitation of access to a Project or any part thereof from any point of
access to such Project, (ii) asserting that (A) any such zoning, certificates of
occupancy, licenses, registrations, permits, consents and/or approvals do not
permit the operation of any material portion of a Project as presently being
conducted, (B) any material improvements located on a Project or any part
thereof cannot be located thereon or operated with their intended use or (C) the
operation of any Project or any part thereof is in violation in any material
respect of any Environmental Statutes, Development Laws or other Legal
Requirements or Space Leases or Property Agreements or (iii) which might (A)
affect the validity or priority of any Loan Document or (B) have a Material
Adverse Effect. Borrower is not aware of any facts or circumstances
which may give rise to any actions, suits or proceedings described in the
preceding sentence.
(k) Utilities. Each
Project has all necessary legal access to water, gas and electrical supply,
storm and sanitary sewerage facilities, other required public utilities (with
respect to each of the aforementioned items, by means of either a direct
connection to the source of such utilities or through connections available on
publicly dedicated roadways directly abutting such Project or through permanent
insurable easements benefiting such Project), fire and police protection,
parking, and means of direct access between such Project and public highways
over recognized curb cuts (or such access to public highways is through private
roadways which may be used for ingress and egress pursuant to permanent
insurable easements).
(l) Mechanics’
Liens. Except as set forth in the title policies issued to
Lender on the Original Date described in subsection (m) below, each Project is
free and clear of any mechanics’ liens or liens in the nature thereof, and no
rights are outstanding that under law could give rise to any such liens, any of
which liens are or may be prior to, or equal with, the lien of the applicable
Mortgage, except those which are insured against by the title insurance policy
insuring the lien of such Mortgage.
42
(m) Title
Insurance. Lender has received lenders’ title insurance
policies insuring the Mortgages as first liens on the Projects, subject only to
Permitted Encumbrances.
(n) Insurance. The
Projects are, as of the date of this Agreement, insured in accordance with the
requirements set forth in Article III hereof.
(o) Space
Leases.
(i) Borrower
has, as of the date of this Agreement, delivered a true, correct and complete
schedule of all Space Leases as of the date hereof, which accurately and
completely sets forth in all material respects, for each such Space Lease, the
following (collectively, the “Rent Roll”): the name
and address of the tenant; the lease expiration date, extension and renewal
provisions; the base rent and percentage rent payable; all additional rent and
pass through obligations; and the security deposit held thereunder and the
location of such deposit.
(ii) Each
Space Lease constitutes the legal, valid and binding obligation of Borrower and,
to the knowledge of Borrower, is enforceable against the tenant
thereof. No default on the part of Borrower (and, to Borrower’s
knowledge, on the part of any tenant) exists, or with the passing of time or the
giving of notice would exist, (A) under any Major Space Lease or (B) to the best
knowledge of Borrower, under any other Space Leases which would, in the
aggregate, have a Material Adverse Effect.
(iii) No tenant
under any Space Lease has, as of the date hereof, paid Rent more than thirty
(30) days in advance, and the Rents under such Space Leases have not been
waived, released, or otherwise discharged or compromised.
(iv) Except as
has been disclosed by Borrower in Exhibit H attached
hereto, all work to be performed by Borrower under the Space Leases has been
substantially performed, all contributions to be made by Borrower to the tenants
thereunder have been made except for any held-back amounts, and all other
conditions precedent to each such tenant’s obligations thereunder have been
satisfied, with the exception of such obligations, if any, which, either
individually or collectively, are not material in nature.
(v) Each
tenant under a Space Lease or such tenant’s authorized subtenant is currently
occupying the space demised by such Space Lease.
(vi) Borrower
has delivered to Lender true, correct and complete copies of all Space Leases
described in the Rent Roll.
(vii) Each
Space Lease is in full force and effect and (except as disclosed on the Rent
Roll) has not been assigned, modified, supplemented or amended in any
way.
43
(viii) Each
tenant under each Space Lease is free from bankruptcy, reorganization or
arrangement proceedings or, to the actual knowledge of Borrower, a general
assignment for the benefit of creditors.
(ix) No Space
Lease provides any party with the right to obtain a lien or encumbrance upon a
Project superior to the lien of the applicable Mortgage.
(x) The
options permitting tenants under Space Leases demising less than 10,000 square
feet to terminate their respective Space Leases will not, in the aggregate, have
a Material Adverse Effect on any or all of the Projects.
(p) Property
Agreements.
(i) Borrower
has, as of the date hereof, delivered to Lender true, correct and complete
copies of all material Property Agreements.
(ii) No
Property Agreement provides any party with the right to obtain a lien or
encumbrance upon a Project superior to the lien of the applicable
Mortgage.
(iii) No
default by Borrower (or, to Borrower’s knowledge, by other parties thereto)
exists or with the passing of time or the giving of notice or both would exist
under any Property Agreement which would, individually or in the aggregate, have
a Material Adverse Effect.
(iv) Borrower
has not received or given any written communication which alleges that a default
exists or, with the giving of notice or the lapse of time, or both, would exist
under the provisions of any Property Agreement.
(v) No
condition exists whereby Borrower or any future owner of a Project may be
required to purchase any other parcel of land which is subject to any Property
Agreement or which gives any Person a right to purchase, or right of first
refusal with respect to, a Project.
(vi) To the
best knowledge of Borrower, no offset or any right of offset exists respecting
continued contributions to be made by any party to any Property Agreement except
as expressly set forth therein. Except as previously disclosed to Lender in
writing, no material exclusions or restrictions on the utilization, leasing or
improvement of any Project (including non compete agreements) exist in any
Property Agreement.
(vii) All “pre
opening” requirements contained in all Property Agreements (including, but not
limited to, all off site and on site construction requirements), if any, have
been fulfilled, and, to the best of Borrower’s knowledge, no condition now
exists whereby any party to any such Property Agreement could refuse to honor
its obligations thereunder.
(viii) All work,
if any, to be performed by Borrower under each of the Property Agreements has
been substantially performed, all contributions to be made by Borrower to any
party to such Property Agreements have been made, and all other conditions to
such party’s obligations thereunder have been satisfied.
44
(q) Personal
Property. Borrower owns no personal property that is material
to the operation of the Projects.
(r) Leasing Brokerage and
Management Fees. Except as disclosed to Lender in writing
prior to the date hereof, there are no brokerage fees or commissions payable by
Borrower with respect to the leasing of space at the Projects and there are no
management fees payable by Borrower with respect to the management of the
Projects.
(s) Security
Deposits. All security deposits held by Borrower in the form
of cash deposits with respect to the Projects on the date hereof have, as of the
date of this Agreement, been transferred to the Security Deposit Account, if,
pursuant to applicable Legal Requirements, such security deposits are required
to be held in a segregated account. Borrower is in compliance with
all Legal Requirements relating to such security deposits as to which failure to
comply might, individually or in the aggregate, have a Material Adverse
Effect.
(t) [Reserved.]
(u) Representations
Generally. The representations and warranties contained in
this Agreement, and the review and inquiry made on behalf of Borrower therefor,
have all been made by Persons having the requisite expertise and knowledge to
provide such representations and warranties. No representation,
warranty or statement of fact made by or on behalf of Borrower in this Agreement
or in any certificate, document or schedule furnished to Lender pursuant hereto,
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained therein or herein not misleading
(which may be to Borrower’s best knowledge where so provided
herein). There are no facts presently known to Borrower which have
not been disclosed to Lender which would, individually or in the aggregate, have
a Material Adverse Effect nor as far as Borrower can foresee might, individually
or in the aggregate, have a Material Adverse Effect.
Section
2.06. Removal of
Liens.
(a) Borrower
shall, at its expense, maintain each Mortgage as a first lien on the Projects
encumbered thereby and shall keep the Projects free and clear of all liens and
encumbrances of any kind and nature other than the Permitted
Encumbrances. Borrower shall, within thirty (30) days following the
filing thereof, promptly discharge of record, by bond or otherwise, any such
liens and, promptly upon request by Lender, shall deliver to Lender evidence
reasonably satisfactory to Lender of the discharge thereof.
(b) Without
limitation to the provisions of Section 2.06(a) hereof, Borrower shall (i) pay,
from time to time when the same shall become due, all claims and demands of
mechanics, materialmen, laborers, and others which, if unpaid, might result in,
or permit the creation of, a lien on a Project or any part thereof, (ii) cause
to be removed of record (by payment or posting of bond or settlement or
otherwise) any mechanics’, materialmens’, laborers’ or other lien on a Project,
or any part thereof, or on the revenues, rents, issues, income or profit arising
therefrom, and (iii) in general, do or cause to be done, without expense to
Lender, everything reasonably necessary to preserve in full the lien of the
Mortgages. If Borrower fails to comply with the requirements of this
Section 2.06(b), then, upon five (5) Business Days’ prior notice to Borrower,
Lender may, but shall not be obligated to, pay any such lien, and Borrower
shall, within five (5) Business Days after Lender’s demand therefor, reimburse
Lender for all sums so expended, together with interest thereon at the Default
Rate from the date advanced, all of which shall be deemed part of the
Debt. Nothing contained herein shall be deemed a consent or request
of Lender, express or implied, by inference or otherwise, to the performance of
any alteration, repair or other work by any contractor, subcontractor or laborer
or the furnishing of any materials by any materialmen in connection
therewith.
45
(c) Notwithstanding
the foregoing, Borrower may contest any lien (other than a lien relating to
non-payment of Impositions, the contest of which shall be governed by Section
4.04 hereof) of the type set forth in subparagraph (b)(ii) of this Section 2.06
provided that, following prior notice to Lender (i) Borrower is contesting the
validity of such lien with due diligence and in good faith and by appropriate
proceedings, without cost or expense to Lender or any of its agents, employees,
officers, or directors, (ii) Borrower shall preclude the collection of, or other
realization upon, any contested amount from the applicable Project or any
revenues from or interest in such Project, (iii) neither the Project nor any
part thereof nor interest therein, shall be in any danger of being sold,
forfeited or lost by reason of such contest by Borrower, (iv) such contest by
Borrower shall not affect the ownership, use or occupancy of such Project, (v)
such contest by Borrower shall not subject Lender or Borrower to the risk of
civil or criminal liability (other than the civil liability of Borrower for the
amount of the lien in question), (vi) such lien is subordinate to the lien of
the related Mortgage(s), (vii) Borrower has not consented to such lien, (viii)
Borrower has given Lender prompt notice of the filing of such lien and, upon
request by Lender from time to time, notice of the status of such contest by
Borrower and/or confirmation of the continuing satisfaction of the conditions
set forth in this Section 2.06(c), (ix) Borrower shall promptly pay the
obligation secured by such lien upon a final determination of Borrower’s
liability therefor, and (x) if requested by Lender, with respect to any Contract
wherein the amount claimed is in excess of $125,000.00, Borrower shall deliver
to Lender cash, a bond or other security reasonably acceptable to Lender equal
to 125% of the contested amount pursuant to collateral arrangements reasonably
satisfactory to Lender.
Section
2.07. Cost of Defending and
Upholding this Agreement and the Lien of the Mortgages.
If any
action or proceeding is commenced to which Lender is made a party relating to
the Loan Documents and/or the Projects or Lender’s interest therein or in which
it becomes necessary to defend or uphold the lien of the Mortgages or the terms
of this Agreement or any other Loan Document, Borrower shall, promptly after
demand, reimburse Lender for all reasonable out-of-pocket expenses (including,
without limitation, reasonable attorneys’ fees and disbursements) incurred by
Lender in connection therewith, and such sum, together with interest thereon at
the Default Rate from and after such demand until fully paid, shall constitute a
part of the Debt.
Section
2.08. Use of the
Projects.
Borrower
will use, or cause to be used, the Projects for such use as is permitted
pursuant to applicable Legal Requirements including, without limitation, under
the certificate of occupancy applicable to each such
Project. Borrower shall not suffer or permit the Projects or any
portion thereof to be used by the public, any tenant, or any Person not subject
to a Lease, in a manner as is reasonably likely to impair Borrower’s title to
any of the Projects, or in such manner as may give rise to a claim or claims of
adverse usage or adverse possession by the public, or of implied dedication of
any of the Projects or any part thereof.
46
Section
2.09. Financial
Reports.
(a) Borrower
will keep and maintain or will cause to be kept and maintained on a Fiscal Year
basis, in accordance with GAAP (or such other accounting basis reasonably
acceptable to Lender) consistently applied, proper and accurate books, federal
income tax returns (subject to Section 2.09(i) hereof), records and accounts
reflecting (i) all of the financial affairs of Borrower and (ii) all items of
income and expense in connection with the operation of the Projects or in
connection with any services, equipment or furnishings provided in connection
with the operation thereof, to the extent realized by
Borrower. Lender shall have the right from time to time at all times
during normal business hours upon not less than three (3) Business Days prior
notice to examine such books, federal income tax returns (subject to Section
2.09(i) hereof), records and accounts at the office of Borrower or other Person
maintaining such books, federal income tax returns (subject to Section 2.09(i)
hereof), records and accounts and to make such copies or extracts thereof as
Lender shall desire. After the occurrence of an Event of Default,
Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower’s and Guarantor’s accounting records with respect to the Projects, as
Lender shall determine to be necessary or appropriate in the protection of
Lender’s interest.
(b) Borrower
will furnish Lender (i) annually, within one hundred twenty (120) days following
the end of each Fiscal Year of Borrower, (ii) quarterly, within forty-five (45)
days following the end of each fiscal quarter of Borrower (other than the fourth
quarter financial statements, which shall be delivered contemporaneously with or
as a part of the annual financial statements) and (iii) on a monthly basis,
within thirty five (35) days following the end of each calendar month, with a
complete copy of Borrower’s financial statement covering (i) all of the
financial affairs of Borrower and (ii) the operation of the Projects for such
Fiscal Year, fiscal quarters or calendar months, as applicable, containing a
statement of revenues and expenses, a statement of assets and liabilities and a
statement of Borrower’s equity. Lender agrees and acknowledges that
the form of the monthly statements to be provided hereunder shall be consistent
with those produced by Borrower in the ordinary course of its business pursuant
to its internal accounting procedures and shall not be required to be in
compliance with GAAP. Borrower’s obligation hereunder for the
delivery of monthly financial statements commenced with the statements for the
month of July 2006. Together with the financial statements required
to be furnished pursuant to this Section 2.09(b), Borrower shall furnish to
Lender (A) an Officer’s Certificate certifying as of the date thereof (1) that
the financial statements accurately represent the results of operations and
financial condition of Borrower and the Projects all (other than the monthly
statements) in accordance with GAAP (or such other accounting basis reasonably
acceptable to Lender) consistently applied, and (2) whether there exists a
Default or Event of Default under the Note or any other Loan Document executed
and delivered by Borrower, and if such event or circumstance exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy such event or circumstance and (B) together with the financial statements
delivered pursuant to Section 2.09(b)(ii) above, a statement showing Net
Operating Income for the previous accounting period.
(c) Borrower
will furnish Lender annually, within sixty (60) days following the end of each
year and/or within fifteen (15) Business Days of request therefor, with a true,
complete and correct cash flow statement with respect to the Projects and the 75
Property (and/or, following an Event of Default and during the continuance
thereof, monthly, within twenty (20) days following the end of each month, as to
the 75 Property) in the form attached hereto as Exhibit J and made a
part hereof, together with an Officer’s Certificate with respect thereto,
showing (i) all cash receipts of any kind whatsoever and all cash payments and
disbursements, (ii) year-to-date summaries of such cash receipts, payments and
disbursements, and (iii) a list of all litigation and proceedings affecting
Borrower, Sole Member or the Projects in which the amount involved is $250,000
or more, if not covered by insurance (or $1,000,000 or more whether or not
covered by insurance).
47
(d) Intentionally
Omitted.
(e) Borrower
will furnish Lender (i) annually, within thirty (30) days following the end of
each year, (ii) quarterly, within twenty (20) days after Lender’s request
therefor, and (iii) within twenty (20) days following the end of each month,
with (y) a true, complete and correct rent roll for the Projects, including a
list of which tenants are in default under their respective leases, dated as of
the date of Lender’s request, identifying each tenant, the monthly rent and
additional rent, if any, payable by such tenant, the expiration date of such
tenant’s Lease, the security deposit, if any, held by Borrower under the Lease,
the space covered by the Lease, each tenant that has filed a bankruptcy,
insolvency, or reorganization proceeding since delivery of the last such rent
roll, and the arrearages for such tenant, if any, and (z) a leasing status
report describing all prospective leasing transactions and leases then under
negotiation, and identifying the prospective tenants, the subject demised
premises, the proposed rents and any tenant concessions, and such rent roll and
leasing status report shall be accompanied by an Officer’s Certificate, dated as
of the date of the delivery of such rent roll and leasing status report,
certifying that each such rent roll and leasing status report is true, correct
and complete in all material respects as of its date.
(f) Borrower
shall furnish to Lender, within thirty (30) days after Lender’s request
therefor, with such further detailed information with respect to the operation
of the Projects and the financial affairs of Borrower as may be reasonably
requested by Lender.
(g) Borrower
shall cause Manager to furnish to Lender, within fifteen (15) Business Days of
Lender’s written request therefor, a schedule of tenant security deposits,
together with a certification of Manager as to the balance in such Security
Deposit Account, if any, and that such tenant security deposits are being held
in accordance with all Legal Requirements.
(h) Borrower
will furnish Lender annually, within ninety (90) days after the end of each
Fiscal Year, with a report setting forth the capital repairs, replacements and
improvements performed at the Projects during such Fiscal Year and the aggregate
Recurring Replacement Expenditures made in connection therewith.
(i) Unless
Borrower is a disregarded entity for tax purposes and not required to file any
tax returns, Borrower shall furnish to Lender annually, within thirty (30) days
of filing its respective tax return, a copy of such tax return.
48
(j) Borrower
shall submit to Lender for Lender’s written approval an Annual Budget, with
respect to each Fiscal Year during the term of the Loan, not later than January
31 of such Fiscal Year, in form reasonably satisfactory to Lender setting forth
in reasonable detail budgeted monthly operating income and monthly operating
capital and other expenses (including, without limitation, expected Capital
Expenditures and Reletting Expenditures) for the Projects. Borrower
has delivered to Lender a true, correct and complete copy of the Annual Budget
for 2009. Each Annual Budget shall contain, among other things,
limitations on management fees, third party service fees, and other expenses as
Borrower may reasonably determine. Lender shall have the right to
approve such Annual Budget which approval shall not be unreasonably withheld,
and in the event that Lender objects to the proposed Annual Budget submitted by
Borrower, Lender shall advise Borrower of such objections within fifteen (15)
days after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall, within five (5) Business
Days after receipt of notice of any such objections, revise such Annual Budget
and resubmit the same to Lender. Lender shall advise Borrower of any
objections to such revised Annual Budget within ten (10) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall revise the same in accordance with the process
described herein until Lender approves an Annual Budget; provided, however,
that if Lender shall not advise Borrower of its objections to any proposed
Annual Budget within the applicable time period set forth in this Section, then
such proposed Annual Budget shall be deemed approved by Lender. Until
such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in Basic Carrying Costs and
utilities expenses. In the event that Borrower must incur an
Extraordinary Expense, then Borrower shall promptly deliver to Lender a
reasonably detailed explanation of such proposed Extraordinary Expense for
Lender’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed, provided, however,
Borrower shall be permitted to incur an Extraordinary Expense reasonably
necessary to prevent or address imminent danger to Persons or property without
the prior approval of Lender provided that Borrower promptly advises Lender of
such Extraordinary Expense and the nature thereof.
(k) In the
event that Borrower fails to deliver any of the financial statements, reports or
other information required to be delivered to Lender pursuant to this Section
2.09 on or prior to their due dates, if any such failure shall continue for ten
(10) days following notice thereof from Lender, Borrower shall pay to Lender on
each Payment Date for each month or portion thereof that any such financial
statement, report or other information remains undelivered, an administrative
fee in the amount of Five Hundred Dollars ($500) multiplied by the number of
undelivered statements, reports or other items up to a maximum amount of Two
Thousand Dollars ($2,000) for any applicable reporting
period. Borrower agrees that such administrative fee (i) is a fair
and reasonable fee necessary to compensate Lender for its additional
administrative costs and increased costs relating to Borrower’s failure to
deliver the aforementioned statements, reports or other items as and when
required hereunder and (ii) is not a penalty.
(l) At
Lender’s request, Borrower agrees to cause the representatives of Borrower and
the Manager who are responsible for the day-to-day management and operation of
the Projects, and such other representatives having knowledge of the financial
condition of Borrower and the condition (financial, physical and otherwise) of
the Projects to be available to meet with representatives of Lender, no less
frequently than twice during each calendar year, for the purpose of providing
Lender with information about Borrower and the Projects and the prospects
thereof including the results of operations (both past and projected), the
status of all leasing activity at the Projects, any proposed refinancing of the
Loan, any capital improvement programs and any other matters relating to
Borrower and the Projects specified by Lender.
49
Section
2.10. Litigation.
Borrower
will give prompt written notice to Lender of any litigation or governmental
proceedings pending or threatened (in writing) against Borrower which might have
a Material Adverse Effect.
Section
2.11. Updates of
Representations.
Borrower
shall deliver to Lender within ten (10) Business Days after the request of
Lender an Officer’s Certificate updating all of the representations and
warranties contained in this Agreement and the other Loan Documents and
certifying that all of the representations and warranties contained in this
Agreement and the other Loan Documents, as updated pursuant to such Officer’s
Certificate, are true, accurate and complete as of the date of such Officer’s
Certificate.
Section
2.12. Condominium
Provisions.
With
respect to each Project that is comprised of condominium units (each such
Project, a “Condominium”),
Borrower hereby represents and warrants, and covenants and agrees, as
follows:
(a) To the
Borrower’s actual knowledge, the Condominium was created in accordance with all
applicable laws (the “Condominium Act”) by
declaration of condominium recorded in the real estate records of the county in
which such Project is located (the “Declaration”). A
Board of Managers (the “Board of Managers”)
governs the Condominium pursuant to the By-Laws of the Condominium (the “By-Laws”), which have
been duly recorded in said real estate records. All of the
Condominium units are owned solely by the Borrower and no other Person has any
interest in such units or the Condominium common areas.
(b) In the
event of a conflict between the terms of this Agreement concerning the use of
insurance proceeds in the event of damage to the Project or the terms of this
Agreement concerning the use of awards from condemnation or taking of the
Project and the terms of the Declaration or By-Laws regarding the same, the
terms and provisions of the this Agreement will control. In the event
of damage or destruction to, or condemnation or taking of, all or any part of
the Condominium which requires a vote of the unit owners of the Condominium to
repair and restore the Condominium, Borrower hereby assigns to Lender Borrower’s
full right and power to vote in such matters and hereby irrevocably appoints
Lender as Borrower’s attorney-in-fact coupled with an interest to cast
Borrower’s vote in such matters as Lender deems appropriate in its sole
judgment, consistent with the provisions of this Agreement with respect to
repair and restoration of Projects generally.
(c) Borrower
will fully and faithfully perform and comply in all material respects with the
material terms, material conditions, and material provisions of the Declaration,
By-Laws, rules and regulations of the Condominium and any other material
documents creating or governing the Condominium.
50
(d) In
addition to the Events of Default specified in Section 13.01 hereof, the
principal sum secured by the Mortgages, together with the accrued and unpaid
interest thereon, will immediately become due at the option of Lender
if:
(1) Borrower
fails within any applicable grace and notice periods to fully and faithfully
perform and comply with the material terms, conditions and provisions of the
Declaration, By-Laws, rules and regulations of the Condominium, or any other
documents creating or governing the Condominium and such failure has or is
reasonably likely to have a Material Adverse Effect;
(2) The
Declaration, By-Laws, rules and regulations of the Condominium or any other
document creating or governing the Condominium is changed in a manner which
materially and adversely affects the lien or security of this Agreement, as
determined by Lender in its reasonable discretion;
(3) (A)
The Condominium is terminated or the Condominium is withdrawn from the
provisions of the Condominium Act and, in either case, the lien of the
applicable Mortgage is materially and adversely affected, or (B) the unit owners
of the Condominium do not resolve to repair and restore the Condominium after
damage to all or a substantial part of the Condominium or after condemnation or
taking of any part of the Condominium, subject to the rights of Borrower to
obtain a Release of the affected Project pursuant to Section 15.02
hereof;
(4) The
Condominium Act or any part or provisions thereof is determined to be invalid or
unenforceable and such determination materially adversely affects the lien of
the related Mortgage or the rights of Lender hereunder, as reasonably determined
by Lender; or
(5) There
is a transfer, release, creation of liens, partition, subdivision, condemnation
or taking of all or part of the common elements of the Condominium which
materially and adversely affects the lien or security of the applicable
Mortgage, as reasonably determined by Lender.
In the
event that any of the foregoing shall occur and continue beyond any applicable
grace and notice periods, Borrower may cure any such default by causing, in
accordance with the terms and provisions of this Agreement and the other Loan
Documents, the Release of the affected Project within 90 days
thereafter. Notwithstanding the foregoing provisions of this Section
2.12, (i) for so long as all of the Condominium units are owned by the Borrower,
Borrower shall not be required to comply with the provisions of subsection (c)
above and (ii) Borrower shall be permitted to terminate the Condominium,
provided that (A) the lien of the Mortgage on the subject Project is not
adversely affected thereby, (B) Borrower provides to Lender evidence reasonably
satisfactory to Lender that the title policy insuring the lien of Lender’s
mortgage on the subject Project remains in full force and effect notwithstanding
such termination of the Condominium, (C) Borrower delivers to Lender not less
than thirty (30) days’ prior written notice of Borrower’s intention to terminate
such Condominium, (D) such termination of the Condominium shall not adversely
affect or otherwise diminish Lender’s rights under this Agreement or the other
Loan Documents and (E) Borrower executes and delivers to Lender, promptly
following request therefor, such documents as Lender shall reasonably require
confirming the continued validity and effectiveness of this Agreement and the
other Loan Documents.
51
(e) Lender
may pay for the account and on behalf of Borrower any amount which Borrower is
obligated to pay, including common charges and expenses or special assessments,
to the Board of Managers or pursuant to the Declaration, By-Laws, rules and
regulations of the Condominium or any other documents creating or governing the
Condominium, upon default, beyond any applicable grace and notice periods, by
Borrower in paying the same, and Lender may perform any action which Borrower
may or is obligated to do pursuant to the Declaration, By-Laws, rules and
regulations of the Condominium or any other document creating or governing the
Condominium upon default, beyond any applicable grace and notice periods, by
Borrower in doing the same. All reasonable sums paid by Lender for
the expense of any such action or proceeding described in this Section 2.12
(including reasonable counsel fees and expenses) shall be paid by Borrower to
Lender promptly on demand, together with interest thereon at the Default Rate
after demand by Lender through the date actually paid by
Borrower. Any such sum paid by Lender and the interest thereon shall
be a lien on the Project prior to any claim, lien, right, title or interest in,
to or on the Project attaching or accruing subsequent to the lien of the
Mortgages, and shall be deemed to be evidenced and secured by the
Mortgages.
(f) Upon
default by Borrower in timely paying to Lender any sum required as provided
above in Section 2.12(e), the whole of the Debt and all other sums and interest
secured by this Agreement shall immediately become due and payable at the option
of Lender. Nothing contained in Section 2.12(e) above shall obligate
Lender to pay any sums or perform any acts on behalf of
Borrower. Furthermore, if Lender pays such amounts or performs such
acts on behalf of Borrower, the same shall not constitute a waiver or
forgiveness by Lender of Borrower’s default under this Agreement or any estoppel
against Lender from declaring Borrower in default hereunder.
(g) Borrower
hereby grants to Lender and its successors and assigns, a true and lawful power
of attorney and proxy, with full power of substitution, for and in its name, to
vote and otherwise act with respect to the Project at all annual, special, and
other meetings of the condominium owners (the “Owners”), or by
written consent in lieu thereof, and at any other time Borrower is required or
permitted to vote or act as an Owner (i) at any time Borrower or the Owners vote
or act to change an Owner’s or the Owners’ percentage of the undivided interest
in the common elements, if such change could reasonably be expected to have an
adverse effect upon Lender or the security for the Loan (ii) [Reserved], (iii) at any time
Borrower or the Owners vote or act to modify or amend the Declaration, if such
change could reasonably be expected to have an adverse effect upon Lender or the
security for the Loan, (iv) at any time Borrower or the Owners vote or act to
modify or amend the By-Laws, if such change could reasonably be expected to have
an adverse effect upon Lender or the security for the Loan, (v) at any time
Borrower or the Owners vote to repair or not repair, as the case may be, the
Common Elements and/or any Unit or Units (as such terms are defined in the
Declaration) of the Condominium upon the occurrence of a fire, other casualty or
condemnation or eminent domain, and (vi) upon the occurrence and during the
continuance of an Event of Default under the Loan Documents, at any time
Borrower or the Owners have the right to vote pursuant to the Declaration and/or
By-Laws. From and after the occurrence of an Event of Default, Lender
shall have the right to require that any members (or representatives) of the
Board of Managers elected (or appointed) by Borrower tender their written
resignation to
52
the Board
of Managers and replace such member or representative with a person elected or
appointed by Lender. Lender has required that, with respect to all of
the current members so appointed or elected by Borrower, which are Xxxxxxxx X.
Xxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxxx and Xxxxxx Xxxxx, Borrower tender written
resignations from each of them as of the date hereof and Lender may submit such
written resignations to the Board of Managers from and after the occurrence of
an Event of Default. The grant of the power of attorney and proxy set
forth above is intended to be fully effective without further action by Borrower
and is intended to be relied upon by the Owners, the Board of Managers and the
Condominium for all purposes. Notwithstanding the foregoing, upon
request of Lender, Borrower will promptly execute and deliver to Lender and its
successors and assigns, a separate power of attorney and proxy, in recordable
form and otherwise in form and substance reasonably acceptable to Lender,
confirming the foregoing grant to Lender.
ARTICLE
III
INSURANCE AND CASUALTY
RESTORATION
Section
3.01. Insurance
Coverage. Borrower
shall, at its expense, maintain the following insurance coverages with respect
to the each Project during the term of this Agreement:
(a) (i) Insurance
against loss or damage by fire, casualty and other hazards included in an
“all-risk” extended coverage endorsement or its equivalent, with such
endorsements as Lender may from time to time reasonably require and which are
customarily required by Institutional Lenders of similar properties similarly
situated in an amount not less than the greater of (A) 100% of the insurable
replacement value of such Project (exclusive of the land and footings and
foundations) and (B) such other amount as is necessary to prevent any reduction
in such policy by reason of and to prevent Borrower, Lender or any other insured
thereunder from being deemed to be a co-insurer and if a Project constitutes a
legal non-conforming use, an ordinance of law coverage endorsement which
contains “Demolition Cost” (in an amount equal to 10% of the “all risk” extended
insurance coverage), “Loss Due to Operation of Law” (in an amount equal to 100%
of the “all risk” extended insurance coverage) and “Increased Cost of
Construction” coverages (in an amount equal to 25% of the “all risk” insurance
extended coverage), covering the Project. Not more frequently than
once every three (3) years, Borrower, at its option, shall either (A) have the
Appraisal updated or obtain a new appraisal of each of the Projects, (B) have a
valuation of each of the Projects made by or for its insurance carrier conducted
by an appraiser experienced in valuing properties of similar type to that of
each of the Projects which are in the geographical area in which the applicable
Projects are located or (C) provide such other evidence as will enable Lender to
determine, in its reasonable discretion, whether there shall have been an
increase in the insurable value of the Projects and Borrower shall deliver such
updated Appraisal, new appraisal, insurance valuation or other evidence
reasonably acceptable to Lender, as the case may be, and, if such updated
Appraisal, new appraisal, insurance valuation, or other evidence reasonably
acceptable to Lender reflects an increase in the insurable value of the
Projects, the amount of insurance required hereunder shall be increased
accordingly and Borrower shall deliver evidence reasonably satisfactory to
Lender that such policy has been so increased.
53
(ii) Commercial
general liability insurance against claims for personal and bodily injury and/or
death to one or more persons or property damage, occurring on, in or about the
Projects in such amounts as Lender may from time to time reasonably require (but
in no event shall Lender’s requirements be increased more frequently than once
during each twelve (12) month period) and which are customarily required by
Institutional Lenders for similar properties similarly situated, but not less
than $1,000,000 per occurrence and $2,000,000 general aggregate on a per
location basis and, in addition thereto, not less than $75,000,000 excess and/or
umbrella liability insurance shall be maintained for any and all
claims.
(iii) Business
income or loss of rents or other similar insurance (A) with loss payable to
Lender, (B) covering all risks required to be covered by the insurance provided
for in Section 3.01(a)(i) hereof, (C) in an amount not less than 100% of the
projected fixed or base rent plus percentage rent for the succeeding eighteen
(18) month period. The amount of such insurance shall be determined
upon the execution of this Agreement, and not more frequently than once each
calendar year thereafter based on Borrower’s reasonable estimate of projected
fixed or base rent plus percentage rent, from the Projects for the next
succeeding eighteen (18) months, (D) containing an unlimited indemnity period
during the time that it takes to repair or rebuild the damaged property, and (E)
containing an extended period of indemnity endorsement which provides that after
the physical loss to the Project has been repaired, the continued loss of income
will be insured until such income either returns to the same level it was at
prior to the loss, or the expiration of twelve (12) months from the date that
the Project is repaired or replaced and operations are resumed, whichever first
occurs, and notwithstanding that the policy may expire prior to the end of such
period. In the event that a Project shall be damaged or destroyed,
Borrower shall and hereby does assign to Lender all payment of claims under the
policies of such insurance, and all amounts payable thereunder, and all net
amounts, shall be collected by Lender under such policies and shall be applied
in accordance with this Agreement; provided, however,
that nothing herein contained shall be deemed to relieve Borrower of its
obligations to timely pay all amounts due under the Loan Documents.
(iv) [Intentionally
Omitted].
(v) Insurance
against loss or damages from explosion of steam boilers, air conditioning
equipment, pressure vessels or similar apparatus now or hereafter installed at
the Projects, in such amounts as Lender may from time to time reasonably require
and which are then customarily required by Institutional Lenders of similar
properties similarly situated.
(vi) If, as to
any Project, the Improvements thereon or any part thereof is situated in an area
designated by the Federal Emergency Management Agency (“FEMA”) as a special
flood hazard area (Zone A or Zone V), flood insurance in an amount equal to the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement basis (or the unpaid balance of the indebtedness
secured hereby if replacement cost coverage is not available for the type of
building insured). In addition, at Lender’s discretion, regardless of whether a
particular Project is located in a special flood hazard area, Borrower shall
maintain flood insurance in amounts satisfactory to Lender, and in all cases,
having a maximum permissible deductible of $100,000.
54
(vii) Worker’s
compensation insurance or other similar insurance which may be required by
Governmental Authorities or Legal Requirements.
(viii) Insurance
against loss resulting from mold, spores or fungus on or about the
Projects.
(ix) During
any period of the term of the Loan that TRIA is in effect, if “acts of
terrorism” or other similar acts or events are hereafter excluded from the
insurance policies maintained pursuant to subsections (i), (ii) and (iii) above,
Borrower shall obtain an endorsement to such policy, or a separate policy
insuring against terrorism and “fire following”, each in an amount equal to one
hundred percent (100%) of the “Full Replacement Cost” for Certified Acts of
Terrorism as defined by TRIA and in an amount satisfactory to Lender for
Non-certified Acts of Terrorism which for purposes of this Agreement shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation, but the
amount shall in no event be less than the total outstanding principal balance of
the Loan. The endorsement or policy shall be in form and substance
reasonably satisfactory to Lender and shall meet Rating Agency criteria for
securitized loans. During any period of the term of the
Loan that TRIA is not in effect, Borrower shall maintain the insurance coverage
described in the immediately preceding sentence but the total annual premium
payable by Borrower for such terrorism coverage shall not exceed an amount
greater than two hundred percent (200%) of the total annual premium being paid
by Borrower as of the Closing Date for such terrorism coverage.
(x) Such
other insurance as may from time to time be required by Lender and which is then
customarily required by Institutional Lenders for similar properties similarly
situated, against other insurable hazards, including, but not limited to,
malicious mischief, vandalism, sinkhole and mine subsidence, windstorm and/or
earthquake, due regard to be given to the size and type of the related Project,
Improvements, Fixtures and Equipment and their location, construction and
use. Additionally, Borrower shall carry such insurance coverage as
Lender may from time to time require if the failure to carry such insurance may
result in a downgrade, qualification or withdrawal of any class of securities
issued in connection with a Secondary Market Transaction or, if the Loan is not
yet part of a Secondary Market Transaction, would result in an increase in the
subordination levels of any class of securities anticipated to be issued in
connection with a proposed Secondary Market Transaction.
55
(b) Borrower
shall cause any Manager of the Projects to maintain fidelity insurance in an
amount equal to the least of (i) the Operating Income of the applicable Projects
for the six (6) month period immediately preceding the date on which the premium
for such insurance is due and payable, (ii) $500,000.00 and (iii) such lesser
amount as Lender shall reasonably approve.
Section
3.02. Policy
Terms
. (a) All
insurance required by this Article III shall be in the form (other than with
respect to Sections 3.01(a)(vi) and (vii) above when insurance in those two
sub-sections is placed with a governmental agency or instrumentality on such
agency’s forms) and amount and with deductibles as, from time to time, shall be
reasonably acceptable to Lender, under valid and enforceable policies issued by
financially responsible insurers authorized to do business in the State where
the Projects are located, with a general policyholder’s service rating of not
less than A and a financial rating of not less than A:X as rated in the most
currently available Best’s Insurance Reports (or the equivalent, if such rating
system shall hereafter be altered or replaced) and shall have a claims paying
ability rating and/or financial strength rating, as applicable, of not less than
“A” (or its equivalent), or such lower claims paying ability rating and/or
financial strength rating, as applicable, as Lender shall, in its sole and
absolute discretion, consent to, from a Rating Agency (one of which after a
Secondary Market Transaction in which Standard & Poor’s rates any securities
issued in connection with such Secondary Market Transaction, shall be Standard
& Poor’s). Certified copies of all insurance policies or
certificates (the form and substance of which must be reasonably satisfactory to
Lender) evidencing such policies shall be promptly delivered to and held by
Lender. All such policies (except policies for worker’s compensation)
shall name Lender, its successors and/or assigns as an additional named insured,
shall provide for loss payable to Lender, its successors and/or assigns and
shall contain (or have attached): (i) standard “non-contributory
mortgagee” endorsement or its equivalent relating, inter alia, to recovery by
Lender notwithstanding the negligent or willful acts or omissions of Borrower;
(ii) a waiver of subrogation endorsement as to Lender; (iii) an endorsement
indicating that neither Lender nor Borrower shall be or be deemed to be a
co-insurer with respect to any casualty risk insured by such policies and shall
provide for a deductible per loss of an amount not more than the lesser of (x)
that which is customarily maintained by owners of similar properties similarly
situated and (y) five percent (5%) of the Actual Net Cash Flow, and (iv) a
provision that such policies shall not be canceled, terminated, denied renewal
or amended, including, without limitation, any amendment reducing the scope or
limits of coverage, without at least thirty (30) days’ prior written notice to
Lender in each instance. Notwithstanding the foregoing provisions of
clause (iii) above, Lender agrees that, in lieu of a deductible under its
general liability insurance policy, Borrower may include in such policy a
self-insured retention in an amount not to exceed $150,000.00 per occurrence,
with an aggregate cap of $2,000,000.00 per policy period. Not less
than ten (10) days prior to the expiration dates of the insurance policies
obtained pursuant to this Agreement, originals or certified copies of renewals
of such policies (or certificates evidencing such renewals) bearing notations
evidencing the payment of premiums or accompanied by other reasonable evidence
of such payment (which premiums shall not be paid by Borrower through or by any
financing arrangement which would entitle an insurer to terminate a policy)
shall be delivered by Borrower to Lender. Borrower shall not carry
separate insurance, concurrent in kind or form or contributing in the event of
loss, with any insurance required under this Article III.
56
(b) If
Borrower fails to maintain and deliver to Lender the certified copies of the
policies or certificates of insurance required by this Agreement, or if there
are insufficient funds in the Basic Carrying Costs Escrow Account to pay the
premiums for same, Lender may, at its option, procure such insurance, and
Borrower shall pay, or as the case may be, reimburse Lender for, all premiums
thereon promptly, upon demand by Lender, with interest thereon at the Default
Rate from the date paid by Lender to the date of repayment and such sum shall
constitute a part of the Debt.
(c) Borrower
shall notify Lender of the renewal premium of each insurance policy and Lender
shall be entitled to pay such amount on behalf of Borrower from the Basic
Carrying Costs Escrow Account. With respect to insurance policies
which require periodic payments (i.e., monthly or quarterly) of premiums, Lender
shall be entitled to pay such amounts fifteen (15) days (or such lesser number
of days as Lender shall determine) prior to the respective due dates of such
installments.
(d) The
insurance required by this Agreement may, at the option of Borrower, be effected
by blanket and/or umbrella policies issued to Borrower covering the Projects
provided that, in each case, the policies otherwise comply with the provisions
of this Agreement and allocate to the Projects, from time to time (but in no
event less than once a year), the coverage specified by this Agreement, without
possibility of reduction or coinsurance by reason of, or damage to, any other
property (real or personal) named therein. If the insurance required
by this Agreement shall be effected by any such blanket or umbrella policies,
Borrower shall furnish to Lender (i) certified copies of the policies or
certificates of insurance together with reasonable access to the original of
such policy to review such policy’s coverage of the Projects, with schedules
attached thereto showing the amount of the insurance provided under such
policies applicable to the Projects and (ii) an Officer’s Certificate setting
forth (A) the number of properties covered by such policy, (B) the location by
city (if available, otherwise, county) and state of the properties, (C) the
average square footage of the properties, (D) a brief description of the typical
construction type included in the blanket policy and (E) such other information
as Lender may reasonably request.
Section
3.03. Assignment of
Policies. (a) Borrower
hereby assigns to Lender the proceeds of all insurance (other than worker’s
compensation and liability insurance) obtained pursuant to this Agreement, all
of which proceeds shall be payable to Lender as collateral and further security
for the payment of the Debt and the performance of Borrower’s obligations
hereunder and under the other Loan Documents, and Borrower hereby authorizes and
directs the issuer of any such insurance to make payment of such proceeds
directly to Lender, except as provided in Section 3.04(a)(ii)
below. Except as otherwise expressly provided in Section 3.04 or
elsewhere in this Article III, Lender shall have the option, in its discretion,
and without regard to the adequacy of its security, to apply all or any part of
the proceeds it may receive pursuant to this Article in such manner as Lender
may elect to any one or more of the following: (i) the payment of the
Debt, whether or not then due, in any proportion or priority as Lender, in its
discretion, may elect, (ii) the repair or restoration of the affected Project,
(iii) the cure of any Event of Default or (iv) the reimbursement of the costs
and expenses of Lender incurred pursuant to the terms hereof in connection with
the recovery of the Insurance Proceeds. Nothing herein contained
shall be deemed to excuse Borrower from repairing or maintaining the Projects as
provided in this Agreement or restoring all damage or destruction to the
Projects, regardless of the sufficiency of the Insurance Proceeds, and the
application or release by Lender of any Insurance Proceeds shall not cure or
waive any Default or notice of Default.
57
(b) In the
event of the foreclosure of a Mortgage or any other transfer of title or
assignment of all or any part of the Projects in extinguishment, in whole or in
part, of the Debt, all right, title and interest of Borrower in and to all
policies of insurance required by this Agreement shall inure to the benefit of
the successor in interest to Borrower or the purchaser of the
Projects. If, prior to the receipt by Lender of any proceeds, the
Projects or any portion thereof shall have been sold on foreclosure of any or
all of the Mortgages or by deed in lieu thereof or otherwise, or any claim under
such insurance policy arising during the term of this Agreement is not paid
until after the extinguishment of the Debt, and Lender shall not have received
the entire amount of the Debt outstanding at the time of such extinguishment,
whether or not a deficiency judgment on this Agreement shall have been sought or
recovered or denied, then, the proceeds of any such insurance to the extent of
the amount of the Debt not so received, shall be paid to and be the property of
Lender, together with interest thereon at the Default Rate, and the reasonable
attorney’s fees, costs and disbursements incurred by Lender in connection with
the collection of the proceeds which shall be paid to Lender and Borrower hereby
assigns, transfers and sets over to Lender all of Borrower’s right, title and
interest in and to such proceeds. Notwithstanding any provisions of
this Agreement to the contrary, Lender shall not be deemed to be a trustee or
other fiduciary with respect to its receipt of any such proceeds, which may be
commingled with any other monies of Lender; provided, however,
that Lender shall use such proceeds for the purposes and in the manner permitted
by this Agreement. Any proceeds deposited with Lender shall be held
by Lender in an interest-bearing account, but Lender makes no representation or
warranty as to the rate or amount of interest, if any, which may accrue on such
deposit and shall have no liability in connection therewith. Interest
accrued, if any, on the proceeds shall be deemed to constitute a part of the
proceeds for purposes of this Agreement. The provisions of this
Section 3.03(b) shall survive foreclosure, deed in lieu thereof or other
termination of any of the Mortgages or the exercise of the rights and remedies
of Lender under this Agreement or the other Loan Documents after a
Default.
Section
3.04. Casualty
Restoration. (a) (i) In
the event of any material damage to or destruction of a Project (or any part
thereof), Borrower shall give prompt written notice to Lender (which notice
shall set forth Borrower’s good faith estimate of the cost of repairing or
restoring such damage or destruction, or if Borrower cannot reasonably estimate
the anticipated cost of restoration, Borrower shall nonetheless give Lender
prompt notice of the occurrence of such damage or destruction, and will
diligently proceed to obtain estimates to enable Borrower to quantify the
anticipated cost and time required for such restoration, whereupon Borrower
shall promptly notify Lender of such good faith estimate) and, provided that
restoration does not violate any Legal Requirements, Borrower shall promptly
commence and diligently prosecute to completion the repair, restoration or
rebuilding of the Project so damaged or destroyed to a condition such that the
Project shall be at least equal in value to that immediately prior to the damage
to the extent practicable, in full compliance with all Legal Requirements and
the provisions of all Leases, and in accordance with Section 3.04(b)
below. Such repair, restoration or rebuilding of the affected Project
are sometimes hereinafter collectively referred to as the “Work”.
58
(ii) Borrower
shall not adjust, compromise or settle any claim for Insurance Proceeds without
the prior written consent of Lender, which shall not be unreasonably withheld or
delayed; provided,
however, that, except during the continuance of an Event of Default,
Lender’s consent shall not be required with respect to the adjustment,
compromising or settlement of any claim for Insurance Proceeds in an amount no
more than the lesser of (i) five percent (5%) of the Allocated Loan Amount for
the applicable Project, and (ii) $1,000,000.00. In addition, if
damage to a Project covered by any of the policies required to be maintained
under this Agreement occurs where the loss does not exceed $500,000.00, provided
no Default or Event of Default has occurred and is continuing, Borrower is
hereby authorized to collect and receipt for the Insurance Proceeds and agrees
to utilize the same for repair and restoration as required under this
Agreement.
(iii) Subject
to Section 3.04(a)(iv), Lender shall apply any Insurance Proceeds which it may
receive towards the Work in accordance with Section 3.04(b) and the other
applicable sections of this Article III.
(iv) If (A) an
Event of Default shall exist, (B) Lender is not reasonably satisfied that the
Debt Service Coverage Ratio, after substantial completion of the Work and a
reasonable amount of time to effect the leasing up of the Project, will be at
least equal to the greater of (x) the Debt Service Coverage Ratio as of the day
immediately prior to the occurrence of such casualty and (y) the Debt Service
Coverage Ratio as of the date hereof, (C) more than thirty percent (30%) of the
reasonably estimated fair market value of the affected Project is damaged or
destroyed, (D) one or more Major Leases constituting in excess of twenty-five
percent (25%) of the leaseable square footage of the Project that is physically
affected by such destruction shall not continue in full force and effect or are
not reasonably likely (as reasonably determined by Lender) to be replaced within
six (6) months following completion of the Work with Space Lease(s) acceptable
to Lender, (E) Lender is not reasonably satisfied that the Work can be
substantially completed (subject only to minor punchlist items) six (6) months
prior to Maturity or (F) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the Note, which
will be incurred with respect to the Project as a result of the occurrence of
any such casualty or condemnation, whichever the case may be, will be covered
out of the insurance coverage referred to in Section 3.01(a)(iii) above (each, a
“Substantial
Casualty”), Lender shall have the option, in its sole discretion to apply
the applicable Insurance Proceeds it may receive pursuant to this Agreement
(less any out-of-pocket cost to Lender of recovering and paying out such
proceeds incurred pursuant to the terms hereof and not otherwise reimbursed to
Lender, including, without limitation, reasonable attorneys’ fees and expenses)
to the payment of the Debt, without any prepayment fee or charge of any kind, or
to allow such proceeds to be used for the Work pursuant to the terms and subject
to the conditions of Section 3.04(b) hereof and the other applicable sections of
this Article III. In the event that Lender shall elect to apply such
proceeds to the Debt, (i) the Allocated Loan Amount of the affected Project
shall be reduced on a dollar for dollar basis with the amount of proceeds so
applied, (ii) Borrower shall have the right to cause a Release of such Project,
and (iii) in connection with such Release, (A) the Release Amount shall be
the Allocated Loan Amount of such Project (as such Allocated Loan Amount may
have been adjusted pursuant to the definition thereof) as so reduced and
(B) Borrower shall not be required to satisfy the other conditions to a
Release with respect to the Project, except those set forth in Section 15.02(b),
(c), (f), (h) and (i).
59
(v) In the
event that Lender elects or is obligated hereunder to allow Insurance Proceeds
to be used for the Work, any excess proceeds remaining after completion of such
Work shall be applied to the payment of the Debt without any prepayment fee or
charge of any kind.
(b) If any
Condemnation Proceeds in accordance with Section 6.01(a), or any Insurance
Proceeds in accordance with Section 3.04(a), are to be applied to the repair,
restoration or rebuilding of a Project, then such proceeds shall be deposited
into a segregated interest-bearing bank account at the Bank, which shall be an
Eligible Account, held by Lender and shall be paid out from time to time to
Borrower as the Work progresses (less any out-of-pocket cost to Lender of
recovering and paying out such proceeds, including, without limitation,
reasonable attorneys’ fees and costs allocable to inspecting the Work and the
plans and specifications therefor) subject to Section 5.13 hereof and to all of
the following conditions:
(i) An
Independent architect or engineer selected by Borrower and reasonably acceptable
to Lender (an “Architect” or “Engineer”) or a Person otherwise reasonably
acceptable to Lender, shall have delivered to Lender a certificate estimating
the cost of completing the Work, and, if the amount set forth therein is more
than the sum of the amount of Insurance Proceeds then being held by Lender in
connection with a casualty and amounts agreed to be paid as part of a final
settlement under the insurance policy upon or before completion of the Work,
Borrower shall have delivered to Lender (A) cash collateral in an amount equal
to such excess, (B) an unconditional, irrevocable, clean sight draft letter of
credit, in form, substance and issued by a bank reasonably acceptable to Lender,
in the amount of such excess and draws on such letter of credit shall be made by
Lender to make payments pursuant to this Article III following exhaustion of the
Insurance Proceeds therefore, (C) a completion bond in form, substance and
issued by a surety company reasonably acceptable to Lender, or (D) such other
collateral as shall be reasonably acceptable to Lender.
(ii) If the
cost of the Work is reasonably estimated by an Architect or Engineer in a
certification reasonably acceptable to Lender to be equal to or exceed five
percent (5%) of the Loan Amount, such Work shall be performed under the
supervision of an Architect or Engineer, it being understood that the plans and
specifications with respect thereto shall provide for Work so that, upon
completion thereof, the Project shall be at least equal in replacement value and
general utility to the Project prior to the damage or destruction.
(iii) Each
request for payment shall be made on not less than ten (10) days’ prior notice
to Lender and shall be accompanied by a certificate of an Architect or Engineer,
or, if the Work is not required to be supervised by an Architect or Engineer, by
an Officer’s Certificate stating (A) that payment is for Work completed in
compliance with the plans and specifications, if required under clause (ii)
above, (B) that the sum requested is required to reimburse Borrower for payments
by Borrower to date, or is due to the contractors, subcontractors, materialmen,
laborers, engineers, architects or other Persons rendering services or materials
for the Work (giving a brief description of such services and materials), and
that when added to all sums previously paid out by Lender does not exceed the
value of the Work done to the date of such certificate, (C) if the sum requested
is to cover payment relating to repair and restoration of personal property
required or relating to the Project, that title to the personal property items
covered by the request for payment is vested in Borrower (unless Borrower is
lessee of such personal property), and (D) that the Insurance Proceeds and other
amounts deposited by Borrower held by Lender after such payment is not less than
the estimated remaining cost to complete such Work; provided, however,
that if such certificate is given by an Architect or Engineer, such Architect or
Engineer shall certify as to clause (A) above, and such Officer’s Certificate
shall certify as to the remaining clauses above, and provided, further, that
Lender shall not be obligated to disburse such funds if Lender determines, in
Lender’s reasonable discretion, that Borrower is not be in compliance with this
Section 3.04(b). Additionally, each request for payment shall contain
a statement signed by Borrower stating that the requested payment is for Work
satisfactorily done to date.
60
(iv) Each
request for payment shall be accompanied by bills and invoices covering that
part of the Work for which payment or reimbursement is being requested and, if
required by Lender, waivers of lien (which may be conditioned upon payment), in
customary form and substance, a search prepared by a title company or licensed
abstractor, or by other evidence reasonably satisfactory to Lender that there
has not been filed with respect to the Project any mechanic’s or other lien or
instrument for retention of title relating to any part of the Work not
discharged of record. Additionally, as to any personal property
covered by the request for payment, Lender shall be furnished with evidence of
having incurred a payment obligation therefor and such further evidence
reasonably satisfactory to assure Lender that UCC filings therefor provide a
valid first lien on the personal property.
(v) Lender
shall have the right to inspect the Work at all reasonable times upon reasonable
prior notice and may condition any disbursement of Insurance Proceeds upon
satisfactory compliance by Borrower with the provisions
hereof. Neither the approval by Lender of any required plans and
specifications for the Work nor the inspection by Lender of the Work shall make
Lender responsible for the preparation of such plans and specifications, or the
compliance of such plans and specifications of the Work, with any applicable
law, regulation, ordinance, covenant or agreement.
(vi) Insurance
Proceeds shall not be disbursed more frequently than once every thirty (30)
days.
(vii) Until
such time as the Work has been substantially completed, Lender shall not be
obligated to disburse up to ten percent (10%) of the cost of the Work (the
“Retention
Amount”) to Borrower. Upon substantial completion of the Work,
Borrower shall send notice thereof to Lender and, subject to the conditions of
Section 3.04(b)(i)-(iv), Lender shall disburse one-half of the Retention Amount
to Borrower; provided,
however, that the remaining one-half of the Retention Amount shall be
disbursed to Borrower when Lender shall have received copies of any and all
final certificates of occupancy or other certificates, licenses and permits
required for the ownership, occupancy and operation of the Project in accordance
with all Legal Requirements. Borrower hereby covenants to diligently
seek to obtain any such certificates, licenses and permits; provided, however, that Lender
will release the portion of the Retention Amount being held with respect to any
contractor, subcontractor or materialman engaged in the Work as of the date upon
which the Architect or Engineer certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all Work and has
supplied all materials in accordance with the provisions of the contractor’s,
subcontractor’s or materialman’s contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of all
sums due to the contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the title insurance policy,
and Lender receives an endorsement to the applicable title insurance policy
insuring the continued priority of the lien of the applicable Mortgage and
evidence of payment of any premium payable for such endorsement.
61
(viii) Upon
failure on the part of Borrower promptly to commence the Work or to proceed
diligently and continuously (subject only to force majeure) to completion of the
Work, which failure shall continue after notice for thirty (30) days (but in no
event more than ninety (90) days in the case of force majeure), Lender may apply
any Insurance Proceeds or Condemnation Proceeds it then or thereafter holds to
the payment of the Debt in accordance with the provisions of the Note; provided, however,
that Lender shall be entitled to apply at any time all or any portion of the
Insurance Proceeds or Condemnation Proceeds it then holds to the extent
necessary to cure any Event of Default under this Agreement, the Note or any
other Loan Document.
(c) If
Borrower (i) within ninety (90) days after the occurrence of any damage to any
Project or any portion thereof (or such shorter period as may be required under
any Major Space Lease) shall fail to submit to Lender for approval plans and
specifications (if required pursuant to Section 3.04(b)(ii) hereof) for the Work
(approved by the Architect and by all Governmental Authorities whose approval is
required), (ii) after any such plans and specifications are approved by all
Governmental Authorities, the Architect and Lender, shall fail to promptly
commence such Work or (iii) shall fail to diligently prosecute such Work to
completion, then, in addition to all other rights available hereunder, at law or
in equity, Lender, or any receiver of any Project or any portion thereof, upon
five (5) Business Days prior notice to Borrower (except in the event of
emergency in which case no notice shall be required), may (but shall have no
obligation to) perform or cause to be performed such Work, and may take such
other steps as it reasonably deems advisable. Borrower hereby waives,
for Borrower, any claim, other than for gross negligence or willful misconduct,
against Lender and any receiver arising out of any act or omission of Lender or
such receiver pursuant to this paragraph (c), and Lender may apply all or any
portion of the Insurance Proceeds (without the need to fulfill any other
requirements of this Section 3.04) to reimburse Lender and such receiver, for
all costs not reimbursed to Lender or such receiver upon demand together with
interest thereon at the Default Rate from the date such amounts are advanced
until the same are paid to Lender or the receiver.
(d) Except as
provided in Section 3.04(a)(ii) above, Borrower hereby irrevocably appoints
Lender as its attorney-in-fact, coupled with an interest, to collect and receive
any Insurance Proceeds paid with respect to any portion of the Projects or the
insurance policies required to be maintained hereunder, and to endorse any
checks, drafts or other instruments representing any Insurance Proceeds whether
payable by reason of loss thereunder or otherwise.
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Section
3.05. Compliance with Insurance
Requirements. Borrower
promptly shall comply with, and shall cause the Projects to comply with, all
Insurance Requirements, even if such compliance requires structural changes or
improvements or would result in interference with the use or enjoyment of any of
the Projects or any portion thereof provided a Borrower shall have a right to
contest in good faith and with diligence such Insurance Requirements provided
(a) no Event of Default shall exist during such contest and such contest shall
not subject any of the Projects or any portion thereof to any lien or affect the
priority of the lien of the related Mortgage, (b) failure to comply with such
Insurance Requirements will not subject Lender or any of its agents, employees,
officers or directors to any civil or criminal liability, (c) such contest will
not cause any reduction in insurance coverage, (d) such contest shall not affect
the ownership, use or occupancy of any of the Projects, (e) none of the Projects
or any part thereof or any interest therein shall not be in any danger of being
sold, forfeited or lost by reason of such contest by Borrower, (f) Borrower has
given Lender prompt notice of such contest and, upon request by Lender from time
to time, notice of the status of such contest by Borrower and/or information of
the continuing satisfaction of the conditions set forth in clauses (a) through
(e) of this Section 3.05, (g) upon a final determination of such contest,
Borrower shall promptly comply with the requirements thereof, and (h) prior to
and during such contest, Borrower shall furnish to Lender security satisfactory
to Lender, in its reasonable discretion, against loss or injury by reason of
such contest or the non-compliance with such Insurance Requirement (and if such
security is cash, Lender shall deposit the same in an interest-bearing account
and interest accrued thereon, if any, shall be deemed to constitute a part of
such security for purposes of this Agreement and the Mortgages, but Lender (i)
makes no representation or warranty as to the rate or amount of interest, if
any, which may accrue thereon and shall have no liability in connection
therewith and (ii) shall not be deemed to be a trustee or fiduciary with respect
to its receipt of any such security and any such security may be commingled with
other monies of Lender). If Borrower shall use any of the Projects or
any portion thereof in any manner which could permit the insurer to cancel any
insurance required to be provided hereunder, Borrower immediately shall obtain a
substitute policy which shall satisfy the requirements of this Agreement and
which shall be effective on or prior to the date on which any such other
insurance policy shall be canceled. Borrower shall not by any action
or omission invalidate any insurance policy required to be carried hereunder
unless such policy is replaced as aforesaid, or materially increase the premiums
on any such policy above the normal premium charged for such
policy. Borrower shall cooperate with Lender in obtaining for Lender
the benefits of any insurance proceeds lawfully or equitably payable to Lender
in connection with the transaction contemplated hereby.
Section
3.06. Event of Default During
Restoration. Notwithstanding
anything to the contrary contained in this Agreement including, without
limitation, the provisions of this Article 3, if an Event of Default exists (a)
at the time of any casualty affecting a Project or any part thereof, or (b) at
any time during any Work, or (c) at any time that Lender is holding or is
entitled to receive any Insurance Proceeds pursuant to this Agreement, then
Lender shall have no obligation to make such proceeds available for Work and
Lender shall have the right and option, to be exercised in its sole and absolute
discretion and election, with respect to the Insurance Proceeds, either to
retain and apply such proceeds in reimbursement for the actual costs, fees and
expenses incurred by Lender in accordance with the terms hereof in connection
with the adjustment of the loss and any balance toward payment of the Debt in
such priority and proportions as Lender, in its sole discretion, shall deem
proper, or towards the Work, upon such terms and conditions as Lender shall
determine, or to cure such Event of Default, or to any one or more of the
foregoing as Lender, in its sole and absolute discretion, may
determine. If Lender shall receive and retain such Insurance
Proceeds, the lien of the Mortgages shall be reduced only by the amount thereof
received, after reimbursement to Lender of expenses of collection, and actually
applied by Lender in reduction of the principal sum payable under the Note in
accordance with the Note.
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Section
3.07. Application of Proceeds to
Debt Reduction. (a) No
damage to any Project, or any part thereof, by fire or other casualty
whatsoever, whether such damage be partial or total, shall relieve Borrower from
its liability to pay in full the Debt and to perform its obligations under this
Agreement and the other Loan Documents.
(b) If any
Insurance Proceeds are applied to reduce the Debt, Lender shall apply the same
in accordance with the provisions of the Note.
ARTICLE
IV
IMPOSITIONS
Section
4.01. Payment of Impositions,
Utilities and Taxes, etc. (a) Borrower
shall pay or cause to be paid all Impositions at least five (5) Business Days
prior to the date upon which any fine, penalty, interest or cost for nonpayment
is imposed, and furnish to Lender, upon request, receipted bills of the
appropriate taxing authority or other documentation reasonably satisfactory to
Lender evidencing the payment thereof. If Borrower shall fail to pay
any Imposition in accordance with this Section and is not contesting or causing
a contesting of such Imposition in accordance with Section 4.04 hereof, or if
there are insufficient funds in the Basic Carrying Costs Escrow
Account to pay any Imposition, Lender shall have the right, but shall not be
obligated, to pay that Imposition, and Borrower shall repay to Lender, on
demand, any amount paid by Lender, with interest thereon at the Default Rate
from the date of the advance thereof to the date of repayment, and such amount
shall constitute a portion of the Debt secured by the Mortgages.
(b) Borrower
shall, prior to the date upon which any fine, penalty, interest or cost for the
nonpayment is imposed, pay or cause to be paid all charges payable by Borrower
for electricity, power, gas, water and other services and utilities in
connection with the Projects, and shall, upon request, which request shall not
be made more than twice during any 12-month period, unless a Default shall have
occurred and be continuing, deliver to Lender receipts or other documentation
reasonably satisfactory to Lender evidencing payment thereof. If
Borrower shall fail to pay any amount required to be paid by Borrower pursuant
to this Section 4.01 and is not contesting such charges in accordance with
Section 4.04 hereof, Lender shall have the right, but shall not be obligated, to
pay that amount, and Borrower will repay to Lender, promptly after demand, any
amount paid by Lender with interest thereon at the Default Rate from the date of
the advance thereof to the date of repayment, and such amount shall constitute a
portion of the Debt secured by the Mortgages.
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(c) Borrower
shall pay all taxes, charges, filing, registration and recording fees, excises
and levies imposed upon Lender by reason of or in connection with its ownership
of any Loan Document or any other instrument related thereto, or resulting from
the execution, delivery and recording of, or the lien created by, or the
obligation evidenced by, any of them, other than income, franchise and other
similar taxes imposed on Lender and shall pay all corporate stamp taxes, if any,
and other taxes, required to be paid on the Loan Documents. If
Borrower shall fail to make any such payment within ten (10) Business Days after
written notice thereof from Lender, Lender shall have the right, but shall not
be obligated, to pay the amount due, and Borrower shall reimburse Lender
therefor, on demand, with interest thereon at the Default Rate from the date of
the advance thereof to the date of repayment, and such amount shall constitute a
portion of the Debt secured by the Mortgages. Prior to the earlier to
occur of an Event of Default and the Maturity Date, Borrower’s payment
obligations under this Section 4.01(c) shall be limited to the extent of funds
in the Cash Collateral Escrow Account available for such purpose pursuant to
Section 5.11(b)(viii) hereof.
Section
4.02. Deduction from
Value. In
the event of the passage after the date of this Agreement of any Legal
Requirement deducting from the value of the Projects for the purpose of
taxation, any lien thereon or changing in any way the Legal Requirements now in
force for the taxation of this Agreement and/or the Debt for federal, state or
local purposes, or the manner of the operation of any such taxes so as to
adversely affect the interest of Lender, or impose any tax or other charge on
any Loan Document, then Borrower will pay such tax, with interest and penalties
thereon, if any, within the statutory period. In the event the
payment of such tax or interest and penalties by Borrower would be unlawful, or
taxable to Lender or unenforceable or provide the basis for a defense of usury,
then in any such event, Lender shall have the option, by written notice of not
less than one hundred twenty (120) days, to declare the Debt immediately due and
payable, with no prepayment fee or charge of any kind. Prior to the
earlier to occur of an Event of Default and the Maturity Date, Borrower’s
payment obligations under this Section 4.02 shall be limited to the extent of
funds in the Cash Collateral Escrow Account available for such purpose pursuant
to Section 5.11(b)(viii) hereof.
Section
4.03. No Joint
Assessment. Borrower
shall not consent to or initiate the joint assessment of any Project (a) with
any other real property constituting a separate tax lot and Borrower represents
and covenants that each Project is and shall remain one or more separate tax
lots or (b) with any portion of such Project 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 such Project as a single lien.
Section
4.04. Right to
Contest. Borrower
shall have the right, after prior notice to Lender, at its sole expense, to
contest by appropriate legal proceedings diligently conducted in good faith,
without cost or expense to Lender or any of its agents, employees, officers or
directors, the validity, amount or application of any Imposition or any charge
described in Section 4.01(b), provided that (a) no Event of Default shall exist
during such proceedings and such contest shall not (unless Borrower shall comply
with clause (d) of this Section 4.04) subject any of the Projects or any portion
thereof to any lien or affect the priority of the lien of any Mortgage, (b)
failure to pay such Imposition or charge will not subject Lender or any of its
agents, employees, officers or directors to any civil or criminal liability, (c)
the contest suspends enforcement of the Imposition or charge (unless Borrower
first pays the Imposition or charge), (d) prior to and during such contest,
Borrower shall furnish to Lender security satisfactory to Lender, in its
reasonable discretion, against loss or injury by reason of such contest or the
non-payment of such Imposition or charge (and if such security is cash, Lender
may deposit the same in an interest-bearing account and interest accrued
thereon, if any, shall be deemed to constitute a part of such security for
purposes of this Agreement and the Mortgages, but Lender (i) makes no
representation or warranty as to the rate or amount of interest, if any, which
may accrue thereon and shall have no liability in connection therewith and (ii)
shall not be deemed to be a trustee or fiduciary with respect to its receipt of
any such security and any such security may be commingled with other monies of
Lender), (e) such contest shall not materially and adversely affect the
ownership, use or occupancy of any of the Projects, (f) none of the Projects or
any part thereof or any interest therein shall not be in any danger of being
sold, forfeited or lost by reason of such contest by Borrower, (g) Borrower has
given Lender notice of the commencement of such contest and upon request by
Lender, from time to time, notice of the status of such contest by Borrower
and/or confirmation of the continuing satisfaction of clauses (a) through (f) of
this Section 4.04, and (h) upon a final determination of such contest, Borrower
shall promptly comply with the requirements thereof. Upon completion
of any contest, Borrower shall immediately pay the amount due, if any, and
deliver to Lender proof of the completion of the contest and payment of the
amount due, if any, following which Lender shall return the security, if any,
deposited with Lender pursuant to clause (d) of this Section
4.04. Borrower shall not pay any Imposition in installments unless
permitted by applicable Legal Requirements, and shall, upon the request of
Lender, deliver copies of all notices and bills relating to any Imposition or
other charge covered by this Article IV to Lender.
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Section
4.05. No Credits on Account of the
Debt. Borrower
will not claim or demand or be entitled to any credit or credits on account of
the Debt for any part of the Impositions assessed against any of the Projects or
any part thereof and no deduction shall otherwise be made or claimed from the
taxable value of any of the Projects, or any part thereof, by reason of this
Agreement or the Debt. In the event such claim, credit or deduction
shall be required by Legal Requirements, Lender shall have the option, by
written notice of not less than thirty (30) days, to declare the Debt
immediately due and payable, and Borrower hereby agrees to pay such amounts not
later than one hundred twenty (120) days after such notice.
Section
4.06. Documentary
Stamps. If,
at any time, the United States of America, any State or Commonwealth thereof or
any subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, any of the Mortgages, this Agreement or any other Loan
Document, or impose any other tax or charges on the same, Borrower will pay the
same, with interest and penalties thereon, if any. Prior to the
earlier to occur of an Event of Default and the Maturity Date, Borrower’s
payment obligations under this Section 4.06 shall be limited to the extent of
funds in the Cash Collateral Escrow Account available for such purpose pursuant
to Section 5.11(b)(viii) hereof.
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ARTICLE
V
CENTRAL CASH
MANAGEMENT
Section
5.01. Available
Cash. Borrower
hereby acknowledges and agrees that all cash derived from (a) Rents (which for
the purposes of this Section 5.01 shall not include security deposits from
tenants under Leases held by Borrower and not applied towards Rent), (b) Loss
Proceeds, (c) Excess Net Sales Proceeds and (d) other sources (to include
elective capital contributions by the owners of Borrower) shall be transferred
or deposited into the Central Account and then utilized (i) to fund the Basic
Carrying Costs Sub-Account, (ii) to fund the Operating Expense Sub-Account,
(iii) to make the Required Debt Service Payment by funding the Debt Service
Payment Sub-Account, (iv) to fund the Recurring Replacement Reserve Sub-Account
and (v) to fund the Reletting Reserve Sub-Account. Borrower shall
cause Manager to collect all security deposits from tenants under valid Leases,
which shall be held by Manager, as agent for Borrower, in accordance with
applicable law and, if in cash, and required by Legal Requirements to be
maintained in a segregated account, in a segregated demand deposit bank account
at Signature Bank, or such other commercial or savings bank or banks as may be
selected by Borrower and reasonably satisfactory to Lender (the “Security
Deposit Account”). Borrower shall notify Lender of any security
deposits held as letters of credit and, upon Lender’s request, such letters of
credit shall be promptly delivered to Lender. Borrower shall have no
right to withdraw funds from the Security Deposit Account; provided that, except
during the continuance of an Event of Default, Borrower may withdraw funds from
the Security Deposit Account to refund or apply security deposits as required or
permitted by the Leases or by applicable Legal Requirements. During
the continuance of an Event of Default, all withdrawals from the Security
Deposit Account must be approved by Lender, which approval shall not be withheld
(and shall be granted promptly) if a refund or application of such security
deposits is required by the Leases or by the applicable Legal
Requirements. Borrower shall cause all Rent which is due and payable
to Borrower pursuant to the terms of the Leases (other than security deposits
under valid Leases which are held in the Security Deposit Account) to be paid
through automated clearing house funds (“ACH”), by Federal wire or by check
directly to the Clearing Account. Pursuant to the Clearing Account
Agreement, Borrower shall cause the Clearing Account Bank to transfer on each
Business Day all available funds on deposit in the Clearing Account to the
Central Account. Borrower shall give each tenant under a Lease an
irrevocable direction in the form of Exhibit E attached hereto and made a part
hereof to deliver all rent payments made by tenants and other payments
constituting Rent directly to the Clearing Account and shall deliver copies of
such letters to Lender, together with an Officer’s Certificate certifying that
such letters were mailed to each tenant under the Leases promptly after the
Closing Date. If, notwithstanding the foregoing, any Rent is received
by Borrower or Manager, then (a) such amounts shall be held in trust for the
benefit, and as the property, of Lender, (b) such amounts shall not be
commingled with any other funds or property of Borrower or Manager and (c)
Borrower or Manager shall deposit such amounts in the Clearing Account within
three (3) Business Days of receipt. Upon execution of any Space Lease
after the Closing Date, Borrower shall deliver to Lender a copy of the
irrevocable direction letter referred to above, the receipt of which has been
acknowledged by the tenant under such Space Lease. Lender may elect
for Cause to change the financial institution in which the Clearing Account and
Central Account shall be maintained; however, Lender shall give Borrower not
fewer than five (5) Business Days’ prior notice of such change. All
fees and charges of the bank(s) in which the Clearing Account and Central
Account is located shall be paid by Borrower. For purposes of this
Section 5.01, “Cause” shall mean (i)
any financial institution which maintains the Clearing Account or the Central
Account shall be in default of the Clearing Account Agreement or any other
agreement relating to the Clearing Account and/or the Central Account, (ii)
Lender reasonably determines that the financial condition of such financial
institution has deteriorated materially, or (iii) an Event of Default shall have
occurred and be continuing.
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Section
5.02. Establishment of
Accounts. Lender
has established the Escrow Accounts and the Central Account in the name of
Lender as secured party. The Escrow Accounts, the Central Account and
the Clearing Account shall be under the sole dominion and control of Lender and
funds held therein shall not constitute trust funds. Borrower hereby
irrevocably directs and authorizes Lender to withdraw funds from the Central
Account, Clearing Account and the Escrow Accounts, all in accordance with the
terms and conditions of this Agreement. Borrower shall have no right
of withdrawal in respect of the Clearing Account, Central Account or the Escrow
Accounts. Each transfer of funds to be made hereunder shall be made
only to the extent that funds are on deposit in the Central Account or the
affected Sub-Account or Escrow Account, and Lender shall have no responsibility
to make additional funds available in the event that funds on deposit are
insufficient. The Central Account shall contain the Basic Carrying
Costs Sub-Account, the Debt Service Payment Sub-Account, the Recurring
Replacement Reserve Sub-Account, the Reletting Reserve Sub-Account and the Bank
Fees Sub-Account, each of which accounts shall be Eligible Accounts or
book-entry sub-accounts of an Eligible Account (each a “Sub-Account” and
collectively, the “Sub-Accounts”) to
which certain funds shall be allocated and from which disbursements shall be
made pursuant to the terms of this Agreement. Sums held in the Escrow
Accounts may be commingled with other monies held by Lender.
Section
5.03. Permitted
Investments. All
sums deposited into the Recurring Replacement Reserve Escrow Account, the
Reletting Reserve Escrow Account and the Cash Collateral Escrow Account may be
invested in Permitted Investments; however, Borrower acknowledges that Lender
makes no representation or warranty as to the rate of return earned
thereon. Lender shall not have any liability for any loss in
investments of funds in such Escrow Accounts and no such loss shall affect
Borrower’s obligation to fund, or liability for funding, the Central Account and
each Sub-Account and Escrow Account, as the case may be. Borrower
agrees that Lender shall include all such earnings on the aforesaid Escrow
Accounts as income of Borrower (and, if Borrower is a partnership, limited
liability company or other pass-through entity, the partners, members or
beneficiaries of Borrower, as the case may be) for federal and applicable state
and local tax purposes. All interest paid or other earnings on funds
deposited into the Escrow Accounts made hereunder shall be deposited into the
Central Account and shall be allocated to the Recurring Replacement Reserve
Escrow Account, the Reletting Reserve Escrow Account or the Cash Collateral
Escrow Account, as applicable. Borrower shall pay all costs, fees and
expenses incurred in connection with the establishment and maintenance of, or
the disbursement from any of the foregoing Escrow Accounts, which sums shall be
due and payable by Borrower upon demand and may be deducted by Lender from
amounts on deposit in the Central Account or the Escrow Accounts.
Section
5.04. Servicing
Fees. At
the option of Lender, the Loan may be serviced by Lender or by a servicer (the
“Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement to the Servicer. Borrower shall
pay all servicing fees of Servicer pursuant to the Servicer’s then standard
conditions and rates or of Lender, if Lender is servicing the Loan on its own
behalf, in any case, not to exceed two basis points (i.e., 0.02%) per annum paid
on the aggregate balance of the Principal Amount computed on the basis of the
actual number of days elapsed in a 360 day year.
68
Section
5.05. Monthly Funding of
Sub-Accounts and Escrow Accounts.
(a) On each
Payment Date during the term of the Loan, the funds derived from Rents, Loss
Proceeds, Excess Net Sales Proceeds and other sources (to include elective
capital contributions by the owners of Borrower) transferred or deposited into
the Central Account shall be allocated, notwithstanding any provisions to the
contrary in Section 5.01 hereof, among the Sub-Accounts as follows and in the
following priority:
(i) first, to the Basic
Carrying Costs Sub-Account, until an amount equal to the Basic Carrying Costs
Monthly Installment for such Current Month has been allocated to the Basic
Carrying Costs Sub-Account; and
(ii) second, to the
Operating Expense Sub-Account, until an amount equal to the Approved Payables
for the Fiscal Operating Month which ends on the day immediately preceding the
date that Borrower submits an Expense Schedule with respect to the Payment Date
in question, has been allocated to the Operating Expense
Sub-Account;
(iii) third, to the Debt
Service Payment Sub-Account, until an amount equal to the Required Debt Service
Payment for the Payment Date occurring in such Current Month has been allocated
to the Debt Service Payment Sub-Account;
(iv) fourth, to the
Recurring Replacement Reserve Sub-Account, until an amount equal to the
Recurring Replacement Reserve Monthly Installment for such Current Month has
been allocated to the Recurring Replacement Reserve Sub-Account;
(v) fifth, to the
Reletting Reserve Sub-Account, until an amount equal to the Reletting Reserve
Monthly Installment for such Current Month has been allocated to the Reletting
Reserve Sub-Account;
(vi) sixth, to the Cash
Collateral Sub-Account an amount equal to all remaining funds then on deposit in
the Central Account.
(b) On each
Payment Date, provided that no Event of Default exists, amounts held in the
Sub-Accounts will be transferred or disbursed, as applicable, as
follows: (i) sums held in the Basic Carrying Costs Sub-Account shall
be transferred to the Basic Carrying Costs Escrow Account; (ii) sums held in the
Operating Expense Sub-Account shall be disbursed to Borrower; (iii) sums held in
the Debt Service Payment Sub-Account, together with any amounts deposited into
the Central Account that are either (y) Loss Proceeds that Lender has elected to
apply to reduce the Debt in accordance with the terms of Article III hereof or
(z) excess Loss Proceeds remaining after the completion of any restoration
required hereunder, shall be transferred to Lender to be applied towards the
Required Debt Service Payment, with any excess being applied to the Principal
Amount; (iv) sums held in the Recurring Replacement Reserve Sub-Account shall be
transferred to the Recurring Replacement Escrow Account; (v) sums held in the
Reletting Reserve Sub-Account shall be transferred to the Reletting Reserve
Escrow Account; and (vi) sums held in the Cash Collateral Sub-Account shall be
transferred to the Cash Collateral Escrow Account.
(c) The
failure of Borrower to make all of the payments required under clauses (i) and
(ii) of Section 5.05(a) in full on each Payment Date shall constitute an Event
of Default under this Agreement, irrespective of the amount of funds on deposit
in the Central Account; provided, however, if adequate funds are available in
the Central Account for such payments or are available pursuant to the last
sentence of Section 5.11(b), the failure by the Bank to allocate such funds to
the appropriate Sub-Accounts shall not constitute an Event of Default and any
funds in the Cash Collateral Escrow Account will be disbursed by Lender pursuant
to Section 5.11(b) hereof. However, notwithstanding anything to the
contrary provided in this Agreement, the lack of sufficient funds in the Central
Account to make the payments required under clauses (iii) through (v), inclusive
(it being agreed that clause (vi) imposes no obligation upon Borrower) of
Section 5.05(a) in full on each Payment Date shall not constitute an Event of
Default, provided that Borrower complies with its obligation under the first
sentence of Section 5.01 to cause all cash to be deposited in the Central
Account.
69
(d) (i) On
or before the day that is seven (7) days prior to each Payment Date (such day,
the “Expense Schedule
Submission Date”), Borrower shall deliver to Lender, for its approval,
not to be unreasonably withheld, a schedule of Operating Expenses that Borrower
proposes to pay, on or after the Payment Date in question, which Operating
Expenses relate to the Fiscal Operating Month that ended on the date immediately
preceding such Expense Schedule Submission Date (the “Expense
Schedule”). Lender will approve or disapprove such Expense
Schedule within three (3) Business Days after its receipt thereof and Lender’s
failure to approve or disapprove any or all of such Operating Expenses shall be
deemed to be Lender’s disapproval thereof (the Operating Expenses so approved by
Lender for payment shall be referred to herein as the “Approved
Payables”). Any Operating Expense on the Expense Schedule that
is, by definition, an Approved Operating Expense, shall be deemed to have been
approved by Lender and shall not require Lender’s further approval under this
subsection (d). In no event shall the Expense Schedule include Basic
Carrying Costs, income taxes, debt service, extraordinary non-recurring costs,
Capital Expenditures, any expenses paid with funds released from any escrow or
reserve accounts, or non-cash charges or expenses such as depreciation or
amortization (by way of example and not by limitation).
(ii) On or prior to the
delivery to Lender of each Expense Schedule, Borrower shall deliver to Lender an
Officer’s Certificate setting forth a detailed list of all Operating Expenses
which were actually paid by Borrower pursuant to the previously delivered
Expense Schedule, which Officer’s Certificate shall, upon Lender's
request, be accompanied by invoices for such Operating Expenses and such
documentation as is reasonably acceptable to Lender evidencing that such
Operating Expenses were paid (such Officer’s Certificate, together with the
supporting documentation, the “Monthly True-Up Operating
Expense Statement” and the Operating Expenses set forth therein which are
accompanied (at Lender's request) by the invoices and evidence of payment
required under this subsection (d) (ii), the “Actual Monthly Operating
Expenses”). If the Actual Monthly Operating Expenses for the
Interest Accrual Period immediately preceding the applicable Payment Date are
less than the amount of the Approved Payables disbursed to Borrower pursuant to
Section 5.05(b)(ii) on such Payment Date (the amount by which the Approved
Payables exceed the Actual Monthly Operating Expenses, the (“Excess Monthly Operating
Expense Payment”), then the amount to be disbursed to Borrower pursuant
to Section 5.05(b)(ii) on the next succeeding Payment Date shall be reduced by
an amount equal to the Excess Monthly Operating Expense Payment.
70
(e) Borrower
agrees that, during the existence of any Event of Default, Lender shall have the
right to apply all or any portion of the funds in the Central Account or any
Sub-Account or Escrow Account to the Debt in Lender’s sole
discretion.
Section
5.06. Payment of Basic Carrying
Costs. Subject
to the following provisions of this Section 5.06, Borrower hereby agrees to pay
all Basic Carrying Costs (without regard to the amount of money in the Basic
Carrying Costs Sub-Account or the Basic Carrying Costs Escrow
Account). Provided that no Event of Default has occurred, Lender
shall make payment of the Basic Carrying Costs out of the Basic Carrying Costs
Escrow Account before same shall be delinquent, provided, however, that if there
are not sufficient funds available in the Basic Carrying Costs Escrow Account,
Lender shall not be obligated to release funds to pay any Basic Carrying Costs,
unless Borrower demonstrates to Lender’s reasonable satisfaction that Borrower
has paid or will pay any such deficiency and/or that funds in an amount
sufficient to pay such deficiency are on deposit in the Cash Collateral Escrow
Account and available for such purpose pursuant to this
Agreement. Upon Lender’s request, Borrower shall furnish Lender with
bills and all other documents necessary, as reasonably determined by Lender, for
the payment of the Basic Carrying Costs which are then due and
payable. Borrower’s obligation to pay (or cause Lender to pay) Basic
Carrying Costs pursuant to this Agreement shall include, to the extent permitted
by applicable law, Impositions resulting from future changes in law which impose
upon Lender an obligation to pay any property taxes or other
Impositions. Notwithstanding the foregoing provisions of this Section
5.06, Lender acknowledges that Borrower has advised Lender that Borrower
maintains a blanket insurance policy to cover the Projects and pays the premiums
for such policy in advance. Upon presentation to Lender of evidence
reasonably satisfactory to Lender of the payment of such premiums, provided that
no Event of Default has occurred, Lender agrees to release to Borrower from the
Basic Carrying Costs Escrow Account (to the extent of funds on deposit therein)
funds in an amount required to reimburse Borrower for the premiums so
paid. Provided that no Event of Default shall exist, all funds
deposited into the Basic Carrying Costs Escrow Account shall be held by Lender
pursuant to the provisions of this Agreement and shall be applied in payment of
Basic Carrying Costs in accordance with the terms hereof. Should an
Event of Default exist, the sums on deposit in the Basic Carrying Costs
Sub-Account and the Basic Carrying Costs Escrow Account may be applied by Lender
in payment of any Basic Carrying Costs or may be applied to the payment of the
Debt or any other charges affecting all or any portion of any of the Projects as
Lender in its sole discretion may determine; provided, however,
that no such application shall be deemed to have been made by operation of law
or otherwise until actually made by Lender as herein provided.
Section
5.07. Reletting Reserve Escrow
Account. Borrower
hereby agrees to pay all Reletting Expenditures (subject to the amount of money
then on deposit in the Reletting Reserve Escrow Account, the Reletting Reserve
Sub-Account or the Cash Collateral Reserve Account and available for such
purpose pursuant to this Agreement). Upon the execution of any Space
Lease with respect to which Borrower is obligated to undertake or pay for any
Reletting Expenditures, Borrower shall submit to Lender (a) a budget (a “Budget”) outlining in
reasonable detail all of the material expenses relating to said Reletting
Expenditures, (b) with respect to a Lease other than a Major Space Lease, a copy
of the signed Lease to which said Reletting Expenditures relate which is
otherwise in compliance with the provisions of this Agreement, (c) a copy of the
plans and specifications for the proposed Reletting Expenditures (to the extent
applicable), and (d) an Officer’s Certificate with respect to the items referred
to in clauses (a) through (c) and, as applicable, setting forth an anticipated
completion date for the Reletting Expenditures (other than leasing
commissions). Thereafter, provided that no Event of Default shall
exist and that Lender has received a written request from Borrower for payment
or reimbursement of any costs incurred in connection with any Reletting
Expenditures or a portion thereof, together with (i) copies of bills for such
Reletting Expenditures and, if requested by Lender with respect to any single
line item costing in excess of $10,000.00, unconditional lien waivers (other
than conditioned upon payment of the amount requested), (ii) a statement from an
Architect or Engineer, indicating that the Reletting Expenditures or portion
thereof in question have been completed in compliance with all Legal
Requirements, and (iii) such other documentation as may be reasonably requested
by Lender to establish that the Reletting Expenditures (other than leasing
commissions) or portion thereof which are the subject of such request have been
completed, all of which are reasonably acceptable in form and substance to
Lender, Lender shall disburse within five (5) Business Days after such request
to Borrower the amount requested in connection with such Reletting
Expenditures. Borrower may make a request for disbursement of sums
from the Reletting Reserve Escrow Account no more than twice during any month
and any request shall be in a minimum amount of $25,000 (except for the final
disbursement, which may be less than $25,000). With respect to any
Reletting Expenditures that constitute brokerage commissions, upon the receipt
of (x) copies of bills for such Reletting Expenditures and (y) with respect to
each Lease other than a Major Space Lease, a copy of the signed Lease to which
said Reletting Expenditures relate which Lease is in compliance with the
provisions of this Agreement, Lender shall disburse to Borrower the amount
requested to pay for such Reletting Expenditures out of the Reletting Reserve
Escrow Account. Lender shall not be required to make any
disbursements out of the Reletting Reserve Escrow Account if (i) an Event of
Default shall exist, (ii) more than two such requests are made in any month or
(iii) sufficient funds are not available in the Reletting Reserve Sub-Account
and/or on deposit in the Cash Collateral Escrow Account and available for such
purpose pursuant to this Agreement. Provided that no Event of Default
shall exist, all funds deposited into the Reletting Reserve Escrow Account shall
be held by Lender pursuant to the provisions of this Agreement and shall be
applied in payment of Reletting Expenditures. Should an Event of
Default exist, the sums on deposit in the Reletting Reserve Escrow Account may
be applied by Lender in payment of any Reletting Expenditures or may be applied
to the payment of the Debt or any other charges affecting all or any portion of
the Projects, as Lender, in its sole discretion, may determine; provided, however,
that no such application shall be deemed to have been made by operation of law
or otherwise until actually made by Lender as herein provided.
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Section
5.08. Recurring Replacement
Reserve Escrow Account. Borrower
hereby agrees to pay all Recurring Replacement Expenditures with respect to each
of the Projects (subject to the amount of money then on deposit in the Recurring
Replacement Reserve Sub-Account or the Recurring Replacement Reserve Escrow
Account and/or on deposit in the Cash Collateral Escrow Account and available
for such purpose pursuant to this Agreement). Provided that Lender
has received written notice from Borrower at least five (5) Business Days prior
to the due date of any payment relating to Recurring Replacement Expenditures
and not more frequently than once each month, and further provided that no Event
of Default exists, that there are sufficient funds available in the Recurring
Replacement Reserve Escrow Account and Borrower shall have theretofore furnished
Lender with copies of bills, invoices and other documentation as may be
reasonably required by Lender to establish that the Recurring Replacement
Expenditures which are the subject of such request represent amounts due for
completed or partially completed capital work and improvements performed at the
Projects, Lender shall promptly make such payments out of the Recurring
Replacement Reserve Escrow Account.
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Provided
that no Event of Default shall exist, all funds deposited into the Recurring
Replacement Reserve Escrow Account shall be held by Lender pursuant to the
provisions of this Agreement and shall be applied in payment of Recurring
Replacement Expenditures. Should an Event of Default exist, the sums
on deposit in the Recurring Replacement Reserve Sub-Account and the Recurring
Replacement Reserve Escrow Account may be applied by Lender in payment of any
Recurring Replacement Expenditures or may be applied to the payment of the Debt
or any other charges affecting all or any portion of the Projects, as Lender in
its sole discretion may determine; provided, however,
that no such application shall be deemed to have been made by operation of law
or otherwise until actually made by Lender as herein provided.
Section
5.09. [Reserved]
(a) .
Section
5.10. [Reserved].
Section
5.11. Cash Collateral Escrow
Account.
(a) Pursuant
to Section 5.05(b) all funds on deposit in the Cash Collateral Sub-Account shall
be transferred to the Cash Collateral Escrow Account. All funds on
deposit in the Cash Collateral Escrow Account shall be held and disbursed by
Lender pursuant to the provisions of this Agreement. Amounts in the
Cash Collateral Escrow Account are to be used solely and exclusively for the
purposes of making the payments described in subsection (b) below.
(b) So long
as no Event of Default exists, subject to the foregoing provisions of subsection
(a), Lender shall disburse on each Payment Date from the balance on deposit in
the Cash Collateral Escrow Account, pro tanto, the following amounts (in the
following order): (i) first, to Borrower, the amount necessary for Borrower to
pay, in full, the Reletting Expenditures payable during the month ending on the
day preceding the Payment Date in question (if but only to the extent that funds
are not otherwise available for such purpose from the Reletting Reserve Escrow
Account, it being agreed that no funds in the Cash Collateral Escrow Account
will be applied to the payment of Reletting Expenditures prior to the
application of all funds on deposit in the Reletting Reserve Escrow Account),
provided that Borrower has complied fully with all of the terms and conditions
set forth in Section 5.07 hereof for the disbursement of funds from the
Reletting Reserve Escrow Account for the payment of Reletting Expenditures, (ii)
then, to Lender, the amount required to pay, in full, the aggregate amount of
any Shortfall Interest (as defined in the Note), (iii) then, to Borrower, the
amount necessary for Borrower to pay, in full, the Recurring Replacement
Expenditures payable during the month ending on the day preceding the Payment
Date in question (if but only to the extent that funds are not otherwise
available for such purpose from the Recurring Replacement Reserve Escrow
Account, it being agreed that no funds in the Cash Collateral Escrow Account
will be applied to the payment of Recurring Replacement Expenditures prior to
the application of all funds on deposit in the Recurring Replacement Reserve
Escrow Account), provided that Borrower has complied fully with all of the terms
and conditions set forth in Section 5.08 hereof for the disbursement of funds
from the Recurring Replacement Reserve Escrow Account for the payment of
Recurring Replacement Expenditures, (iv) then, to Lender, the amount required to
pay, in full, the amount of any CD Interest, but only on the Maturity Date, (v)
then, to Lender, the unpaid Principal Amount, no earlier than the Maturity Date,
(vi) then, to Lender, all Default Interest, (vii) then, to Lender, all late
Charges, (viii) then, to Lender, any other charges and sums due under this
Agreement, the Note or any of the other Loan Documents, and (ix) last, to
Lender, all Participation Interest on the Maturity Date or the earlier repayment
in full of the Debt in connection with an Acceptable Refinancing or otherwise
(the aggregate amount of the funds disbursed during the Term pursuant to the
preceding clauses (i) through (iv), inclusive, and (vi) through (viii),
inclusive, is herein referred to as the “CCEA
Disbursements”). Funds on deposit in the Cash Collateral
Escrow Account shall not be used for any other purpose, provided, however, that
if, on any Payment Date, the funds then on deposit in the Central Account are
not sufficient to make the payments required under Sections 5.05(a)(i) and (ii)
hereof, then, if there are funds then on deposit in the Cash Collateral Escrow
Account, such funds may be utilized to make the payments required under Sections
5.05(a)(i) and (ii) hereof prior to the application of such funds for the
purposes described in the preceding clauses (i) through (viii), inclusive; provided, that during
the ninety (90) day period prior to the Maturity Date, funds shall not be
released from the Cash Collateral Escrow Account for the payment of any asset
and property management fees or construction management fees to any Affiliate of
Borrower pursuant to the Approved Management Agreement; provided, however, that the
foregoing fees may be paid upon the Maturity Date or earlier repayment in full
of the Debt in connection with an Acceptable Refinancing or otherwise, which
fees shall be paid immediately prior to the payment of Participation
Interest. If, following the indefeasible payment in full of the Debt,
there remain any funds on deposit in the Cash Collateral Escrow Account, Lender
shall release fifty percent (50%) of such funds to Borrower and shall retain the
remaining fifty percent (50%) thereof as additional interest under the
Loan.
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(c) Should an
Event of Default exist, the sums on deposit in the Cash Collateral Escrow
Account may be applied by Lender in payment of any Reletting Expenditures for
any of the Projects, in payment of all accrued and unpaid interest (including
all Shortfall Interest and CD Interest), if any, or may be applied to the
payment of the Debt or any other charges affecting all or any portion of any of
the Projects as Lender, in its sole discretion, may determine; provided,
however, that no such application shall be deemed to have been made by operation
of law or otherwise until actually made by Lender as herein
provided.
Section
5.12. [Reserved].
Section
5.13. Loss
Proceeds. In
the event of a casualty to any Project, unless Lender elects, or is required
pursuant to Article III hereof to make all of the Insurance Proceeds available
to Borrower for restoration, Lender and Borrower shall cause all such Insurance
Proceeds to be paid by the insurer directly to the Central Account, whereupon
Lender shall, after deducting Lender’s reasonable costs of recovering and paying
out such Insurance Proceeds, including without limitation, reasonable attorneys’
fees, apply same to reduce the Debt in accordance with the terms of the Note;
provided,
however, that if Lender elects, is required to elect or is deemed to have
elected, to make the Insurance Proceeds available for restoration, all Insurance
Proceeds in respect of rent loss, business interruption or similar coverage
shall be maintained in the Central Account, to be applied by Lender in the same
manner as Rent received with respect to the operation of the Projects; provided,
further, however, that in the event that the Insurance Proceeds with respect to
such rent loss, business interruption or similar insurance policy are paid in
one or more lump sums in advance, Lender shall hold such Insurance Proceeds in a
segregated interest-bearing escrow account, which shall be an Eligible Account,
shall estimate, in Lender’s reasonable discretion, the number of months required
for Borrower to restore the damage caused by the casualty, shall divide the
aggregate rent loss, business interruption or similar Insurance Proceeds by such
number of months, and shall disburse from such bank account into the Central
Account each month during the performance of such restoration such monthly
installment of said Insurance Proceeds. In the event that Insurance
Proceeds are to be applied toward restoration, Lender shall hold such funds in a
segregated bank interest-bearing account at the Bank, which shall be an Eligible
Account, and shall disburse same in accordance with the provisions of Section
3.04 hereof. Unless Lender elects, or is required pursuant to Section
6.01 hereof to make all of the Condemnation Proceeds available to Borrower for
restoration, Lender and Borrower shall cause all such Condemnation Proceeds to
be paid to the Central Account, whereupon Lender shall, after deducting Lender’s
reasonable costs of recovering and paying out such Condemnation Proceeds,
including without limitation, reasonable attorneys’ fees, apply same to reduce
the Debt in accordance with the terms of the Note; provided, however,
that any Condemnation Proceeds received in connection with a temporary Taking
shall be maintained in the Central Account, to be applied by Lender in the same
manner as Rent received with respect to the operation of the Projects; provided,
further, however, that in the event that the Condemnation Proceeds of any such
temporary Taking are paid in a lump sum in advance, Lender shall hold such
Condemnation Proceeds in a segregated interest-bearing bank account, which shall
be an
74
Eligible
Account, shall estimate, in Lender’s reasonable discretion, the number of months
that the Project shall be affected by such temporary Taking, shall divide the
aggregate Condemnation Proceeds in connection with such temporary Taking by such
number of months, and shall disburse from such bank account into the Central
Account each month during the pendency of such temporary Taking such monthly
installment of said Condemnation Proceeds. In the event that
Condemnation Proceeds are to be applied toward restoration, Lender shall hold
such funds in a segregated interest-bearing bank account at the Bank, which
shall be an Eligible Account, and shall disburse same in accordance with the
provisions of Section 3.04 hereof. If any Loss Proceeds are received
by Borrower, such Loss Proceeds shall be received in trust for Lender, shall be
segregated from other funds of Borrower, and shall be forthwith paid into the
Central Account, or paid to Lender to hold in a segregated interest-bearing bank
account at the Bank, in each case to be applied or disbursed in accordance with
the foregoing. Any Loss Proceeds (other than proceeds of business
interruption, loss of rents or a temporary taking) made available to Borrower
for restoration in accordance herewith, to the extent not used by Borrower in
connection with, or to the extent they exceed the cost of, such restoration,
shall be deposited into the Central Account, whereupon Lender shall apply the
same to reduce the Debt in accordance with the terms of the Note.
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Section
5.14. [Reserved].
Section
5.15. [Reserved].
Section
5.16. REIT Limitations on
Investment of Sums in Escrow Accounts. (a) Notwithstanding
anything herein to the contrary, Lender hereby acknowledges the status of MCC as
a real estate investment trust (“REIT”) and Lender
agrees that it shall only invest amounts held in the Escrow Accounts in a manner
that is not inconsistent with the status of MCC as a REIT and which will not
cause MCC to fail: (a) the annual gross income tests set forth in Section
856(c)(2) and (3) of the Code; and (b) the quarterly assets tests set forth in
Section 856(c)(4) of the Code and which minimizes federal, state and local
income and excise taxes incurred by MCC or any of its Affiliates, including
taxes under Section 857(b), 860(c) and 4981 of the Code.
(b) Lender
may invest the sums held in the Escrow Accounts in Permitted
Investments. Notwithstanding anything herein to the contrary, the
Lender shall not invest the sums held in the Escrow Accounts, except as set
forth in this Section 5.16, without the prior written approval of the Manager,
which consent shall not be unreasonably withheld, conditioned or
delayed.
ARTICLE
VI
CONDEMNATION
Section
6.01. Condemnation. (a) Borrower
shall notify Lender promptly of the commencement or threat of any Taking of all
or any portion of a Project. Lender is hereby irrevocably appointed
as Borrower’s attorney-in-fact, coupled with an interest, with exclusive power
to collect, receive and retain the proceeds of any such Taking in accordance
with the terms of this Agreement, Borrower shall not make any compromise or
settlement in connection with such proceedings without the prior written consent
of Lender, which consent shall not be unreasonably withheld or delayed (except
during the existence of an Event of Default, in which event Borrower’s approval
shall not be required), provided, however,
that Borrower may, without Lender’s consent, compromise or settle any such
proceeding with respect to Condemnation Proceeds in an amount less than five
percent (5%) of the Allocated Loan Amount of the affected
Project. Borrower shall execute and deliver to Lender any and all
instruments reasonably required in connection with any such proceeding promptly
after request therefor by Lender. All Condemnation Proceeds are
hereby assigned to and shall be paid to Lender. If any Condemnation
shall result in the actual constructive loss of fifteen percent (15%) or more of
the fair market value of any Project, Lender shall have the option, in Lender’s
sole discretion, to apply such Condemnation Proceeds (less any cost to Lender of
recovering and paying out such proceeds, including, without limitation,
reasonable attorneys’ fees and disbursements and costs allocable to inspecting
any repair, restoration or rebuilding work and the plans and specifications
therefor), toward the payment of the Debt or to allow such proceeds to be used
for the Work; provided, however, with respect
to any other Condemnation, Lender shall make such proceeds available to Borrower
for restoration in accordance with Section 3.04(b). In the event
Lender elects or is required to make Condemnation Proceeds available to be used
toward the restoration or rebuilding of the affected Project to a usable whole,
such Condemnation Proceeds shall be disbursed in the manner and subject to the
conditions set forth in Section 3.04(b) hereof. Any excess proceeds
remaining after completion of such restoration or rebuilding shall be applied to
the repayment of the Debt. If the Condemnation Proceeds are used to
reduce the Debt, they shall be applied in accordance with the provisions of the
Note with no prepayment fee or charge of any kind. In addition, in
the event that Lender shall elect to apply such Condemnation Proceeds to reduce
the Debt, the Allocated Loan Amount of the affected Project shall be
reduced on a dollar for dollar basis with the amount of proceeds so
applied, Borrower shall have the right to cause a Release of such
Project and in connection with such Release, the Release Amount shall
be the Allocated Loan Amount of such Project (as such Allocated Loan Amount may
have been increased pursuant to the definition thereof), as so
reduced. Borrower shall promptly execute and deliver all instruments
requested by Lender for the purpose of confirming the assignment of the
Condemnation Proceeds to Lender.
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(b) Application
of all or any part of the Condemnation Proceeds to the Debt shall be made in
accordance with the provisions of Sections 3.06 and 3.07 hereof. No
application of the Condemnation Proceeds to the reduction of the Debt shall have
the effect of releasing the lien of any Mortgage until the remainder of the Debt
has been paid in full; provided, however, (i) the
Allocated Loan Amount of such Project (as such Allocated Loan Amount may have
been increased pursuant to the definition thereof), shall be reduced on a dollar
for dollar basis with the amount of such Condemnation Proceeds, (ii) Borrower
may cause a Release of such Project in accordance with the terms and provisions
of this Agreement and the other Loan Documents, and (iii) the Release Amount of
such Project shall equal its remaining Allocated Loan Amount. In the
case of any Taking, Lender, to the extent that Lender has not been reimbursed by
Borrower, shall be entitled, as a first priority out of any Condemnation
Proceeds, to reimbursement for all costs, fees and expenses reasonably incurred
in the determination and collection of any Condemnation Proceeds. All
Condemnation Proceeds deposited with Lender pursuant to this Section, until
expended or applied as provided herein, shall be held in accordance with Section
3.04(b) hereof and shall constitute additional security for the payment of the
Debt and the payment and performance of Borrower’s obligations, but Lender shall
not be deemed a trustee or other fiduciary with respect to its receipt of such
Condemnation Proceeds or any part thereof. All awards so deposited
with Lender shall be held by Lender in a segregated interest-bearing Eligible
Account but Lender makes no representation or warranty as to the rate or amount
of interest, if any, which may accrue on any such deposit and shall have no
liability in connection therewith. For purposes hereof, any reference
to the award shall be deemed to include interest, if any, which has accrued
thereon.
ARTICLE
VII
LEASING AND
MANAGEMENT
Section
7.01. Leases. (a) Borrower
shall deliver copies of all Space Leases, and amendments, modifications and
renewals thereof entered into after the date hereof, to Lender. All new Space
Leases shall provide for rental rates comparable to then existing local market
rates and terms and conditions which constitute good and prudent business
practice and are consistent with prevailing market terms and conditions, and,
except for Space Leases with the Manager not in excess of 4,000 square feet with
respect to any Project, shall be arms-length transactions. On the
Original Date, Borrower has delivered to Lender, and Lender has approved,
standard forms of Space Lease for the Projects, which provide that they are
subordinate to the Loan and that the lessees thereunder will attorn to
Lender.
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(b) Borrower
shall not enter into a proposed Major Space Lease or a proposed renewal,
extension or modification (affecting monetary terms and/or other terms that are
material in nature) of an existing Major Space Lease without the prior written
consent of Lender which consent shall not, so long as no Event of Default
exists, be unreasonably withheld or delayed (it being agreed and acknowledged by
Borrower that Lender may consider, in connection with a request for its consent
under this subsection (b), inter alia, the funds
anticipated to be generated by the Projects and the availability of the same
under Sections 5.05 and 5.11 to pay the anticipated tenant improvement costs and
leasing commissions); provided, however,
that with respect to any existing Major Space Lease, the foregoing shall not be
deemed to limit the right of any tenant to extend or renew its lease pursuant to
any such right or option in favor of any such tenant expressly set forth in its
Lease. Any request by Borrower for Lender’s approval of a proposed
Major Space Lease shall be in writing and shall be accompanied by a copy of such
proposed Major Space Lease, together with a summary of the material terms
thereof (including, but not limited to, the proposed tenant improvement costs
and leasing commissions) and a copy of such proposed lease as blacklined to show
changes from the Standard Lease Form approved by Lender. Lender shall
approve or disapprove each proposed Major Space Lease or proposed renewal,
extension or modification of an existing Major Space Lease for which Lender’s
approval is required under this Agreement within ten (10) Business Days after
the submission by Borrower to Lender of such written request for such approval,
after which such proposed Major Space Lease shall be deemed to have been
approved by Lender. If requested by Borrower, within five (5)
Business Days after request therefor, Lender will grant conditional approval of
proposed Major Space Leases or proposed renewals, extensions or modifications of
existing Major Space Leases based upon the initial summary of material terms,
provided that Lender shall retain the right to disapprove any such proposed
Major Space Lease or proposed renewal, extension or modification of an existing
Major Space 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 Major Space Lease or proposed renewal,
extension or modification of an existing Major Space Lease or if the form of
proposed Major Space Lease reflects material revisions to the Standard Lease
Form that are not either (y) required to reflect the approved terms and
conditions of the proposed Major Space Lease or (z) consistent with changes then
being made generally to lease documents in the then current leasing market for
comparable space in similar buildings in the locale of the Project in
question. If requested by Borrower with respect to a tenant (i) under
a proposed Major Space Lease, and/or (ii) that is a “national” or “credit”
tenant, Lender agrees to enter into its standard form of Subordination,
Non-disturbance and Attornment agreement with such tenant, with such revisions
to such form as are requested by the proposed tenant and are reasonably
acceptable to Lender.
(c) Any new
Space Lease or renewal, amendment and modification of any existing Space Lease
that does not constitute a Major Space Lease shall not be subject to the prior
approval of Lender; provided that (i) No Event of Default exists; (ii) the
proposed Space Lease shall be written substantially in accordance with the
standard form of Space Lease approved by Lender with respect to the applicable
Project, subject to arms-length negotiated terms in accordance with reasonable
commercial practices, (iii) the proposed Space Lease provide for rental rates
comparable to then existing local market rates and terms and conditions which
constitute good and prudent business practice and are consistent with prevailing
market terms and conditions, (iv) shall have a term (together with all renewal
options) of not greater than fifteen years and (v) Borrower demonstrates to
Lender that there are sufficient funds to pay the required tenant improvement
costs and leasing commissions, which are generated from the Projects and/or
available for such purpose under Sections 5.05 and 5.11 hereof.
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(d) Borrower
(i) shall observe and perform all of its material obligations under the Leases
pursuant to applicable Legal Requirements and shall not do or permit to be done
anything to impair the value of the Space Leases as security for the Debt; (ii)
shall promptly send copies to Lender of all material notices of default which
Borrower shall receive under the Space Leases; (iii) shall, consistent with the
Approved Manager Standard, enforce the material terms, covenants and conditions
contained in the Space Leases to be observed or performed; (iv) shall not
collect any of the Rents under the Space Leases more than one (1) month in
advance (except that Borrower may collect in advance such security deposits as
are permitted pursuant to applicable Legal Requirements and are commercially
reasonable in the prevailing market); (v) shall not execute any other assignment
of lessor’s interest in the Space Leases or the Rents except as otherwise
expressly permitted pursuant to this Agreement; (vi) shall not cancel or
terminate any of the Space Leases or accept a surrender thereof in any manner
inconsistent with the Approved Manager Standard; (vii) shall not convey,
transfer or suffer or permit a conveyance or transfer of all or any part of the
Projects or the Improvements or of any interest therein so as to effect a merger
of the estates and rights of, or a termination or diminution of the obligations
of, lessees thereunder; (viii) shall not, without Lender’s prior written
approval (not to be unreasonably withheld, conditioned or delayed) alter, modify
or change the material terms of any guaranty of any Major Space Lease or cancel
or terminate any such guaranty; (ix) shall, in accordance with the Approved
Manager Standard, make all reasonable efforts to seek lessees for space as it
becomes vacant and enter into Space Leases in accordance with the terms hereof;
(x) shall not, without Lender’s prior written approval (not to be unreasonably
withheld, conditioned or delayed) materially modify, alter or amend any Major
Space Lease or Property Agreement; and (xi) shall, without limitation to any
other provision hereof, execute and deliver at the request of Lender all such
further assurances, confirmations and assignments in connection with the
Projects as are required herein and as Lender shall from time to time reasonably
require.
(e) All
security deposits of lessees, whether held in cash or any other form, shall be
treated by Borrower as trust funds, but shall not be commingled with any other
funds of Borrower and, if cash, shall be deposited by Borrower in the Security
Deposit Account. Any bond or other instrument which Borrower is
permitted to hold in lieu of cash security deposits under applicable Legal
Requirements shall be maintained in full force and effect unless replaced by
cash deposits as hereinabove described, shall be issued by a Person reasonably
satisfactory to Lender, shall, if permitted pursuant to Legal Requirements, at
Lender’s option, name Lender as payee or mortgagee thereunder or be fully
assignable to Lender and shall, in all respects, comply with applicable Legal
Requirements and otherwise be reasonably satisfactory to
Lender. Borrower shall, upon request, provide Lender with evidence
reasonably satisfactory to Lender of Borrower’s compliance with the
foregoing. Following the occurrence and during the continuance of any
Event of Default, Borrower shall, upon Lender’s request, if permitted by
applicable Legal Requirements, turn over the security deposits (and any interest
thereon) to Lender to be held by Lender in accordance with the terms of this
Agreement, the Leases and all Legal Requirements.
79
Section
7.02. Management of
Projects. (a) Borrower
shall manage the Projects or cause the Projects to be managed in accordance with
the Approved Manager Standard.
(b) Borrower
covenants and agrees with Lender that (i) each Project will be managed by
Manager pursuant to the management agreements in effect, as of the Original
Date, which agreements were approved by Lender (collectively, the “Initial Management
Agreement”), until such time as the Initial Management Agreement is
replaced, as more particularly described in subsection (c) below,
(ii) after Borrower has knowledge of a fifty percent (50%) or more change
in the ultimate beneficial control of the ownership of Manager, Borrower will
promptly give Lender notice thereof (a “Manager Control
Notice”) and (iii) the Management Agreement may be terminated by Lender
at any time (A) for cause (including, but not limited to, Manager’s gross
negligence, misappropriation of funds, willful misconduct or fraud), or (B)
during the existence of an Event of Default, or (C) following the receipt of a
Manager Control Notice, or (D) that the Manager has defaulted in its obligations
beyond any applicable notice and cure period as set forth in the Management
Agreement, or (E) after the Manager takes an action or becomes the subject
of an action taken as to it that is described in Section 13.01(h) or (i) hereof,
but without giving effect to the qualifying proviso in Section 13.01(i), and a
substitute managing agent satisfying the Approved Manager Standard shall be
appointed by Borrower. Borrower may from time to time appoint a
successor manager to manage the Projects, provided that any such successor
manager shall be a reputable management company which meets the Approved Manager
Standard or is an Affiliate of Borrower. Borrower further covenants
and agrees that Borrower shall require Manager (or any successor managers) to
maintain at all times during the term of the Loan worker’s compensation
insurance as required by Governmental Authorities. Borrower
represents and warrants that the Initial Management Agreement, which is the
Approved Management Agreement, has not been amended or modified since the
Original Date, and remains in full force and effect.
(c) Borrower
(i) covenants and agrees that any replacement management agreements for the
Projects entered into by Borrower with Manager will be in form and substance
reasonably acceptable to Lender and shall be submitted to Lender for its
reasonable approval not less than five (5) Business Days prior to the date of
execution (such replacement management agreement, together with the Initial
Management Agreement, collectively, the “Management
Agreement”), and (ii) acknowledges that Borrower has entered into and has
caused Manager to enter into, for the benefit of Lender, a consent and
subordination agreement in the form executed and delivered by Manager and
Borrower to Lender on the Original Date.
ARTICLE
VIII
MAINTENANCE AND
REPAIR
Section
8.01. Maintenance and Repair of
the Projects; Alterations; Replacement of Equipment. Borrower
hereby covenants and agrees that:
80
(a) Borrower
shall not (i) desert or abandon any Project, (ii) change the use of any Project
or cause or permit the use or occupancy of any part of any Project to be
discontinued if such discontinuance or use change would violate any zoning or
other law, ordinance or regulation; (iii) consent to or seek any lowering of the
zoning classification, or greater zoning restriction affecting any Project; or
(iv) take any steps whatsoever to convert any Project, or any portion thereof,
to a condominium or cooperative form of ownership.
(b) Borrower
shall (i) take good care of all of the Projects including grounds generally, and
utility systems and sidewalks, roads, alleys, and curbs therein, and shall keep
the same in good, safe and insurable condition and in all material respects in
compliance with all applicable Legal Requirements, (ii) promptly make all
repairs to the Projects, above grade and below grade, interior and exterior,
structural and nonstructural, ordinary and extraordinary, unforeseen and
foreseen, and maintain the Projects in a manner appropriate for the facility, it
being agreed and understood that Borrower’s obligation under this Section
8.01(b)(ii) to make any payments in the nature of Recurring Replacement
Expenditures shall be limited to the amount of funds on deposit in the Recurring
Replacement Reserve Escrow Account and/or on deposit in the Cash Collateral
Escrow Account and available for such purpose pursuant to this Agreement and
(iii) not commit or suffer to be committed any waste of the Projects or do or
suffer to be done anything which will increase the risk of fire or other hazard
to any of the Projects or impair the value thereof. Borrower shall
keep the sidewalks, vaults, gutters and curbs comprising, or adjacent to, each
of the Projects, clean and free from dirt, snow, ice, rubbish and
obstructions. All repairs made by Borrower shall be made with
first-class materials, in a good and workmanlike manner, shall be equal or
better in quality to the original work and shall comply with all applicable
Legal Requirements and Insurance Requirements. To the extent any of
the above obligations are obligations of tenants under Space Leases or other
Persons under Property Agreements, Borrower may fulfill its obligations
hereunder by causing such tenants or other Persons, as the case may be, to
perform their obligations thereunder. As used herein, the terms
“repair” and “repairs” shall be deemed to include all necessary
replacements.
(c) Borrower
shall not demolish, remove, construct, or, except as otherwise expressly
provided herein, restore, or alter any of the Projects or any portion thereof;
nor consent to or permit any such demolition, removal, construction,
restoration, addition or alteration which would diminish the value of the
Projects. Borrower may, without Lender’s consent, perform alterations
to the Improvements and Equipment which (i) do not constitute a Material
Alteration (as hereinafter defined), (ii) could not reasonably be expected to
have a Material Adverse Effect on the applicable Project or to Borrower 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, conditioned or
delayed; provided,
however, Lender reserves the right to condition its consent to any
Material Alteration on the following: (i) such conditions as would be
required by a prudent interim construction lender, including, but not limited
to, the prior approval by Lender of plans and specifications, construction
budgets and the furnishing to Lender of evidence regarding funds, permits and
insurance, in form and substance reasonably satisfactory to Lender; and (iii)
Mortgagor’s agreement to pay all fees, costs and expenses reasonably incurred by
Mortgagee in granting such consent, including, without limitation, reasonable
attorneys’ fees and expenses. As used herein, “Material Alteration”
shall mean any alteration affecting structural elements of the applicable
Project the cost of which exceeds $500,000; provided, however, that in no
event shall (i) any Recurring Replacement Expenditures, (ii) any Reletting
Expenditures or (iii) alterations performed as part of a restoration after a
Casualty or Condemnation, constitute a Material Alteration.
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(d) Borrower
represents and warrants to Lender that (i) there are no fixtures, machinery,
apparatus, tools, equipment or articles of personal property attached or
appurtenant to, or located on, or used by Borrower in connection with the
management, operation or maintenance of the Projects, except for the Equipment
and Fixtures and equipment leased by Borrower for the management, operation or
maintenance of the Projects in accordance with the Loan Documents; (ii) the
Equipment, Fixtures and the leased equipment constitute all of the fixtures,
machinery, apparatus, tools, equipment and articles of personal property
necessary to the proper operation and maintenance of the Projects; and (iii) all
of the Equipment and Fixtures are free and clear of all liens, except for the
lien of the Mortgage(s) and the Permitted Encumbrances, and except for such
indebtedness as is permitted pursuant to Section 2.02(g) (viii)
hereof. All right, title and interest of Borrower in and to all
extensions, improvements, betterments, renewals and appurtenances to the
Projects acquired by, or released to, Borrower or constructed, assembled or
placed by Borrower in the Projects after the Original Date, and all changes and
substitutions of the security constituted thereby, shall be and, in each such
case, without any further mortgage, encumbrance, conveyance, assignment or other
act by Lender or Borrower, shall become subject to the lien and security
interest of this Agreement as fully and completely, and with the same effect, as
though owned by Borrower on the date hereof and specifically described in this
Agreement, but at any and all times Borrower shall execute and deliver to Lender
any documents Lender may reasonably deem necessary or appropriate for the
purpose of specifically subjecting the same to the lien and security interest of
this Agreement.
(e) Notwithstanding
the provisions of this Agreement to the contrary, Borrower shall have the right,
at any time and from time to time, to remove and dispose of Equipment which may
have become obsolete or unfit for use or which is no longer useful in the
management, operation or maintenance of the Projects. Borrower shall
promptly replace any such Equipment so disposed of or removed with other
Equipment of equal value and utility, free of any security interest or superior
title, liens or claims (except for such purchase money security interests
granted by Borrower, provided the same are permitted pursuant to Section
2.02(g)(viii) hereof); except that, if by reason of technological or other
developments, replacement of the Equipment so removed or disposed of is not
necessary or desirable for the proper management, operation or maintenance of
the Projects, Borrower shall not be required to replace the same. All
such replacements or additional equipment shall be deemed to constitute “Equipment” and shall
be covered by the security interest herein granted.
ARTICLE
IX
TRANSFER OR ENCUMBRANCE OF
THE PROJECTS
Section
9.01. Other
Encumbrances. Borrower
shall not further encumber or permit the further encumbrance in any manner
(whether by grant of a pledge, security interest or otherwise) of the Projects
or any part thereof or interest therein, including, without limitation, of the
Rents therefrom. In addition, Borrower shall not further encumber and
shall not permit the further encumbrance in any manner (whether by grant of a
pledge, security interest or otherwise) of Borrower or any direct or indirect
interest in Borrower, except as expressly permitted pursuant to this
Agreement.
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Section
9.02. No
Transfer. Borrower
acknowledges that Lender has examined and relied on the expertise of Borrower
and MCRLP in owning and operating properties such as the Projects in agreeing to
make the Loan and will continue to rely on Borrower’s ownership of the Projects
as a means of maintaining the value of the Projects as security for repayment of
the Debt and Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Projects. Borrower shall not Transfer,
nor permit any Transfer, other than a Permitted Transfer, without the prior
written consent of Lender, which consent Lender may withhold in its sole and
absolute discretion. Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon a Transfer, other
than a Permitted Transfer, without Lender’s consent. This provision
shall apply to every Transfer other than a Permitted Transfer, regardless of
whether voluntary or not, or whether or not Lender has consented to any previous
Transfer.
Section
9.03. Due on
Sale. Lender
may declare the Debt immediately due and payable upon any Transfer, other than a
Permitted Transfer, without Lender’s consent without regard to whether any
impairment of its security or any increased risk of default hereunder can be
demonstrated. This provision shall apply to every Transfer, other
than a Permitted Transfer, of the Projects or any part thereof or interest in
the Projects or in Borrower or Sole Member regardless of whether voluntary or
not, or whether or not Lender has consented to any previous Transfer of the
Projects or interest in Borrower or Sole Member.
Section
9.04. Transfer of Projects; Loan
Assumption. Notwithstanding
the foregoing set forth in Sections 9.02 and 9.03, neither Lender’s consent nor
a Rating Comfort Letter shall be required for, and Borrower shall have the
one-time right to effect, a sale or transfer of (a) fee title to all of the
Projects or (b) 100% of the direct and/or indirect ownership interests in the
Borrower, in either case in a single transaction (“Special Transfer”) to
a Qualified Transferee, provided that Borrower satisfies the following
conditions:
(i) no Event
of Default or event which with the giving of notice or the passage of time would
constitute an Event of Default shall have occurred and remain
uncured;
(ii) Lender
shall have received from Borrower not less than thirty (30) days’ prior written
notice of the proposed sale or transfer;
(iii) Lender
shall have received information satisfactory to it regarding such Qualified
Transferee’s compliance with the Patriot Act;
(iv) such
Qualified Transferee and its property manager shall have sufficient experience
in the ownership and management of properties similar to the Projects, and
Lender shall be provided with reasonable evidence thereof (and Lender reserves
the right to reasonably withhold approval of the substitution of the property
manager);
83
(v) such
Qualified Transferee shall have executed and delivered to Lender an assumption
agreement in form and substance acceptable to Lender, evidencing such Qualified
Transferee’s agreement to abide and be bound by the terms of the Note, the
Mortgage and the other Loan Documents, together with such legal opinions and
title insurance endorsements as may be reasonably requested by
Lender;
(vi) Lender
shall have received evidence satisfactory to it (which shall include a legal
non-consolidation opinion reasonably acceptable to (A) prior to a Secondary
Market Transaction, Lender or (B) after a Secondary Market Transaction, the
Rating Agency) that the single-purpose nature and bankruptcy remoteness of
Borrower and its shareholders, partners or members, as the case may be,
following such transfers are in accordance with the standards of the Rating
Agency;
(vii) Lender
shall have received on or prior to the date of the sale or transfer (A) an
application fee in the amount of $5,000.00 and (B) the payment of all actual
out-of-pocket costs and expenses incurred by Lender and, if applicable, the
Rating Agency, in connection with such assumption (including reasonable
attorneys’ fees and costs);
(viii) such
Qualified Transferee is a Single Purpose Entity that complies with the
representations and covenants set forth in Section 2.02(g), Section 2.02(t) and
Section 2.02(w) hereof;
(ix) Borrower
and the Qualified Transferee execute and cause to be filed in such public
records as Lender deems appropriate, without any cost or expense to Lender, new
financing statements or financing statement amendments and any additional
documents reasonably requested by Lender to grant, reaffirm or continue the
liens and security interests held by Lender under the Loan
Documents;
(x) Borrower
causes to be delivered to Lender, without any cost or expense to Lender, such
property and liability insurance endorsements or certificates and other similar
materials as Lender may reasonably deem necessary at the time of the Special
Transfer, all in form and substance reasonably satisfactory to
Lender;
(xi) Borrower
executes and delivers to Lender, without any cost or expense to Lender, a
release of Lender, its officers, directors, employees and agents, from all
claims and liability relating to the transactions evidenced by the Loan
Documents through and including the date of the closing of the Special Transfer,
which agreement shall be in form and substance reasonably satisfactory to Lender
and shall be binding upon the Qualified Transferee;
(xii) Subject
to the provisions of Section 18.32 hereof, such Special Transfer is not
construed so as to relieve Borrower of any personal liability under the Note or
any of the other Loan Documents for any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such Special Transfer and
Borrower executes, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate the
ratification of said personal liability. Borrower shall be released
from and relieved of any personal liability under the Note or any of the other
Loan Documents for any acts or events occurring or obligations arising after the
closing of such Special Transfer which are not caused by or arising out of any
acts or events occurring or obligations arising prior to or simultaneously with
the closing of such Special Transfer;
84
(xiii) An
Acceptable Substitute Guarantor shall have assumed the Guaranty or shall have
executed a replacement guaranty substantially similar to the Guaranty and such
successor Guarantor executes such documents as may be reasonably required by
Lender to evidence such assumption. The original Guarantor shall be
released from and relieved of any of its obligations under any indemnity or
guaranty executed in connection with the Loan for any acts or events occurring
or obligations arising after the closing of such Special Transfer which are not
caused by or arising out of any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Special
Transfer;
(xiv) the
Qualified Transferee shall assume the obligations of Borrower under any
management agreements pertaining to the Projects, or shall cause the new manager
and management agreement to satisfy the requirements of Section 7.02 hereof, as
applicable;
(xv) the
Qualified Transferee shall furnish an opinion of counsel reasonably satisfactory
to Lender that the acquisition of the Projects and the assumption of the Loan
and the Loan Documents by Qualified Transferee and, to the extent applicable,
successor Guarantor, were validly authorized, and duly executed and delivered,
and constitute the legal, valid and binding obligations of Qualified Transferee
and such successor Guarantor, enforceable against each of them in accordance
with their respective terms, and with respect to such other matters as Lender
may reasonably require; and
(xvi) the
Qualified Transferee shall provide Lender with fully executed copies of (A)
deeds covering the Projects, (B) bills of sale covering the personal property
with respect to each Project and (C) assignments and assumption agreements (in
respect of the Leases) in form and substance reasonably satisfactory to
Lender.
ARTICLE
X
CERTIFICATES
Section
10.01. Estoppel
Certificates.
(a) After
request by Lender, Borrower, within fifteen (15) days and at its expense, will
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, and the unpaid
principal amount of the Note, (ii) the rate of interest of the Note, (iii) the
date payments of interest and/or principal were last paid, (iv) any offsets or
defenses to the payment of the Debt, and if any are alleged, the nature thereof,
(v) that the Note and this Agreement have not been modified or if modified,
giving particulars of such modification and (vi) no Default by Borrower exists
or if such Default by Borrower exists, the nature thereof, the period of time it
has existed, and the action being taken to remedy such Default.
85
(b) Within
fifteen (15) days after written request by Borrower, Lender shall furnish to
Borrower a written statement confirming (i) the amount of the Debt, (ii) the
maturity date of the Note, (iii) the date to which interest has been paid, and
(iv) whether, to Lender’s knowledge, there exist any uncured Events of Default
for which Lender has provided written notice. Lender agrees to
provide such statement regardless of whether any notice of an uncured Event of
Default has been delivered to Borrower.
(c) Borrower
shall use all commercially reasonable efforts to obtain estoppel certificates
from tenants in form and substance reasonably acceptable to Lender or as
required under a tenant’s Space Lease, upon the reasonable request of Lender,
provided, that, Borrower shall not be required to request such estoppel
certificates from tenants more than once in the calendar year that the Lender
anticipates including the Loan in a Secondary Market Transaction or once per
year in any other calendar year.
ARTICLE
XI
NOTICES
Section
11.01. Notices
. Any
notice, demand, statement, request or consent made hereunder shall be in writing
and delivered personally or sent to the party to whom the notice, demand or
request is being made by Federal Express or other nationally recognized
overnight delivery service, as follows and shall be deemed given when delivered
personally or one (1) Business Day after being deposited with Federal Express or
such other nationally recognized delivery service:
|
|
If
to Lender:
|
To
Lender, at the address first written
above,
|
|
|
with
a copy to:
|
|
|
Xxxxxxxxx
Xxxxxxx, LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxx
X. Xxxxxxxx, Esq.
|
|
|
If
to Borrower:
|
To
Borrower, at the address first written
above,
|
|
|
with
copies to:
|
|
|
Xxxx-Xxxx
Realty Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
and
|
00
|
|
Xxxxxxxxx
Xxxx Xxxxx & Xxxxx LLP
00 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx,
Esq.
|
or such
other address as either Borrower or Lender shall hereafter specify by not less
than ten (10) days prior written notice as provided herein; provided, however,
that notwithstanding any provision of this Article to the contrary, such notice
of change of address shall be deemed given only upon actual receipt
thereof. Rejection or other refusal to accept or the inability to
deliver because of changed addresses of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand, statement, request
or consent.
ARTICLE
XII
INDEMNIFICATION
Section
12.01. Indemnification Covering
Projects. In
addition, and without limitation of any other provision of this Agreement or any
other Loan Document, Borrower shall protect, indemnify and save harmless Lender
and its successors and assigns, and each of their agents, employees, officers,
directors, stockholders, partners and members (collectively, “Indemnified
Parties”) for, from and against any claims, demands, penalties, fines,
liabilities, settlements, losses damages, fees, costs and expenses of whatever
kind or nature, known or unknown, contingent or otherwise, whether incurred or
imposed within or outside the judicial process, including, without limitation,
reasonable attorneys’ fees and disbursements imposed upon or incurred by or
asserted against any of the Indemnified Parties (collectively, “Liabilities”) by
reason of (a) ownership of this Agreement, the Assignment, the Projects or any
part thereof or any interest therein or receipt of any Rents; (b) any accident,
injury to or death of any person or loss of or damage to property occurring in,
on or about the Projects or any part thereof or on the adjoining sidewalks,
curbs, parking areas, streets or ways; (c) any use, nonuse or condition in, on
or about, or possession, alteration, repair, operation, maintenance or
management of, the Projects or any part thereof or on the adjoining sidewalks,
curbs, parking areas, streets or ways; (d) any failure on the part of Borrower
to perform or comply with any of the terms of this Agreement or the Assignment;
(e) performance of any labor or services or the furnishing of any materials or
other property in respect of the Projects or any part thereof; (f) 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 Projects or any
part thereof; (g) any Imposition including, without limitation, any Imposition
attributable to the execution, delivery, filing, or recording of any Loan
Document, Lease or memorandum thereof; (h) any lien or claim arising on or
against the Projects or any part thereof under any Legal Requirement or any
liability asserted against any of the Indemnified Parties with respect thereto;
(i) any claim arising out of or in any way relating to any tax or other
imposition on the making and/or recording of this Agreement, the Note or any of
the other Loan Documents; (j) a Default under Sections 2.02(f) or 2.02(g)
hereof, (k) the failure of any Person to file timely with the Internal Revenue
Service an accurate Form 0000-X, Xxxxxxxxx for Recipients of Proceeds from Real
Estate, Broker and Barter Exchange Transactions, which may be required in
connection with the Loan, or to supply a copy thereof in a timely fashion to the
recipient of the proceeds of the Loan; or (l) the claims of any lessee or any
Person acting through or under any lessee or otherwise arising under or as a
consequence of any Lease. Notwithstanding the foregoing provisions of
this Section 12.01 to the contrary, Borrower shall have no obligation to
indemnify the Indemnified Parties pursuant to this Section 12.01 for
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses relative to the foregoing which result from Lender’s, and its
successors’ or assigns’, willful misconduct or gross negligence. Any
amounts payable to Lender by reason of the application of this Section 12.01
shall constitute a part of the Debt secured by this Agreement and the other Loan
Documents and shall become immediately due and payable and shall bear interest
at the Default Rate from the date the liability, obligation, claim, cost or
expense is sustained by Lender, as applicable, until paid. The
provisions of this Section 12.01 shall survive the termination of this Agreement
whether by repayment of the Debt, foreclosure or delivery of a deed in lieu
thereof, assignment or otherwise. In case any action, suit or
proceeding is brought against any of the Indemnified Parties by reason of any
occurrence of the type set forth in (a) through (l) above, Borrower shall, at
Borrower’s expense, resist and defend such action, suit or proceeding or will
cause the same to be resisted and defended by counsel at Borrower’s expense for
the insurer of the liability or by counsel designated by Borrower (unless
reasonably disapproved by Lender promptly after Lender has been notified of such
counsel); provided,
however, that nothing herein shall compromise the right of Lender (or any
other Indemnified Party) to appoint its own counsel at Borrower’s expense for
its defense with respect to any action which, in the reasonable opinion of
Lender or such other Indemnified Party, as applicable, presents a conflict or
potential conflict between Lender or such other Indemnified Party that would
make such separate representation advisable. Any Indemnified Party
will give Borrower prompt notice after such Indemnified Party obtains actual
knowledge of any potential claim by such Indemnified Party for indemnification
hereunder. The Indemnified Parties shall not settle or compromise any
action, proceeding or claim as to which it is indemnified hereunder without
notice to Borrower.
87
ARTICLE
XIII
DEFAULTS
Section
13.01. Events of
Default. Except
as otherwise provided in Section 5.05(c) of this Agreement and/or in Section
3.1(b) of the Note, the occurrence of one of the following events shall
constitute an event of default (“Event of Default”)
under this Agreement (and under any of the other Loan Documents which makes
reference to such term as defined herein), and the Debt shall become immediately
due at the option of Lender upon the occurrence of any one or more of the
following events:
(a) if the
final payment due under the Note shall not be paid on Maturity or earlier
prepayment of the Loan, as the case may be;
(b) if any
monthly payment of interest and/or principal due under the Note (other than the
sums described in (a) above) shall not be fully paid on the date upon which the
same is due and payable thereunder;
(c) if
payment of any sum (other than the sums described in (a) above or (b) above)
required to be paid pursuant to the Note, this Agreement or any other Loan
Document shall not be paid within five (5) Business Days after Lender delivers
written notice to Borrower that payment of same was not made timely thereunder
or hereunder;
88
(d) if
Borrower, Sole Member or Guarantor shall institute or cause to be instituted any
proceeding for the termination or dissolution of Borrower or Sole
Member;
(e) if the
insurance policies required hereunder are not kept in full force and effect, or
if the insurance policies or certificates evidencing such insurance policies (in
form and substance reasonably satisfactory to Lender) are not assigned and
delivered to Lender as herein required for five (5) Business Days after notice
from Lender;
(f) if
Borrower attempts to assign its rights under this Agreement or any other Loan
Document or any interest herein or therein, or if any Transfer occurs other than
a Permitted Transfer or other Transfer permitted in accordance with the
provisions hereof;
(g) if any
representation or warranty of Borrower or Guarantor made herein or in any other
Loan Document or in any certificate, report, financial statement or other
instrument or agreement furnished to Lender shall prove false or misleading in
any material and adverse respect;
(h) if
Borrower or Sole Member shall make an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts generally as they become
due;
(i) if a
receiver, liquidator or trustee of Borrower or Sole Member shall be appointed or
if Borrower or Sole Member shall be adjudicated bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower or Sole Member or if any
proceeding for the dissolution or liquidation of Borrower or Sole Member shall
be instituted; however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower or Sole Member, as
applicable, upon the same not being discharged, stayed or dismissed within
ninety (90) days or if Borrower or Sole Member shall generally not be paying its
debts as they become due.
(j) if
Borrower shall be in default beyond any notice or grace period, if any, under
any mortgage or deed of trust or security agreement covering any part of the
Projects other than the Mortgages (and other than the first mortgage on the
Xxxxxxxxxx Project), without regard to its priority relative to the Mortgages;
provided,
however, this provision shall not be deemed a waiver of the provisions of
Article IX prohibiting further encumbrances affecting the Projects or any other
provision of this Agreement;
(k) if a
Project becomes subject (i) to any lien which is superior to the lien of the
applicable Mortgage, other than a lien for real estate taxes and assessments not
due and payable, or (ii) to any mechanic’s, materialman’s or other lien which is
or is asserted to be superior to the lien of such Mortgage, and such lien shall
remain undischarged (by payment, bonding, or otherwise) for thirty (30) days
unless contested in accordance with the terms hereof;
(l) if
Borrower abandons a Project;
89
(m) except as
permitted in this Agreement, Borrower undertakes any Material Alteration of any
of the Improvements without the prior consent of Lender;
(n) if
Borrower consummates a transaction which would cause this Agreement or Lender’s
rights under this Agreement, the Note or any other Loan Document to constitute a
non-exempt prohibited transaction under ERISA or result in a violation of a
state statute regulating government plans subjecting Lender to liability for a
violation of ERISA or a state statute;
(o) if
Borrower shall be in default under Section 2.12(d) hereof, beyond all applicable
notice, grace and cure periods therein contained;
(p) if
Borrower or Sole Member shall fail to be in compliance with Section 2.02(g)
hereof; provided, however, that a
breach of any covenant contained in Section 2.02(g) hereof shall not constitute
an Event of Default if (i) such breach was inadvertent, immaterial and
non-recurring, (ii) such breach is curable and Borrower shall promptly cure such
breach within fifteen (15) Business Days of notice from Lender and (iii) within
fifteen (15) Business Days of the request by Lender, Borrower causes counsel to
deliver to Lender a revised or updated substantive legal non-consolidation
opinion to the effect that such breach shall not in any material manner impair,
negate or amend the opinions rendered in the non-consolidation opinion delivered
in connection with the closing of the Loan, which opinion and counsel shall be
acceptable to Lender in its reasonable discretion;
(q) [Reserved];
or
(r) if a
default shall occur under any of the other terms, covenants or conditions of the
Note, this Agreement or any other Loan Document, other than as set forth in (a)
through (q) above, for ten (10) days after notice from Lender in the case of any
default which can be cured by the payment of a sum of money, or for thirty (30)
days after notice from Lender in the case of any other default or an additional
one hundred fifty (150) days if Borrower is diligently and continuously
effectuating a cure of a curable non-monetary default, other than as set forth
in (a) through (q) above.
Section
13.02. Remedies. (a) Upon
the occurrence and during the continuance of any Event of Default, subject to
the provisions of Section 5.05(c) of this Agreement and/or Section 3.1(b) of the
Note and in addition to any other rights or remedies available to it hereunder
or under any other Loan Document, at law or in equity, Lender may take such
action, without notice or demand, as it reasonably deems advisable to protect
and enforce its rights against Borrower and in and to the Projects including,
but not limited to, the following actions, each of which may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine, in its sole discretion, without impairing or otherwise affecting any
other rights and remedies of Lender hereunder, at law or in equity to declare
all or any portion of the unpaid Debt to be immediately due and payable; provided, however,
that upon the occurrence of any of the events specified in Section 13.01(i), the
entire Debt will be immediately due and payable without notice or demand or any
other declaration of the amounts due and payable. 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, and
shall not be, 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 all of the Projects, the Mortgages have been foreclosed, all of
the Projects have been sold and/or otherwise realized upon in satisfaction of
the Debt or the Debt has been paid in full. To the extent permitted
by applicable law, nothing contained in any Loan Document shall be construed as
requiring Lender to resort to any portion of the Projects for the satisfaction
of any of the Debt in preference or priority to any other portion, and Lender
may seek satisfaction out of any Project or all Projects, in its
discretion.
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(b) During
the existence of an Event of Default (but without limitation to any of Lender’s
rights under Section 17.08), 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 (and, in connection therewith, to
bifurcate or otherwise modify the nature of the collateral that secures such
notes) 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 in accordance with the foregoing, Borrower ratifying all
that such attorney shall do by virtue thereof.
(c) No delay
or omission to exercise any remedy, right or power accruing during the existence
of 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 Mortgages to the
extent necessary to foreclose on all or any portion of the Projects, the Rents,
the Sub-Accounts, the Escrow Accounts or any other collateral.
(d) If
Borrower fails to perform any covenant or obligation contained herein and such
failure shall continue beyond any notice and cure period, 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.
Section
13.03. [Reserved].
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Section
13.04. Possession of the
Projects. Upon
the occurrence of any Event of Default hereunder and the acceleration of the
Debt or any portion thereof, Borrower, if an occupant of any Project or any part
thereof, upon demand of Lender, shall immediately surrender possession of such
Project(s) (or the portion thereof so occupied) to Lender, and if Borrower is
permitted to remain in possession, the possession shall be as a month to month
tenant of Lender and, on demand, Borrower shall pay to Lender monthly, in
advance, a reasonable rental for the space so occupied and in default thereof
Borrower may be dispossessed. The covenants herein contained may be
enforced by a receiver of the Projects or any part thereof. Nothing
in this Section 13.04 shall be deemed to be a waiver of the provisions of this
Agreement making the Transfer of the Projects or any part thereof without
Lender’s prior written consent an Event of Default.
Section
13.05. Interest After
Default. If
any amount due under the Note, this Agreement or any of the other Loan Documents
is not paid within any applicable notice and grace period after same is due,
whether such date is the stated due date, any accelerated due date or any other
date or at any other time specified under any of the terms hereof or thereof,
then, in such event, Borrower shall pay interest on the amount not so
paid from and after the date on which such amount first becomes due at the
Default Rate; and such interest shall be due and payable at such rate until the
earlier of the cure of all Events of Default or the payment of the entire amount
due to Lender, whether or not any action shall have been taken or proceeding
commenced to recover the same or to foreclose this Agreement. All
unpaid and accrued interest shall be secured by this Agreement as part of the
Debt. Nothing in this Section 13.05 or in any other provision of this
Agreement shall constitute an extension of the time for payment of the
Debt.
Section
13.06. Borrower’s Actions After
Default. After
the happening of any Event of Default and immediately upon the commencement of
any action, suit or other legal proceedings by Lender to obtain judgment for the
Debt, or of any other nature in aid of the enforcement of the Loan Documents,
Borrower will (a) after receipt of notice of the institution of any such action,
waive the issuance and service of process and enter its voluntary appearance in
such action, suit or proceeding, and (b) if required by Lender, consent to the
appointment of a receiver or receivers of the Projects or any part thereof and
of all the earnings, revenues, rents, issues, profits and income
thereof.
Section
13.07. Control by Lender After
Default. Notwithstanding
the appointment of any custodian, receiver, liquidator or trustee of Borrower,
or of any of its property, or of the Projects or any part thereof, to the extent
permitted by Legal Requirements, Lender shall be entitled to obtain possession
and control of all property now and hereafter covered by this Agreement and the
Assignment in accordance with the terms hereof.
Section
13.08. Right to Cure
Defaults.
(a) During
the existence of any Event of Default, Lender or its agents may, but without any
obligation to do so and without notice to or demand on Borrower and without
releasing Borrower from any obligation hereunder, make or do the same in such
manner and to such extent as Lender may deem necessary to protect the security
hereof. Lender and its agents are authorized to enter upon the
Projects or any part thereof for such purposes, or appear in, defend, or bring
any action or proceedings to protect Lender’s interest in the Projects or any
part thereof or to foreclose this Agreement or collect the Debt, and the cost
and expense thereof (including reasonable attorneys’ fees to the extent
permitted by law), with interest as provided in this Section 13.08, shall
constitute a portion of the Debt and shall be immediately due and payable to
Lender upon demand. All such costs and expenses incurred by Lender or
its agents in remedying such Event of Default or in appearing in, defending, or
bringing any such action or proceeding shall bear interest at the Default Rate,
for the period from the date so demanded to the date of payment to
Lender. All such costs and expenses incurred by Lender or its agents
together with interest thereon calculated at the above rate shall be deemed to
constitute a portion of the Debt and be secured by this Agreement.
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(b) If Lender
makes any payment or advance that Lender is authorized by this Agreement to make
in the place and stead of Borrower (i) relating to the Impositions or tax liens
asserted against the Projects, Lender may do so according to any xxxx, statement
or estimate procured from the appropriate public office without inquiry into the
accuracy of the xxxx, statement or estimate or into the validity of any of the
Impositions or the tax liens or claims thereof; (ii) relating to any apparent or
threatened adverse title, lien, claim of lien, encumbrance, claim or charge,
Lender will be the sole judge of the legality or validity of same; or (iii)
relating to any other purpose authorized by this Agreement but not enumerated in
this Section 13.08, Lender may do so whenever, in its judgment and discretion,
the payment or advance seems necessary or desirable to protect the Projects and
the full security interest intended to be created by this
Agreement. In connection with any payment or advance made pursuant to
this Section 13.08, Lender has the option and is authorized, but in no event
shall be obligated, to obtain a continuation report of title prepared by a title
insurance company. The payments and the advances made by Lender
pursuant to this Section 13.08 and the cost and expenses of said title report
will be due and payable by Borrower on demand, together with interest at the
Default Rate, and will be secured by this Agreement.
Section
13.09. Late Payment
Charge. If
any portion of the Debt is not paid in full on or before the day on which it is
due and payable under and in accordance with the terms of the Note, then
Borrower shall be liable to pay to Lender an amount equal to three percent (3%)
of such unpaid portion of the Debt (“Late Charge”) to
defray the expense incurred by Lender in handling and processing such delinquent
payment, and such amount shall constitute a part of the Debt. The
Late Charge shall not apply to the payment of the Principal Amount at
Maturity.
Section
13.10. Recovery of Sums Required to
Be Paid. Lender
shall have the right from time to time to take action to recover any sum or sums
which constitute a part of the Debt as the same become due and payable hereunder
(after the expiration of any grace period or the giving of any notice herein
provided, if any), without regard to whether or not the balance of the Debt
shall be due, and without prejudice to the right of Lender thereafter to bring
an action of foreclosure, or any other action, for a default or defaults by
Borrower existing at the time such earlier action was commenced.
Section
13.11. Marshalling and Other
Matters. Borrower
hereby waives, to the fullest extent permitted by law, the benefit of all
appraisement, valuation, stay, extension, reinstatement, redemption (both
equitable and statutory) and homestead laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Projects or any
part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of any or all of the Mortgages on behalf of Borrower,
whether equitable or statutory and on behalf of each and every Person acquiring
any interest in or title to the Projects or any part thereof subsequent to the
date of this Agreement and on behalf of all Persons to the fullest extent
permitted by applicable law.
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Section
13.12. Tax Reduction
Proceedings. After
an Event of Default, Borrower shall be deemed to have appointed Lender as its
attorney-in-fact to seek a reduction or reductions in the assessed valuation of
the Projects for real property tax purposes or for any other purpose and to
prosecute any action or proceeding in connection therewith. This
power, being coupled with an interest, shall be irrevocable for so long as any
part of the Debt remains unpaid and any Event of Default shall
exist.
Section
13.13. General Provisions Regarding
Remedies
(a) Right to Terminate
Proceedings. Lender may terminate or rescind any proceeding or
other action brought in connection with its exercise of the remedies provided in
Section 13.02 at any time before the conclusion thereof, as determined in
Lender’s sole discretion and without prejudice to Lender.
(b) No Waiver or
Release. The failure of Lender to exercise any right, remedy
or option provided in the Loan Documents shall not be deemed a waiver of such
right, remedy or option or of any covenant or obligation contained in the Loan
Documents. No acceptance by Lender of any payment after the
occurrence of an Event of Default and no payment by Lender of any payment or
obligation for which Borrower is liable hereunder shall be deemed to waive or
cure any Event of Default. No sale of all or any portion of the
Projects, no forbearance on the part of Lender, and no extension of time for the
payment of the whole or any portion of the Debt or any other indulgence given by
Lender to Borrower or any other Person, shall operate to release or in any
manner affect the interest of Lender in the Projects or the liability of
Borrower to pay the Debt. No waiver by Lender shall be effective
unless it is in writing and then only to the extent specifically
stated.
(c) No Impairment; No
Releases. The interests and rights of Lender under the Loan
Documents shall not be impaired by any indulgence, including (i) any renewal,
extension or modification which Lender may grant with respect to any of the
Debt; (ii) any surrender, compromise, release, renewal, extension, exchange or
substitution which Lender may grant with respect to the Projects or any portion
thereof; or (iii) any release or indulgence granted to any maker, endorser,
guarantor or surety of any of the Debt.
ARTICLE
XIV
COMPLIANCE WITH
REQUIREMENTS
Section
14.01. Compliance with Legal
Requirements. (a) Borrower
shall promptly comply in all material respects with all present and future Legal
Requirements, foreseen and unforeseen, ordinary and extraordinary, whether
requiring structural or nonstructural repairs or alterations including, without
limitation, all zoning, subdivision, building, safety and environmental
protection, land use and development Legal Requirements, all Legal Requirements
which may be applicable to the curbs adjoining the Projects or to the use or
manner of use thereof, and all rent control, rent stabilization and all other
similar Legal Requirements relating to rents charged and/or collected in
connection with the Leases. Borrower represents and warrants that
each Project is in compliance in all material respects with all Legal
Requirements as of the date hereof, no notes or notices of any uncured material
violations of any Legal Requirements have been entered or received by Borrower
and to Borrower’s knowledge, there is no basis for the entering of such note or
notices.
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(b) Borrower
shall have the right to contest by appropriate legal proceedings diligently
conducted in good faith, without cost or expense to Lender, the validity or
application of any Legal Requirement and to suspend compliance therewith if
permitted under applicable Legal Requirements, provided (i) failure to comply
therewith may not subject Lender to any civil or criminal liability, (ii) prior
to and during such contest, Borrower shall furnish to Lender security reasonably
satisfactory to Lender, in its discretion, against loss or injury by reason of
such contest or non compliance with such Legal Requirement, (iii) no monetary
Default or Event of Default shall exist during such proceedings and such contest
shall not otherwise violate any of the provisions of any of the Loan Documents,
(iv) such contest shall not (unless Borrower shall comply with the provisions of
clause (ii) of this Section 14.01(b)) subject the Project to any lien or
encumbrance the enforcement of which is not suspended or otherwise affect the
priority of the lien of the related Mortgage(s); (v) such contest shall not
adversely affect the ownership, use or occupancy of the Project, other than in a
de minimis manner; (vi)
the Project or any part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such contest by Borrower;
(vii) Borrower shall give Lender prompt notice of the commencement of such
proceedings and, upon request by Lender, notice of the status of such
proceedings and/or confirmation of the continuing satisfaction of the conditions
set forth in clauses (i) - (vi) of this Section 14.01(b); and (viii) upon a
final determination of such proceeding, Borrower shall take all steps necessary
to comply with any requirements arising therefrom.
Section
14.02. Compliance with Recorded
Documents; No Future Grants. Borrower
shall promptly perform and observe or cause to be performed and observed, all of
the material terms, covenants and conditions of all material Property Agreements
and all things necessary to preserve intact and unimpaired any and all material
appurtenances or other interests or rights affecting the Projects.
ARTICLE
XV
PREPAYMENT
Section
15.01. Prepayment. (a) Except
as set forth in Section 15.01(b) hereof, no prepayment of the Debt may be made
in whole or in part.
(b) Borrower
may prepay the Loan, in whole or in part, as of the last day of an Interest
Accrual Period only in accordance with the following provisions:
(i) [Reserved];
95
(ii) Lender
shall have received from Borrower, not less than twenty (20) days’, nor more
than ninety (90) days’, prior written notice specifying the date proposed for
such prepayment, and the amount which is to be prepaid and whether a Release is
requested in connection therewith;
(iii) Borrower
shall pay to Lender all interest through and including the last day of the
Interest Accrual Period in which such prepayment is being made, together with
any and all other amounts due and owing pursuant to the terms of the Note, this
Agreement or the other Loan Documents;
(iv) Any
partial prepayment, other than in connection with a Release, shall be in a
minimum amount not less than $1,000,000.00 and shall be in whole multiples of
$1,000 in excess thereof;
(v) [Reserved];
(vi) Any
partial prepayment of the Principal Amount other than in connection with a
Release, including, without limitation, Unscheduled Payments, shall not release
or relieve Borrower from the obligation to pay the regularly scheduled
installments of interest becoming due under the Note;
(vii) [Reserved];
and
(viii) [Reserved].
Section
15.02. Release of
Project. Borrower
may obtain the release of one or more of the Projects from the lien of the
applicable Mortgage and related Loan Documents (each a “Release,” and “Released”
shall have the meaning correlative thereto) in connection with a prepayment
permitted under, and made in accordance with, Section
15.01(b), provided that, in each instance, each of the following
conditions shall be satisfied:
(a) The
Release shall be in connection with a sale of a Project or a Release that is
permitted pursuant to this Agreement to be effected in connection with a
casualty or condemnation affecting a Project;
(b) Borrower
shall pay to Lender (i) all accrued and unpaid interest, at the Interest Rate in
effect for the then current Interest Accrual Period on the portion of the
Principal Amount being prepaid (including, if such prepayment is not being made
on a Payment Date, interest through the end of the current Interest Accrual
Period), (ii) the Allocated Loan Amount for the Project being released and (iii)
if such Release occurs at the Maturity Date or prior thereto in connection with
the repayment in full of the Debt upon an Acceptable Refinancing (as defined in
the Note) or otherwise, the Participation Interest (as defined in the Note) due
with respect to the Project being released, it being agreed that the
Participation Interest, if any, with respect to any Project that is released
prior to the Maturity Date, other than in connection with the repayment in full
of the Debt, shall only be due and payable on the Maturity Date or earlier
repayment in full of the Debt in connection with an Acceptable Refinancing or
otherwise;
96
(c) both
immediately before such Release and immediately thereafter, no Event of Default
shall exist; excepting only an Event of Default that will be cured
contemporaneously with such Release, unless Lender shall have theretofore
commenced the exercise of remedies under this Agreement or the other Loan
Documents;
(d) [Reserved];
(e) [Reserved];
(f) [Reserved];
(g) Borrower
shall have accompanied its notice to Lender under Section 15.01(b)(iii) with a
copy of the applicable contract of sale (if any, and whether executed or not
executed) and any related documents, and, not less than ten (10) days prior to
closing of such sale, shall deliver to Lender drafts of any documents necessary
to effectuate such Release (which shall be subject to Lender’s approval, which
shall not be unreasonably withheld);
(h) Borrower
shall have paid to Lender all out-of-pocket costs and expenses (including
reasonable attorneys’ fees and disbursements) reasonably incurred by Lender in
connection with such Release; and
(i) Borrower
and Guarantor shall have executed and delivered such documents as Lender may
reasonably request to confirm the continued validity of the Loan Documents and
the liens thereof.
ARTICLE
XVI
ENVIRONMENTAL
COMPLIANCE
Section
16.01. Covenants, Representations
and Warranties. (a) As
to each Project, Borrower hereby represents and warrants to Lender that, as of
the date hereof: (i) except as may be disclosed in the Environmental Report, to
the best of Borrower's knowledge, information and belief, the Project is not in
direct or indirect violation of any Environmental Statute; (ii) except as may be
disclosed in the Environmental Report, to the best of Borrower’s knowledge,
information and belief, no Hazardous Materials are located on or have been
handled, generated, stored, processed or disposed of on or released or
discharged from the Project (including underground contamination) except for
those Hazardous Materials used by Borrower or any Tenants in the ordinary course
of its business and in material compliance with all Environmental Statutes;
(iii) to the best of Borrower's knowledge, information and belief, the Project
is not subject to any private or governmental lien or judicial or administrative
notice or action relating to Hazardous Materials; (iv) to the best of Borrower’s
knowledge, except as may be disclosed in the Environmental Report, there are no
existing or closed underground storage tanks or other underground storage
receptacles for Hazardous Materials on the Project; (v) Borrower has received no
written notice of, and to the best of Borrower's knowledge and belief, there
exists no investigation, action, proceeding or claim by any agency, authority or
unit of government or by any third party which would result in any liability,
penalty, sanction or judgment under any Environmental Statutes with respect to
any condition, use or operation of the Project nor does Borrower know of any
basis for such a claim; and (vi) Borrower has received no written notice of and,
to the best of Borrower's knowledge and belief, there has been no claim by any
party that any use, operation or condition of the Project has caused any
nuisance or any other liability or adverse condition on any other property nor
does Borrower know of any basis for such a claim.
97
(b) Borrower
shall keep or cause the Project to be kept free from Hazardous Materials (except
those substances used by Borrower or Tenants in the ordinary course of their
respective business and in material compliance with all Environmental Statutes)
and in material compliance with all Environmental Statutes, shall not install or
use any underground storage tanks, shall expressly prohibit the use, generation,
handling, storage, production, processing and disposal of Hazardous Materials by
all Tenants (except those Hazardous Materials used in the ordinary course of
such Tenant's respective business and in compliance with all Environmental
Statutes), and, without limiting the generality of the foregoing, during the
term of the Loan, shall not install in the Improvements or permit to be
installed in the Improvements asbestos or any substance containing
asbestos.
(c) Borrower
shall promptly notify Lender if Borrower shall become aware of the possible
existence of any Hazardous Materials on a Project in violation of Environmental
Statutes or this Agreement or if Borrower shall become aware that the Project is
or may be in direct or indirect violation, in any material respect, of any
Environmental Statutes. Further, promptly (but in any event within
five (5) Business Days) after receipt of the same, Borrower shall deliver to
Lender copies of any and all orders, notices, permits, applications, reports,
and other communications, documents and instruments pertaining to the actual,
alleged or potential presence or existence of any Hazardous Materials at, on,
about, under, within or in connection with the Project in violation of this
Agreement or any Environmental Statutes. Borrower shall, promptly and
when and as required pursuant to Environmental Statutes or as reasonably
required by Lender, at Borrower's sole cost and expense, take all actions as
shall be reasonably necessary or advisable for the clean up of any and all
portions of the Project or other affected property to which Hazardous Materials
emanating from the Project have migrated (unless arising (y) directly from the
gross negligence or willful misconduct of Lender or any agents, contractors or
invitees of Lender or (z) from Hazardous Substances which are initially placed
in, on or under (or introduced in, on or under) the Project, by any parties
other than Borrower, its Affiliates and/or their respective agents or
contractors after the foreclosure, deed-in-lieu or other taking of title by
Lender, its successors or assigns), including, without limitation, all
investigative, monitoring, removal, containment and remedial actions in
accordance with all applicable Environmental Statutes (and in all events in a
manner reasonably satisfactory to Lender), and shall further pay or cause to be
paid, at no expense to Lender, all clean up, administrative and enforcement
costs of applicable governmental agencies which may be asserted against the
Project. In the event Borrower fails to do so or commence doing same
after thirty (30) days notice of such necessary clean-up and to diligently
prosecute same to completion, Lender may, but shall not be obligated to, cause
the Project or other affected property to which Hazardous Materials emanating
from the Project have migrated to be cleaned up from any such Hazardous
Materials or otherwise brought into conformance with Environmental Statutes and
any and all reasonable costs and expenses incurred by Lender in connection
therewith, together with Default Rate Interest thereon from the date incurred by
Lender until actually paid by Borrower, shall be immediately paid by Borrower on
demand and shall be secured by this Agreement and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the
Note. Borrower hereby grants to Lender and its agents and employees
access to the Project and a license to remove any items Lender has reasonable
grounds to believe to be Hazardous Materials in violation of any Environmental
Statutes or this Agreement and to do all things Lender shall deem reasonably
necessary to bring the Project in conformance with Environmental
Statutes. Borrower covenants and agrees, at Borrower's sole cost and
expense, to indemnify, defend (at trial and appellate levels, and with
attorneys, consultants and experts reasonably acceptable to Lender), and hold
Lender harmless from and against any and all liens, damages, losses,
liabilities, obligations, settlement payments, penalties, assessments,
citations, directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys', consultants'
and experts' fees and disbursements actually incurred in investigating,
defending, settling or prosecuting
98
any
claim, litigation or proceeding) which may at any time be imposed upon, incurred
by or asserted or awarded against Lender or the Project (if and to the extent
any costs imposed against the Project result in a loss to Lender), and arising
directly or indirectly from or out of: (i) the presence, release or
threat of release of any Hazardous Materials in violation of any Environmental
Statutes or this Agreement on, in, under or affecting all or any portion of the
Project or any surrounding areas to which Hazardous Materials emanating from the
Project have migrated, regardless of whether or not caused by or within the
control of Borrower; (ii) the violation of any Environmental Statutes relating
to or affecting the Project, whether or not caused by or within the control of
Borrower; (iii) the failure by Borrower to comply in all material respects with
the terms and conditions of this Section 16.01; (iv)
the breach of any representation or warranty contained in this Section 16.01; or (v)
the enforcement of this Section 16.01,
including, without limitation, the cost of assessment, containment and/or
removal of any and all Hazardous Materials in violation of any Environmental
Statutes or this Agreement from all or any portion of the Project or any
surrounding areas to which Hazardous Materials emanating from the Project have
migrated, the cost of any actions taken in response to the presence, release or
threat of release of any Hazardous Materials on, in, under or affecting any
portion of the Project or any surrounding areas to which Hazardous Materials
emanating from the Project have migrated to prevent or minimize such release or
threat of release in accordance with all Environmental Statutes, so that it does
not migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or the environment, and costs incurred to comply with
the Environmental Statutes in connection with all or any portion of the Project
or any such surrounding areas. The indemnity set forth in this Section 16.01(c)
shall also include any diminution in the value of the security afforded by the
Project or any future reduction in the sales price of the Project by reason of
any matter set forth in this Section 16.01(c), to
the extent that a loss is actually suffered or incurred by
Lender. Lender's rights under this Section shall survive payment in
full of the indebtedness secured hereby and shall be in addition to all other
rights of Lender under this Agreement, the Mortgage, the Note and the other Loan
Documents. The foregoing indemnity in this Section 16.01(c)
shall not include any costs which arise directly from (x) the gross negligence
or willful misconduct of Lender or any agents, contractors or invitees of
Lender, or (y) Hazardous Materials which are initially placed in, on or under
the Project after the foreclosure, deed-in-lieu or other taking of title by
Lender, its successors and assigns.
(d) Upon
Lender's request, at any time after the occurrence and during the continuance of
an Event of Default hereunder or at such other time as Lender has reasonable
grounds to believe that Hazardous Materials are or have been released, stored or
disposed of on or around the Project in violation of any Environmental Statutes
or this Agreement or that the Project may otherwise be in violation of the
Environmental Statutes, Borrower shall provide to Lender, at Borrower's sole
cost and expense, an inspection or audit of the Project prepared by a
hydrogeologist or environmental engineer or other appropriate consultant
reasonably approved by Lender indicating the presence or absence of Hazardous
Materials on the Project in violation of any Environmental Statutes or this
Agreement or an inspection or audit of the Improvements prepared by an
engineering or consulting firm reasonably approved by Lender indicating the
presence or absence of friable asbestos or substances containing asbestos on the
Project. If Borrower fails to provide such inspection or audit within
forty-five (45) days after such request, Lender may, upon notice to Borrower,
order the same, and Borrower hereby grants to Lender and its employees and
agents access to the Project and a license to undertake such inspection or
audit. The cost of such inspection or audit, together with Default
Rate Interest thereon from the date incurred by Lender until actually paid by
Borrower, shall be immediately due and payable to Lender by Borrower on demand
and shall be secured hereby and by all of the other Loan Documents securing all
or any part of the indebtedness evidenced by the Note.
99
(e) In the
event of a conflict or inconsistency between any provision of this Agreement and
any provision of the Environmental Indemnity Agreement, the provision that
affords to Lender the greatest protection and/or broadest rights and remedies
shall be controlling.
(f) If, at
any time hereafter, Borrower or Lender acquires knowledge or reasonably suspects
that lead based paint is present on the Project, Borrower agrees, at its sole
cost and expense and within thirty (30) days thereafter, to cause to be prepared
a lead based paint report prepared by an expert, and in form, scope and
substance, reasonably acceptable to Lender.
(g) Borrower
agrees that if it has been, or if at any time hereafter it is, determined that
any Project contains lead based paint, on or before thirty (30) days following
(i) the Original Date, if such determination was made prior to the Original Date
or (ii) such determination, if such determination is hereafter made, as
applicable, Borrower shall, at its sole cost and expenses, develop and
implement, and thereafter diligently and continuously carry out (or cause to be
developed and implemented and thereafter diligently and continually to be
carried out), an operations, abatement and maintenance plan for the lead based
paint on the Project, which plan shall be prepared by an expert, and be in form,
scope and substance, reasonably acceptable to Lender (together with any Lead
Based Paint Report, the “O&M
Plan”). (If an O&M Plan has been prepared prior to the
date hereof, Borrower agrees to diligently and continually carry out (or cause
to be carried out) the provisions thereof). Compliance with the
O&M Plan shall require or be deemed to require, without limitation, the
proper preparation and maintenance of all records, papers and forms required
under the Environmental Statutes.
(h) With
respect to any Project, the Environmental Report for which states that such
Project contains asbestos containing materials (“ACM’s”), Borrower
covenants and agrees to institute, within thirty (30) days after the Original
Date, an operations and maintenance program (the “Maintenance Program”)
designed by an environmental consultant, reasonably satisfactory to the Lender,
consistent with “Guidelines for Controlling Asbestos-Containing Materials in
Buildings” (USEPA, 1985) and other relevant guidelines, and such Maintenance
Program will hereafter continuously remain in effect until the indebtedness
secured hereby is repaid in full. In furtherance of the foregoing,
Borrower shall inspect and maintain all ACM's on a regular basis and ensure that
all ACM's shall be maintained in a condition that prevents exposure of occupants
to ACM's at all times. Without limiting the generality of the
preceding sentence, Lender may reasonably require (i) periodic notices or
reports to Lender in form, substance and at such intervals as Lender may
specify, (ii) an amendment to such Maintenance Program to address changing
circumstances, laws or other matters, (iii) at Borrower's sole expense,
supplemental examination of the Project by consultants specified by Lender, and
(iv) variation of the Maintenance Program in response to the reports provided by
any such consultants.
100
ARTICLE
XVII
COOPERATION; SECONDARY
MARKET TRANSACTION
Section
17.01. Cooperation. Borrower
shall, at the request of Lender, in connection with one or more sales or
assignments of the Note or participations therein or securitizations of rated
single or multi-class securities (the “Securities”) secured
by or evidencing ownership interests in the Note and the Mortgages (each such
sale, assignment, participation and/or securitization, a “Secondary Market
Transaction”): (a) (i) provide such financial and other
information with respect to the Projects, Borrower and its Affiliates, Manager
and, to the extent in Borrower’s possession, any tenants of the Projects, (ii)
provide business plans and budgets relating to the Projects 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 Projects, as may be reasonably
requested from time to time by Lender or the Rating Agencies in connection with
a Secondary Market Transaction or Exchange Act requirements (the items provided
to Lender pursuant to 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) cause counsel to render opinions as to non-consolidation and any
other opinion customary in securitization transactions with respect to the
Projects, Borrower and its 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 Projects, 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, its
Affiliates and/or Guarantor 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 (i) result in a material economic change in the transaction
(ii) change the Maturity Date or the LIBOR Margin, except in connection with a
bifurcation of the Loan which may result in varying LIBOR Margins, but which
LIBOR Margins shall have a weighted average that equals the LIBOR Margin of the
original Loan (which initial weighted average shall not change), except in the
event of the application of Net Proceeds to the prepayment of the Loan, (iii)
modify or amend any other material economic terms of the Loan,
(iv) increase, in more than a de minimis manner, Borrower’s obligations and
liabilities or decrease in more than a de minimis manner, Borrower’s rights
under the Loan Documents, or (v) increase, in more than a de minimis manner,
Lender’s rights under the Loan Documents. Lender shall pay its own
costs and expenses in connection with the foregoing and shall reimburse Borrower
for any reasonable out-of-pocket costs and expenses incurred by Borrower in
connection with actions taken by Borrower at Lender’s request pursuant to this
Section 17.01, other than Borrower’s legal fees and expenses in connection with
a Secondary Market Transaction (other than those attendant to a restructuring of
the Loan, which reasonable fees and disbursements shall be reimbursed by
Lender). Borrower’s cooperation obligations set forth herein shall
continue until the Loan has been paid in full.
101
Section
17.02. Use of
Information. Borrower
understands that all or any portion of the Provided Information and the Required
Records may be included in disclosure documents in connection with a Secondary
Market Transaction, including a prospectus or private 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. Lender shall provide Borrower a
reasonable opportunity to review and comment on all Provided
Information. If the Disclosure Document is required to be revised,
Borrower shall cooperate with Lender in updating the Provided Information or
Required Records 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
Projects necessary to keep the Disclosure Document accurate and complete in all
material respects with respect to such matters.
Section
17.03. Borrower Obligations
Regarding Disclosure Documents. In
connection with a Disclosure Document, Borrower shall: (a) if requested by
Lender, certify in writing that Borrower has carefully examined those portions
of such Disclosure Document, pertaining to Borrower, the Projects, Manager and
the Loan which have been identified by Lender in writing as requiring Borrower’s
review (the “Applicable
Portions”), and that such portions, to Borrower’s knowledge, 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; and (b) indemnify (in
a separate instrument of indemnity, if so requested by Lender) (i) any
underwriter, syndicate member or placement agent (collectively, the “Underwriters”)
retained by Lender or its issuing company affiliate (the “Issuer”) in
connection with a Secondary Market Transaction, (ii) Lender and (iii) 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 or entity who controls
the Issuer or the Lender within the meaning of Section 15 of the Securities Act
or Section 30 of the Exchange Act (collectively within (iii), the “Issuer
Group”), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the “Underwriter Group”) for any
Liabilities to which Lender, the Issuer Group or the Underwriter Group may
become subject (including reimbursing all of them for any reasonable legal or
other expenses actually incurred in connection with investigating or defending
the Liabilities) insofar as the Liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any of the Provided Information or in any of the Applicable Portions applicable
to Borrower, Manager, the Projects or the Loan, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated in the Applicable Portions or necessary in order to make the
statements in the Applicable Portions of such sections in light of the
circumstances under which they were made, not misleading, provided, however,
notwithstanding anything in this Article XVII to the contrary, that Borrower
shall not be required to indemnify Lender, the Issuer Group or the Underwriter
Group for any Liabilities relating to (i) untrue statements or omissions which
Borrower identified to Lender in writing at the time of Borrower’s examination
of such Disclosure Document, or (ii) information contained in Provided
Information reviewed but not prepared by Borrower, Guarantor or any of their
respective Affiliates and not known by Borrower to be untrue or incorrect in any
material respect.
102
Section
17.04. Borrower Indemnity Regarding
Filings. In
connection with filings under the Exchange Act, Borrower shall (i) indemnify
Lender, the Issuer Group and the Underwriter Group for any Liabilities to which
Lender, the Issuer Group or the Underwriter Group may become subject insofar as
the Liabilities arise out of or are based upon the omission or alleged 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 (ii) reimburse Lender, the Issuer Group or the Underwriter Group
for any legal or other expenses actually incurred by Lender, Issuer Group or the
Underwriter Group in connection with defending or investigating the Liabilities,
provided, however, notwithstanding anything in this Article XVII to the
contrary, that Borrower shall not be required to indemnify Lender, the Issuer
Group or the Underwriter Group for any Liabilities relating to (i) untrue
statements or omissions which Borrower identified to Lender in writing at the
time of Borrower’s examination of such Disclosure Document, or (ii) information
contained in Provided Information reviewed but not prepared by Borrower,
Guarantor or any of their respective Affiliates and not known by Borrower to be
untrue or incorrect in any material respect.
Section
17.05. Indemnification
Procedure. Promptly
after receipt by an indemnified party under Section 17.03 or 17.04 of notice of
the commencement of any action for which a claim for indemnification is to be
made against Borrower, such 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 it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to
Borrower. If any action is brought against any 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
indemnified party promptly after receiving the aforesaid notice of commencement,
to assume the defense thereof with counsel satisfactory to such indemnified
party in its reasonable discretion. After notice from Borrower to
such indemnified party under this Section 17.05, Borrower shall not be
responsible for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if
the defendants in any such action include both Borrower and an indemnified
party, and any 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
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Borrower shall
not be liable for the expenses of more than one separate counsel unless there
are legal defenses available to it that are different from or additional to
those available to another indemnified party.
103
Section
17.06. Contribution. In
order to provide for just and equitable contribution in circumstances in which
the indemnity agreement provided for in Section 17.03 or 17.04 is for any reason
held to be unenforceable by an indemnified party in respect of any Liabilities
(or action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 17.03 or 17.04, Borrower shall contribute to the
amount paid or payable by the indemnified party as a result of such 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 Issuer
Group’s 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.
Section
17.07. Rating
Surveillance. Lender
will retain the Rating Agencies to provide rating surveillance services on
Securities. The pro rata expenses of such surveillance will be paid
for by Borrower based on the applicable percentage of such expenses determined
by dividing the then outstanding Principal Amount by the then aggregate
outstanding amount of the pool created in the Secondary Market Transaction which
includes the Loan.
Section
17.08. 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 one or more of the Mortgages to be split into a first and
second mortgage loans, (ii) create one or more senior and subordinate notes
(e.g., an A/B, A/B/C or A/B/C/D 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 pledges of membership interests (directly or
indirectly) in Borrower (e.g., a senior loan/mezzanine loan structure), in each
such case, in whatever proportion and whatever priority Lender determines;
provided, however, in each such instance (a) 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, (b) the weighted
average of the LIBOR Margins for all such Notes (or components of such Notes)
immediately after the effective date of such modification equals the LIBOR
Margin of the original Note immediately prior to such modification, and (c) such
restructuring of the Loan does not increase, in more than a de minimis manner,
Lender’s rights or Borrower’s obligations and liabilities or decrease, in more
than a de minimis manner, Borrower’s rights under the Loan
Documents. If requested by Lender, Borrower (and Borrower’s
constituent members, if applicable, and Guarantor) shall execute within ten (10)
Business Days after such request, such documentation as Lender may reasonably
request to evidence and/or effectuate any such modification or
severance. Borrower agrees to cooperate with Lender in connection
with the exercise of its rights under this Section 17.08, which cooperation
shall be at no cost or expense to Borrower, provided that all costs and expenses
of Borrower for which Lender shall be responsible hereunder shall have been
reasonably incurred by Borrower.
104
Section 17.09. Overriding
Provision. (a)
Notwithstanding the foregoing provisions of this Article XVII, Borrower agrees
and acknowledges that Gramercy Warehouse Funding I LLC (“GWF”) shall have the
right, without notice to or the consent of Borrower, to transfer or assign the
Loan or any interest therein to any Affiliate of GWF or of Gramercy Capital
Corp. (“GKK”)
including, but not limited to, Xxxxxxxx Xxxx Xxxxxx XXX 0000-0, Xxxxxxxx Real
Estate CDO 2006-1, and Gramercy Real Estate CDO 2007-1 LLC (each a “CDO”), which CDO is
currently managed by GKK Manager LLC, an affiliate of GKK, and that GKK Manager
LLC intends to remain the manager of the CDO following such
transfer.
(b) However,
Borrower expressly acknowledges that, as a result of (a) the enforcement of the
provisions of one or more documents to which such CDO is a party or by which it
is bound, including, but not limited to, the documents governing the CDO and/or
any financing documents to which it is a party or (b) any action taken by the
holders of the Securities issued by the CDO, in each case without the consent or
approval of GKK, GKK may be removed as a manager or special servicer of the CDO
and in such a case, GKK may be divested of the power to direct or cause the
direction of the management of the Loan, which divestiture shall not give rise
to any rights of Borrower or obligations of Lender hereunder.
(c) Except
as set forth in the preceding clauses (a) and (b), Borrower and Lender agree and
acknowledge that GWF or any successor Lender shall be permitted to transfer or
assign the Loan or any interest therein to any Person that is not an Affiliate
of GKK only if (i) GKK or an Affiliate of GKK retains the power to direct or
cause the direction of the management of the Loan (which shall include making
decisions with respect to the determination of the FMV (as defined in the Note)
and the marketing of the Projects, as contemplated in the Note), in which case
neither notice to nor consent of Borrower shall be required or (ii) in the event
that Lender does not retain the power described in the immediately preceding
clause (i), Lender obtains Borrower’s consent to such transfer or assignment,
which consent Borrower agrees it will not unreasonably withhold, condition or
delay.
(d) Lender
acknowledges that its rights under Article XVII shall be limited to the extent
set forth in this Section 17.09.
ARTICLE
XVIII
MISCELLANEOUS
Section
18.01. Right of
Entry. Lender
and its agents shall have the right to enter and inspect the Projects or any
part thereof at all reasonable times, subject to the rights of tenants, and,
except in the event of an emergency, upon reasonable notice and to inspect
Borrower’s books and records and to make abstracts and reproductions
thereof.
Section
18.02. Cumulative
Rights. The
rights of Lender under this Agreement shall be separate, distinct and cumulative
and none shall be given effect to the exclusion of the others. No act
of Lender shall be construed as an election to proceed under any one provision
herein to the exclusion of any other provision. Lender shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled, subject to the terms of this Agreement, to every right and remedy now
or hereafter afforded by law.
Section
18.03. Liability. If
Borrower consists of more than one Person, the obligations and liabilities of
each such Person hereunder shall be joint and several.
Section
18.04. Exhibits
Incorporated. The
information set forth on the cover hereof, and the Exhibits annexed hereto, are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
105
Section
18.05. Severable
Provisions. If
any term, covenant or condition of the Loan Documents including, without
limitation, the Note or this Agreement, is held to be invalid, illegal or
unenforceable in any respect, such Loan Document shall be construed without such
provision.
Section
18.06. Duplicate
Originals. This
Agreement may be executed in any number of duplicate originals and each such
duplicate original shall be deemed to constitute but one and the same
instrument.
Section
18.07. No Oral
Change. The
terms of this Agreement, together with the terms of the Note and the other Loan
Documents constitute the entire understanding and agreement of the parties
hereto and supersede all prior agreements, understandings and negotiations
between Borrower and Lender with respect to the Loan. This Agreement,
and any provisions hereof, may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act on the part of Borrower
or Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
Section
18.08. Waiver of Counterclaim,
Etc BORROWER
HEREBY WAIVES THE RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY
COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT AGAINST IT BY LENDER OR ITS
AGENTS, AND WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER
PARTY HERETO AGAINST THE OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE PERMITTED
TO ASSERT HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS, AGAINST
BORROWER, OR IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT OR THE DEBT.
Section
18.09. Headings; Construction of
Documents; Inconsistency; etc. The
table of contents, headings and captions of various paragraphs of this Agreement
are for convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions
hereof. Each of Lender and Borrower acknowledges that it was
represented by competent counsel in connection with the negotiation and drafting
of this Agreement and the other Loan Documents and that neither this Agreement
nor the other Loan Documents shall be subject to the principle of construing the
meaning against the Person who drafted same. To the extent that (a) any terms or
provisions of this Agreement or other Loan Documents (besides the Note) are (b)
in direct conflict with Section 5.05(c) of this Agreement and/or with Section
3.1(b) of the Note or any other terms and provisions of this Agreement, the
terms and provisions set forth in Section 5.05(c) of this Agreement and/or in
Section 3.1(b) of the Note shall govern and control from and after the date of
this Agreement, and such inconsistent terms or provisions of this Agreement or
other Loan Documents (besides the Note) shall be construed and enforced in a
manner consistent and in harmony with the terms and provisions of Section
5.05(c) of this Agreement and/or with Section 3.1(b) of the Note, as the case
may be.
Section
18.10. Sole Discretion of
Lender. Whenever
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide that arrangements or terms are satisfactory
or not satisfactory shall be in the sole discretion of Lender and shall be final
and conclusive, except as may be otherwise specifically provided
herein.
106
Section
18.11. Waiver of
Notice. Borrower
shall not be entitled to any notices of any nature whatsoever from Lender except
with respect to matters for which this Agreement or any other Loan Document
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable Legal Requirements, permitted to waive the giving of
notice.
Section
18.12. Binding
Effect. All
of the grants, covenants, terms, provisions and conditions herein shall be
binding upon Borrower and shall inure to the benefit of Lender, subsequent
holders of this Agreement and their successors and assigns. Without
limitation to any provision hereof, the term “Borrower” shall include and refer
to the borrower named herein, any subsequent owner of the Projects, and its
respective heirs, executors, legal representatives, successors and
assigns. The representations, warranties and agreements contained in
this Agreement and the other Loan Documents are intended solely for the benefit
of the parties hereto, shall confer no rights hereunder, whether legal or
equitable, in any other Person and no other Person shall be entitled to rely
thereon.
Section
18.13. Applicable
Law. THIS
AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER
AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN
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, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN
AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS (OTHER THAN WITH RESPECT TO LIENS AND SECURITY INTERESTS IN PROPERTY
WHOSE PERFECTION AND PRIORITY IS COVERED BY ARTICLE 9 OF THE UCC (INCLUDING,
WITHOUT LIMITATION, THE CENTRAL ACCOUNT AND THE RESERVE ACCOUNTS) WHICH SHALL BE
GOVERNED BY THE LAW OF THE JURISDICTION APPLICABLE THERETO IN ACCORDANCE WITH
SECTIONS 9-301 THROUGH 9-307 OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK)
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 CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND
ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. 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, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE
AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW EXCEPT AS SPECIFICALLY SET FORTH
ABOVE.
107
Section
18.14. Intentionally
Deleted.
Section
18.15. Actions and
Proceedings. Lender
has the right to appear in and defend any action or proceeding brought with
respect to any Project in its own name or, if required by Legal Requirements or,
if in Lender’s reasonable judgment, it is necessary, in the name and on behalf
of Borrower, which Lender believes will adversely affect the Projects or this
Agreement and to bring any action or proceedings, in its name or in the name and
on behalf of Borrower, which Lender, in its discretion, decides should be
brought to protect its interest in the Projects.
Section
18.16. Usury
Laws. This
Agreement and the Note are subject to the express condition, and it is the
expressed intent of the parties, that at no time shall Borrower be obligated or
required to pay interest on the principal balance due under the Note at a rate
which could subject the holder of the Note to either civil or criminal liability
as a result of being in excess of the maximum interest rate which Borrower is
permitted by law to contract or agree to pay. If by the terms of this
Agreement or the Note, Borrower is at any time required or obligated to pay
interest on the principal balance due under the Note at a rate in excess of such
maximum rate, such rate of interest shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Note. No application to the principal
balance of the Note pursuant to this Section 18.16 shall give rise to any
requirement to pay any prepayment fee or charge of any kind due hereunder, if
any.
Section
18.17. Remedies of
Borrower. In
the event that a claim or adjudication is made that Lender has acted
unreasonably or unreasonably delayed acting in any case where by law or under
the Note, this Agreement or the Loan Documents, Lender has an obligation to act
reasonably or promptly, Lender shall not be liable for any monetary damages and
Borrower’s remedies shall be limited to injunctive relief or
declaratory judgment.
Section
18.18. Offsets, Counterclaims and
Defenses. As
of the date hereof, Borrower acknowledges and agrees that it has no defenses,
offsets or counterclaims to any of its respective obligations under the Original
Loan Documents, the Note or this Agreement, nor any claims against Lender of any
nature whatsoever. Any assignee of this Agreement, the Assignment and the Note
shall take the same free and clear of all offsets, counterclaims or defenses
which are unrelated to the Note, the Assignment or this Agreement which Borrower
may otherwise have against any assignor of this Agreement, the Assignment and
the Note and no such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee
upon this Agreement, the Assignment or the Note and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
108
Section
18.19. No Merger. If
Borrower’s and Lender’s estates become the same including, without limitation,
upon the delivery of a deed by Borrower in lieu of a foreclosure sale, or upon a
purchase of the Projects by Lender in a foreclosure sale, this Agreement and the
lien by the Mortgage shall not be destroyed or terminated by the application of
the doctrine of merger and in such event Lender shall continue to have and enjoy
all of the rights and privileges of Lender as to the separate estates; and, as a
consequence thereof, upon the foreclosure of the lien created by this Agreement,
any Leases or subleases then existing and created by Borrower shall not be
destroyed or terminated by application of the law of merger or as a result of
such foreclosure unless Lender or any purchaser at any such foreclosure sale
shall so elect. No act by or on behalf of Lender or any such
purchaser shall constitute a termination of any Lease or sublease unless Lender
or such purchaser shall give written notice thereof to such lessee or
sublessee.
Section
18.20. Restoration of
Rights. In
case Lender shall have proceeded to enforce any right under this Agreement by
foreclosure sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then, in every such case, Borrower and Lender shall be
restored to their former positions and rights hereunder with respect to the
Projects subject to the lien hereof.
Section
18.21. Waiver of Statute of
Limitations. The
pleadings of any statute of limitations as a defense to any and all obligations
secured by this Agreement are hereby waived to the full extent permitted by
Legal Requirements.
Section
18.22. Intentionally
Deleted.
Section
18.23. Application of Default Rate
Not a Waiver. Application
of the Default Rate shall not be deemed to constitute a waiver of any Default or
Event of Default or any rights or remedies of Lender under this Agreement, any
other Loan Document or applicable Legal Requirements, or a consent to any
extension of time for the payment or performance of any obligation with respect
to which the Default Rate may be invoked.
Section
18.24. Intentionally
Deleted.
Section
18.25. No Joint Venture or
Partnership. Borrower
and Lender intend that the relationship created hereunder be solely that of
borrower and lender. Nothing herein is intended to create a joint
venture, partnership, tenancy in common, or joint tenancy relationship between
Borrower and Lender nor to grant Lender any interest in the Projects other than
as a lender and mortgagee.
Section
18.26. Time of the
Essence. Time
shall be of the essence in the performance of all obligations of Borrower
hereunder.
109
Section
18.27. Borrower’s Obligations
Absolute. Borrower
acknowledges that Lender and/or certain Affiliates of Lender are engaged in the
business of financing, owning, operating, leasing, managing, and brokering real
estate and in other business ventures which may be viewed as adverse to or
competitive with the business, prospect, profits, operations or condition
(financial or otherwise) of Borrower. Except as set forth to the
contrary in the Loan Documents, all sums payable by Borrower hereunder shall be
paid without notice or demand, counterclaim, set-off, deduction or defense and
without abatement, suspension, deferment, diminution or reduction, and the
obligations and liabilities of Borrower hereunder shall in no way be released,
discharged, or otherwise affected (except as expressly provided herein) by
reason of: (a) any damage to or destruction of or any Taking of the
Projects or any portion thereof; (b) any restriction or prevention of or
interference with any use of the Projects or any portion thereof; (c) any title
defect or encumbrance or any eviction from the Projects or any portion thereof
by title paramount or otherwise; (d) any bankruptcy proceeding relating to
Borrower, Sole Member, or any guarantor or indemnitor, or any action taken with
respect to this Agreement or any other Loan Document by any trustee or receiver
of Borrower or Sole Member or any guarantor or indemnitor, or by any court, in
any such proceeding; (e) any claim which Borrower has or might have against
Lender; (f) any default or failure on the part of Lender to perform or comply
with any of the terms hereof or of any other agreement with Borrower (except to
the extent that such default or failure on the part of Lender is as a result of
Lender’s refusal to release funds from any Escrow Account in contravention of
the terms and provisions of this Agreement and the other Loan Documents); or (g)
any other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not Borrower shall have notice or knowledge of any of the
foregoing.
Section
18.28. Publicity. All
promotional news releases, publicity or advertising by Manager, Borrower or
their respective Affiliates through any media intended to reach the general
public shall not refer to the Loan Documents or the financing evidenced by the
Loan Documents, or to Lender or to any of its Affiliates without the prior
written approval of Lender or such Affiliate, as applicable, in each instance,
such approval not to be unreasonably withheld or delayed. Lender
shall be authorized to provide information relating to the Projects, the Loan
and matters relating thereto to rating agencies, underwriters, potential
securities investors, auditors, regulatory authorities and to any Persons which
may be entitled to such information by operation of law.
Section
18.29. Lender
Authority. Lender
hereby represents and warrants that it has full power and authority to execute,
deliver and perform, as applicable, the Loan Documents to which it is a
party. The execution, delivery and performance of the Loan Documents
to which Lender is a party are within the powers of Lender and have been duly
authorized by Lender by all requisite action (and Lender hereby represents that
no consent, approval or action is required to authorize any of the Loan
Documents to which Lender is a party, other than those which have been
obtained).
Section 18.30. [Reserved].
Section
18.31. [Reserved].
110
Section
18.32. Exculpation
. Notwithstanding
anything herein or in any other Loan Document to the contrary, except as
otherwise set forth in this Section 18.32 to the contrary, Lender shall not
enforce the liability and obligation of Borrower or (a) if Borrower is a
partnership, its constituent partners or any of their respective partners, (b)
if Borrower is a trust, its beneficiaries or any of their respective Partners
(as hereinafter defined), (c) if Borrower is a corporation, any of its
shareholders, directors, principals, officers or employees, or (d) if Borrower
is a limited liability company, any of its members (the Persons described in the
foregoing clauses (a) - (d), as the case may be, are hereinafter referred to as
the “Partners”)
to perform and observe the obligations contained in this Agreement or any of the
other Loan Documents by any action or proceeding wherein a money judgment shall
be sought against Borrower or the Partners, except that Lender may bring a
foreclosure action, action for specific performance, or other appropriate action
or proceeding against Borrower (but not its Partners) (including, without
limitation, an action to obtain a deficiency judgment against Borrower) solely
for the purpose of enabling Lender to realize upon (i) Borrower’s interest in
the Projects, (ii) the Rent to the extent (x) received by Borrower (or received
by its Partners) after the occurrence of an Event of Default, or
(y) distributed to Borrower (or its Partners, but only to the extent
received by its Partners) during or with respect to any period for which Lender
did not receive a Manager Certification accurate in all material respects
confirming and certifying that all Operating Expenses with respect to the
Projects which had accrued as of the applicable date of such Manager
Certification had been paid (or if same had not been paid, that Manager had
taken adequate reserves therefor) (all Rent covered by clauses (x) and (y) being
hereinafter referred to as the “Recourse
Distributions”) and (iii) any other collateral given to Lender under the
Loan Documents (the collateral described in the foregoing clauses (i) - (iii) is
hereinafter referred to as the “Default Collateral”);
provided, however, that any
judgment in any such action or proceeding shall be enforceable against Borrower
only to the extent of any such Default Collateral. The provisions of
this Section shall not, however,
(a) impair
the validity of the Debt evidenced by the Note or in any way affect or impair
the lien of the related Mortgage(s) or any of the other Loan Documents or the
right of Lender to foreclose this Agreement following the occurrence of an Event
of Default;
(b) impair
the right of Lender to name Borrower as a party defendant in any action or suit
for judicial foreclosure and sale under this Agreement;
(c) affect
the validity or enforceability of the Note, this Agreement, or any of the other
Loan Documents, or impair the right of Lender to seek a personal judgment
against the Guarantor in accordance with the Guaranty;
(d) impair
the right of Lender to obtain the appointment of a receiver;
(e) impair
the enforcement of the Assignment;
(f) impair
the right of Lender to bring suit for a monetary judgment with respect to fraud
or intentional material misrepresentation by Borrower, Guarantor, any Affiliate
of either of them in connection with this Agreement, the Note or the other Loan
Documents, and the foregoing provisions shall not modify, diminish or discharge
the liability, if any, of Borrower with respect to same;
111
(g) impair
the right of Lender to bring suit for a monetary judgment against Borrower or
Guarantor (but not the Partners of Borrower) to obtain the Recourse
Distributions received by Borrower or its Partners, to the extent of any such
Recourse Distributions theretofore distributed to and received by Borrower or
such Partners, and the foregoing provisions shall not modify, diminish or
discharge the liability of Borrower or Guarantor with respect to
same;
(h) impair
the right of Lender to bring suit for a monetary judgment with respect to
Borrower’s misappropriation of tenant security deposits or Rent collected more
than one (1) month in advance, and the foregoing provisions shall not modify,
diminish or discharge the liability, if any, of Borrower with respect to
same;
(i) impair
the right of Lender to obtain Loss Proceeds due to Lender pursuant to this
Agreement;
(j) impair
the right of Lender to enforce the provisions of Sections 2.02(g), 12.01, 16.01,
or 17.03 through 17.06, inclusive, of this Agreement, even after repayment in
full by Borrower of the Debt or to bring suit for a monetary judgment against
Borrower with respect to any obligation set forth in said Sections;
(k) prevent
or in any way hinder Lender from exercising, or constitute a defense, or
counterclaim, or other basis for relief in respect of the exercise of, any other
remedy against any or all of the collateral securing the Note as provided in the
Loan Documents;
(l) impair
the right of Lender to bring suit for a monetary judgment with respect to any
misapplication or conversion of Loss Proceeds, and the foregoing provisions
shall not modify, diminish or discharge the liability of Borrower or Guarantor
with respect to same;
(m) impair
the right of Lender to xxx for, seek or demand a deficiency judgment against
Borrower solely for the purpose of foreclosing the Projects or any part thereof,
or realizing upon the Default Collateral; provided, however,
that any such deficiency judgment referred to in this clause (m) shall be
enforceable against Borrower only to the extent of any of the Default
Collateral;
(n) impair
the ability of Lender to bring suit for a monetary judgment with respect to
damage, arson or physical waste to or of the Projects or with respect to any act
or failure to act, by Borrower or any Affiliate of Borrower with respect to all
or any portion of the Projects that constitutes gross negligence or willful
misconduct;
(o) impair
the right of Lender to bring a suit for a monetary judgment against Borrower in
the event of the exercise of any right or remedy under any federal, state or
local forfeiture laws resulting in the loss of the lien of any Mortgage, or the
priority thereof, against all or any portion of the Projects;
(p) be deemed
a waiver of any right which Lender may have under Sections 506(a), 506(b),
1111(b) or any other provision of the Bankruptcy Code to file a claim for the
full amount of the Debt or to require that all collateral shall continue to
secure all of the Debt; or
112
(q) impair
the right of Lender to bring suit for monetary judgment with respect to any
losses resulting from any claims, actions or proceedings initiated by Borrower
(or any Affiliate of Borrower) alleging that the relationship of Borrower and
Lender is that of joint venturers, partners, tenants in common, joint tenants or
any relationship other than that of debtor and creditor.
The
provisions of this Section 18.32 shall be inapplicable to Borrower if (a) any
proceeding, action, petition or filing with respect to Borrower or Sole Member
under the Bankruptcy Code, or any similar state or federal law now or hereafter
in effect relating to bankruptcy, reorganization or insolvency, or the
arrangement or adjustment of debts, shall be filed by or consented to or
acquiesced in by, Borrower, Guarantor, Sole Member or any Affiliate of any
thereof, or if any such party shall aid, solicit, support or otherwise cooperate
or collude in the making or commencement of any such proceeding, action,
petition or filing, or if Borrower or Sole Member shall institute any proceeding
for its dissolution or liquidation, or shall make an assignment for the benefit
of creditors, (b) any voluntary Transfer in violation of Article IX shall occur,
(c) Borrower shall voluntarily further encumber or permit the further
encumbrance of, the Projects, or any of them, or of any direct or indirect
interest in Borrower, in violation of Section 9.01, (d) Borrower, Sole Member or
Guarantor or any of their respective Affiliates contest or in any material way
intentionally interferes with, directly or indirectly (collectively, a “Contest”) any
foreclosure action, UCC sale or other material remedy exercised by Lender upon
the occurrence of any Event of Default, whether by making any motion, bringing
any counterclaim, claiming any defense other than asserting a good-faith defense
to any action brought by Lender, seeking any injunction or other restraint,
commencing any action, or otherwise (provided that if any such Person obtains a
non-appealable order successfully asserting a Contest, Borrower shall have no
liability under this clause (d)), in which event Lender shall have recourse
against all of the assets of Borrower including, without limitation, any right,
title and interest of Borrower in and to the Projects and any Recourse
Distributions received by the Partners of Borrower (but excluding the other
assets of such Partners to the extent Lender would not have had recourse thereto
other than in accordance with the provisions of this Section
18.32).
[SIGNATURE
PAGES FOLLOW]
113
IN WITNESS WHEREOF, Borrower
and Lender have duly executed this Agreement the day and year first above
written.
|
BORROWER:
|
|
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ONE GRANDE SPE
LLC,
a
Delaware limited liability company
By:
/s/ Xxxxxxxx X.
Xxxxx
Name: Xxxxxxxx
X. Xxxxx
Title:
Chief Executive Officer
|
|
|
1280 WALL SPE
LLC,
a
Delaware limited liability company
By:
/s/ Xxxxxxxx X.
Xxxxx
Name: Xxxxxxxx
X. Xxxxx
Title:
Chief Executive Officer
|
|
|
10 SYLVAN SPE
LLC,
a
Delaware limited liability company
By:
/s/ Xxxxxxxx X.
Xxxxx
Name: Xxxxxxxx
X. Xxxxx
Title:
Chief Executive Officer
|
|
|
5 INDEPENDENCE SPE
LLC,
a
Delaware limited liability company
By:
/s/ Xxxxxxxx X.
Xxxxx
Name: Xxxxxxxx
X. Xxxxx
Title:
Chief Executive
Officer
|
[SIGNATURES
CONTINUE ON NEXT PAGE]
114
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1
INDEPENDENCE SPE LLC,
a
Delaware limited liability company
By:
/s/ Xxxxxxxx X.
Xxxxx
Name: Xxxxxxxx
X. Xxxxx
Title:
Chief Executive Officer
|
|
|
3
XXXXXX SPE LLC,
a
Delaware limited liability company
By:
/s/ Xxxxxxxx X.
Xxxxx
Name: Xxxxxxxx
X. Xxxxx
Title:
Chief Executive
Officer
|
[SIGNATURES
CONTINUE ON NEXT PAGE]
115
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LENDER:
GRAMERCY
WAREHOUSE FUNDING I LLC,
a
Delaware limited liability company
By: /s/Xxxxxx X.
Xxxxx
Name:
Xxxxxx X. Xxxxx
Title:
Chief Operating Officer
|
116
