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LOAN AGREEMENT
Dated as of July 29, 1997
Between
XXXXXXXX PROPERTIES NATOMAS, L.P., XXXXXXXX PROPERTIES
CORPORETUM, L.P., XXXXXXXX PROPERTIES SEVEN MILE, L.P.
AND XXXXXXXX PROPERTIES GATEWAY II, L.P.
as Borrower
AND
XXXXXX BROTHERS REALTY CORPORATION
as Lender
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TABLE OF CONTENTS
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Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.............................. 1
Section 1.1 Definitions.......................................... 1
Section 1.2 Principles of Construction........................... 14
II. GENERAL TERMS........................................................ 15
Section 2.1 Loan Commitment; Disbursement to Borrower............ 15
2.1.1 The Loan............................................. 15
2.1.2 Disbursement to Borrower............................. 15
2.1.3 The Note............................................. 15
2.1.4 Advances............................................. 15
Section 2.2 Use of Proceeds...................................... 16
Section 2.3 Loan Repayment....................................... 16
2.3.1 Repayment............................................ 16
2.3.2 Mandatory Prepayments................................ 17
2.3.3 Intentionally Omitted................................ 17
Section 2.4 Release of Properties................................ 17
2.4.1 Release of All the Properties........................ 17
2.4.2 Release of Individual Properties..................... 17
2.4.3 Intentionally Omitted................................ 19
2.4.4 Release on Payment in Full........................... 19
Section 2.5 Interest............................................. 19
2.5.1 Generally............................................ 19
2.5.2 Determination of Interest Rate....................... 20
2.5.3 Default Rate; Post-Maturity Interest................. 24
Section 2.6 Payments and Computations............................ 24
2.6.1 Making of Payments................................... 24
2.6.2 Computations......................................... 24
Section 2.7 Substitution of Properties........................... 24
III. CONDITIONS PRECEDENT................................................ 33
Section 3.1 Conditions Precedent to Initial Advance.............. 33
Section 3.2 Conditions Precedent to Subsequent Advances.......... 38
Section 3.3 Intentionally Omitted................................ 43
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Section 3.4 Conditions Precedent to Advances........................43
IV. REPRESENTATIONS AND WARRANTIES........................................43
Section 4.1 Borrower Representations................................43
Section 4.2 Applicability of Representations........................52
Section 4.3 Survival of Representations.............................52
V. AFFIRMATIVE COVENANTS.................................................52
Section 5.1 Borrower Covenants......................................52
VI. NEGATIVE COVENANTS....................................................59
Section 6.1 Borrower's Negative Covenants...........................59
VII. CASUALTY; CONDEMNATION; ESCROWS.......................................61
Section 7.1 Insurance; Casualty and Condemnation....................61
7.1.1 Insurance...............................................61
7.1.2 Condemnation............................................65
7.1.3 Restoration.............................................66
Section 7.2 Intentionally Omitted...................................70
Section 7.3 Tax and Insurance Escrow Fund...........................71
7.3.1 Tax and Insurance Escrow Fund...........................71
7.3.2 Grant of Security Interest..............................72
7.3.3 Application of Tax and Insurance Escrow Fund............72
Section 7.4 Intentionally Omitted...................................72
Section 7.5 Ground Lease Escrow Fund................................72
VIII. DEFAULTS..............................................................73
Section 8.1 Event of Default........................................73
Section 8.2 Remedies................................................75
Section 8.3 Remedies Cumulative.....................................77
IX. SPECIAL PROVISIONS....................................................77
Section 9.1 Sale of Notes and Securitization........................77
Section 9.2 Intentionally Omitted...................................78
Section 9.3 Intentionally Omitted...................................78
Section 9.4 Exculpation.............................................78
9.4.1 Exculpation.............................................78
9.4.2 Reservation of Certain Rights...........................78
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PAGE
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9.4.3 Exceptions to Exculpation...............................78
9.4.4 Bankruptcy Claims.......................................79
Section 9.5 Intentionally Omitted...................................79
Section 9.6 Servicer................................................79
Section 9.7 Participation...........................................79
X. MISCELLANEOUS...........................................................79
Section 10.1 Survival................................................79
Section 10.2 Lender's Discretion.....................................80
Section 10.3 Governing Law...........................................80
Section 10.4 Modification, Waiver in Writing.........................81
Section 10.5 Delay Not a Waiver......................................82
Section 10.6 Notices.................................................82
Section 10.7 Trial by Jury...........................................83
Section 10.8 Headings................................................83
Section 10.9 Severability............................................83
Section 10.10 Waiver of Notice.......................................84
Section 10.11 Remedies of Borrower...................................84
Section 10.12 Expenses; Indemnity....................................84
Section 10.13 Exhibits and Schedules Incorporated....................85
Section 10.14 No Joint Venture or Partnership; No Third Party
Beneficiaries..........................................85
Section 10.15 Publicity..............................................86
Section 10.16 Cross-Default; Cross-Collateralization; Waiver of
Marshalling of Assets..................................86
Section 10.17 Waiver of Counterclaim.................................87
Section 10.18 Conflict; Construction of Documents; Reliance..........87
Section 10.19 Brokers and Financial Advisors.........................87
Section 10.20 Prior Agreements.......................................88
Section 10.21 Joint and Several Liability............................88
Section 10.22 Waiver of Certain Rights and Defenses under
California Law.........................................88
Section 10.23 Counterparts...........................................89
Section 10.24 Effectiveness of Loan Documents........................89
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SCHEDULES
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Schedule I - List of Properties and Release Amounts
Schedule II - List of Additional Properties
Schedule III - Litigation
Schedule IV - Form of Estoppel Certificate
Schedule V - Form of Subordination, Nondisturbance and Attornment
Agreement
Schedule VI - Leases Without Provision for Subordination or Attornment
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 29, 1997 (this "AGREEMENT"),
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between XXXXXXXX PROPERTIES NATOMAS, L.P., a Delaware limited partnership,
XXXXXXXX PROPERTIES CORPORETUM, L.P., a Delaware limited partnership, XXXXXXXX
PROPERTIES SEVEN MILE, L.P., a Delaware limited partnership and XXXXXXXX
PROPERTIES GATEWAY II, L.P., a Delaware limited partnership, each having its
principal place of business at 0000 Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000 (collectively, "BORROWER") and XXXXXX BROTHERS REALTY CORPORATION,
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a Delaware corporation having an address at Three World Financial Center, New
York, New York 10281 ("LENDER").
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All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.
W I T N E S S E T H :
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WHEREAS, Borrower desires to obtain from Lender, and Lender is willing
to make to Borrower, a loan in the principal amount of up to ONE HUNDRED TWENTY
MILLION AND NO/100 DOLLARS ($120,000,000) (the "LOAN") pursuant to the terms and
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provisions set forth in this Agreement and the other Loan Documents;
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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SECTION 1.1 DEFINITIONS.
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For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"ADDITIONAL PROPERTY" shall have the meaning set forth in Section
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2.1.4(b).
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"ADJUSTED RELEASE AMOUNT" shall mean for an Individual Property the
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product of the Pro rata Release Amount for such Individual Property and one
hundred fifteen percent (115%).
"AFFILIATE" shall mean, as to any Person, any other Person that,
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directly or indirectly, is in control of, is controlled by or is under common
control with such Person.
"ALTA" shall mean American Land Title Association, or any successor
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thereto.
"ANNUAL BUDGET" shall mean the operating budget, including all planned
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capital expenditures, for all the Properties prepared by Borrower for the
applicable Fiscal Year or other period.
"ASSIGNMENT OF LEASES" shall mean, with respect to an Individual
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Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from an Individual Borrower, as assignor, to Lender, as
assignee, assigning to Lender all of such Individual Borrower's interest in and
to the Leases and Rents of such Individual Property as security for the Loan, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean, with respect to each
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Individual Property, that certain Assignment of Management Agreement and
Subordination of Management Fees, dated as of the date hereof, among the related
Individual Borrower, as assignor, Lender, as assignee, and the related Manager,
as Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"ASSIGNMENTS OF LEASES" shall mean, collectively all of the Assignment
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of Leases encumbering the Properties.
"ASSIGNMENTS OF MANAGEMENT AGREEMENTS" shall mean, collectively, every
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Assignment of Management Agreement executed and delivered by an Individual
Borrower.
"AWARD" shall have the meaning set forth in Section 7.1.2.
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"BASIC CARRYING COSTS" shall mean, with respect to an Individual
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Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) real property taxes
with respect to such Individual Property and (ii) insurance premiums with
respect to such Individual Property.
"BORROWER" shall mean, collectively, Xxxxxxxx Properties Natomas,
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L.P., a Delaware limited partnership, Xxxxxxxx Properties Corporetum, L.P., a
Delaware limited partnership, Xxxxxxxx Properties Seven Mile, L.P., a Delaware
limited partnership and Xxxxxxxx Properties Gateway II, L.P., a Delaware limited
partnership, together with the successors and assigns of such entities.
"BREAKAGE COSTS" shall have the meaning set forth in Section 2.5.2(h).
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"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
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other day on which national banks in New York are not open for business.
"CAPITAL EXPENDITURES" for any period shall mean the amount expended
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for items capitalized under GAAP (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
"CASUALTY/CONDEMNATION INVOLUNTARY PREPAYMENT" shall have the meaning
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set forth in Section 2.3.2.
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"CASUALTY CONSULTANT" shall have the meaning set forth in Section
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7.1.3(b)(iii).
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"CASUALTY RETAINAGE" shall have the meaning set forth in Section
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7.1.3(b)(iv).
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"CLOSING DATE" shall mean the date of the funding of the initial
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advance of a portion of the proceeds of the Loan.
"CLOSING DATE DEBT SERVICE COVERAGE RATIO" shall have the meaning set
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forth in Section 2.4.2(f).
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"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
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as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in Section
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7.1.3(b).
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"CONTRIBUTION AGREEMENT" shall mean that certain Contribution
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Agreement by and among the Individual Borrowers dated as of the date hereof, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"CPI" shall mean the Consumer Price Index as published by the Bureau
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of Labor Statistics of the U.S. Department of Labor, All Items for Urban Wage
Earners and Clerical Workers or any appropriate successor or substitute index.
"DEBT" shall mean the outstanding principal amount set forth in, and
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evidenced by, 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.
"DEBT SERVICE" shall mean, with respect to any particular period of
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time, scheduled principal and interest payments under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the applicable
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period in which the numerator is the Net Operating Income for such period as set
forth in the statements required hereunder and the denominator is the aggregate
amount of principal and interest due and payable on the Note for such period or
such other debt service calculation expressly set forth in this Agreement.
"DEFAULT" shall mean the occurrence of any event hereunder or under
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any other Loan Document which, but for the giving of notice or passage of time,
or both, would be an Event of Default.
"DEFAULT RATE" shall have the meaning set forth in the Note.
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"ELIGIBLE INVESTMENTS" shall mean any one or more of the following
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investments in obligations or securities acquired at a purchase price of not
greater than par, including those issued by Lender or any Affiliate of Lender,
provided that such obligations or securities are either payable on demand or
have a maturity not later than the Business Day immediately prior to the date on
which the proceeds thereof are anticipated to be expended or applied pursuant to
the terms of the Loan Documents:
(i) direct obligations of, and obligations fully guaranteed as to
payment of principal and interest by, the United States, Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association or any agency or
instrumentality of the United States of America provided such obligations are
backed by the full faith and credit of the United States of America;
(ii) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia at all times having the highest
long-term debt rating of the Rating Agencies, or such lower rating (but not
lower than the second highest such rating category of the Rating Agencies) as
will not or would not result in the qualification, reduction or withdrawal of
the initial ratings assigned in connection with a Securitization by the Rating
Agencies, as evidenced by a letter confirming such result by the Rating
Agencies;
(iii) commercial or finance company paper which is rated at all times
by the Rating Agencies in its highest unsecured commercial or finance company
paper rating category or such lower unsecured commercial or finance company
paper rating category (but not lower than the second highest such rating
category of the Rating Agencies) as will not or would not result in the
qualification, reduction or withdrawal of the initial ratings assigned in
connection with a Securitization by the Rating Agencies, as evidenced by a
letter confirming such result by the Rating Agencies;
(iv) certificates of deposit, demand or time deposits, federal funds
or bankers' acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or of any state
thereof and subject to supervision and examination by federal or state banking
authorities, provided that the commercial paper or long-term unsecured debt
obligations of such depository institution or trust company (or in the case of
the principal depository institution or trust company in a holding company
system, the commercial paper or long-term unsecured debt obligations of such
holding company) are rated at all times in the highest rating category for such
securities by the Rating Agencies, or such lower category for such securities
(but not lower than the second highest such rating category of the Rating
Agencies) as will not or would not result in the qualification, reduction or
withdrawal of the initial ratings assigned in connection with a Securitization
by the Rating Agencies, as evidenced by a letter confirming such result by the
Rating Agencies;
(v) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation as will not or would not result in the
qualification, reduction or withdrawal of the initial ratings assigned in
connection with a Securitization by the Rating Agencies, as evidenced by a
letter confirming such result by the Rating Agencies;
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(vi) repurchase obligations with respect to any security described
in clauses (i) and (ii) of this definition, in each case entered into with a
depository institution or trust company (acting as principal) described in
clause (iv) above;
(vii) securities (other than stripped bonds or stripped coupons)
bearing interest or sold at a discount that are issued by any corporation
incorporated under the laws of the United States of America or any state thereof
or the District of Columbia which are rated at all times in the highest rating
category of the Rating Agencies, or in such lower category (but not lower than
the second highest such rating category of the Rating Agencies) as will not or
would not result in the qualification, reduction or withdrawal of the initial
ratings assigned in connection with a Securitization by the Rating Agencies, as
evidenced by a letter confirming such result by the Rating Agencies;
(viii) interests in money market funds which at all times have a
rating of "AAA" by the Rating Agencies, or such lower rating (but not lower than
the second highest rating category of the Rating Agencies for money market
funds) as will not or would not result in the qualification, reduction or
withdrawal of the initial ratings assigned in connection with a Securitization
by the Rating Agencies, as evidenced by a letter confirming such result from the
Rating Agencies; and
(ix) such other investment bearing interest or sold at a discount
acceptable to Lender and the Rating Agencies as will or would not result in the
qualification, reduction or withdrawal of the initial ratings assigned in
connection with a Securitization by the Rating Agencies, as evidenced by a
letter confirming such result from the Rating Agencies; provided that such
investment shall be rated at all times by the Rating Agencies not lower than its
second highest rating category for investments of such type.
No obligation or security set forth above shall be an Eligible
Investment if (y) such obligation 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 provide a yield to maturity in excess of
one hundred twenty percent (120%) of the yield to maturity at par of such
underlying investment.
"ENVIRONMENTAL INDEMNITY" shall mean, collectively, one or more
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Environmental Indemnity Agreements with respect to one or more Individual
Properties executed by Borrower in connection with the Loan for the benefit of
Lender.
"ERISA" shall have the meaning set forth in Section 6.1(k).
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"EURODOLLAR LOAN" shall mean each portion of the outstanding principal
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amount of the Loan at such time as interest thereon accrues at a rate of
interest based upon LIBOR.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 8.1(a).
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"EURODOLLAR RATE REQUEST" shall mean Borrower's irrevocable telephonic
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notice (to be promptly confirmed in writing), to be received by Lender by 00
Xxxx (Xxx Xxxx Xxxx time) three (3) Working Days prior to the date specified in
the Eurodollar Rate Request for the commencement of the Interest Period, of (a)
Borrower's intention to have all or any portion of the outstanding principal
amount of the Loan which is not then the subject of an Interest Period (other
than an Interest Period which is terminating on the Working Day specified in
such notice) bear interest at LIBOR and (b) the Interest Period desired by
Borrower in respect of the amount specified.
"EURODOLLAR RATE REQUEST AMOUNT" shall mean the amount, to be
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specified by Borrower in each Eurodollar Rate Request, which shall in no event
be less than Five Million and No/100 Dollars ($5,000,000).
"FISCAL YEAR" shall mean each twelve month period commencing on
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January 1 and ending on December 31 during each year of the term of the Loan.
"FOREIGN TAXES" shall have the meaning set forth in Section 2.5.2(e).
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"GAAP" shall mean generally accepted accounting principles as of the
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date of the applicable financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
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commission, office or authority of any nature whatsoever for any governmental
xxxx (xxxxxxx, xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether
now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean all income, calculated on a
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cash basis with respect to past periods or calculated on an accrual basis with
respect to future periods, which calculations shall be reasonably acceptable to
Lender and based upon operating statements and other information delivered to
Lender by Borrower, derived from the ownership and operation of the Properties
from whatever source, including, but not limited to, all rent, utility charges,
escalations, forfeited security deposits, service fees or charges, license fees,
parking fees, rent concessions or credits, and any business interruption
insurance proceeds but excluding rent, sales, use and occupancy or other taxes
on receipts required to be accounted for by Borrower to any government or
governmental agency, refunds and uncollectible accounts, sales of furniture,
fixtures and equipment, proceeds of casualty insurance and condemnation awards
(other than condemnation awards constituting compensation for temporary
takings); provided, however, that condemnation awards constituting compensation
for temporary takings shall not be included in this definition whenever this
definition is used for purposes of computing Debt Service Coverage Ratio. Gross
income shall not be diminished as a result of the Mortgages or the creation of
any intervening estate or interest in the Properties or any part thereof.
"GROUND LEASE" shall mean, collectively, (i) that certain Base Ground
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Lease between Xxxxxxxxxxx Community College District, as Landlord, and
Xxxxxxxxxxx Development Authority, Inc., as Tenant, dated as of Xxxxx 00, 0000,
(xx) that certain Ground Sublease between Xxxxxxxxxxx Development Authority,
Inc., as Landlord, and Duke Associates No. 52 Limited Partnership, as Tenant,
dated as of May 11, 1987, as amended by that certain
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Amendment to Lease dated as of 1989, (iii) that certain Ground Sublease between
Xxxxxxxxxxx Development Authority, Inc., as Landlord, and Duke Associates No. 52
Limited Partnership, as Tenant, dated as of May 1, 1988, and (iv) that certain
Ground Sublease between Xxxxxxxxxxx Development Authority, Inc., as Landlord and
Duke Associates No. 52 Limited Partnership, as Tenant, dated as of August 1,
1989.
"GROUND LEASE ESCROW FUND" shall have the meaning set forth in Section
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7.5 hereof.
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"IMPROVEMENTS" shall have the meaning set forth in the related
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Mortgage with respect to each Individual Property.
"INCOME TAXES" shall mean, for any period, the federal and state
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income taxes payable by the partners of the Borrower with respect to the
Borrower's taxable income for such period.
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in Section
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10.12(b).
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"INDIVIDUAL BORROWER" shall mean, individually, any of Xxxxxxxx
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Properties Natomas, L.P., Xxxxxxxx Properties Corporetum, L.P., Xxxxxxxx
Properties Seven Mile, L.P. or Xxxxxxxx Properties Gateway II, L.P.
"INDIVIDUAL PROPERTY" shall mean an Individual Borrower's fee or
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leasehold interest in each parcel of real property and the improvements thereon
owned by such Individual Borrower encumbered by a Mortgage on the Closing Date
and in each Additional Property thereafter encumbered by a Mortgage from and
after the date such Additional Property is so encumbered, together with all
rights pertaining to such property and improvements, as more particularly
described in the Granting Clauses of such Mortgages and referred to therein as
the "Property".
"INITIAL ADVANCE" shall mean Lender's initial advance of proceeds of
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the Loan in the amount of Fifty-One Million Nine Hundred Thousand and No/100
Dollars ($51,900,000).
"INSURANCE PREMIUMS" shall have the meaning set forth in Section
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7.1.1(b) hereof.
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"INSURANCE PROCEEDS" shall have the meaning set forth in Section
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7.1.3(b).
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"INTEREST PERIOD" shall mean with respect to any Eurodollar Loan and
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subject to availability, the period during which interest at LIBOR, determined
as provided in this Agreement, shall be applicable to the Eurodollar Rate
Request Amount in question; provided, however, that (i) the initial Interest
Period shall be the period commencing on the Closing Date through and including
August 9, 1997; (ii) after such initial Interest Period, each such period shall
be either one (1), two (2) or three (3) months; (iii), each such period shall be
measured from the Scheduled Payment Date specified by Borrower in each
Eurodollar Rate
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Request for the commencement of the computation of interest at LIBOR to but not
including the Scheduled Payment Date in the calendar month in which such period
terminates; (iv) in no event shall any such period extend beyond the Maturity
Date and (v) for purposes of determining the availability of an Interest Period
in respect of a Eurodollar Loan, such Interest Period shall be deemed available
if Lender is offered a rate as provided in the definition of LIBOR set forth
herein.
"LEASE" shall mean any lease, or, to the extent of the interest
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therein of Borrower, any sublease or subsublease, letting, license, concession
or other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in any Individual
Property of Borrower, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.
"LEASE GUARANTY" shall have the meaning set forth in Section 5.1(r).
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"LEGAL REQUIREMENTS" shall mean, with respect to each Individual
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Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities affecting such Individual Property or any part
thereof or the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, and all material
permits, licenses and authorizations and regulations relating thereto, and all
material covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting such Individual Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to such Individual Property or any part thereof, or (ii) in any material way
limit the use and enjoyment thereof.
"LENDER" shall mean Xxxxxx Brothers Realty Corporation, together with
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its successors and assigns.
"LIBOR" shall mean, with respect to each Interest Period, the rate per
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annum equal to the quotient of (a) the rate reported on the date one (1) Working
Day prior to the beginning of such Interest Period as of 11:00 a.m., London,
England time, on Telerate Access Service Page 3750 (British Bankers Association
Settlement Rate) as the London Interbank Offered Rate for U.S. Dollar deposits
having a term equal to the Interest Period selected by Borrower in the related
Eurodollar Rate Request and in an amount comparable to the related Eurodollar
Rate Request Amount to be outstanding during such Interest Period (or, if said
Telerate Access Service Page shall cease to be publicly available, as reported
by the Reuters Screen LIBO Page, and if said Reuters Screen Page shall cease to
be publicly available, then as reported by any publicly available source of
similar market data selected by Lender in Lender's sole discretion, exercised in
good faith, that accurately reflects such Xxxxxx
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Xxxxxxxxx Offered Rate) divided by (b) a number equal to 1.00 minus the
aggregate (without duplication) of the rates (expressed as a decimal) of reserve
requirements applicable to Lender current on the date one (1) Working Day prior
to the beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves) under any regulations of any
Governmental Authority as now and from time to time hereafter in effect, dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of the Board of
Governors of the Federal Reserve System) maintained by a member bank of such
system. For purposes of this Agreement, the amount of any Eurodollar Loan to be
outstanding during each related Interest Period shall be the related portion of
the principal balance of the Loan bearing interest at a rate of interest based
upon LIBOR at 11:00 a.m., London, England time, on the date one (1) Working Day
prior to the beginning of the related Interest Period, less (1) the amount, if
any, which Borrower has elected to voluntarily prepay and which is to be applied
in reduction of such portion of the principal balance of the Loan after such
Working Day and prior to the expiration of the Interest Period immediately
preceding such related Interest Period pursuant to a proper and timely
irrevocable notice given in accordance with the provisions of Section 2.3.1 and
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(2) the amount of any Casualty/Condemnation Involuntary Prepayment during the
Interest Period immediately preceding such related Interest Period, but which is
not to be applied in reduction of the principal balance of the Loan until the
Scheduled Payment Date commencing such related Interest Period.
"LICENSES" shall have the meaning set forth in Section 4.1(v).
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"LIEN" shall mean, with respect to each Individual Property, any
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mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting the
related Individual Property or any portion thereof or Borrower, or any interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement (other
than a financing statement giving notice of a true lease), and mechanic's,
materialmen's and other similar liens and encumbrances.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note,
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the Mortgage and Assignment of Leases encumbering each Individual Property, the
Environmental Indemnity, the Assignments of Management Agreements, the
Contribution Agreement and any other document evidencing or securing the Loan,
as each such document may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"MANAGEMENT AGREEMENT" shall mean, with respect to each Individual
--------------------
Property, the management agreement entered into by and between an Individual
Borrower and the related Manager and approved by Lender, pursuant to which such
Manager is to provide management and other services with respect to such
Individual Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time in accordance with this
Agreement.
-9-
"MANAGEMENT AGREEMENTS" shall mean, collectively, every Management
---------------------
Agreement executed and delivered by an Individual Borrower.
"MANAGER" shall mean Xxxxxxxx Properties Management, L.P., a Texas
-------
limited partnership, or such other property manager retained by an Individual
Borrower pursuant to a Management Agreement and approved by Lender.
"MATURITY DATE" shall mean August 29, 1998 or such other date on which
-------------
the final payment of principal of the Note becomes due and payable as therein
provided, whether at a stated maturity, by declaration of acceleration, or
otherwise.
"MORTGAGE" shall mean, with respect to an Individual Property, that
--------
certain first priority Mortgage and Security Agreement, Leasehold Mortgage and
Security Agreement or Deed of Trust and Security Agreement executed and
delivered by an Individual Borrower as security for the Loan made to Borrower
and encumbering such Individual Property, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"MORTGAGES" shall mean, collectively, all of the Mortgages encumbering
---------
the Properties.
"NATOMAS MANAGEMENT AGREEMENT" shall mean, with respect to the
----------------------------
Individual Property known as Natomas Corporate Center, collectively, the six (6)
Property Management Agreements, each dated as of March 22, 1993 between 2495
Natomas Investors and Natomas Manager, as amended pursuant to that certain
letter agreement dated March 31, 1997, between Xxxxxxxx Properties Acquisition
Partners, L.P. (predecessor in interest to Xxxxxxxx Properties Natomas, L.P.)
and Natomas Manager, as assigned to Xxxxxxxx Properties Acquisition Partners,
L.P., pursuant to that certain Assignment of Property Management Agreement dated
April 2, 1997 by 2495 Natomas Investors to Xxxxxxxx Properties Acquisition
Partners, L.P., pursuant to which the Natomas Manager is to provide management
and other services with respect to the Individual Property known as Natomas
Corporate Center and each of which terminated on June 1, 1997.
"NATOMAS MANAGER" shall mean KCS Properties, Inc., a California
---------------
limited partnership.
"NET OPERATING INCOME" means, for the relevant calculation period, the
--------------------
amount obtained by subtracting Operating Expenses from Gross Income from
Operations.
"NET PROCEEDS" shall have the meaning set forth in Section 7.1.3(b).
------------ ----------------
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
----------------------- -------
7.1.3(b)(vi).
------------
"NON-CURABLE PROPERTY DEFAULT" shall mean a Default, other than a
----------------------------
Default which can be cured by the payment of money, which (i) arises by reason
of a circumstance or
-10-
state of facts existing at or with respect to an Individual Property and (ii)
cannot practicably be remedied within the notice and cure periods provided
therefor in the Loan Documents.
"NOTE" shall mean that certain Promissory Note of even date herewith,
----
made by Borrower in favor of Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender
---------------------
by Borrower which is signed by an authorized officer of the general partner of
Borrower.
"OPERATING EXPENSES" shall mean, for any period, all ordinary and
------------------
customary out-of-pocket expenses, the calculation of which shall be reasonably
satisfactory to Lender, incurred by or on behalf of Borrower for or in
connection with the ownership, operation, leasing and maintenance of the
Properties paid to Persons that are not Affiliates of Borrower or, if paid to
Affiliates of Borrower, in amounts reflecting an arm's-length transaction on
market terms. Operating Expenses shall not include (a) the cost of repairs,
additions, alterations, improvements, leasing and brokerage commissions and
other costs (including financing costs) to the extent same are required to be
capitalized in accordance with GAAP, (b) depreciation and other non-cash
charges, (c) principal and interest payments on the Loan, (d) any income or
capital gains taxes payable upon the income or capital gains of Borrower or its
partners and (e) Borrower's overhead, entity and audit expenses.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
-------------
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Properties, now or hereafter levied or assessed or
imposed against the Properties or any part thereof.
"OUTSIDE CLOSING DATE" shall have the meaning set forth in Section
-------------------- -------
2.1.4(b).
--------
"PARTICIPATION" shall have the meaning set forth in Section 9.7.
------------- -----------
"PERMITTED ENCUMBRANCES" shall mean, with respect to an Individual
----------------------
Property, collectively, (a) the Liens and security interests created by the Loan
Documents; (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Individual Property or any part thereof or
insured over to Lender's satisfaction; (c) Liens, if any, for Taxes imposed by
any Governmental Authority not yet due or delinquent or being contested in
accordance with the terms and provisions of Section 5.1(b); (d) any and all
--------------
utility or access easements that may exist or may hereafter be granted by
Borrower and that do not materially and adversely affect (i) the marketability
of title to such Individual Property, (ii) the fair market value of such
Individual Property, (iii) the use of such Individual Property for its use as of
the date hereof or (iv) Borrower's ability to comply with the terms and
provisions of the Loan Documents; (e) rights of existing and future tenants, as
tenants only, pursuant to the Leases; (f) Liens for Labor and Material Costs (as
defined in the Mortgage) being contested in accordance with the terms and
provisions of Section 3.6(b) of the Mortgage and (g) such other title and survey
exceptions as Lender has approved or may approve in writing in Lender's
reasonable discretion.
-11-
"PERSON" shall mean any individual, corporation, 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.
"PERSONAL PROPERTY" shall have the meaning set forth in the Mortgage
-----------------
with respect to each Individual Property.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to each
--------------------------
Individual Property, a report prepared by a company reasonably satisfactory to
Lender regarding the physical condition of such Individual Property, reasonably
satisfactory in form and substance to Lender, which report shall, among other
things, (i) confirm that such Individual Property and its use complies, in all
material respects, with all applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws) and (ii) include a copy of a
final certificate of occupancy with respect to all Improvements on such
Individual Property.
"POLICIES" and "POLICY" shall have the meaning specified in Section
-------- ------ -------
7.1.1(b).
--------
"PREPAYMENT DATE" shall have the meaning set forth in Section 2.3.1.
--------------- -------------
"PRIME RATE" shall mean the annual rate of interest publicly announced
----------
by Citibank, N.A. in New York, New York, as its base rate, as such rate shall
change from time to time. If Citibank, N.A. ceases to announce a base rate,
Prime Rate shall mean the rate of interest published in The Wall Street Journal
-----------------------
from time to time as the "Prime Rate". If more than one "Prime Rate" is
published in The Wall Street Journal for a day, the average of such "Prime
-----------------------
Rates" shall be used, and such average shall be rounded up to the nearest one-
eighth of one percent (0.125%). If The Wall Street Journal ceases to publish the
-----------------------
"Prime Rate", the Lender shall select an equivalent publication that publishes
such "Prime Rate", and if such "Prime Rates" are no longer generally published
or are limited, regulated or administered by a governmental or quasigovernmental
body, then Lender shall select a comparable interest rate index.
"PRIME RATE LOAN" shall mean any portion of the outstanding principal
---------------
of the Loan at such time as interest thereon accrues at a rate of interest based
upon the Prime Rate.
"PROPERTIES" shall mean, collectively, all of the Individual
----------
Properties.
"PRO RATA RELEASE AMOUNT" shall mean for an Individual Property or
-----------------------
Subparcel the product of (a) the quotient obtained by dividing the Release
Amount for such Individual Property or Subparcel by the sum of the original
Release Amount for all Properties, and (b) the outstanding principal balance of
the Loan.
"PRO RATA SUBSTITUTE RELEASE AMOUNT" shall mean for a Substitute
----------------------------------
Property the product of (a) the quotient obtained by dividing the Substitute
Release Amount for such Individual Property by the sum of the original Release
Amount for all Properties, and (b) the
-12-
outstanding principal balance of the Loan.
"RATING AGENCY" shall mean any one or more, but in no event more than
-------------
three, of Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc.,
Xxxxx'x Investors Service, Inc., Duff & Xxxxxx Credit Rating Co. and Fitch
Investors Service, Inc. or any other nationally-recognized statistical rating
agency which has been selected by Lender in its sole discretion in connection
with a Securitization.
"REGULAR INTEREST RATE" shall have the meaning set forth in Section
--------------------- -------
2.5.2(a).
--------
"RELEASE AMOUNT" shall mean, for an Individual Property or Subparcel,
--------------
the amount set forth on Schedule I hereto.
----------
"RENTABLE SPACE PERCENTAGE" shall have the meaning set forth in
-------------------------
Section 7.1.3(b)(i)(C).
----------------------
"RENTS" shall have the meaning set forth in the Mortgage with respect
-----
to each Individual Property.
"RESTORATION" shall have the meaning set forth in Section 7.1.1(g).
----------- ----------------
"SCHEDULED PAYMENT DATE" shall mean the tenth day of each calendar
----------------------
month during the term of the Loan or, if such day is not a Working Day, the
immediately preceding Working Day.
"SECURITIZATION" shall have the meaning set forth in Section 9.1.
-------------- -----------
"SERVICER" shall have the meaning set forth in Section 9.6.
-------- -----------
"SERVICING AGREEMENT" shall have the meaning set forth in Section 9.6.
------------------- -----------
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in Section
---------------------- -------
8.2(c).
------
"STATE" shall mean, with respect to an Individual Property, the State
-----
or Commonwealth in which such Individual Property or any part thereof is
located.
"SUBPARCEL" shall mean a separately identifiable subparcel forming a
---------
part of an Individual Property as set forth on Schedule I or Schedule II.
---------- -----------
"SUBSEQUENT ADVANCE" shall have the meaning set forth in Section
------------------ -------
2.1.4(b).
---------
"SUBSEQUENT ADVANCE CLOSING DATE" shall mean the date of the funding
-------------------------------
of any subsequent advance of a portion of the proceeds of the Loan pursuant to
Section 2.1.4.
-------------
"SUBSEQUENT ADVANCE REQUEST" shall have the meaning set forth in
--------------------------
Section 2.1.4(b).
-----------------
-13-
"SUBSTITUTE PROPERTY" shall have the meaning set forth in Section 2.7.
------------------- -----------
"SUBSTITUTE RELEASE AMOUNT" shall have the meaning set forth in
-------------------------
Section 2.7(viii).
-----------------
"SUBSTITUTED PROPERTY" shall have the meaning set forth in Section
-------------------- -------
2.7.
---
"SURVEY" shall mean a survey of the Individual Property in question
------
prepared by a surveyor licensed in the State and reasonably satisfactory to
Lender and the company or companies issuing the Title Insurance Policies, and
containing a certification of such surveyor reasonably satisfactory to Lender.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in
-----------------------------
Section 7.3.1.
-------------
"TAXES" shall mean all real estate and personal property taxes,
-----
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Properties or part thereof.
"THRESHOLD AMOUNT" shall have the meaning set forth in Section
---------------- -------
5.1(s).
------
"TITLE INSURANCE POLICY" shall mean, with respect to each Individual
----------------------
Property, an ALTA mortgagee title insurance policy (or the form of mortgagee
title insurance policy promulgated by applicable State laws and regulations) in
the form (reasonably acceptable to Lender) issued with respect to such
Individual Property and insuring the lien of the Mortgage encumbering such
Individual Property.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
--- -----------------------
Code as in effect in the applicable State or Commonwealth in which an Individual
Property is located.
"U.S. OBLIGATIONS" shall mean direct non-callable obligations of the
----------------
United States of America.
"WORKING DAY" shall mean any day on which dealings in foreign
-----------
currencies and exchange are carried on in London, England and in New York, New
York.
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
--------------------------
All references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified.
Unless otherwise specified, the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.
-14-
II. GENERAL TERMS
-------------
SECTION 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
-----------------------------------------
2.1.1 THE LOAN. Subject to and upon the terms and conditions set
--------
forth herein, Lender hereby agrees to make the Loan to Borrower in the principal
amount of up to One Hundred Twenty Million and No/100 Dollars ($120,000,000).
The Loan shall mature on the Maturity Date.
2.1.2 DISBURSEMENT TO BORROWER. Borrower may request and receive
------------------------
only one borrowing hereunder in respect of the Loan, which borrowing may be
advanced to Borrower in not more than four (4) disbursements in accordance with
the terms hereof, and any amount borrowed and repaid hereunder in respect of the
Loan may not be reborrowed. For the purposes of this Section 2.1.2, a purchase
-------------
of a Participation by Borrower will not be deemed to be a reborrowing. Borrower
shall, on the Closing Date, receive the Initial Advance, subject to the
direction given by Borrower as to the application of Loan proceeds to pay
certain closing costs and to fund the Tax and Insurance Escrow Fund in
accordance with the provisions of this Agreement. Borrower shall, on any
Subsequent Advance Closing Date, receive the related Subsequent Advance, subject
to the direction given by Borrower as to the application of Loan proceeds to pay
certain closing costs and to fund the Tax and Insurance Escrow Fund and the
Ground Lease Escrow Fund, if applicable, in accordance with the provisions of
this Agreement.
2.1.3 THE NOTE. The Loan shall be evidenced by the Note of Borrower,
--------
in the original principal amount of the Loan. The Note shall bear interest as
provided in Section 2.5 and shall be subject to repayment as provided in Section
----------- -------
2.3. The Note shall be entitled to the benefits of this Agreement and shall be
---
secured by the Mortgages, the Assignments of Leases and the other Loan
Documents.
2.1.4 ADVANCES. (a) Lender shall make, and Borrower shall accept,
--------
the Initial Advance subject to and upon the conditions and terms contained
herein including, without limitation, the conditions contained in Section 3.1.
------------
hereof.
(b) In addition to the Initial Advance, Borrower may request and
receive not more than three (3) subsequent advances of a portion of the proceeds
of the Loan not previously advanced (each, a "SUBSEQUENT ADVANCE"); provided,
------------------
however, that (1) the amount of any Subsequent Advance and the Release Amount of
any Additional Property to be encumbered by a Mortgage in connection with such
Subsequent Advance shall be determined by Lender in its sole discretion after
Lender's review of the Subsequent Advance Request and all due diligence
materials and other information required for the satisfaction of the conditions
set forth in Section 3.2 and (2) Borrower shall have satisfied each of the
-----------
conditions contained in Section 3.2. Lender shall not be obligated to make a
-----------
Subsequent Advance after November 30, 1997 (the "OUTSIDE CLOSING DATE").
--------------------
Borrower may submit to Lender, at any time after the Closing Date and not later
than five (5) days prior to the Outside Closing Date, a
-15-
written request for a Subsequent Advance in form and substance acceptable to
Lender (each such request being hereinafter referred to as a "SUBSEQUENT ADVANCE
------------------
REQUEST"). Each Subsequent Advance Request shall, among other things, (i)
-------
request an advance of Loan proceeds in an amount no less than One Million and
No/100 Dollars ($1,000,000), (ii) set forth one or more of the properties listed
on Schedule II hereto or such other property or properties as may be acceptable
-----------
to Lender in its sole discretion (each such property so identified being
hereinafter referred to as an "ADDITIONAL PROPERTY") which shall be encumbered
-------------------
by a Mortgage and included as an Individual Property hereunder as security for
the Loan and (iii) set forth the proposed Subsequent Advance Closing Date with
respect to the Subsequent Advance requested, which Subsequent Advance Closing
Date shall be no less than five (5) days subsequent to the date on which the
Subsequent Advance Request is received by Lender. Borrower hereby acknowledges
that Borrower's agreement that each Additional Property so identified secure the
related Subsequent Advance and all prior advances of proceeds of the Loan is a
material inducement to Lender to make the Loan.
SECTION 2.2 USE OF PROCEEDS.
---------------
Borrower shall use the proceeds of the Loan disbursed to it pursuant
to this Agreement to (a) repay and discharge any existing loans relating to the
Properties, (b) pay all past-due Basic Carrying Costs, if any, in respect of the
Properties, (c) fund the Tax and Insurance Escrow Fund and the Ground Lease
Escrow Fund, (d) pay costs and expenses incurred in connection with the Closing
of the Loan, as approved by Lender, (e) fund any working capital requirements of
the Properties, (f) pay costs and expenses incurred in connection with the
acquisition of the Properties and (g) distribute the balance, if any, to the
Borrower's partners or as Borrower may otherwise determine in its sole
discretion.
SECTION 2.3 LOAN REPAYMENT.
--------------
2.3.1 REPAYMENT. Borrower shall repay any outstanding principal
---------
indebtedness of the Loan in full on the Maturity Date, together with interest
thereon to (but excluding) the date of repayment. In addition to Borrower's
right to make a Casualty/Condemnation Involuntary Prepayment as set forth in
Section 2.3.2 below, Borrower shall have the right to prepay all or any portion
-------------
of the Loan prior to the Maturity Date, without the payment of any penalty or
premium, upon not less than ten (10) days prior written notice to Lender
specifying the date on which prepayment is to be made (a "PREPAYMENT DATE"),
---------------
provided that no Event of Default shall have occurred and be continuing. In
addition to the amount of such prepayment, Borrower shall also pay to Lender,
together with such prepayment, all interest accrued and unpaid with respect to
such prepayment and, if such Prepayment Date is not a Scheduled Payment Date,
Borrower shall also pay any applicable Breakage Costs. Each notice of
prepayment of the Loan shall be irrevocable and shall specify (i) the applicable
Prepayment Date, (ii) the amount of such prepayment and the amount of interest
thereon to be paid in connection therewith and (iii) any Individual Property or
Subparcel that is to be released from the Lien of the Mortgage thereon (and the
related Loan Documents) in connection with such prepayment.
-16-
2.3.2 MANDATORY PREPAYMENTS. The Loan is subject to mandatory
---------------------
prepayment in certain instances of Casualty and Condemnation (each a
"CASUALTY/CONDEMNATION INVOLUNTARY PREPAYMENT"), in the manner and to the extent
---------------------------------------------
set forth in Section 7.1.3 hereof. Each Casualty/Condemnation Involuntary
-------------
Prepayment shall be made on a Scheduled Payment Date and include all accrued and
unpaid interest up to but not including such Scheduled Payment Date or, if not
paid on a Scheduled Payment Date, include interest that would have accrued on
such prepayment through the next regularly Scheduled Payment Date together with
any applicable Breakage Costs.
2.3.3 INTENTIONALLY OMITTED.
---------------------
SECTION 2.4 RELEASE OF PROPERTIES. Except as set forth in this
---------------------
Section 2.4, no repayment or prepayment of all or any portion of the Note shall
-----------
cause, give rise to a right to require, or otherwise result in, the release of
any Lien of any Mortgage on any of the Properties.
2.4.1 RELEASE OF ALL THE PROPERTIES. (a) If Borrower has elected to
-----------------------------
prepay the entire outstanding principal balance of the Loan, the requirements of
Section 2.3 have been satisfied and Borrower shall have paid to Lender the
-----------
outstanding principal amount of the Loan together with all interest accrued
thereon, any applicable Breakage Costs and any other amounts owed by Borrower to
Lender pursuant to this Agreement or any other Loan Document, then all of the
Properties shall be released from the Liens of their respective Mortgages (and
related Loan Documents).
(b) In connection with the release of the Liens, Borrower
shall submit to Lender, not less than ten (10) days prior to the Prepayment
Date, a release of Lien (and related Loan Documents) for each Individual
Property for execution by Lender. Such release shall be in a form appropriate
for each jurisdiction in which an Individual Property is located and
satisfactory to Lender in its reasonable discretion. In addition, Borrower shall
provide all other documentation that Lender reasonably requires to be delivered
by Borrower in connection with such release, together with an Officer's
Certificate of Borrower certifying that such documentation (i) is in compliance
with all Legal Requirements, and (ii) will effect such releases in accordance
with the terms of this Agreement.
2.4.2 RELEASE OF INDIVIDUAL PROPERTIES. Borrower on one or more
--------------------------------
occasions may obtain (i) the release of an Individual Property or a Subparcel
from the Lien of the Mortgage thereon (and related Loan Documents) and (ii) the
release of Borrower's obligations under the Loan Documents with respect to such
Individual Property or Subparcel (other than those expressly stated to survive),
upon satisfaction of the requirements of Section 2.3 and the satisfaction of
each of the following conditions:
(a) Borrower shall have (i) prepaid the Loan in the amount of the
Adjusted Release Amount for such Individual Property or Subparcel, (ii) paid to
Lender all interest accrued and unpaid with respect to the Pro rata Release
Amount for such Individual Property or Subparcel and any other amounts due and
owing to Lender with respect to such Individual
-17-
Property or Subparcel pursuant to this Agreement or the other Loan Documents and
(iii) paid to Lender any Breakage Costs payable in connection with the payment
of such Adjusted Release Amount.
(b) All payments of principal of, and interest on, the Loan
theretofore or at such time required to be paid shall have been paid and all
other amounts theretofore or at such time required to be paid under the Loan
Documents shall have been received by Lender (including, without limitation, all
reasonable costs and expenses incurred by Lender in connection with such
release).
(c) Borrower shall submit to Lender, not less than ten (10) days
prior to the date of such release, a release of Lien (and related Loan
Documents) for such Individual Property or Subparcel for execution by Lender.
Such release shall be in a form appropriate for each jurisdiction in which the
Individual Property or Subparcel is located and reasonably satisfactory to
Lender. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release,
together with an Officer's Certificate of Borrower certifying that such
documentation (i) is in compliance with all Legal Requirements, (ii) will effect
such release in accordance with the terms of this Agreement, and (iii) will not
impair or otherwise adversely affect the Liens, security interests and other
rights of Lender under the Loan Documents not being released (or as to the
parties to the Loan Documents and Properties (or portion thereof) subject to the
Loan Documents not being released).
(d) Borrower shall have delivered an Officer's Certificate to
Lender (i) at least ten (10) days prior to the date such Individual Property or
Subparcel is to be released from the Lien of the Mortgage thereon (and related
Loan Documents) and (ii) on the date of such release, certifying in each case
that the conditions in this Section have been satisfied (or will be satisfied on
the date of such release), with detailed calculations indicating the derivation
of the amounts then payable in connection with such release pursuant to this
Section 2.4.2(d).
-----------------
(e) Immediately prior to, and after giving effect to, the proposed
release, no Event of Default shall have occurred and be continuing; provided,
--------
however, that Borrower may obtain a release during the period that a Non-Curable
-------
Property Default exists under the Loan Documents with respect to the Individual
Property or Subparcel to be released, if (i) such Non-Curable Property Default
is the only Event of Default then existing under the Loan Documents, (ii) all
other conditions contained in this Section are satisfied in connection with such
release and (iii) after giving effect to such release, no Event of Default shall
exist.
(f) After giving effect to such release, other than a release in
connection with a Casualty/Condemnation Involuntary Prepayment or a Non-Curable
Property Default, the Debt Service Coverage Ratio for all of the Properties (or
portion thereof) then remaining subject to the Liens of the Mortgages calculated
with respect to the twelve (12) full calendar months immediately preceding the
release of the Individual Property or Subparcel and projected with respect to
the twelve (12) full calendar months immediately following the
-18-
release of the Individual Property or Subparcel shall be no less than 1.46 (the
"CLOSING DATE DEBT SERVICE COVERAGE RATIO").
----------------------------------------
(g) With respect to the release of a Subparcel from the Lien of the
Mortgage thereon (and related Loan Documents), (i) the transfer of such
Subparcel to a Person other than Borrower in connection with such release shall
not cut off or interfere with any access rights or easements necessary for the
continued operation of the related Individual Property in the manner operated
prior to such transfer and any deed executed and delivered in connection with
any such transfer shall be subject and subordinate to such rights and easements;
(ii) an accurate legal description of such Subparcel sufficient for recordation
purposes together with a survey depicting such Subparcel or other description of
the location of such Subparcel and evidence of compliance with all relevant
subdivision requirements reasonably satisfactory to Lender shall be delivered to
Lender for review prior to such transfer; (iii) any reciprocal easement
agreement to be entered into in connection with such transfer shall be delivered
to Lender for its review and approval, such approval not to be unreasonably
withheld; (iv) any consents or approvals with respect to subdivision or zoning
that are required in connection with such transfer shall have been obtained; (v)
prior to such transfer, Lender shall be provided with evidence that the portion
of the Individual Property remaining subject to the Lien of the related Mortgage
after such release shall continue to comply with all Legal Requirements,
including, without limitation, applicable zoning, land use, subdivision,
parking, traffic and fire safety Legal Requirements and (vi) in connection with
such release, Borrower shall deliver to Lender an endorsement to the Title
Insurance Policy insuring the Lien of the related Mortgage, satisfactory to
Lender or, if such an endorsement is not available, other evidence satisfactory
to Lender, reflecting the continued insurance of the Lien of the related
Mortgage with respect to the portion of the Individual Property remaining
subject to the Lien of the related Mortgage after such release.
2.4.3 INTENTIONALLY OMITTED.
---------------------
2.4.4 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
--------------------------
request and at the expense of Borrower, upon payment in full of all principal
and interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of the Note and this Loan
Agreement, release the Liens of the Mortgages not theretofore released.
SECTION 2.5 INTEREST.
--------
2.5.1 GENERALLY. Interest on the Loan and the Note shall accrue at
---------
the Regular Interest Rate and shall be calculated in accordance with Section
-------
2.6.2. Interest on the Loan shall be paid in arrears in monthly installments on
-----
the tenth day of each calendar month up to and including the tenth day of
August, 1998; each of such payments to be calculated at the Regular Interest
Rate. The outstanding principal balance of the Loan together with all accrued
and unpaid interest thereon shall be due and payable on the Maturity Date. All
amounts due under the Note shall be payable without setoff,
-19-
counterclaim or any other deduction whatsoever.
2.5.2 DETERMINATION OF INTEREST RATE.
------------------------------
(a) The rate or rates at which the outstanding principal amount of
the Loan bears interest from time to time shall be referred to as the "REGULAR
-------
INTEREST RATE". The Regular Interest Rate applicable to the Loan shall be: (i)
-------------
one hundred sixty-five basis points (1.65%) above LIBOR with respect to the
applicable Interest Period for a Eurodollar Loan or (ii) the Prime Rate for a
Prime Rate Loan if the Loan is converted to a Prime Rate Loan pursuant to the
provisions of Section 2.5.2(b), (c) or (f).
---------------- --- ---
(b) Interest shall be charged and payable on the outstanding
principal amount of the Loan at a rate per annum equal to the Regular Interest
--- -----
Rate, but in no event to exceed the maximum rate permitted under applicable law.
Subject to the terms and conditions of this Section 2.5.2, the Loan shall be a
-------------
Eurodollar Loan and Borrower shall pay interest on the outstanding principal
amount of the Loan at LIBOR plus the applicable spread set forth in Section
-------
2.5.2(a) for the Interest Period(s) selected by Borrower by submitting a
---------
Eurodollar Rate Request to Lender, which Eurodollar Rate Request shall be
irrevocable. In the event that Borrower fails to submit a Eurodollar Rate
Request with respect to a Eurodollar Loan not later than 12 Noon (New York City
time) three (3) Working Days prior to the last day of the relevant Interest
Period, the Eurodollar Loan in question shall bear interest, commencing at the
end of such Interest Period, at the Prime Rate. Borrower shall not have the
right to have more than two (2) Interest Periods with respect to the Loan in
effect at any one time regardless of whether any portion of the Principal Amount
is then bearing interest at the Prime Rate. Notwithstanding anything to the
contrary contained in this Section 2.5.2(b), Borrower shall pay interest on the
amount of a Subsequent Advance at LIBOR plus the applicable spread set forth in
Section 2.5.2(a) for an Interest Period in effect with respect to a Eurodollar
----------------
Loan on the day on which such Subsequent Advance is made and selected by
Borrower no less than one (1) Working Day prior to the day on which such
Subsequent Advance is made and, upon the conclusion of such Interest Period
Borrower shall thereafter pay interest on the outstanding principal amount of
such Subsequent Advance at LIBOR plus the applicable spread set forth in Section
-------
2.5.2(a) for the Interest Period(s) selected by Borrower by submitting a
--------
Eurodollar Rate Request in the same manner as Borrower shall pay interest on the
outstanding principal amount previously advanced under the Loan pursuant to the
terms and conditions of this Section 2.5.2. Any change in the rate of interest
-------------
hereunder due to a change in the Regular Interest Rate shall become effective as
of the opening of business on the first day on which such change in the Regular
Interest Rate shall become effective. Each determination by Lender of the
Regular Interest Rate shall be conclusive and binding for all purposes, absent
manifest error.
(c) In the event that Lender shall have determined (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining LIBOR then
Lender shall forthwith give notice by telephone of such
-20-
determination, confirmed in writing, to Borrower at least one (1) day prior to
the last day of the related Interest Period. If such notice is given, the
related outstanding Eurodollar Loan shall be converted, on the last day of the
then current Interest Period with respect thereto, to a Prime Rate Loan. Until
such notice has been withdrawn by Lender, no further Eurodollar Loans shall be
made nor shall Borrower have the right to convert a Prime Rate Loan to a
Eurodollar Loan. In the event that Lender shall have determined (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that the scheduled Maturity Date will occur prior to the last day of the
next scheduled Interest Period, then the related outstanding Eurodollar Loan,
without notice to Borrower, shall be automatically converted to a Eurodollar
Loan with an Interest Period that will expire on or prior to the Maturity Date,
or, if no such Interest Period is available, to a Prime Rate Loan on the last
day of the then current Interest Period with respect thereto.
(d) If, pursuant to the terms of this Agreement, any portion of the
Loan has been converted to a Prime Rate Loan and Lender shall determine (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that the event(s) or circumstance(s) which resulted in such conversion
shall no longer be applicable, Lender shall give notice thereof to Borrower, and
Borrower may elect to convert the Prime Rate Loan to a Eurodollar Loan by giving
Lender one or more Eurodollar Rate Requests at least three (3) Working Days
prior to the desired conversion date; provided, however, that any such
-------- -------
conversion shall be an aggregate amount of not less than the Prime Rate Loan.
Notwithstanding any provision of this Agreement to the contrary, in no event
shall Borrower have the right to elect to convert a Eurodollar Loan to a Prime
Rate Loan.
(e) With respect to a Eurodollar Loan, all payments made by
Borrower hereunder shall be made free and clear of, and without reduction for or
on account of, income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions, reserves or withholdings imposed, levied, collected, withheld
or assessed by any Governmental Authority, which are imposed, enacted or become
effective after the date hereof (such non-excluded taxes being referred to
collectively as "FOREIGN TAXES"), excluding income and franchise taxes of the
-------------
United States of America or any political subdivision or taxing authority
thereof or therein (including Puerto Rico). If any Foreign Taxes are required
to be withheld from any amounts payable to Lender hereunder, the amounts so
payable to Lender shall be increased to the extent necessary to yield to Lender
(after payment of all Foreign Taxes) interest or any such other amounts payable
hereunder at the rate or in the amounts specified hereunder. Whenever any
Foreign Tax is payable pursuant to applicable law by Borrower, as promptly as
possible thereafter, Borrower shall send to Lender an original official receipt,
if available, or certified copy thereof showing payment of such Foreign Tax.
Borrower hereby indemnifies Lender for any incremental taxes, interest or
penalties that may become payable by Lender which may result from any failure by
Borrower to pay any such Foreign Tax when due to the appropriate taxing
authority or any failure by Borrower to remit to Lender the required receipts or
other required documentary evidence.
(f) If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender to make or maintain a
-21-
Eurodollar Loan as contemplated hereunder, (i) the obligation of Lender
hereunder to make a Eurodollar Loan or to convert a Prime Rate Loan to a
Eurodollar Loan shall be canceled forthwith and (ii) any outstanding Eurodollar
Loan shall be converted automatically to a Prime Rate Loan on the next
succeeding Scheduled Payment Date or within such earlier period as required by
law. Borrower hereby agrees promptly to pay Lender, upon demand, any additional
amounts necessary to compensate Lender for any costs incurred by Lender in
making any conversion in accordance with this Agreement, including, without
limitation, any interest or fees payable by Lender to lenders of funds obtained
by it in order to make or maintain the Eurodollar Loan hereunder. Lender's
notice of such costs, as certified to Borrower, shall be conclusive absent
manifest error.
(g) In the event that any change in any requirement of law or in
the interpretation or application thereof, or compliance by Lender with any
request or directive (whether or not having the force of law) hereafter issued
from any central bank or other Governmental Authority:
(i) shall hereafter impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of Lender
which is not otherwise included in the determination of LIBOR
hereunder;
(ii) shall hereafter have the effect of reducing the rate of return
on Lender's capital as a consequence of its obligations
hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking
into consideration Lender's policies with respect to capital
adequacy) by any amount deemed by Lender to be material; or
(iii) shall hereafter impose on Lender any other condition and the
result of any of the foregoing is to increase the cost to
Lender of making, renewing or maintaining loans or extensions
of credit or to reduce any amount receivable hereunder;
then, in any such case, Borrower shall promptly pay Lender, upon demand, any
additional amounts necessary to compensate Lender for such additional cost or
reduced amount receivable which Lender deems to be material as determined by
Lender (except to the extent such additional amount has already been taken into
account by the application of clause (b) of the definition of LIBOR set forth in
Section 1.1). If Lender becomes entitled to claim any additional amounts
-----------
pursuant to this Section 2.5.2(g), Lender shall provide Borrower with not less
----------------
than ninety (90) days written notice specifying in reasonable detail the event
by reason of which it has become so entitled and the additional amount required
to fully compensate Lender for such additional cost or reduced amount. A
certificate as to any additional costs or amounts payable pursuant to the
foregoing sentence submitted by Lender to Borrower shall be
-22-
conclusive in the absence of manifest error. This provision shall survive
payment of the Note and the satisfaction of all other obligations of Borrower
under this Agreement and the Loan Documents.
(h) Borrower agrees to indemnify Lender and to hold Lender harmless
from any loss or expense which Lender sustains or incurs as a consequence of (i)
any default by Borrower in payment of the principal of or interest on a
Eurodollar Loan, including, without limitation, any such loss or expense arising
from interest or fees payable by Lender to lenders of funds obtained by it in
order to maintain a Eurodollar Loan hereunder, (ii) any prepayment (whether
voluntary or mandatory) of the Eurodollar Loan on a day that (A) is not the
Scheduled Payment Date immediately following the last day of an Interest Period
with respect thereto or (B) is the Scheduled Payment Date immediately following
the last day of an Interest Period with respect thereto if Borrower did not give
the prior written notice of such prepayment required pursuant to the terms of
this Agreement, including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain the Eurodollar Loan hereunder and (iii) the conversion (for any
reason whatsoever, whether voluntary or involuntary) of the Regular Interest
Rate from LIBOR plus the applicable spread to the Prime Rate with respect to any
portion of the outstanding principal amount of the Loan then bearing interest at
LIBOR plus the applicable spread on a date other than the Scheduled Payment Date
immediately following the last day of an applicable Interest Period or the
failure of Borrower to act in accordance with a Eurodollar Rate Request
submitted by Borrower to Lender, including, without limitation, such loss or
expenses arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain a Eurodollar Loan hereunder (the amounts
referred to in clauses (i), (ii) and (iii) are herein referred to collectively
as the "BREAKAGE COSTS"). This provision shall survive payment of the Note in
--------------
full and the satisfaction of all other obligations of Borrower under this
Agreement and the other Loan Documents.
(i) Lender shall not be entitled to claim compensation pursuant to
this Section 2.5.2 for any Foreign Taxes, increased cost or reduction in amounts
-------------
received or receivable hereunder, or any reduced rate of return, which was
incurred or which accrued more than the earlier of (i) ninety (90) days before
the date Lender notified Borrower of the change in law or other circumstance on
which such claim of compensation is based and delivered to Borrower a written
statement setting forth in reasonable detail the basis for calculating the
additional amounts owed to Lender under this Section 2.5.2, which statement
-------------
shall be conclusive and binding upon all parties hereto absent manifest error or
(ii) any earlier date provided that Lender notified Borrower of such change in
law or circumstance and delivered the written statement referenced in clause (i)
within ninety (90) days after Lender received written notice of such change in
law or circumstance.
(j) Lender will use reasonable efforts (consistent with legal and
regulatory restrictions) to maintain the availability of the Eurodollar Loan and
to avoid or reduce any increased or additional costs payable by Borrower under
this Section 2.5.2, including, if requested by Borrower, a transfer or
-------------
assignment of the Loan to a branch, office or Affiliate of Lender in another
jurisdiction, or a redesignation of its lending office with respect to the Loan,
-23-
in order to maintain the availability of the Eurodollar Loan or to avoid or
reduce such increased or additional costs, provided that the transfer or
assignment or redesignation (i) would not result in any additional costs,
expenses or risk to Lender that are not reimbursed by Borrower and (ii) would
not be disadvantageous in any other respect to Lender as determined by Lender in
its reasonable discretion.
2.5.3 DEFAULT RATE; POST-MATURITY INTEREST. Upon the occurrence of a
------------------------------------
Default in the payment of any principal or interest due under the Loan Documents
or an Event of Default, Lender shall be entitled to receive and Borrower shall
pay to Lender interest on the entire outstanding principal balance of the Note
and, to the extent permitted by applicable law, on any other amounts due at the
Default Rate. Interest at the Default Rate shall be computed from the occurrence
of the Default in the payment of principal, interest or other sums due under the
Loan Documents or the Event of Default until the actual receipt and collection
of the Debt (or that portion thereof that is then due) or the cure of any other
Event of Default. Interest at the Default Rate, to the extent permitted by
applicable law, shall be added to the Debt and shall be secured by the
Mortgages. This subsection, however, shall not be construed as an agreement or
privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any
Event of Default.
SECTION 2.6 PAYMENTS AND COMPUTATIONS.
-------------------------
2.6.1 MAKING OF PAYMENTS. Whenever any payment hereunder or under
------------------
the Note shall be stated to be due on a day which is not a Working Day, such
payment in the amount due on such non-Working Day shall be paid on the
immediately preceding Working Day.
2.6.2 COMPUTATIONS. Interest payable hereunder or under the Note by
------------
Borrower shall be calculated on the basis of a three hundred sixty (360) day
year based on twelve (12) thirty (30) day months, except that interest due and
payable for a period of less than a full month shall be calculated by
multiplying the actual number of days elapsed in such period by a daily rate
based on said 360-day year, unless such calculation would result in a usurious
rate, in which case interest shall be calculated on the per annum basis of a
year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as
the case may be.
SECTION 2.7 SUBSTITUTION OF PROPERTIES. Subject to the terms and
--------------------------
conditions set forth in this Section 2.7, Borrower may obtain a release of the
-----------
Lien of a Mortgage (and the related Loan Documents) encumbering an Individual
Property (a "SUBSTITUTED PROPERTY") by substituting therefor another office or
--------------------
industrial property acquired by Borrower (individually, a "SUBSTITUTE PROPERTY"
-------------------
and collectively, the "SUBSTITUTE PROPERTIES"), provided that such substitution
---------------------
shall not be allowed more than three (3) times during the term of the Loan. In
addition, any such substitution shall be subject, in each case, to the
satisfaction of the following conditions
-24-
precedent:
(i) Lender shall have received a copy of a deed or an assignment
and assumption of lessee's interest in the Ground Lease
(together with the ground lessor's consent thereto), as
applicable, conveying all of Borrower's right, title and
interest in and to the Substituted Property to an entity other
than Borrower and a letter from Borrower countersigned by a
title insurance company acknowledging receipt of such deed or
assignment and assumption, as applicable, and agreeing to
record such deed or assignment and assumption, as applicable,
in the real estate records for the county in which the
Substituted Property is located.
(ii) Lender shall have received an appraisal of the Substitute
Property dated no more than sixty (60) days prior to the
substitution by an appraiser acceptable to the Rating Agencies
or such other evidence of the value of the Substitute Property
as shall be satisfactory to Lender in its sole discretion which
appraisal or other evidence shall indicate that the value of
the Substitute Property is equal to or greater than the value
of the Substituted Property determined by Lender at the time of
the encumbrance of the Substituted Property by the related
Mortgage in connection with the Initial Advance or a Subsequent
Advance, as applicable.
(iii) After giving effect to the substitution, the Debt Service
Coverage Ratio for the Loan for all of the Properties is not
less than the Debt Service Coverage Ratio for the Loan for all
of the Properties as of the Outside Closing Date.
(iv) The Net Operating Income for the Substitute Property does not
show a downward trend over the three (3) years immediately
prior to the date of substitution or, with respect to a
Substitute Property for which information regarding the Net
Operating Income of such Substitute Property for the three (3)
years immediately prior to the date of substitution cannot be
obtained by Borrower after Borrower's exercise of diligent
efforts, the Net Operating Income shall not show a downward
trend for such period of time immediately prior to the date of
substitution as may be determined from the information
regarding such Net Operating Income available.
(v) The Net Operating Income and Debt Service Coverage Ratio (for
the twelve (12) month period immediately preceding the
substitution) for the Substitute Property is equal to or
greater than
-25-
the Net Operating Income and Debt Service Coverage Ratio (for
the twelve (12) month period immediately preceding the
substitution) for the related Substituted Property. For
purposes of this clause (v), the Debt Service Coverage Ratio
with respect to a Substitute Property or a Substituted Property
shall be calculated using the Net Operating Income with respect
to such Substitute Property or the Substituted Property, as
applicable, and the principal and interest due and payable on
the Note with respect to the related Pro rata Substitute
Release Amount or Pro rata Release Amount, as applicable.
(vi) Lender shall have received evidence in writing from the Rating
Agencies to the effect that such substitution will not result
in a withdrawal, qualification or downgrade of the respective
ratings in effect immediately prior to such substitution for
the Securities issued in connection with the Securitization
that are then outstanding.
(vii) No Default or Event of Default shall have occurred and be
continuing and Borrower shall be in compliance in all material
respects with all terms and conditions set forth in this
Agreement and in each Loan Document on Borrower's part to be
observed or performed. Lender shall have received a certificate
from Borrower confirming the foregoing, stating that the
representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in
all material respects on and as of the date of the substitution
with respect to Borrower, the Properties and the Substitute
Property and containing any other representations and
warranties with respect to Borrower, the Properties, the
Substitute Property or the Loan as the Rating Agencies may
require, unless such certificate would be inaccurate, such
certificate to be in form and substance satisfactory to the
Rating Agencies. Notwithstanding the foregoing, Borrower may
obtain the release of the Lien of a Mortgage encumbering an
Individual Property affected by a Non-Curable Property Default
and substitute therefor a Substitute Property pursuant to the
terms and provisions of this Section 2.7 if (A) such Non-
-----------
Curable Property Default is the only Event of Default then
existing under the Loan Documents, (B) all other conditions
contained in this Section 2.7 are satisfied in connection with
-----------
such release and substitution and (C) after giving effect to
such release and substitution, no Event of Default shall exist.
(viii) Borrower shall have executed, acknowledged and delivered to
Lender (A) a Mortgage, an Assignment of Leases and two XXX-
-00-
0 Xxxxxxxxx Xxxxxxxxxx with respect to the Substitute Property,
together with a letter from Borrower countersigned by a title
insurance company acknowledging receipt of such Mortgage,
Assignment of Leases and UCC-1 Financing Statements and
agreeing to record or file, as applicable, such Mortgage,
Assignment of Leases and Rents and one of the UCC-1 Financing
Statements in the real estate records for the county in which
the Substitute Property is located and to file one of the UCC-1
Financing Statement in the office of the Secretary of State of
the state in which the Substitute Property is located, so as to
effectively create upon such recording and filing valid and
enforceable Liens upon the Substitute Property, of the
requisite priority, in favor of Lender (or such other trustee
as may be desired under local law), subject only to the
Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents and (B) an Assignment of
Agreements and an Environmental Indemnity with respect to the
Substitute Property. The Mortgage, Assignment of Leases, UCC-1
Financing Statements and Environmental Indemnity shall be the
same in form and substance as the counterparts of such
documents executed and delivered with respect to the related
Substituted Property subject to modifications reflecting the
Substitute Property as the Individual Property that is the
subject of such documents and such modifications reflecting the
laws of the state in which the Substitute Property is located
as shall be recommended by the counsel admitted to practice in
such state and delivering the opinion as to the enforceability
of such documents required pursuant to clause (xv) below. The
Mortgage encumbering the Substitute Property shall secure all
amounts evidenced by the Note, provided that in the event that
the jurisdiction in which the Substitute Property is located
imposes a mortgage recording, intangibles or similar tax and
does not permit the allocation of indebtedness for the purpose
of determining the amount of such tax payable, the principal
amount secured by such Mortgage shall be equal to one hundred
twenty-five percent (125%) of the amount of the Loan allocated
to the Substitute Property. The amount of the Loan allocated to
the Substitute Property (such amount being hereinafter referred
to as the "SUBSTITUTE RELEASE AMOUNT") shall equal the Release
-------------------------
Amount of the related Substituted Property.
(ix) Lender shall have received (A) any "tie-in" or similar
endorsement to each Title Insurance Policy insuring the Lien of
an existing Mortgage as of the date of the substitution
available with respect to the Title Insurance Policy insuring
the Lien of the
-27-
Mortgage with respect to the Substitute Property and (B) a
Title Insurance Policy (or a marked, signed and redated
commitment to issue such Title Insurance Policy) insuring the
Lien of the Mortgage encumbering the Substitute Property,
issued by the title company that issued the Title Insurance
Policies insuring the Lien of the existing Mortgages and dated
as of the date of the substitution, with reinsurance and direct
access agreements that replace such agreements issued in
connection with the Title Insurance Policy insuring the Lien of
the Mortgage encumbering the Substituted Property. The Title
Insurance Policy issued with respect to the Substitute Property
shall (1) provide coverage in the amount of the Substitute
Release Amount if the "tie-in" or similar endorsement described
above is available or, if such endorsement is not available, in
an amount equal to one hundred twenty-five percent (125%) of
the Substitute Release Amount, (2) insure Lender that the
relevant Mortgage creates a valid first lien on the Substitute
Property encumbered thereby, free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the
terms of any endorsements), (3) contain such endorsements and
affirmative coverages as are contained in the Title Insurance
Policies insuring the Liens of the existing Mortgages, and (4)
name Lender as the insured. Lender also shall have received
copies of paid receipts showing that all premiums in respect of
such endorsements and Title Insurance Policies have been paid.
(x) Intentionally omitted.
(xi) Lender shall have received a current title survey for each
Substitute Property, certified to the title company and Lender
and their successors and assigns, in the same form and having
the same content as the certification of the Survey of the
Substituted Property prepared by a professional land surveyor
licensed in the state in which the Substitute Property is
located and acceptable to the Rating Agencies in accordance
with the 1992 Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys. Such survey shall reflect the
same legal description contained in the Title Insurance Policy
relating to such Substitute Property and shall include, among
other things, a metes and bounds description of the real
property comprising part of such Substitute Property. The
surveyor's seal shall be affixed to each survey and each survey
shall certify that the surveyed property is not located in a
"one-hundred-year flood hazard area."
-28-
(xii) Lender shall have received valid certificates of insurance
indicating that the requirements for the policies of insurance
required for an Individual Property hereunder have been
satisfied with respect to the Substitute Property and evidence
of the payment of all premiums payable for the existing policy
period.
(xiii) Lender shall have received a Phase I environmental report and,
if recommended under the Phase I environmental report, a Phase
II environmental report, which conclude that the Substitute
Property does not contain any Hazardous Substance (as defined
in the Mortgage) and is not subject to any risk of
contamination from any off-site Hazardous Substance. If any
such report discloses the presence of any Hazardous Substance
or the risk of contamination from any off-site Hazardous
Substance, such report shall include an estimate of the cost of
any related remediation and Borrower shall deposit with Lender
an amount equal to one hundred twenty-five percent (125%) of
such estimated cost, which deposit shall constitute additional
security for the Loan and shall be released to Borrower upon
the delivery to Lender of (A) an update to such report
indicating that there is no longer any Hazardous Substance on
the Substitute Property or any danger of contamination from any
off-site Hazardous Substance that has not been fully remediated
and (B) paid receipts indicating that the costs of all such
remediation work have been paid.
(xiv) Borrower shall deliver or cause to be delivered to Lender (A)
updates certified by Borrower of all organizational
documentation related to Borrower and/or the formation,
structure, existence, good standing and/or qualification to do
business delivered to Lender in connection with the Initial
Advance; (B) good standing certificates, certificates of
qualification to do business in the jurisdiction in which the
Substitute Property is located (if required in such
jurisdiction) and (C) resolutions of the general partner of
Borrower authorizing the substitution and any actions taken in
connection with such substitution.
(xv) Lender shall have received the following opinions of Borrower's
counsel: (A) an opinion or opinions of counsel admitted to
practice under the laws of the state in which the Substitute
Property is located stating that the Loan Documents delivered
with respect to the Substitute Property pursuant to clause
(viii) above are valid and enforceable in accordance with their
terms, subject to the laws applicable to creditors' rights and
equitable principles, and that Borrower is qualified to do
business and in
-29-
good standing under the laws of the jurisdiction where the
Substitute Property is located or that Borrower is not
required by applicable law to qualify to do business in such
jurisdiction; (B) an opinion of Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P. or such other counsel acceptable to the Rating
Agencies stating that the Loan Documents delivered with
respect to the Substitute Property pursuant to clause (viii)
above were duly authorized, executed and delivered by Borrower
and that the execution and delivery of such Loan Documents and
the performance by Borrower of its obligations thereunder will
not cause a breach of, or a default under, any agreement,
document or instrument to which Borrower is a party or to
which it or its properties are bound and (C) an opinion of
counsel acceptable to the Rating Agencies stating that
subjecting the Substitute Property to the Lien of the related
Mortgage and the execution and delivery of the related Loan
Documents does not and will not affect or impair the ability
of Lender to enforce its remedies under all of the Loan
Documents or to realize the benefits of the cross-
collateralization provided for thereunder.
(xvi) Borrower shall have paid all Basic Carrying Costs relating to
each of the Properties and the Substitute Property, including
without limitation, (i) accrued but unpaid insurance premiums
relating to each of the Properties and the Substitute
Property, (ii) currently due Taxes (including any in arrears)
relating to each of the Properties and the Substitute Property
and (iii) currently due Other Charges relating to each of the
Properties and Substitute Property.
(xvii) Borrower shall have paid or reimbursed Lender for all costs
and expenses incurred by Lender (including, without
limitation, reasonable attorneys fees and disbursements) in
connection with the substitution and Borrower shall have paid
all recording charges, filing fees, taxes or other expenses
(including, without limitation, mortgage and intangibles taxes
and documentary stamp taxes) payable in connection with the
substitution.
(xviii) Lender shall have received annual operating statements and
occupancy statements for the Substitute Property for the most
current completed fiscal year and a current operating
statement for the Substituted Property, each certified to
Lender as being true and correct and a certificate from
Borrower certifying that there has been no adverse change in
the financial condition of the Substitute Property since the
date of such operating statements.
-30-
(xix) Borrower shall have delivered to Lender estoppel certificates
from any existing tenants (A) constituting anchor tenants at
the Substitute Property, (B) leasing an entire building at the
Substitute Property and (C) that, together with those
described in clauses (A) and (B), lease no less than seventy-
five percent (75%) of the gross leasable area at the
Substitute Property. All such estoppel certificates shall be
in the form attached hereto as Schedule IV and shall indicate
-----------
that (1) the subject lease is a valid and binding obligation
of the tenant thereunder, (2) there are no defaults under such
lease on the part of the landlord or tenant thereunder, (3)
the tenant thereunder has no defense or offset to the payment
of rent under such leases, (4) no rent under such lease has
been paid more than one (1) month in advance, (5) the tenant
thereunder has no option or right of first refusal under such
lease to purchase all or any portion of the Substitute
Property and (6) all tenant improvement work required under
such lease has been completed and the tenant under such lease
is in actual occupancy of its leased premises. If an estoppel
certificate indicates that all tenant improvement work
required under the subject lease has not yet been completed,
Borrower shall, if required by the Rating Agencies, deliver to
Lender financial statements indicating that Borrower has
adequate funds to pay all costs related to such tenant
improvement work as required under such lease.
(xx) Lender shall have received copies of all tenant leases and any
ground leases affecting the Substitute Property certified by
Borrower as being true and correct. Lender shall have received
a current rent roll of the Substitute Property certified by
Borrower as being true and correct.
(xxi) Lender shall have received subordination, nondisturbance and
attornment agreements in the form attached hereto as Schedule
--------
V with respect to all of the Leases affecting the Substitute
-
Property other than such Leases that are, by their terms,
subordinate to the Mortgage with respect to the Substitute
Property.
(xxii) Lender shall have received (A) an endorsement to the Title
Insurance Policy insuring the Lien of the Mortgage encumbering
the Substitute Property insuring that the Substitute Property
constitutes a separate tax lot or, if such an endorsement is
not available in the state in which the Substitute Property is
located, a letter from the title insurance company issuing
such Title Insurance Policy stating that the Substitute Policy
constitutes a separate tax lot or (B) a letter from the
appropriate taxing
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authority stating that the Substitute Property constitutes a
separate tax lot.
(xxiii) Lender shall have received a Physical Conditions Report with
respect to the Substitute Property stating that the Substitute
Property and its use comply in all material respects with all
applicable Legal Requirements (including, without limitation,
zoning, subdivision and building laws) and that the Substitute
Property is in good condition and repair and free of damage or
waste. If compliance with any Legal Requirements are not
addressed by the Physical Conditions Report, such compliance
shall be confirmed by delivery to Lender of a certificate of
an architect licensed in the state in which the Substitute
Property is located, a letter from the municipality in which
such Property is located, a certificate of a surveyor that is
licensed in the state in which the Substitute Property is
located (with respect to zoning and subdivision laws), an ALTA
3.1 zoning endorsement to the Title Insurance Policy delivered
pursuant to clause (ix) above (with respect to zoning laws) or
a subdivision endorsement to the Title Insurance Policy
delivered pursuant to clause (ix) above (with respect to
subdivision laws). If the Physical Conditions Report
recommends that any repairs be made with respect to the
Substitute Property, such Physical Conditions Report shall
include an estimate of the cost of such recommended repairs
and Borrower shall deposit with Lender an amount equal to one
hundred twenty-five percent (125%) of such estimated cost,
which deposit shall constitute additional security for the
Loan and shall be released to Borrower upon the delivery to
Lender of (A) an update to such Physical Conditions Report or
a letter from the engineer that prepared such Physical
Conditions Report indicating that the recommended repairs were
completed in good and workmanlike manner and (B) paid receipts
indicating that the costs of all such repairs have been paid.
(xxiv) Lender shall have received a certified copy of the Management
Agreement with respect to the management of the Substitute
Property executed by Manager and the Individual Borrower
acquiring title to the Substitute Property, which Management
Agreement shall be substantially the same in form and
substance as the Management Agreement with respect to the
management of the Substituted Property, and Manager and such
Individual Borrower shall have executed and delivered to
Lender an Assignment of Management Agreement with respect to
such Management Agreement.
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(xxv) Lender shall have received such other and further approvals,
documents and information, other than opinions, in connection
with the substitution as the Rating Agencies may have requested.
(xxxvi) Lender shall have received copies of all contracts and agreements
relating to the leasing and operation of the Substitute Property
(other than the related Management Agreement and such contracts
and agreements that may be terminated by the Individual Borrower
that is a party thereto without cause upon no more than thirty
(30) days prior notice) together with a certification of Borrower
attached to each such contract or agreement certifying that the
attached copy is a true and correct copy of such contract or
agreement and all amendments thereto.
(xxvii) Borrower shall submit to Lender, not less than ten (10) days
prior to the date of such substitution, a release of Lien (and
related Loan Documents) for the Substituted Property for
execution by Lender. Such release shall be in a form appropriate
for the jurisdiction in which the Substituted Property is located
and satisfactory to Lender in its sole discretion. Borrower shall
deliver an Officer's Certificate certifying that the requirements
set forth in this Section 2.7 have been satisfied.
-----------
Upon the satisfaction of the foregoing conditions precedent, Lender will release
its Lien from the Substituted Property to be released and the Substitute
Property shall be deemed to be an Individual Property for purposes of this
Agreement and the Substitute Release Amount with respect to such Substitute
Property shall be deemed to be the Release Amount with respect to such
Substitute Property for all purposes hereunder.
Notwithstanding anything to the contrary contained herein, Borrower's
rights pursuant to this Section 2.7 to obtain the release of the Lien of a
-----------
Mortgage encumbering an Individual Property affected by a Non-Curable Property
Default by substituting therefor a Substitute Property shall be subject to
Lender's right to waive the Non-Curable Property Default affecting such
Individual Property.
III. CONDITIONS PRECEDENT
--------------------
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE.
---------------------------------------
The obligation of Lender to make the Initial Advance hereunder is
subject to the fulfillment by Borrower or waiver by Lender of the following
conditions precedent no later than the Closing Date or such other date as set
forth below:
(a) Representations and Warranties; Compliance with Conditions. The
----------------------------------------------------------
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representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Default or an Event of Default shall have occurred and be continuing; and
Borrower shall be in compliance in all material respects with all terms and
conditions set forth in this Agreement and in each other Loan Document on its
part to be observed or performed.
(b) Loan Agreement and Note. Lender shall have received the original
-----------------------
of this Agreement and the Note, in each case, duly executed and delivered on
behalf of Borrower.
(c) Delivery of Loan Documents; Title Insurance; Reports; Leases.
------------------------------------------------------------
(i) Mortgages and Assignments of Leases, Assignments of Leases.
----------------------------------------------------------
Lender shall have received from each Individual Borrower holding title to an
Individual Property as of the date hereof fully executed and acknowledged
counterparts of the Mortgage and the Assignment of Leases relating to each such
Individual Property and evidence that counterparts of such Mortgages and the
Assignments of Leases have been delivered to the title company for recording, in
the reasonable judgment of Lender, so as to effectively create upon such
recording valid and enforceable Liens upon each such Individual Property, of the
requisite priority, in favor of Lender (or such other trustee as may be required
or desired under local law), subject only to the Permitted Encumbrances and such
other Liens as are permitted pursuant to the Loan Documents. Lender shall have
also received from each such Individual Borrower fully executed counterparts of
the Environmental Indemnity relating to each such Individual Property.
(ii) Title Insurance. Lender shall have received Title Insurance
---------------
Policies (or marked, signed and redated commitments to issue such Title
Insurance Policies) issued by a title company reasonably acceptable to Lender
and dated as of the Closing Date, with reinsurance and direct access agreements
reasonably acceptable to Lender. Such Title Insurance Policies shall (A)
provide coverage in an amount equal to the amount of the Release Amount of the
related Individual Property if the tie-in or similar endorsement described below
is available, or, if such endorsement is not available, in an amount equal to
one hundred twenty-five percent (125%) of the Release Amount of the related
Individual Property, (B) insure Lender that the relevant Mortgage creates a
valid lien on the Individual Property encumbered thereby of the requisite
priority, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (C) contain such endorsements and affirmative
coverages as Lender may reasonably request including, without limitation, any
"tie-in" or similar endorsement available with respect to the other Title
Insurance Policies issued in connection with the Initial Advance and (D) name
Lender as the insured. Lender also shall have received evidence that all
premiums in respect of such Title Insurance Policies have been paid.
(iii) Survey. Lender shall have received a current title survey
------
for each
-34-
Individual Property to which title is held by an Individual Borrower as of the
date hereof, certified to the title company and Lender and their successors and
assigns, in form and content reasonably satisfactory to Lender and prepared by a
professional and properly licensed land surveyor reasonably satisfactory to
Lender in accordance with the 1992 Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal
description contained in the Title Insurance Policies relating to such
Individual Property referred to in clause (ii) above and shall include, among
other things, a metes and bounds description of the real property comprising
part of such Individual Property reasonably satisfactory to Lender. The
surveyor's seal shall be affixed to each survey and the surveyor shall provide a
certification for each survey in form and substance reasonably acceptable to
Lender.
(iv) Insurance. Lender shall have received valid certificates of
---------
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its reasonable discretion, and evidence of the payment of all premiums
payable for the existing policy period.
(v) Environmental Reports. Lender shall have received a Phase I
---------------------
environmental report and, if applicable, a Phase II environmental report, in
respect of each Individual Property to which title is held by an Individual
Borrower as of the date hereof, in each case satisfactory in form and substance
to Lender in its reasonable discretion.
(vi) Intentionlly Omitted.
---------------------
(vii) Encumbrances. Borrower shall have taken or caused to be taken
------------
such actions in such a manner so that Lender has a valid and perfected Lien of
the requisite priority as of the Closing Date with respect to each Mortgage in
the applicable Individual Property to which title is held by an Individual
Borrower as of the date hereof, subject only to applicable Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents, and Lender shall have received reasonably satisfactory evidence
thereof.
(d) Related Documents. Each additional document not specifically
-----------------
referenced herein, but relating to the transactions contemplated herein, shall
have been duly authorized, executed and delivered by all parties thereto and
Lender shall have received and approved certified copies thereof.
(e) Delivery of Organizational Documents. On or before the Closing
------------------------------------
Date, Borrower shall deliver or cause to be delivered to Lender copies certified
by Borrower of all organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or qualification to do
business, as Lender may request in its reasonable discretion, including,
without limitation, good standing certificates, qualifications to do business in
the appropriate jurisdiction (if required in such jurisdictions), resolutions
authorizing the entering into of the Loan and incumbency certificates as may be
requested by Lender.
(f) Opinions of Borrower's Counsel. Lender shall have received
------------------------------
opinions of
-35-
Borrower's counsel, which counsel shall be reasonably acceptable to
Lender with respect to due execution, authority, enforceability of the Loan
Documents, usury and such other matters as Lender may reasonably require, all
such opinions in form, scope and substance customary for rated transactions and
satisfactory to Lender and Lender's counsel in their reasonable discretion.
(g) Intentionally Omitted.
---------------------
(h) Basic Carrying Costs. Borrower shall have paid all Basic Carrying
--------------------
Costs relating to each of the Properties to which title is held by an Individual
Borrower as of the date hereof, which Basic Carrying Costs are in arrears,
including without limitation, (i) insurance premiums currently due with respect
to each of the Properties, (ii) currently due Taxes (including any in arrears)
relating to each of the Properties, and (iii) currently due Other Charges
relating to each of the Properties, which amounts shall be funded with proceeds
of the Loan.
(i) Completion of Proceedings. All corporate and other proceedings
-------------------------
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents and all documents incidental thereto shall be
satisfactory in form and substance to Lender, and Lender shall have received all
such counterpart originals or certified copies of such documents as Lender may
reasonably request.
(j) Payments. All payments, deposits or escrows required to be made
--------
or established by Borrower under this Agreement, the Note and the other Loan
Documents on or before the Closing Date shall have been paid.
(k) Intentionally Omitted.
---------------------
(l) Intentionally Omitted.
------------------------
(m) Transaction Costs. Borrower shall have paid or reimbursed Lender
-----------------
for (i) all title insurance premiums and recording and filing fees incurred in
connection with the origination of the Loan; (ii) all of Lender's out-of-pocket
expenses incurred in connection with the underwriting and origination of the
Loan, provided that Borrower's obligation with respect to such expenses shall
not exceed Twenty Thousand and No/100 Dollars ($20,000) and (iii) the fees and
disbursements of Lender's counsel incurred in connection with the origination of
the Loan, provided that Borrower's obligation with respect to such fees and
disbursements shall not exceed Sixty Thousand and No/100 Dollars ($60,000).
(n) Intentionally Omitted.
---------------------
(o) Intentionally Omitted.
---------------------
(p) Material Adverse Change. There shall have been no material
-----------------------
adverse change in the financial condition or business condition of Borrower, or
the Properties, in the aggregate, since the date of Borrower's most recent
financial statement delivered to Lender.
-36-
The income and expenses of the Properties, in the aggregate, the occupancy
leases thereof, and all other features of the transaction shall be as
represented to Lender without material adverse change. Borrower shall not be the
subject of any bankruptcy, reorganization, or insolvency proceeding,
(q) Underlying Asset Documentation. Lender shall have received a copy
------------------------------
of each deed conveying each Individual Property to Borrower, each of which shall
be satisfactory in form and substance to Lender in its sole discretion.
(r) Estoppel Certificates. Borrower shall have delivered to Lender
---------------------
estoppel certificates from any existing tenants (i) constituting anchor tenants
at each Individual Property, (ii) leasing an entire building at the Individual
Property and (iii) that, together with those described in clauses (i) and (ii),
lease no less than seventy-five percent (75%) of the gross leasable area at each
Individual Property. All such estoppel certificates shall be in form and
substance reasonably satisfactory to Lender.
(s) Leases and Rent Roll. Lender shall have received copies of all
--------------------
tenant leases, certified copies of any tenant leases as requested by Lender and
certified copies of all ground leases affecting the Properties. Lender shall
have received a current certified rent roll of each Individual Property,
reasonably satisfactory in form and substance to Lender.
(t) Subordination and Attornment. Lender shall have received
----------------------------
appropriate instruments acceptable to Lender subordinating all of the Leases
affecting the Properties designated by Lender to the Mortgage, except such
Leases as Lender may specifically require to be superior to the Mortgage and
such Leases that contain self-executing subordination provisions acceptable to
Lender. Lender shall have received an agreement to attorn to Lender
satisfactory to Lender from any tenant under a Lease that does not provide for
such attornment by its terms.
(u) Debt Service Coverage Ratio. The Debt Service Coverage Ratio
---------------------------
projected for the twelve (12) month period immediately following the Closing
Date and calculated using an interest rate of 9.25% shall be no less than 1.40.
(v) Intentionally Omitted.
----------------------
(w) Tax Lot. Lender shall have received evidence that each Individual
-------
Property constitutes a separate tax lot, which evidence shall be reasonably
satisfactory in form and substance to Lender.
(x) Physical Conditions Reports. Lender shall have received Physical
---------------------------
Conditions Reports with respect to each Individual Property, which reports shall
be reasonably satisfactory in form and substance to Lender.
(y) Management Agreement. Lender shall have received a certified copy
--------------------
of the Management Agreement with respect to each Individual Property
satisfactory in form and substance to Lender and Borrower. Manager and the
related Individual Borrower shall have
-37-
executed and delivered to Lender an Assignment of Management Agreement with
respect to each Management Agreement for each Individual Property.
(z) Further Documents. Lender or its counsel shall have received such
-----------------
other and further approvals, opinions, documents and information as Lender or
its counsel may have reasonably requested.
SECTION 3.2 CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES.
-------------------------------------------
The obligation of Lender to make any Subsequent Advance hereunder is
subject to the fulfillment by Borrower or waiver by Lender of the following
conditions precedent no later than the Subsequent Advance Closing Date with
respect to such Subsequent Advance or such other date as set forth below:
(a) Subsequent Advance Request. Lender shall have received a
--------------------------
Subsequent Advance Request in accordance with Section 2.1.4(b).
----------------
(b) Representations and Warranties; Defaults. The representations and
----------------------------------------
warranties of Borrower contained in this Agreement and the other Loan Documents
shall be true and correct in all material respects on and as of the Subsequent
Advance Closing Date with respect to Borrower, the Properties and each
Additional Property to be encumbered with a Mortgage in connection with such
Subsequent Advance with the same effect as if made on and as of such date, no
Default or Event of Default shall have occurred and be continuing and Borrower
shall be in compliance in all material respects with all terms and conditions
set forth in this Agreement and in each Loan Document on Borrower's part to be
observed or performed. Lender shall have received a certificate from Borrower
confirming the foregoing and any other representations and warranties with
respect to Borrower, the Properties, any Additional Property to be encumbered
with a Mortgage in connection with such Subsequent Advance or the Loan as Lender
may reasonably require, unless such certificate would be inaccurate, such
certificate to be in form and substance reasonably satisfactory to Lender.
(c) Modification of Existing Loan Documents. Borrower shall have
---------------------------------------
executed, acknowledged and delivered to Lender (A) an amendment to this
Agreement restating the Closing Date Debt Service Coverage Ratio as the Debt
Service Coverage Ratio projected for the twelve (12) month period immediately
following such Subsequent Advance Closing Date and calculated using an interest
rate of 9.25% per annum and setting forth the Release Amount with respect to any
Additional Property to be added as security for the Loan in connection with such
Subsequent Advance; (B) any modification or amendment to any existing Mortgage
or Assignment of Leases encumbering any Individual Property as of the Subsequent
Advance Closing Date or any notice of such Subsequent Advance that Lender
reasonably determines is necessary or advisable to ensure that such Mortgage or
Assignment of Leases secures such Subsequent Advance and evidence that
counterparts of such modification, amendment or notice have been delivered to
the title company for recording and (C) any other modification, amendment or
supplement to this Agreement or the other Loan Documents that
-38-
Lender may reasonably require in connection with such Subsequent Advance and the
related addition of any Additional Property as security for the Loan.
(d) Additional Loan Documents. An Individual Borrower shall have
-------------------------
acquired title to any Additional Property to be added as security for the Loan
in connection with such Subsequent Advance and each such Individual Borrower
shall have executed, acknowledged and delivered to Lender (A) a Mortgage, an
Assignment of Leases and one or more UCC-1 Financing Statements with respect to
each such Additional Property and evidence that counterparts of such Mortgage,
Assignment of Leases and UCC-1 Financing Statements have been delivered to the
title company for recording or filing, as applicable, so as to effectively
create upon such recording valid and enforceable Liens upon such Additional
Property, of the requisite priority, in favor of Lender (or such other trustee
as may be desired under local law), subject only to the Permitted Encumbrances
and such other Liens as are permitted pursuant to the Loan Documents and (B) an
Environmental Indemnity and any other additional document that Lender may
reasonably require with respect to the addition of each Additional Property as
security for the Loan in connection with such Subsequent Advance.
(e) Title Insurance. Lender shall have received (A) (1) any available
---------------
endorsement to, or other modifications of, each Title Insurance Policy insuring
the Lien of an existing Mortgage delivered in connection with any prior advance
of the proceeds of the Loan as Lender determines is reasonably necessary or
advisable to ensure the continued priority of the Lien of such existing Mortgage
as amended or modified in connection with such Subsequent Advance and (2) any
"tie-in" or similar endorsement to each such Title Insurance Policy available
with respect to any Title Insurance Policy insuring the Lien of any Mortgage
with respect to an Additional Property delivered to Lender in connection with
such Subsequent Advance and (B) a Title Insurance Policy (or a marked, signed
and redated commitment to issue such Title Insurance Policy) insuring the Lien
of any Mortgage with respect to an Additional Property delivered to Lender in
connection with such Subsequent Advance, issued by a title company acceptable to
Lender and dated as of the Subsequent Advance Closing Date, with reinsurance and
direct access agreements reasonably acceptable to Lender. Such Title Insurance
Policies shall (1) provide coverage in an amount equal to the amount of the
Release Amount of the related Additional Property if the tie-in or similar
endorsement described above is available, or, if such endorsement is not
available, in an amount equal to one hundred twenty-five percent (125%) of the
Release Amount of the related Additional Property, (2) insure Lender that the
relevant Mortgage creates a valid lien on such Additional Property encumbered
thereby of the requisite priority, free and clear of all exceptions from
coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (3)
contain such endorsements and affirmative coverages as Lender may reasonably
request, and (4) name Lender as the insured. Lender also shall have received
evidence that all premiums in respect of such endorsements, modifications and
Title Insurance Policies have been paid.
(f) Survey. Lender shall have received a current title survey for
------
each Additional Property to be encumbered by a Mortgage in connection with such
Subsequent Advance, certified to the title company and Lender and their
successors and assigns, in form
-39-
and content reasonably satisfactory to Lender and prepared by a professional and
properly licensed land surveyor reasonably satisfactory to Lender in accordance
with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys. Such survey shall reflect the same legal description contained in the
Title Insurance Policies relating to such Additional Property and shall include,
among other things, a metes and bounds description of the real property
comprising part of such Additional Property reasonably satisfactory to Lender.
The surveyor's seal shall be affixed to each survey and the surveyor shall
provide a certification for each survey in form and substance acceptable to
Lender.
(g) Insurance. Lender shall have received valid certificates of
---------
insurance for the policies of insurance required hereunder with respect to each
Additional Property to be encumbered by a Mortgage in connection with such
Subsequent Advance, satisfactory to Lender in its reasonable discretion, and
evidence of the payment of all premiums payable for the existing policy period.
(h) Environmental Reports. Lender shall have received a Phase I
---------------------
environmental report and, if applicable, a Phase II environmental report, in
respect of each Additional Property to be encumbered by a Mortgage in connection
with such Subsequent Advance, in each case satisfactory in form and substance to
Lender in its reasonable discretion.
(i) Encumbrances. The applicable Individual Borrower shall have taken
------------
or caused to be taken such actions in such a manner so that Lender has a valid
and perfected Lien of the requisite priority as of the Subsequent Advance
Closing Date with respect to each Mortgage encumbering an Additional Property to
be delivered in connection with such Subsequent Advance, subject only to
applicable Permitted Encumbrances and such other Liens as are permitted pursuant
to the Loan Documents, and Lender shall have received reasonably satisfactory
evidence thereof.
(j) Organizational Documents. On or before the Subsequent Advance
------------------------
Closing Date, Borrower shall deliver or cause to be delivered to Lender updates
certified by Borrower of all organizational documentation related to any
Individual Borrower executing and delivering a Mortgage or any other Loan
Document in connection with the Subsequent Advance and/or the formation,
structure, existence, good standing and/or qualification to do business
delivered to Lender in connection with the initial advance under the Loan and
such additional organizational and authorizing documentation as Lender may
request pertaining to the Subsequent Advance including, without limitation, good
standing certificates, qualifications to do business in the appropriate
jurisdictions (if required in such jurisdictions) and taking into consideration
any Additional Property to be encumbered by a Mortgage in connection with such
Subsequent Advance, resolutions authorizing the entering into of the Subsequent
Advance and any related documentation and incumbency certificates as may be
reasonably requested by Lender.
(k) Opinions. Lender shall have received opinions of Borrower's
--------
counsel, which counsel shall be reasonably acceptable to Lender, with respect to
due execution, authority, enforceability of any of the documents described in
clauses (c) and (d) above and
-40-
such other matters as Lender may reasonably require in connection with the
Subsequent Advance, all such updates and opinions in form, scope and substance
customary for rated transactions and satisfactory to Lender and Lender's counsel
in their reasonable discretion.
(l) Ground Lease. If the Additional Property known as Seven Mile
------------
Crossing is to be encumbered by a Mortgage in connection with such Subsequent
Advance, (i) the Ground Lease shall be satisfactory in form and substance to
Lender or Borrower shall obtain such amendments or modifications to any lease
constituting the Ground Lease and such nondisturbance or other agreements from
one or more of the lessors under the leases constituting the Ground Leases that
Lender shall deem necessary or advisable in order for the leasehold interest
pursuant to such Ground Lease to constitute acceptable collateral for the Loan
and (ii) Borrower shall have delivered to Lender an estoppel certificate from
each of the lessors under the leases constituting the Ground Lease, which
estoppels shall be satisfactory in form and substance to Lender.
(m) Basic Carrying Costs. Borrower shall have paid all Basic Carrying
--------------------
Costs relating to each of the Properties and each Additional Property to be
encumbered by a Mortgage in connection with such Subsequent Advance which are in
arrears, including without limitation, (i) insurance premiums then due with
respect to each of the Properties and each Additional Property to be added as an
Individual Property in connection with such Subsequent Advance, (ii) currently
due Taxes (including any in arrears) relating to each of the Properties and each
Additional Property to be encumbered by a Mortgage in connection with such
Subsequent Advance and (iii) currently due Other Charges relating to each of the
Properties and each Additional Property to be encumbered by a Mortgage in
connection with such Subsequent Advance, which amounts shall be funded with
proceeds of the Subsequent Advance.
(n) Escrows. Borrower shall make such additional deposits to the Tax
-------
and Insurance Escrow Fund required pursuant to Section 7.3 with respect to each
-----------
Additional Property to be encumbered by a Mortgage in connection with such
Subsequent Advance, which amounts may be funded from the proceeds of such
Subsequent Advance.
(o) Intentionally Omitted.
---------------------
(p) Transaction Costs. Borrower shall have paid or reimbursed Lender
-----------------
for (i) all title insurance premiums and recording and filing fees incurred in
connection with the Subsequent Advance; (ii) all of Lender's out-of-pocket
expenses incurred in connection with the Subsequent Advance, provided that
Borrower's obligation with respect to such expenses, such expenses incurred in
connection with any prior Subsequent Advance and such expenses pursuant to
Section 3.1(m)(ii) shall not in the aggregate, exceed Twenty Thousand and No/100
------------------
Dollars ($20,000) and (iii) the fees and disbursements of Lender's counsel
incurred in connection with the Subsequent Advance, provided that Borrower's
obligation with respect to such fees and disbursements, such fees and
disbursements incurred in connection with any prior Subsequent Advance and such
fees and disbursements pursuant to Section 3.1(m)(iii) shall not, in the
--------------------
aggregate, exceed Sixty Thousand and No/100 Dollars ($60,000).
-41-
(q) Intentionally Omitted.
---------------------
(r) Intentionally Omitted.
---------------------
(s) Material Adverse Change. There shall have been no material
-----------------------
adverse change in the financial condition or business condition of Borrower or
any Individual Property and any Additional Property to be encumbered by a
Mortgage in connection with such Subsequent Advance, in the aggregate, since the
date of Borrower's most recent financial statement delivered to Lender. The
income and expenses of the Properties and any Additional Property to be
encumbered by a Mortgage in connection with such Subsequent Advance, in the
aggregate, the occupancy leases thereof, and all other features of the
transaction shall be as represented to Lender without material adverse change.
Borrower shall not be the subject of any bankruptcy, reorganization, or
insolvency proceeding.
(t) Underlying Asset Documentation. Lender shall have received a copy
------------------------------
of each deed conveying each Additional Property to be encumbered by a Mortgage
in connection with such Subsequent Advance to Borrower, each of which shall be
satisfactory in form and substance to Lender in its sole discretion.
(u) Estoppel Certificates. Borrower shall have delivered to Lender
---------------------
estoppel certificates from any existing tenants (1) constituting anchor tenants
at such Additional Property, (2) leasing an entire building at such Additional
Property and (3) that, together with those described in clauses (1) and (2),
lease no less than seventy-five percent (75%) of the gross leasable area at such
Additional Property. All such estoppel certificates in form and substance
reasonably satisfactory to Lender.
(v) Leases and Rent Roll. Lender shall have received copies of all
--------------------
tenant leases, certified copies of any tenant leases as requested by Lender and
any ground leases affecting each Additional Property to be encumbered by a
Mortgage in connection with such Subsequent Advance. Lender shall have received
a current certified rent roll of each such Additional Property, reasonably
satisfactory in form and substance to Lender.
(w) Subordination. Lender shall have received appropriate instruments
-------------
acceptable to Lender subordinating all of the Leases affecting each Additional
Property to be encumbered by a Mortgage in connection with such Subsequent
Advance designated by Lender to the Mortgage, except such Leases as Lender may
specifically require to be superior to the Mortgage and such Leases that contain
self-executing subordination provisions acceptable to Lender. Lender shall have
received an agreement to attorn to Lender satisfactory to Lender from any tenant
under a Lease that does not provide for such attornment by its terms.
(x) Debt Service Coverage Ratio. The Debt Service Coverage Ratio
---------------------------
projected for the twelve (12) month period immediately following the Subsequent
Advance Closing Date and calculated using an interest rate of 9.25% shall be no
less than 1.40.
(y) Tax Lot. Lender shall have received evidence that each Additional
-------
Property to be encumbered by a Mortgage in connection with such Subsequent
Advance
-42-
constitutes a separate tax lot, which evidence shall be reasonably
satisfactory in form and substance to Lender.
(z) Physical Conditions Reports. Lender shall have received Physical
---------------------------
Conditions Reports with respect to each Additional Property to be encumbered by
a Mortgage in connection with such Subsequent Advance, which reports shall be
reasonably satisfactory in form and substance to Lender.
(aa) Management Agreement. Lender shall have received a certified
--------------------
copy of the Management Agreement with respect to each Additional Property to be
encumbered by a Mortgage in connection with such Subsequent Advance, which
Management Agreement shall be reasonably satisfactory in form and substance to
Lender and Borrower and the related Manager shall have executed and delivered to
Lender an Assignment of Management Agreement with respect to such Management
Agreement.
(bb) Further Documents. Lender and its counsel shall have completed
-----------------
their review of the documents and other information to be delivered pursuant to
this Section 3.2 and received such other and further approvals, opinions,
-----------
documents and information as Lender or its counsel may have reasonably
requested. Borrower shall satisfy such other conditions with respect to the
Subsequent Advance as a reasonably prudent lender would impose with respect to a
loan advance comparable to the Subsequent Advance and mortgaged property
comparable to each Additional Property encumbered by a Mortgage in connection
with such Subsequent Advance.
SECTION 3.3 INTENTIONALLY OMITTED.
---------------------
SECTION 3.4 CONDITIONS PRECEDENT TO ADVANCES.
---------------------------------
All conditions precedent to advances of proceeds of the Loan set forth
in Sections 3.1 and 3.2 are solely for the benefit of Lender and any of such
------------ ---
conditions may be waived by Lender in its sole discretion.
IV. REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 4.1 BORROWER REPRESENTATIONS.
------------------------
Borrower represents and warrants as of the date hereof and as of the
Closing Date that:
(a) Organization. Each Individual Borrower has been duly organized
------------
and is validly existing and in good standing with requisite power and authority
to own its properties and to transact the businesses in which it is now engaged.
Each Individual Borrower is duly
-43-
qualified to do business and is in good standing in each jurisdiction where it
is required to be so qualified in connection with its properties, businesses and
operations. Each Individual Borrower possesses all material rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of each Individual Borrower is the ownership, management
and operation of its respective Individual Property.
(b) Proceedings. Each Individual Borrower has taken all necessary
-----------
action to authorize the execution, delivery and performance of this Agreement
and the other Loan Documents to which it is a party. This Agreement and such
other Loan Documents have been duly executed and delivered by or on behalf of
each Individual Borrower and constitute legal, valid and binding obligations of
each Individual Borrower enforceable against each Individual Borrower in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(c) No Conflicts. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of any Individual Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement or other
agreement or instrument to which any Individual Borrower is a party or by which
any Individual Borrower's property or assets is subject, nor will such action
result in any material violation of the provisions of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over any Individual Borrower or any Individual Borrower's
properties or assets, and any consent, approval, authorization, order,
registration or qualification of or with any court or any such regulatory
authority or other governmental agency or body required for the execution,
delivery and performance by Borrower of this Agreement or any other Loan
Documents has been obtained and is in full force and effect.
(d) Litigation. Except as otherwise set forth on Schedule III hereto,
---------- ------------
there are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority or other agency now pending or, to Borrower's knowledge,
threatened against or affecting any Individual Borrower or any of the
Properties, which actions, suits or proceedings, if determined against any
Individual Borrower or any of the Properties, might materially adversely affect
the financial condition or business of Borrower or the condition or ownership of
any of the Properties.
(e) Agreements. No Individual Borrower is a party to any agreement or
----------
instrument or subject to any restriction which might materially and adversely
affect Borrower or, other than the Permitted Encumbrances, any of the
Properties, or Borrower's business, properties or assets, operations or
financial condition. Other than as set forth in the estoppel
-44-
certificates from tenants under Leases delivered to Lender in connection with
the Loan, to Borrower's knowledge, no Individual Borrower is in default in any
material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any material agreement or
instrument to which it is a party or by which any Individual Borrower or any
Individual Property is bound.
(f) Title. Each Individual Borrower has good and marketable fee or
-----
leasehold, as applicable, title to the real property comprising part of the
Individual Property and good title to the balance of such Individual Property
with respect to which such Individual Borrower executes and delivers a Mortgage,
free and clear of all Liens whatsoever except the Permitted Encumbrances, such
other Liens as are permitted pursuant to the Loan Documents and the Liens
created by the Loan Documents. Each Mortgage intended to encumber any of the
Properties, when properly recorded in the appropriate records, together with any
Uniform Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, perfected first lien on the applicable
Individual Property, subject only to Permitted Encumbrances and the Liens
created or permitted by the Loan Documents and (ii) perfected security interests
in and to, and perfected collateral assignments of, all personalty (including
the Leases) that can be perfected by the filing of financing statements, all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. Borrower has paid for all
work, labor or materials (other than payments with respect to tenant improvement
work payable by the tenant pursuant to the related Lease and Liens for Labor and
Material Costs being contested in accordance with the terms and provisions of
Section 3.6(b) of the Mortgage) affecting any Individual Property currently due
and payable.
(g) No Bankruptcy Filing. No Individual Borrower is contemplating
--------------------
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of such Individual
Borrower's assets or property, and no Individual Borrower has knowledge of any
Person contemplating the filing of any such petition against it.
(h) Intentionally Omitted.
---------------------
(i) No Plan Assets. Borrower is not an "employee benefit plan," as
--------------
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (i)
Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (ii) transactions by or with Borrower or any Individual Borrower are
not subject to state statutes regulating investments of, and fiduciary
obligations with respect to, governmental plans.
(j) Compliance. Other than as set forth in the Physical Condition
----------
Reports or the environmental reports with respect to the Properties delivered to
Lender in connection with the Loan, to the best of Borrower's knowledge,
Borrower and each of the Properties and
-45-
the use thereof comply in all material respects with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes. Borrower is not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority, the violation of which might
materially adversely affect the financial condition or business of Borrower.
There has not been and shall never be committed by Borrower or, to Borrower's
knowledge, any other person in occupancy of or involved with the operation or
use of the Properties any act or omission affording the federal government or
any state or local government the right of forfeiture as against any of the
Properties or any part thereof or any monies paid in performance of Borrower's
obligations under any of the Loan Documents. Borrower hereby covenants and
agrees not to commit, permit or suffer to exist any act or omission affording
such right of forfeiture.
(k) Financial Information. All financial data prepared by or at the
---------------------
direction of Borrower, including, without limitation, the statements of cash
flow and income and operating expense, that have been delivered to Lender in
respect of the Properties (other than the projections contained in such
financial data requested by Lender, with respect to which Borrower makes no
representation or warranty) (i) are true, complete and correct in all material
respects, (ii) accurately represent the financial condition of the Properties as
of the date of such reports in all material respects, and (iii) to the extent
prepared by an independent certified public accounting firm, have been prepared
in accordance with GAAP consistently applied throughout the periods covered,
except as disclosed therein. Other than the Debt and the liabilities associated
with the Permitted Encumbrances, Borrower does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are known
to Borrower and none of such liabilities are reasonably likely to have a
materially adverse effect on the Properties or the operation thereof for their
current respective uses, except as referred to or reflected in said financial
statements. Since the date of such financial statements, to the best of
Borrower's knowledge there has been no materially adverse change in the
financial condition or operations of the Properties from that set forth in said
financial statements.
(l) Condemnation. No condemnation or other proceeding has been
------------
commenced or, to Borrower's best knowledge, is contemplated with respect to all
or any portion of any of the Properties or for the relocation of roadways
providing access to any of the Properties.
(m) Federal Reserve Regulations. No part of the proceeds of the Loan
---------------------------
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
(n) Utilities and Public Access. To the best of Borrower's knowledge,
---------------------------
each Individual Property has rights of access to public ways and is served by
water, sewer, sanitary sewer and storm drain facilities adequate to service such
Individual Property for its respective
-46-
intended uses. To the best of Borrower's knowledge, all public utilities
necessary to the full use and enjoyment of each Individual Property are located
either in the public right-of-way abutting such Individual Property (which are
connected so as to serve such Individual Property without passing over other
property) or in recorded easements serving such Individual Property and such
easements are set forth in the Title Insurance Policies. To the best of
Borrower's knowledge, all roads necessary for the use of each Individual
Property for its current respective purpose have been completed and dedicated to
public use and accepted by all Governmental
Authorities.
(o) Not a Foreign Person. Borrower is not a "foreign person" within
--------------------
the meaning of (S) 1445(f)(3) of the Code.
(p) Separate Lots. Each Individual Property is comprised of one (1)
-------------
or more parcels which constitute a separate tax lot and does not constitute a
portion of any other tax lot not a part of such Individual Property.
(q) Assessments. There are no pending or, to Borrower's knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any of the Properties other than as reflected by the current Permitted
Exceptions, nor are there any contemplated improvements to any of the Properties
that may result in such special or other assessments.
(r) Enforceability. The Loan Documents are not subject to any right
--------------
of rescission, set-off, counterclaim or defense by Borrower, including the
defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable, and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
(s) No Prior Assignment. As of the Closing Date, there will be no
-------------------
prior assignments of the Leases or any portion of the Rents due and payable or
to become due and payable which are presently outstanding.
(t) Insurance. Borrower has obtained and has delivered to Lender
---------
certified copies of all insurance policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement.
(u) Use of Properties. Each of the Properties is used exclusively for
-----------------
office or industrial purposes and other appurtenant and related uses.
(v) Certificate of Occupancy; Licenses. To the best of Borrower's
----------------------------------
knowledge, all material certifications, permits, licenses and approvals
(collectively, the "LICENSES"), have been obtained and are in full force and
--------
effect. All certificates of completion and occupancy permits required for the
legal use, occupancy and operation of each of the Properties have been obtained
and are in full force and effect. Borrower shall keep and maintain all material
Licenses necessary for the operation of each of the Properties. The use being
made of each Individual Property is in conformity in all material respects with
the
-47-
certificate of occupancy issued for such Individual Property.
(w) Flood Zone. Except as shown on the Surveys, to Borrower's
----------
knowledge none of the Improvements on any of the Properties are located in a
"one-hundred-year flood hazard area" as identified by the Federal Insurance
Administration.
(x) Physical Condition. Other than as set forth in the Physical
------------------
Condition Reports or the environmental reports with respect to the Properties
delivered to Lender in connection with the Loan, to the best of Borrower's
knowledge, each of the Properties, including, without limitation, all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects, subject to ordinary wear and tear; to Borrower's
knowledge, there exists no structural or other material defects or damages in
any of the Properties, whether latent or otherwise, and Borrower has not
received notice from any insurance company or bonding company of any defects or
inadequacies in any of the Properties, or any part thereof, which would
materially 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.
(y) Boundaries. Other than as shown on the Survey of the applicable
----------
Individual Property, to the best of Borrower's knowledge, all of the
improvements which were included in determining the appraised value of each
Individual Property lie wholly within the boundaries and building restriction
lines of such Individual Property, and no improvements on adjoining properties
encroach upon such Individual Property, and no easements or other encumbrances
upon the applicable Individual Property encroach upon any of the improvements,
so as to affect the value or marketability of the applicable Individual Property
except those which are insured against by title insurance.
(z) Leases. The Properties are not subject to any Leases other than
------
the Leases described in the rent rolls delivered to Lender in connection with
this Agreement. No person has any possessory interest in any of the Properties
or right to occupy the same except under and pursuant to the provisions of the
Leases. Other than as set forth in the estoppel certificates from tenants under
Leases delivered to Lender in connection with the Loan, to Borrower's knowledge,
the current Leases are in full force and effect and there are no defaults
thereunder by either party and there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute defaults thereunder.
Borrower is the sole owner of the entire lessor's interest in the Leases. None
of the Rents reserved in the Leases have been assigned or otherwise pledged or
hypothecated other than pursuant to the Loan Documents. To the best of
Borrower's knowledge, none of the Rents have been collected for more than one
(1) month in advance of when due under the applicable Lease. The premises
demised under the Leases have been completed and the tenants under the Leases
have accepted the same and have taken possession of the same on a rent-paying
basis other than those tenants under Leases for which premises are being
constructed or renovated as a condition to occupancy. Other
-48-
than as set forth in the estoppel certificates from tenants under Leases
delivered to Lender in connection with the Loan, to Borrower's knowledge, there
exist no offsets or defenses to the payment of any portion of the Rents. Other
than as set forth in the estoppel certificates from tenants under Leases
delivered to Lender in connection with the Loan, no Lease contains an option to
purchase, right of first refusal to purchase, or any other similar provision.
Except as set forth on Schedule VI hereto or as disclosed in writing to Lender
-----------
with respect to any Additional Property prior to any Subsequent Advance with
respect to which such Additional Property is to be encumbered by a Mortgage, to
Borrower's knowledge, all of the Leases are subordinate to the applicable
Mortgage either pursuant to their terms or recorded subordination agreements and
all of the Leases provide that the tenant thereunder agrees to attorn to Lender.
(aa) Survey. To Borrower's knowledge, the Survey for each of the
------
Properties delivered to Lender in connection with this Agreement does not fail
to reflect any matter that materially and adversely affects any of the
Properties or the title thereto.
(bb) Intentionally Omitted.
---------------------
(cc) Filing and Recording Taxes. All transfer taxes, deed stamps,
--------------------------
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of the Properties to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Mortgages encumbering the Properties have been paid.
(dd) Investment Company Act; Other Regulations. Borrower is not an
-----------------------------------------
"investment company," within the meaning of, or that is required to register
under, the Investment Company Act of 1940, as amended, nor is Borrower a company
"controlled" by an "investment company" under such act as amended, except with
respect to an investment company that (i) controls Borrower, (ii) is required to
register under such act as amended and (iii) has so registered, which regulation
is in good standing.
(ee) Single-Purpose. Borrower hereby represents and warrants to, and
--------------
covenants with, Lender that as of the date hereof and until such time as the
Debt shall be paid in full:
(i) Borrower and each Individual Borrower do not own and will
not own any asset or property other than (A) the Properties, and (B) incidental
personal property necessary for the ownership or operation of the Properties.
(ii) Borrower and each Individual Borrower will not engage in
any business other than the ownership, management and operation of the
Properties and Borrower and each Individual Borrower will conduct and operate
its business as presently conducted and operated.
-49-
(iii) Borrower and each Individual Borrower will not enter into
any contract or agreement with any Affiliate of any Individual Borrower, any
constituent party of any Individual Borrower or any Affiliate of any constituent
party, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arm's-length basis
with third parties other than any such party.
(iv) Borrower and each Individual Borrower have not incurred
and shall not incur any indebtedness, secured or unsecured, direct or indirect,
absolute or contingent (including guaranteeing any obligation), other than (A)
the Debt; (B) unsecured trade payables and other unsecured indebtedness not
evidenced by a note, equipment leases and endorsements of checks, incurred by
Borrower or one or more Individual Borrowers for or in respect of the operation
of the Properties in the ordinary course of operating its business; (C)
unsecured indebtedness not evidenced by a note payable or reimbursable to a
tenant under a Lease on account of work performed or costs incurred by such
tenant in connection with its occupancy of space at an Individual Property
pursuant to the Lease, including costs for tenant improvement work; and (D)
indebtedness relating solely to the financing of construction of capital
improvements, tenant improvements or building equipment or leasing costs payable
to third parties or any Manager in accordance with the Management Agreements and
incurred with respect to one or more of the Individual Properties and costs
associated with such indebtedness, either unsecured or secured only by
subordinate liens and (i) which in the aggregate does not exceed an amount equal
to five percent (5%) of the outstanding principal amount of the Loan at any
time, (ii) the proceeds of which are not distributed to any Individual Borrower
or any direct beneficial owner of an interest in any Individual Borrower, but
are instead used to fund directly the costs of items described above, other than
commissions and fees paid to any Manager or Natomas Manager in accordance with
the Management Agreements or the Natomas Management Agreement, (iii) which is
evidenced by a note or other written agreement having terms (other than the
interest rate and repayment terms) no less favorable to Borrower than the terms
of the Loan, (iv) the terms of which shall require that the principal amount of
such indebtedness be repaid from Net Operating Income prior to any distributions
to any direct beneficial owner of an interest in any Individual Borrower (other
than for income, franchise, or other taxes imposed on Borrower for the privilege
of doing business in the jurisdictions in which the Property is located) and (v)
is subject to a subordination and standstill agreement satisfactory in form and
substance to Lender. Except as set forth in the immediately preceding sentence,
no indebtedness other than the Debt may be secured (subordinate or pari passu)
---- -----
by the Properties.
(v) No Individual Borrower has made or will make any loans or
advances to any third party (including any affiliate or constituent party), and
no Individual Borrower shall acquire obligations or securities of its
Affiliates.
(vi) Each Individual Borrower is and will remain solvent and
each Individual Borrower will pay its debts and liabilities (including, as
applicable, shared personnel employment and overhead expenses) from its assets
as the same shall become due, subject to Borrower's right to contest Taxes and
Other Charges in accordance with Section 5.1(b) and Labor and Material Costs in
--------------
accordance with Section 3.6(b) of the
-50-
Mortgage.
(vii) Each Individual Borrower has done or caused to be done and
will do all things necessary to observe partnership formalities and preserve its
existence, and each Individual Borrower will not, nor will any Individual
Borrower permit any constituent party to, amend, modify or otherwise change the
partnership certificate, partnership agreement, articles of incorporation and
bylaws, trust or other organizational documents of such Individual Borrower or
such constituent party without the prior written consent of Lender.
(viii) Borrower will maintain books and records separate from
those of its affiliates and any constituent party and each Individual Borrower
will file its own tax returns. Each Individual Borrower shall maintain its
books, records, resolutions and agreements as official records.
(ix) Each Individual Borrower will be a legal entity separate
and distinct from any other entity (including any Affiliate of any Individual
Borrower or any constituent party of any Individual Borrower), shall correct any
known misunderstanding regarding its status as a separate entity and shall
conduct business in its own name; provided, however that each Individual
Borrower may use the word "Xxxxxxxx" as a part of such Individual Borrower's
name, may describe itself as a "wholly-owned subsidiary" of Xxxxxxxx Properties
Acquisition Partners, L.P. so long as such description is true and correct and
may permit its relationship with its Affiliates to be disclosed in order to
comply with any public filing requirements applicable to Xxxxxxxx Properties
Trust.
(x) Each Individual Borrower is adequately capitalized and
will maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated
business operations.
(xi) No Individual Borrower or constituent party will seek or
effect the liquidation, dissolution, winding up, or consolidation or merger in
connection with an insolvency proceeding, in whole or in part, of any Individual
Borrower.
(xii) Borrower has and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party or any other
Person.
(xiii) Each Individual Borrower does not and will not hold itself
out to be responsible for the debts or obligations of any other Person other
than the debts or obligations of another Individual Borrower.
(xiv) If each Individual Borrower is a limited partnership, the
general partner of each Individual Borrower is a corporation or limited
liability company whose sole asset is its interest in one or more Individual
Borrowers and the general partner will at times comply, and will cause the
related Individual Borrower to comply, with each of the representations,
warranties, and covenants contained in this Section 4.1(ee) as if such
---------------
representation, warranty or covenant was made directly by such general partner.
-51-
(ff) No Change in Facts or Circumstances; Disclosure. All information
-----------------------------------------------
submitted by Borrower to Lender and in all financial statements, rent rolls,
reports, certificates and other documents submitted in connection with the Loan
or in satisfaction of the terms thereof and all statements of fact made by
Borrower in this Agreement or in any other Loan Document, are accurate, complete
and correct in all material respects to the best of Borrower's knowledge. To the
best of Borrower's knowledge, there has been no material adverse change in any
condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects or might materially and adversely
affect any of the Properties or the business operations or the financial
condition of Borrower. To the best of Borrower's knowledge, Borrower has
disclosed to Lender all material facts and has not failed to disclose any
material fact that could cause any representation or warranty made herein to be
materially misleading.
(gg) Illegal Activity. No portion of any Individual Property has been
----------------
or will be purchased with proceeds of any illegal activity.
SECTION 4.2 APPLICABILITY OF REPRESENTATIONS
--------------------------------
Notwithstanding anything to the contrary contained in this Agreement,
Borrower shall not be deemed to have made any representation, warranty or
covenant set forth in this Agreement, including, without limitation, the
representations, warranties and covenants set forth in Sections 4.1, 5.1 and
------------ ---
6.1, with respect to any Individual Property prior to the acquisition of title
---
to such Individual Property by an Individual Borrower.
SECTION 4.3 SURVIVAL OF REPRESENTATIONS.
---------------------------
Borrower agrees that all of the representations and warranties of
Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the
-----------
other Loan Documents shall survive for so long as the context thereof requires
but at least as long as any amount remains owing to Lender under this Agreement
or any of the other Loan Documents by Borrower, provided that the accuracy of
such representations and warranties shall be determined as of the Closing Date
or a Subsequent Advance Date, as applicable. All representations, warranties,
covenants and agreements made in this Agreement or in the other Loan Documents
by Borrower shall be deemed to have been relied upon by Lender notwithstanding
any investigation heretofore or hereafter made by Lender or on its behalf.
V. AFFIRMATIVE COVENANTS.
---------------------
SECTION 5.1 BORROWER COVENANTS.
------------------
From the date hereof and until payment and performance in full of all
-52-
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Mortgages encumbering the Properties (and all related obligations)
in accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
(a) Existence; Compliance with Legal Requirements; Insurance.
--------------------------------------------------------
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its partnership existence, rights, licenses,
permits and franchises and comply in all material respects with all Legal
Requirements applicable to it and the Properties (except for those Legal
Requirements being contested by Borrower in accordance with this Agreement and
other Loan Documents). Borrower shall at all times maintain, preserve and
protect all of its material property used in the conduct of its business and
shall keep all of the Properties in good working order and repair (except for
ordinary wear and tear and damage from a casualty or condemnation pending any
required restoration thereof), and from time to time make, or cause to be made,
all reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgages encumbering
such Properties. Borrower shall keep each of the Properties insured at all times
by financially sound and reputable insurers, to such extent and against such
risks, and maintain liability and such other insurance, as is more fully
provided in this Agreement.
(b) Taxes and Other Charges. Borrower shall pay all Taxes and Other
-----------------------
Charges now or hereafter levied or assessed or imposed against the Properties or
any part thereof prior to delinquency or the imposition of any fine or penalty;
provided, however, Borrower's obligation to directly pay Taxes shall be
suspended for so long as Borrower complies with the terms and provisions of
Section 7.3 hereof. Borrower shall not suffer and shall promptly cause to be
-----------
paid and discharged any lien or charge whatsoever which may be or become a lien
or charge against any of the Properties (subject to Borrower's right to contest
Taxes and Other Charges in accordance with this Section 5.1(b)), and shall
---------------
promptly pay for all utility services provided to the Properties. Borrower
shall furnish to Lender receipts for the payment of the Taxes and the Other
Charges prior to the date the same shall become delinquent (provided, however,
that Borrower is not required to furnish such receipts for payment of Taxes in
the event that such Taxes have been paid by Lender pursuant to Section 7.3
-----------
hereof). After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i) no Event of
Default has occurred and remains uncured, (ii) Borrower is permitted to do so
under the provisions of any mortgage or deed of trust affecting any of the
Properties, (iii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances,
(iv) no Individual Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, canceled or lost, and (v) Borrower
shall promptly upon final determination thereof pay the amount of any such Taxes
or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith. In addition, if the Taxes or Other Charges are
not paid in full when the
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Borrower commences such contest, then the following shall apply: (A) such
proceeding shall suspend the collection of Taxes or Other Charges from the
applicable Individual Property, and (B) Borrower shall have furnished such
security as may be required in the proceeding, or as may be reasonably requested
by Lender or sufficient funds are on deposit in the Tax and Insurance Escrow
Fund to pay any such Taxes or Other Charges pursuant to Section 7.3, to insure
-----------
the payment of any such Taxes or Other Charges, together with all interest and
penalties thereon. Lender may pay over any such cash deposit or part thereof
held by Lender to the claimant entitled thereto at any time when, in the
reasonable judgment of Lender, the entitlement of such claimant is established
after Borrower's appeals have been exhausted.
(c) Litigation. Borrower shall give prompt written notice to Lender
----------
of any litigation or governmental proceedings pending or threatened against
Borrower which might materially adversely affect Borrower's financial condition
or business or any of the Properties.
(d) Access to Premises. Borrower shall permit agents, representatives
------------------
and employees of Lender to inspect (but not to perform invasive testing other
than as permitted pursuant to this Agreement, the Environmental Indemnity and
the other Loan Documents) any of the Properties or any part thereof at
reasonable hours upon reasonable advance notice subject to the rights of
tenants, subtenants and licensees with respect to the Properties.
(e) Notice of Default. Borrower shall promptly advise Lender of any
-----------------
material adverse change in Borrower's financial condition, or of the occurrence
of any Default or Event of Default of which Borrower has knowledge.
(f) Cooperate in Legal Proceedings. Borrower shall cooperate fully
------------------------------
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election and at its cost, to
participate in any such proceedings.
(g) Perform Loan Documents. Borrower shall observe, perform and
----------------------
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all reasonable costs, fees and expenses to the extent required under
the Loan Documents executed and delivered by, or applicable to, Borrower.
(h) Insurance Benefits. Borrower shall cooperate with Lender in
------------------
obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable in connection with any of the Properties, and Lender shall be
reimbursed for any expenses reasonably incurred in connection therewith
(including reasonable attorneys' fees and disbursements, and the payment by
Borrower of the expense of an appraisal on behalf of Lender in case of a fire or
other casualty affecting any of the Properties or any part thereof) out of such
Insurance Proceeds.
(i) Further Assurances; Supplemental Mortgage Affidavits. Borrower
----------------------------------------------------
shall, at Borrower's sole cost and expense:
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(i) furnish to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
title and other insurance reports and agreements, and each and every other
document, certificate, agreement and instrument reasonably required to be
furnished by Borrower pursuant to the terms of the Loan Documents;
(ii) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require under the Loan Documents; and
(iii) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Loan Documents, as
Lender shall reasonably require from time to time.
(j) Intentionally Omitted.
---------------------
(k) Financial Reporting.
-------------------
(i) Borrower shall keep adequate books and records of account
in accordance with GAAP, or in accordance with other methods acceptable to
Lender in its reasonable discretion, consistently applied and furnish to Lender,
in electronic or other form acceptable to Lender, the following:
(A) monthly operating statements of each Individual
Property together with a property balance sheet for such month, prepared and
certified by such Individual Borrower in the form reasonably required by Lender,
detailing the revenues received, the expenses incurred and the net operating
income before and after debt service (principal and interest) and major capital
improvements for that month and containing appropriate year to date information,
and containing a comparison for such month with the annual budget delivered
pursuant to clause (E), on a quarterly basis within thirty (30) days after the
end of each calendar quarter;
(B) certified updated rent rolls signed and dated by each
Individual Borrower, detailing the names of all tenants of the Individual to
which such Individual Borrower holds title, the portion of Improvements on such
Individual Property occupied by each tenant, the base rent and any other charges
payable under each Lease and the term of each Lease, including the expiration
date, and any other information as is reasonably required by Lender, within
thirty (30) days after the end of each of each fiscal quarter;
(C) an annual consolidated operating statement of
Borrower detailing the total revenues received, total expenses incurred, total
cost of all capital improvements, total debt service and total cash flow for the
Properties, to be certified by Borrower, within ninety (90) days after the close
of each fiscal year of Borrower;
-55-
(D) an annual balance sheet and profit and loss statement
of Borrower in the form reasonably required by Lender, prepared and certified by
Borrower, within ninety (90) days after the close of each fiscal year of
Borrower;
(E) an annual operating budget presented on a monthly
basis consistent with the monthly and annual operating statements described
above for the Property, including cash flow projections for the upcoming year,
and all proposed capital replacements and improvements at least fifteen (15)
days prior to the start of each calendar year; and
(F) an annual consolidated operating statement, balance
sheet and profit and loss statement of Xxxxxxxx Properties Acquisition Partners,
L.P. prepared by a "Big Six" accounting firm, within ninety (90) days after the
close of each fiscal year of Xxxxxxxx Properties Acquisition Partners, L.P.
(ii) Upon reasonable request from Lender, Borrower and its
Affiliates shall furnish to Lender an accounting of all security deposits held
in connection with any Lease, including the name and identification number of
the accounts in which such security deposits are held, the name and address of
the financial institutions in which such security deposits are held and the name
of the Person to contact at such financial institution, along with any authority
or release necessary for Lender to obtain information regarding such accounts
directly from such financial institutions.
(iii) Borrower and its Affiliates shall furnish Lender with such
other additional financial or management information (other than audited
financial statements of an Individual Borrower or any partner of an Individual
Borrower) as may, from time to time, be reasonably required by Lender in form
and substance reasonably satisfactory to Lender.
(l) Business and Operations. Borrower will continue to engage in the
-----------------------
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of each of the
Properties. Borrower and its general partner will qualify to do business and
will remain in good standing under the laws of each jurisdiction as and to the
extent the same are required for the ownership, maintenance, management and
operation of each of the Properties.
(m) Title to the Properties. Borrower will warrant and defend (i)
-----------------------
the title to each of the Properties and every part thereof, subject only to
Liens permitted hereunder (including Permitted Encumbrances), and (ii) the
validity and priority of the Liens of the Mortgages and the Assignments of
Leases on the Properties, subject only to Liens permitted hereunder (including
Permitted Encumbrances), in each case against the claims of all Persons
whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in any of the Properties, other than as permitted
hereunder, is claimed by another Person.
(n) Costs of Enforcement. In the event (i) that any Mortgage
--------------------
encumbering any of the Properties is foreclosed in whole or in part or that any
such Mortgage is put into the hands of an attorney for collection, suit, action
or foreclosure, (ii) of the foreclosure of any
-56-
mortgage prior to or subsequent to any Mortgage encumbering any of the
Properties in which proceeding Lender is made a party, or (iii) of the
bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of
Borrower or an assignment by Borrower for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and agrees to pay
all costs of collection and defense, including reasonable attorneys' fees in
connection therewith and in connection with any appellate proceeding or post-
judgment action involved therein, which shall be due and payable together with
all required service or use taxes.
(o) Estoppel Statement. After request by Lender, Borrower shall
------------------
within ten (10) days furnish Lender with a statement, duly acknowledged and
certified, setting forth (A) the amount of the original principal amount of the
Loan, (B) the unpaid principal amount of the Loan, (C) the Regular Interest
Rate, (D) the date installments of interest and/or principal were last paid, (E)
any offsets or defenses to the payment of the Debt, if any, and (F) that the
Note, this Agreement, the Mortgages and the other Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification. Within ten (10) days of Borrower's request,
Lender will deliver to Borrower a statement setting forth (i) the unpaid
principal amount of the Loan, (ii) the Regular Interest Rate, (iii) the amount
of the installment of interest and/or principal due and payable with respect to
the Loan on the Scheduled Payment Date for the month in which such statement is
delivered and (iv) the date on which Lender last received a payment with respect
to the Loan.
(p) Loan Proceeds. Borrower shall use the proceeds of the Loan
-------------
received by it on the Closing Date only for the purposes set forth in Section
-------
2.2.
---
(q) Ground Lease. Borrower shall in a timely manner observe, perform
------------
and fulfill in all material respects each and every material covenant, term and
provision of the Ground Lease in accordance with the terms thereof.
(r) Leasing Matters. An Individual Borrower may enter into new Leases
---------------
without the consent of Lender, provided that each such new Lease shall provide
for rental rates and terms comparable to existing local market rates and terms
(taking into account the type and quality of tenant, the term of the Lease, the
tenant inducements or concessions under the Lease and the size and quality of
the demised space), shall be arm's-length transactions with bona fide,
independent third party tenants and shall be written on the standard form of
lease which shall have been approved by Lender in its reasonable discretion,
without any change thereto that would have a material adverse effect on the
value of the related Individual Property or materially and adversely affect the
value of the Lease as security for the Debt. Upon request, Borrower shall
furnish Lender with executed copies of all Leases. In addition, all renewals of
Leases and all proposed leases shall provide for rental rates and terms
comparable to existing local market rates and terms (taking into account the
type and quality of tenant, the term of the Lease, the tenant inducements or
concessions under the Lease and the size and quality of the demised space) and
shall be arm's-length transactions with bona fide, independent third party
tenants. All Leases shall provide that they are subordinate to the Mortgage with
respect to the related Individual Property and that the tenant agrees to attorn
to Lender, unless Lender agrees otherwise. Borrower (i) shall observe and
perform in all material respects all the material
-57-
obligations imposed upon the landlord under the Leases and shall not do or
permit to be done anything to materially and adversely affect the value of the
Leases as security for the Debt; (ii) shall promptly send copies to Lender of
all notices of default which Borrower shall send or receive thereunder; (iii)
shall enforce all of the material terms, covenants and conditions contained in
the Leases upon the part of the lessee thereunder to be observed or performed,
short of termination thereof, which Borrower deems reasonably prudent to
enforce; (iv) shall not collect any of the Rents more than one (1) month in
advance of when due under the applicable Lease; (v) shall not execute any other
assignment of the lessor's interest in the Leases or the Rents and (vi) shall
not, without the prior written consent of Lender, amend, modify, waive the
provisions of, terminate, reduce the rents under or shorten the term of any
Lease. Notwithstanding the foregoing, an Individual Borrower may, without
Lender's consent (y) amend, modify or waive the provisions of any Leases if such
action does not have a material adverse effect upon the value of the related
Individual Property (taking into account the circumstances of the affected
Lease) and (z) terminate, reduce the rents under or shorten the term of any
Leases if such action (taking into account the planned alternative use of the
related demised space and the circumstances of the affected Lease) does not
materially and adversely affect the value of the related Individual Property. No
Individual Borrower shall, without the prior consent of Lender (A) alter, modify
or change the terms of any guaranty, letter of credit or other credit support
with respect to the Leases (a "LEASE GUARANTY") or cancel or terminate such
--------------
Lease Guaranty (other than such an action required by the terms of such Lease
Guaranty or the related Lease) if such action could materially and adversely
affect the value of the related Individual Property, or (B) consent to any
assignment of or subletting under the Leases not in accordance with their terms
if such action could materially and adversely affect the value of the related
Individual Property.
(s) Alterations. Borrower shall obtain Lender's prior written
-----------
consent, which consent shall not be unreasonably withheld or delayed, for any
alterations to any Improvements on any Individual Property that may have a
material adverse effect on Borrower's financial condition, the value of such
Individual Property or the Net Operating Income with respect to such Individual
Property, other than tenant improvement work performed pursuant to the terms and
provisions of a Lease and not adversely affecting any structural component of
any Improvements, any utility or HVAC system contained in any Improvements or
the exterior of any building constituting a part of any Improvements or
alterations performed in connection with the restoration of an Individual
Property after the occurrence of a casualty in accordance with the terms and
provisions of this Agreement. If the total unpaid amounts due and payable with
respect to alterations to the Improvements on the Properties (other than such
amounts to be paid or reimbursed by tenants under the Leases) shall at any time
exceed five percent (5%) of the outstanding principal balance of the Loan (the
"THRESHOLD AMOUNT"), Borrower shall promptly deliver to Lender as security for
-----------------
the payment of such amounts and as additional security for Borrower's
obligations under the Loan Documents any of the following: (i) cash, (ii) U.S.
Obligations, (iii) other securities having a rating acceptable to Lender and
that the applicable Rating Agencies have confirmed in writing will not, in and
of itself, result in a downgrade, withdrawal or qualification of the initial,
or, if higher, then current ratings assigned in connection with any
Securitization or (iv) a completion bond or letter of credit issued by a
financial institution having a rating by Standard & Poor's
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Ratings Group of not less than A-1+ if the term of such bond or letter of credit
is no longer than three (3) months or, if such term is in excess of three (3)
months, issued by a financial institution having a rating that is acceptable to
Lender and that the applicable Rating Agencies have confirmed in writing will
not, in and of itself, result in a downgrade, withdrawal or qualification of the
initial, or, if higher, then current ratings assigned in connection with any
Securitization. Such security shall be in an amount equal to the excess of the
total unpaid amounts with respect to alterations to the Improvements on the
Properties (other than such amounts to be paid or reimbursed by tenants under
the Leases) over the Threshold Amount and may be reduced from time to time by
the cost estimated by Lender to terminate any of the alterations and restore the
related Individual Property to the extent necessary to prevent any material
adverse effect on the value of such Individual Property.
VI. NEGATIVE COVENANTS.
------------------
SECTION 6.1 BORROWER'S NEGATIVE COVENANTS.
-----------------------------
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Mortgages encumbering each of the Properties in accordance with the
terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:
(a) Operation of Properties. Borrower shall not, without the prior
-----------------------
consent of Lender (which consent shall not be unreasonably withheld or delayed),
terminate any Management Agreement relating to any Individual Property or
otherwise replace the related Manager or enter into any other management
agreements with respect to any of the Properties; provided, however, that
Borrower may replace the Manager under a Management Agreement with an Affiliate
of Xxxxxxxx Properties Management, L.P., which Affiliate shall assume in writing
such Management Agreement subject to the confirmation in writing from the
applicable Rating Agencies that the replacement of Manager with such Affiliate
will not, in and of itself, result in a downgrade, qualification or withdrawal
of the initial, or, if higher, then current ratings assigned in connection with
any Securitization. Xxxxxxxx Properties Natomas, L.P. shall satisfy any
outstanding obligations pursuant to the Natomas Management Agreement within
forty-five (45) days of the termination thereof.
(b) Liens. Borrower shall not, without the prior written consent of
-----
Lender, create, incur, assume or suffer to exist any Lien on any portion of any
of the Properties or permit any such action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan Documents;
(iii) Liens for Taxes, or Other Charges not yet delinquent or
accruing any
-59-
penalty (subject to Borrower's right to contest Taxes and Other Charges pursuant
to Section 5.1(b)).
---------------
(c) Dissolution. Each Individual Borrower shall not dissolve,
-----------
terminate, liquidate, merge with or consolidate into another Person other than
in connection with a transfer of an Individual Property in accordance with the
terms and provisions of Section 6.1 of the Mortgage.
-----------
(d) Change In Business. Borrower and each Individual Borrower shall
------------------
not enter into any line of business other than the ownership and operation of
the Properties, or make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business.
(e) Debt Cancellation. No Individual Borrower shall cancel or
-----------------
otherwise forgive or release any claim or debt owed to such Individual Borrower
by any Person (other than the termination of Leases in accordance with
Section 5.1(r)), unless adequate consideration is received and such cancellation
--------------
or forgiveness occurs in the ordinary course of such Individual Borrower's
business or such cancellation or forgiveness is prudent and commercially
reasonable under the circumstances.
(f) Affiliate Transactions. No Individual Borrower shall enter into,
----------------------
or be a party to, any transaction with an Affiliate of any Individual Borrower
or any of the partners of any Individual Borrower except in the ordinary course
of business and on terms which are fully disclosed to Lender in advance and are
no less favorable to such Individual Borrower or such Affiliate than would be
obtained in a comparable arm's-length transaction with an unrelated third party.
(g) Zoning. Borrower and each Individual Borrower shall not initiate
------
or consent to any zoning reclassification of any portion of any of the
Properties or seek any variance under any existing zoning ordinance or use or
permit the use of any portion of any of the Properties in any manner that could
result in such use becoming a non-conforming use under any zoning ordinance or
any other applicable land use law, rule or regulation, without the prior consent
of Lender, which consent shall not be unreasonably withheld or delayed. If
under applicable zoning provisions the use of all or any portion of any of the
Properties is or shall become a nonconforming use, Borrower and each Individual
Borrower shall not cause or permit the nonconforming use to be discontinued or
abandoned without the prior written consent of Lender, which consent shall not
be unreasonably withheld or delayed.
(h) Assets. Borrower and each Individual Borrower shall not purchase
------
or own any real property other than the Properties.
(i) No Joint Assessment. No Individual Borrower shall suffer, permit
-------------------
or initiate the joint assessment of any Individual Property (i) with any other
real property constituting a tax lot separate from such Individual Property, and
(ii) with any portion of such Individual Property which may be deemed to
constitute personal property, or any other
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procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such Individual
Property.
(j) Principal Place of Business. No Individual Borrower shall change
---------------------------
its principal place of business set forth on the first page of this Agreement
without first giving Lender thirty (30) days prior written notice.
(k) ERISA. (i) No Individual Borrower shall engage in any transaction
-----
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under the Note, this Agreement or
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
-----
(ii) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (A) Borrower is
not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(C) one or more of the following circumstances is true:
(1) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. (S)2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. (S)2510.3-101(f)(2); or
(3) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R. (S)2510.3-
101(c) or (e) or an investment company registered under The Investment
Company Act of 1940.
VII. CASUALTY; CONDEMNATION; ESCROWS
-------------------------------
"VII. CASUALTY; CONDEMNATION; ESCROWS"
SECTION 7.1 INSURANCE; CASUALTY AND CONDEMNATION.
------------------------------------
"Section 7.1 Insurance; Casualty and Condemnation"
7.1.1 INSURANCE.
---------
(a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and each of the Properties providing at least the
following coverages:
(i) comprehensive all risk insurance on the Improvements and the
Personal Property, including contingent liability from Operation of Building
Laws, Demolition Costs and Increased Cost of Construction Endorsements, in each
case (A) in an amount equal
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to one hundred percent (100%) of the "Full Replacement Cost," which for purposes
of this Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of
depreciation, but the amount shall in no event be less than the outstanding
principal balance of the Loan; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of Ten Thousand and No/100
Dollars ($10,000) for all such insurance coverage; and (D) containing an
"Ordinance or Law Coverage" or "Enforcement" endorsement if any of the
Improvements or the use of the Individual Property shall at any time constitute
legal non-conforming structures or uses. In addition, Borrower shall obtain (y)
flood hazard insurance if any portion of the Improvements is currently or at any
time in the future located in a federally designated "special flood hazard area"
in an amount equal to the lesser of (1) one hundred twenty-five percent (125%)
of the Release Amount for the Individual Property located in part or in whole
therein or (2) the maximum amount of such insurance available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the
National Flood Insurance Reform Act of 1994, as each may be amended or such
greater amount as Lender shall require; and (z) earthquake insurance in amounts
and in form and substance reasonably satisfactory to Lender in the event the
Individual Property is located in an area with a high degree of seismic
activity, provided that the insurance pursuant to clauses (y) and (z) hereof
shall be on terms consistent with the comprehensive all risk insurance policy
required under this subsection (i), except that the deductible on such flood
hazard insurance with respect to the Properties and such earthquake insurance
with respect to the Properties other than the Individual Property known as
Pacific Gateway Center II shall not be in excess of Twenty-Five Thousand and
No/100 Dollars ($25,000) and the deductible on such earthquake insurance with
respect to the Individual Property known as Pacific Gateway Center II shall not
be in excess of five percent (5%) of the replacement value of such Individual
Property at the time of loss;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Individual Property, such insurance (A) to be on the so-called
"occurrence" form with a combined limit, including umbrella coverage, of not
less than Three Million and No/100 Dollars ($3,000,000) or, if any of the
Improvements contain elevators, Five Million and No/100 Dollars ($5,000,000);
(B) to continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economic conditions making
such protection inadequate; and (C) to cover at least the following hazards:
(1) premises and operations; (2) products and completed operations on an "if
any" basis; (3) independent contractors; and (4) blanket contractual liability
for all legal contracts;
(iii) business income insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for in
subsection (i) above; (C) containing an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and Personal
Property has been repaired, the continued loss of income will be 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 Property is repaired or
replaced and operations are resumed, whichever first occurs, and notwithstanding
that the
-62-
policy may expire prior to the end of such period; and (D) in an amount equal to
one hundred percent (100%) of the projected gross income from the Individual
Property for a period of twelve (12) months from the date that the Individual
Property is repaired or replaced and operations are resumed. The amount of such
business income insurance shall be determined prior to the date hereof and at
least once each year thereafter based on Borrower's reasonable estimate of the
gross income from the Property for the succeeding twenty-four (24) month period.
All proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan Documents
from time to time due and payable hereunder and under the Note; provided,
however, that nothing herein contained shall be deemed to relieve Borrower of
its obligations to pay the obligations secured by the Loan Documents on the
respective dates of payment provided for in the Note and the other Loan
Documents except to the extent such amounts are actually paid out of the
proceeds of such business income insurance;
(iv) at all times during which structural construction, repairs
or alterations are being made with respect to the Improvements, and only if the
Individual Property coverage form does not otherwise apply, (A) owner's
contingent or protective liability insurance covering claims not covered by or
under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder's risk completed value form (1) on a non-
reporting basis, (2) against all risks insured against pursuant to subsection
(i) above, (3) including permission to occupy the Individual Property, and (4)
with an agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of
the state in which the Individual Property is located, and employer's liability
insurance with a limit of at least One Million and No/100 Dollars ($1,000,000)
per accident and per disease per employee, and One Million and No/100 Dollars
($1,000,000) for disease aggregate in respect of any work or operations on or
about the Individual Property, or in connection with the Individual Property or
its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on terms
consistent with the commercial property insurance policy required under
subsection (i) above;
(vii) umbrella liability insurance in an amount not less than
Ten Million and No/100 Dollars ($10,000,000) per occurrence on terms consistent
with the commercial general liability insurance policy required under subsection
(ii) above;
(viii) motor vehicle liability coverage for all owned and non-
owned vehicles, including rented and leased vehicles containing minimum limits
per occurrence, including umbrella coverage, of Five Million and No/100 Dollars
($5,000,000); a nd
(ix) upon sixty (60) days' written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time to time
may reasonably request against such other insurable hazards which at the time
are commonly insured against for
-63-
property similar to the Individual Property located in or around the region in
which the Individual Property is located.
(b) All insurance provided for in Section 7.1.1(a) shall be
----------------
obtained under valid and enforceable policies (collectively, the "POLICIES" or
--------
in the singular, the "POLICY"), and any proposed change in such insurance
------
coverage shall be subject to the reasonable approval of Lender as to the
compliance of any such change with the requirements of Section 7.1.1(a). The
----------------
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the state in which the Property is
located and having a claims paying ability rating of "AA" (or its equivalent) or
better by at least two (2) of the Rating Agencies one of which shall be Standard
& Poor's Ratings Group if Standard & Poor's Ratings Group is one of the Rating
Agencies issuing a rating in connection with the Securitization Transaction. The
Policies described in Section 7.1.1(a)(i), (iii), (iv)(B) and (vi) shall
--------------------------------------------
designate Lender as loss payee. As soon as reasonably practicable and in no
event less than five (5) days prior to the expiration dates of the Policies
theretofore furnished to Lender, evidence that the Policies have been renewed
and, no later than five (5) days prior to the date due, evidence satisfactory to
Lender of payment of the premiums due thereunder (the "INSURANCE PREMIUMS"),
------------------
shall be delivered by Borrower to Lender; provided, however, that Borrower's
obligation to directly pay Insurance Premiums shall be suspended for so long as
Borrower complies with the terms and provisions of Section 7.3.
-----------
(c) Any blanket insurance Policy shall specifically allocate to
the Individual Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate
Policy insuring only the Property in compliance with the provisions of Section
-------
7.1.1(a).
--------
(d) All Policies of insurance provided for or contemplated by
Section 7.1.1(a), except for the Policy referenced in Section 7.1.1(a)(v), shall
---------------- -------------------
name Borrower as the insured and Lender as the additional insured, as its
interests may appear, and in the case of property damage, boiler and machinery,
flood and earthquake insurance, shall contain a so-called New York standard non-
contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section 7.1.1(a)
----------------
(v) shall contain clauses or endorsements to the effect that:
---
(i) no act or negligence of Borrower, or anyone acting
for Borrower, or of any tenant under any Lease or other occupant, or failure to
comply with the provisions of any Policy, other than the failure to pay the
related Insurance Premium, which might otherwise result in a forfeiture of the
insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other
than to increase the coverage provided thereby) or canceled without at least
thirty (30) days' written notice to Lender and any other party named therein as
an additional insured; and
-64-
(iii) each Policy shall provide that the issuers thereof
shall give written notice to Lender if the Policy has not been renewed fifteen
(15) days prior to its expiration; an d
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, without notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Property, including, without
limitation, the obtaining of such insurance coverage as Lender in its reasonable
discretion deems necessary to satisfy the requirements of Section 7.1.1(a), and
----------------
all premiums incurred by Lender in connection with such action or in obtaining
such insurance and keeping it in effect shall be paid by Borrower to Lender upon
demand and until paid shall be secured by the Mortgages and shall bear interest
at the Default Rate.
(g) If the Individual Property shall be damaged or destroyed,
in whole or in part, by fire or other casualty, Borrower shall give prompt
notice of such damage to Lender and shall promptly commence and diligently
prosecute the completion of the repair and restoration of the Individual
Property as nearly as possible to the condition the Individual Property was in
immediately prior to such fire or other casualty, with such alterations as may
be reasonably approved by Lender (a "RESTORATION") and otherwise in accordance
-----------
with Section 7.1.3. Borrower shall pay all costs of such Restoration whether or
-------------
not such costs are covered by insurance. Lender may, but shall not be obligated
to make proof of loss if not made promptly by Borrower;
(h) In the event of foreclosure of the Mortgage with respect to
the Individual Property, or other transfer of title to the Individual Property
in extinguishment in whole or in part of the Debt all right, title and interest
of Borrower in and to the Policies that are not blanket Policies then in force
concerning the Individual Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.
7.1.2 CONDEMNATION. Borrower shall promptly give Lender notice of
------------
the actual or threatened commencement of any condemnation or eminent domain
proceeding affecting any of the Properties and shall deliver to Lender copies of
any and all papers served in connection with such proceedings. Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise
(including but not limited to any transfer made in lieu of or in anticipation of
the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement and the Debt shall not be reduced
-65-
until any award or payment therefor (an "AWARD") shall have been actually
-----
received and applied by Lender, after the deduction of expenses of collection,
to the reduction or discharge of the Debt. Lender shall not be limited to the
interest paid on the Award by the condemning authority but shall be entitled to
receive out of the award interest at the rate or rates provided herein or in the
Note. If the Property or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 7.1.3. If the
-------------
Property is sold, through foreclosure or otherwise, prior to the receipt by
Lender of the Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt.
7.1.3 RESTORATION. The following provisions shall apply in
-----------
connection with the Restoration of any Individual Property:
(a) If the Net Proceeds shall be less than Five Hundred
Thousand and No/100 Dollars ($500,000) and the costs of completing the
Restoration shall be less than Five Hundred Thousand and No/100 Dollars
($500,000), the Net Proceeds will be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in Section 7.1.3(b)(i)
-------------------
are met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than Five
Hundred Thousand and No/100 Dollars ($500,000) or the costs of completing the
Restoration is equal to or greater than Five Hundred Thousand and No/100 Dollars
($500,000) Lender shall make the Net Proceeds available for the Restoration in
accordance with the provisions of this Section 7.1.3. The term "NET PROCEEDS"
------------- ------------
for purposes of this Section 7.1.3 shall mean: (i) the net amount of all
-------------
insurance proceeds received by Lender pursuant to Section 7.1.1 (a)(i), (iv),
--------------------------
(vi) and (vii) as a result of such damage or destruction, after deduction of its
--------------
reasonable costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting same ("INSURANCE PROCEEDS"), or (ii) the net amount
------------------
of the Award, after deduction of its reasonable costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting same
("CONDEMNATION PROCEEDS"), whichever the case may be.
---------------------
(i) The Net Proceeds shall be made available to Borrower
for Restoration provided that each of the following conditions
are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are Insurance
Proceeds, less than fifty percent (50%) of the total floor
area of the Improvements on the Individual Property has
been damaged, destroyed or rendered unusable as a result of
such fire or other casualty or (2) in the event the Net
Proceeds are Condemnation Proceeds, less than ten percent
(10%) of the land constituting the Individual Property is
taken, and such land is
-66-
located along the perimeter or periphery of the Individual
Property, and no portion of the Improvements is located in
such land;
(C) Leases demising in the aggregate a percentage
amount equal to or greater than the Rentable Space
Percentage of the total rentable space in the Individual
Property which has been demised under executed and delivered
Leases in effect as of the date of the occurrence of such
fire or other casualty or taking, whichever the case may be,
shall remain in full force and effect during and after the
completion of the Restoration, notwithstanding the
occurrence of any such fire or other casualty or taking,
whichever the case may be. The term "RENTABLE SPACE
--------------
PERCENTAGE" shall mean (1) in the event the Net Proceeds are
----------
Insurance Proceeds, a percentage amount equal to twenty-five
percent (25%) and (2) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to ten
percent (10%);
(D) Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than sixty
(60) days after the later of (1) the date such damage or
destruction or taking, whichever the case may be, occurs or
(2) if any related Insurance Proceeds or Condemnation
Proceeds, as the case may be, are to be paid to Lender in
accordance with this Article VII, the date on which Lender
makes any such Insurance Proceeds or Condemnation Proceeds
received by Lender available to Borrower pursuant to this
Section 7.1.1) and shall diligently pursue the same to
-------------
satisfactory completion;
(E) Lender shall be reasonably satisfied that any
operating deficits, including all scheduled payments of
principal and interest under the Note, which will be
incurred with respect to the Individual Property as a
result of the occurrence of any such fire or other casualty
or taking, whichever the case may be, will be covered out
of (1) the Net Proceeds, (2) the insurance coverage
referred to in Section 7.1.1(a)(iii), if applicable, or (3)
---------------------
by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration
will be completed on or before the earliest to occur of (1)
the Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases which are required
in accordance with the provisions of this Section 7.1.3(b)
----------------
to remain in effect subsequent to the occurrence of such
fire or other casualty or taking, whichever the case may
be, and the completion of the Restoration, (3) such time as
may be required under applicable zoning law, ordinance,
rule or regulation in order to repair and restore the
Property to the condition it was in immediately prior to
such fire or other casualty or to as nearly as possible the
condition it was in immediately prior to such taking, as
applicable or (4) the expiration of
-67-
the insurance coverage referred to in Section 7.1.1(a)
----------------
(iii);
-----
(G) the Individual Property and the use thereof after
the Restoration will be, in all material respects, in
compliance with and permitted under all applicable zoning
laws, ordinances, rules and regulations;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
material compliance with all applicable governmental laws,
rules and regulations (including, without limitation, all
applicable environmental laws); and
(I) such fire or other casualty or taking, as
applicable, does not result in the loss of reasonably
adequate access to the Individual Property or the related
Improvements.
(ii) The Net Proceeds shall be held by Lender in an
interest-bearing and, until disbursed in accordance with the
provisions of this Section 7.1.3(b), shall constitute additional
----------------
security for the Debt and other obligations under the Loan
Documents. The Net Proceeds shall be disbursed by Lender to, or
as directed by, Borrower from time to time during the course of
the Restoration, upon receipt of evidence reasonably satisfactory
to Lender that (A) all materials installed and work and labor
performed (except to the extent that they are to be paid for out
of the requested disbursement) in connection with the Restoration
have been paid for in full, and (B) there exist no notices of
pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or
encumbrances of any nature whatsoever on the Individual Property
arising out of the Restoration which have not either been fully
bonded to the reasonable satisfaction of Lender and discharged of
record or in the alternative fully insured to the satisfaction of
Lender by the title company issuing the Title Insurance Policy.
(iii) All plans and specifications required in connection
with the Restoration shall be subject to prior review and
acceptance in all respects by Lender and by an independent
consulting engineer selected by Lender (the "CASUALTY
--------
CONSULTANT") and such acceptance shall not be unreasonable
----------
withheld. Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required
or obtained in connection with the Restoration. The identity of
the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and acceptance by
Lender and the Casualty Consultant and such acceptance shall not
be unreasonably withheld. All reasonable costs and expenses
incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation,
reasonable counsel fees and disbursements and the Casualty
-68-
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to
the costs actually incurred from time to time for work in place
as part of the Restoration, as certified by the Casualty
Consultant, minus the Casualty Retainage. The term "CASUALTY
----- --------
RETAINAGE" shall mean an amount equal to ten percent (10%) of the
---------
costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until the
Restoration has been completed. The Casualty Retainage shall in
no event, and notwithstanding anything to the contrary set forth
above in this Section 7.1.3(b), be less than the amount actually
---------------
held back by Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. The Casualty Retainage
shall not be released until the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with
the provisions of this Section 7.1.3(b) and that all approvals
----------------
necessary for the re-occupancy and use of the Individual Property
have been obtained from all appropriate governmental and quasi-
governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty
Retainage; provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant
certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, the
contractor, subcontractor or materialman delivers the lien
waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the Title
Insurance Policy, and Lender receives an endorsement to the Title
Insurance Policy insuring the continued priority of the lien of
the related Mortgage and evidence of payment of any premium
payable for such endorsement. If required by Lender, the release
of any such portion of the Casualty Retainage shall be approved
by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or
materialman.
(v) Lender shall not be obligated to make disbursements of
the Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the reasonable opinion of Lender in
consultation with the Casualty Consultant, be sufficient to pay
in full the balance of the costs which are estimated by the
Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the
deficiency (the "NET PROCEEDS DEFICIENCY") with Lender before any
-----------------------
further disbursement of the Net
-69-
Proceeds shall be made. The Net Proceeds Deficiency deposited
with Lender shall be held by Lender and shall be disbursed for
costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section
-------
7.1.3(b) shall constitute additional security for the Debt and
--------
other obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency
deposited with Lender after the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with
the provisions of this Section 7.1.3(b), and the receipt by
----------------
Lender of evidence satisfactory to Lender that all costs incurred
in connection with the Restoration have been paid in full, shall
be remitted by Lender to Borrower, provided no Event of Default
shall have occurred and shall be continuing under the Note, this
Security Instrument or any of the Other Security Documents.
(c) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Section 7.1.3(b)(vii) may be retained and applied by Lender toward
---------------------
the payment of the Debt, without the payment of any premium or penalty in
connection with the prepayment of any portion of the principal balance of the
Loan, or, at the discretion of Lender, the same may be paid, either in whole or
in part, to Borrower for such purposes as Lender shall designate, in its
discretion. All Net Proceeds retained and applied by Lender to the Debt shall be
applied (A) first, to the payment of all interest then due and owing under the
Loan, (B) second, to the payment of all other amounts then due and owing under
the Loan and the Loan Documents and (C) third, to the outstanding principal
amount of the Loan and the reduction of the Pro rata Release Amount with respect
to the Individual Property affected by the related casualty or condemnation;
provided, however, that the application of Net Proceeds set forth in clause (C)
shall not reduce the outstanding principal balance of the Loan for purposes of
calculating the Pro rata Release Amount of any Individual Property other than
the Individual Property affected by the related casualty or condemnation. If the
Net Proceeds applied as set forth in clause (C) above exceed the Pro rata
Release Amount of the Individual Property affected by the related casualty or
condemnation, the Pro rata Release Amount of each Individual Property other than
the affected Individual Property shall be reduced by the product of (1) such
excess Net Proceeds multiplied by (2) the quotient of the Pro rata Release
Amount of such other Individual Property divided by the total Pro rata Release
Amounts of all of the Properties other than the affected Individual Property.
(d) Notwithstanding anything to the contrary contained in this
Section 7.1.3 or in Section 3.4 of the Mortgage, Borrower shall have no
-------------
obligation toundertake any Restoration except to the extent that any Net
Proceeds are made available to Borrower for such purpose.
SECTION 7.2 INTENTIONALLY OMITTED.
---------------------
-70-
SECTION 7.3 TAX AND INSURANCE ESCROW FUND
-----------------------------
7.3.1 TAX AND INSURANCE ESCROW FUND. Borrower shall pay to Lender
-----------------------------
on the tenth day of each calendar month (i)Eone-twelfth of the Taxes that Lender
estimates will be payable during the next ensuing twelveE(12) months in order to
accumulate with Lender sufficient funds to pay all such Taxes at least tenE(10)
days prior to their respective due dates, and (ii)Eone-twelfth of the Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage
afforded by the Policies with respect to all of the Properties upon the
expiration thereof in order to accumulate with Lender sufficient funds to pay
all such Insurance Premiums at least thirtyE(30) days prior to the expiration of
the Policies (said amounts in (i) and (ii) above hereinafter called the "TAX AND
-------
INSURANCE ESCROW FUND"). The Tax and Insurance Escrow Fund and the payments of
---------------------
interest or principal or both, payable pursuant to the Note, shall be added
together and shall be paid as an aggregate sum by Borrower to Lender. Lender
will maintain the Tax and Insurance Escrow Fund in a segregated account and the
Tax and Insurance Escrow Fund shall be invested and reinvested by Lender, at
Borrower's direction, in one or more Eligible Investments, subject to the
following restrictions: (A) such Eligible Investments and the proceeds thereof
shall be deemed a part of the Tax and Insurance Escrow Fund; (B) each such
Eligible Investment shall be made in the name of Lender (in its capacity as
such) or in the name of a nominee of Lender under its complete and exclusive
dominion and control or, if applicable law provides for perfection of pledges of
an instrument not evidenced by a certificate or other instrument through
registration of such pledge on books maintained by or on behalf of the issuer of
such investment, such pledge may be so registered; (C) Lender shall have the
sole control over such investment, the income thereon and the proceeds thereof;
(D) other than investments described in clause (B) above, any certificate or
other instrument evidencing such investment shall be delivered directly to
Lender or its agent; and (E) the proceeds of each investment shall be remitted
by the purchaser thereof directly to Lender. Lender will apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be
made by Borrower pursuant to Section 5.1 hereof and under the Mortgages. In
-----------
making any payment relating to the Tax and Insurance Escrow Fund, Lender may do
so according to any xxxx, statement or estimate procured from the appropriate
public office (with respect to Taxes) or insurer or agent (with respect to
Insurance Premiums), without inquiry into the accuracy of such xxxx, statement
or estimate or into the validity of any tax, assessment, sale, forfeiture, tax
lien or title or claim thereof, unless Borrower has notified Lender of
Borrower's intention to contest any such Tax in accordance with Section 5.1(b)
--------------
hereof and promptly proceeds with such contest. If the amount of the Tax and
Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Section 5.1 hereof, Lender shall, in its sole discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax and Insurance Escrow Fund. Any amount remaining in the Tax
and Insurance Escrow Fund after the Debt has been paid in full shall be returned
to Borrower. In allocating such excess, Lender may deal with the Person shown on
the records of Lender to be the owner of the Properties. If at any time Lender
-71-
reasonably determines that the Tax and Insurance Escrow Fund is not or will not
be sufficient to pay the items set forth in clauses (i) and (ii) above, Lender
shall notify Borrower of such determination and Borrower shall increase its
monthly payments to Lender by the amount that Lender estimates is sufficient to
make up the deficiency at least tenE(10) days prior to delinquency of the Taxes
and/or thirtyE(30) days prior to expiration of the Policies, as the case may be.
7.3.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges,
--------------------------
assigns and grants a security interest to Lender, as security for payment of all
sums due under the Loan and the performance of all other terms, conditions and
provisions of the Loan Documents and this Agreement on Borrower's part to be
paid and performed, of all Borrower's right, title and interest in and to the
Tax and Insurance Escrow Fund. Borrower shall not, without obtaining the prior
written consent of Lender, further pledge, assign or grant any security interest
in the Tax and Insurance Escrow Fund or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto.
7.3.3 APPLICATION OF TAX AND INSURANCE ESCROW FUND. Application
--------------------------------------------
and Insurance Escrow Fund Until expended or applied as above provided, any
amounts in the Tax and Insurance Escrow Fund shall constitute additional
security for the Debt. Upon the occurrence of an Event of Default, Lender may
apply any sums then present in the Tax and Insurance Escrow Fund to the payment
of the following items in any order in its sole discretion: (i) Taxes and Other
Charges; (ii) insurance premiums; (iii) interest on the unpaid principal balance
of the Note; (iv) amortization of the unpaid principal balance of the Note; or
(v) all other sums payable pursuant to this Agreement and the other Loan
Documents.
SECTION 7.4 INTENTIONALLY OMITTED.
---------------------
SECTION 7.5 GROUND LEASE ESCROW FUND.
------------------------
Borrower shall pay to Lender, together with the scheduled payment
of principal and interest under the Loan each month, an amount that is estimated
by Lender to be due and payable by Borrower under the Ground Lease for all rent
and any and all other charges which may be due by Borrower under the Ground
Lease in order to accumulate with Lender sufficient funds to pay all sums
payable under the Ground Lease at least ten (10) Business Days prior to the
dates due (said amounts, hereinafter called the "GROUND LEASE ESCROW FUND"). The
Ground Lease Escrow Fund is for the purpose of paying all sums due under the
Ground Lease. Upon Borrower's failure to pay any rent or other charges due under
the Ground Lease after the receipt of any notice and the expiration of any cure
period available to Borrower pursuant to the Ground Lease, Lender may, in its
discretion, apply any amounts held in the Ground Lease Escrow Fund to the
payment of such rent or other charges; provided
-72-
however, that the provisions of this Section 7.5 shall not be deemed to create
-----------
any obligation on the part of Lender to pay any such rent or other charges from
amounts on deposit in the Ground Lease Escrow Fund. Borrower hereby pledges,
assigns and grants a security interest to Lender, as security for payment of all
sums due under the Loan and the performance of all other terms, conditions and
provisions to be paid and performed, of all Borrower's right, title and interest
in and to the Ground Lease Escrow Fund. Borrower shall not, without obtaining
the prior written consent of Lender, further pledge, assign or grant any
security interest in the Ground Lease Escrow Fund or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto. Upon the occurrence of an Event of Default, Lender
may apply any sums then present in the Ground Lease Escrow Fund to the payment
of the Debt in any order in its sole discretion. Until expended or applied as
above provided, the Ground Lease Escrow Fund shall constitute additional
security for the Debt. Notwithstanding the foregoing, the Borrower shall not be
required to make monthly deposits to the Ground Lease Escrow Fund so long as on
the Closing Date and for the remainder of the Term, the Borrower has deposited
and maintains in the Ground Lease Escrow Fund sufficient amounts for the payment
of three (3) months of rent and any and all other charges under the Ground
Lease. Such initial deposit may be increased by Lender in the amount Lender
deems is necessary in its reasonable discretion based on any increases in the
rent due under the Ground Lease.
VIII. DEFAULTS
--------
SECTION 8.1 EVENT OF DEFAULT.
----------------
(a) Each of the following events shall constitute an event of
default hereunder (an "EVENT OF DEFAULT"):
----------------
(i) if any payment of principal or interest under the Loan is
not paid when due or if any other amount payable under the Loan, this Agreement
or the other Loan Documents is not paid within (5) days after written notice to
Borrower from Lender;
(ii) if any of the Taxes or Other Charges are not paid prior
to the same becoming delinquent or the imposition of any penalty with respect to
the payment of such Taxes or Other Charges, subject to Borrower's right to
contest Taxes or Other Charges in accordance with the terms and provisions of
Section 5.1(b);
--------------
(iii) if the Policies are not kept in full force and effect;
(iv) except as permitted in the Mortgages, if any Individual
Borrower transfers or encumbers any portion of the Properties without Lender's
prior written consent;
(v) if any representation or warranty made by Borrower, any
Individual Borrower or any general partner of any Individual Borrower herein or
in any other Loan Document, or in any report, certificate, financial statement
or other instrument, agreement or document furnished by Borrower or any
Individual Borrower to Lender shall have been false
-73-
or misleading in any material respect as of the date the representation or
warranty was made; provided, however, that in the case of any such
representation or warranty that is susceptible of cure, if such representation
or warranty shall remain uncured for thirty (30) days after written notice to
Borrower from Lender or, in the case of any such representation or warranty that
is susceptible of cure but cannot reasonably be cured within such 30-day period
and Borrower shall have commenced to cure such representation or warranty within
such 30-day period and thereafter diligently and expeditiously proceeds to cure
the same, such 30-day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such
representation or warranty, such additional period not to exceed one hundred
eighty (180) days;
(vi) if any Individual Borrower shall make an assignment for
the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed
for any Individual Borrower or any general partner of any Individual Borrower or
if any Individual Borrower or any general partner of any Individual Borrower
shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, any Individual Borrower or any general partner of any Individual
Borrower, or if any proceeding for the dissolution or liquidation of any
Individual Borrower or any general partner of any Individual Borrower shall be
instituted; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by any Individual Borrower or
any general partner of any Individual Borrower, upon the same not being
discharged, stayed or dismissed within one hundred twenty (120) days;
(viii) if any Individual Borrower attempts to assign its rights
under this Agreement or any of the other Loan Documents or any interest herein
or therein in contravention of the Loan Documents;
(ix) if Borrower or any Individual Borrower breaches any of
its respective negative covenants contained in Section 6.1(c), (e), (h) or (k)
-------------------------------
or any other negative covenant contained in Section 6.1 that is not susceptible
-----------
of cure or any covenant contained in Section 4.1(ee) hereof;
--------------
(x) with respect to any term, covenant or provision set
forth herein which specifically contains a notice requirement or grace period,
if Borrower or any Individual Borrower shall be in default under such term,
covenant or condition after the giving of such notice or the expiration of such
grace period;
(xi) if a default on the part of any Individual Borrower
shall have occurred under the Ground Lease and continued beyond any applicable
notice and grace period;
(xii) if Borrower or any Individual Borrower shall continue to
be in Default under any of the other terms, covenants or conditions of this
Agreement not specified in subsections (i) to (xi) above, for ten (10) days
after notice to Borrower from Lender, in the
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case of any Default which can be cured by the payment of a sum of money, or for
thirty (30) days after written notice from Lender in the case of any other
Default; provided, however, that if such non-monetary Default is susceptible of
cure but cannot reasonably be cured within such 30-day period and provided
further that Borrower shall have commenced to cure such Default within such 30-
day period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed one hundred eighty (180) days; or
(xiii) if there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
whether as to Borrower, any Individual Borrower or any of the Properties, or if
any other such event shall occur or condition shall exist, if the effect of such
event or condition is to accelerate the maturity of any portion of the Debt or
to permit Lender to accelerate the maturity of all or any portion of the Debt.
(b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower or any Individual
Borrower and in and to all or any of the Properties, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower or any Individual Borrower and any or all of the
Properties, including, without limitation, all rights or remedies available at
law or in equity; and upon any Event of Default described in clauses (vi), (vii)
or (viii) above, the Debt and all other obligations of Borrower hereunder and
under the other Loan Documents shall immediately and automatically become due
and payable, without notice or demand, and Borrower hereby expressly waives any
such notice or demand, anything contained herein or in any other Loan Document
to the contrary notwithstanding.
(c) The parties hereto acknowledge that a Default or an Event
of Default arising solely from a Non-Curable Property Default shall no longer
exist upon the release of the Individual Property affected by such Non-Curable
Property Default from the Lien of the Mortgage thereon (and related Loan
Documents) pursuant to Section 2.4.2 or Section 2.7.
----------------------------
SECTION 8.2 REMEDIES.
--------
(a) Upon the occurrence and during the continuance of an
Event of Default, all or any one or more of the rights, powers, privileges and
other remedies available to Lender against Borrower under this Agreement or any
of the other Loan Documents executed and delivered by, or applicable to,
Borrower at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with
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respect to all or any of the Properties. Any such actions taken by Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing (i) Lender is not subject to any "one
action" or "election of remedies" law or rule, (ii) all liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against the Properties and each
Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full, and (iii) to the
extent permitted by applicable law, Borrower hereby waives any and all rights it
may have by statute to assert that Lender is not entitled to any additional
recovery from the Properties because Lender has not claimed a deficiency within
the time prescribed by such statute or otherwise failed to meet the procedural
requirement for claiming a deficiency judgment.
(b) With respect to Borrower and the Properties, nothing
contained herein or in any other Loan Document shall be construed as requiring
Lender to resort to any Individual Property for the satisfaction of any of the
Debt in preference or priority to any other Individual Property, and Lender may
seek satisfaction out of all of the Properties or any part thereof, in its
absolute discretion in respect of the Debt. In addition, Lender shall have the
right from time to time to partially foreclose the Mortgages in any manner and
for any amounts secured by the Mortgages then due and payable as determined by
Lender in its sole discretion including, without limitation, the following
circumstances: (i) in the event Borrower defaults beyond any applicable grace
period in the payment of one or more scheduled payments of principal and
interest, Lender may foreclose one or more of the Mortgages to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may foreclose one
or more of the Mortgages to recover so much of the principal balance of the Loan
as Lender may accelerate and such other sums secured by one or more of the
Mortgages as Lender may elect. Notwithstanding one or more partial foreclosures,
the Properties shall remain subject to the Mortgages to secure payment of sums
secured by the Mortgages and not previously recovered.
(c) Lender sh all have the right from time to time to sever
the Note and the other Loan Documents into one or more separate notes, mortgages
and other security documents (the "SEVERED LOAN DOCUMENTS") in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
shall not be obligated to pay any costs or expenses incurred in connection with
the preparation, execution, recording or filing of the Severed Loan Documents
and the Severed Loan Documents shall not contain any representations, warranties
or covenants not contained in the Loan Documents and any such representations
and warranties contained in the Severed Loan Documents will be given
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Borrower only as of the Closing Date.
SECTION 8.3 REMEDIES CUMULATIVE.
-------------------
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or any Individual Borrower pursuant to this Agreement
or the other Loan Documents, or existing at law or in equity or otherwise.
Lender's rights, powers and remedies may be pursued singly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's
sole discretion. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy, right or power
may be exercised from time to time and as often as may be deemed expedient. A
waiver of one Default or Event of Default with respect to Borrower or any
Individual Borrower shall not be construed to be a waiver of any subsequent
Default or Event of Default by Borrower or any Individual Borrower or to impair
any remedy, right or power consequent thereon.
IX. SPECIAL PROVISIONS
------------------
SECTION 9.1 SALE OF NOTES AND SECURITIZATION.
--------------------------------
Lender shall have the right to sell, assign or otherwise transfer the
Loan or any portion thereof or interest therein held by Lender or sell the Note
or participations therein in connection with a public or private securitization
(such sale and/or securitization, the "SECURITIZATION") or otherwise, without
--------------
the consent of Borrower or the satisfaction of any other requirement with
respect to Borrower, provided that Lender or an Affiliate of Lender shall
continue to act as lead lender following any such sale, assignment or transfer
and Borrower shall not be required to deal directly with any Person holding an
interest in the Loan other than Lender, an Affiliate of Lender or Servicer with
respect to the Loan or under this Agreement or the other Loan Documents. All
third party costs and expenses incurred by Lender in connection with the
Securitization or other sale or transfer of the Loan and all reasonable third
party costs and expenses incurred by Borrower in connection with the
Securitization or other sale or transfer of the Loan shall be paid by Lender.
Unless and until the Securitization has occurred, all references to the
Securitization and/or the Rating Agencies contained in this Agreement and the
other Loan Documents shall be deemed to be inapplicable.
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SECTION 9.2 INTENTIONALLY OMITTED.
---------------------
SECTION 9.3 INTENTIONALLY OMITTED.
---------------------
SECTION 9.4 EXCULPATION.
-----------
9.4.1 EXCULPATION. Except as otherwise provided, Lender shall not
-----------
enforce the liability and obligation of Borrower or any Individual Borrower to
perform and observe the obligations contained in the Note, this Agreement or any
other Loan Document by any action or proceeding wherein a money judgment shall
be sought against Borrower or any Individual Borrower, except that Lender may
bring a foreclosure action, action for specific performance or other appropriate
action or proceeding to enable Lender to enforce and realize upon the Mortgages
or any other Loan Document, and the interest in the Properties, the Rents and
any other collateral given to Lender created by the Loan Documents; provided,
however, that any judgment in any action or proceeding shall be enforceable
against Borrower or any Individual Borrower only to the extent of Borrower's or
any such Individual Borrower's interest in the Properties, in the Rents and in
any other collateral given to Lender. Lender, by accepting the Note and this
Agreement, agrees that it shall not, except as otherwise provided in Section
7.10 of the Mortgages, xxx for, seek or demand any deficiency judgment against
Borrower, any Individual Borrower, their respective partners or any officer,
employee or director of any partner of Borrower or such Individual Borrower in
any action or proceeding, under or by reason of or under or in connection with
the Note, this Agreement or the other Loan Documents.
9.4.2 RESERVATION OF CERTAIN RIGHTS. The provisions of Section 9.4.1
----------------------------- -------------
shall not (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by the Note, this Agreement or the other Loan Documents;
(b) impair the right of Lender to name Borrower or any Individual Borrower as a
party defendant in any action or suit for judicial foreclosure and sale under
the Mortgages; (c) affect the validity or enforceability of any indemnity,
guaranty, master lease or similar instrument made in connection with the Note,
this Agreement or the other Loan Documents; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) impair the enforcement of the
Assignments of Leases and Rents executed in connection herewith; (f) impair the
right of Lender to obtain a deficiency judgment or judgment on the Note against
Borrower or any Individual Borrower if necessary to obtain any insurance
proceeds or condemnation awards to which Lender would be otherwise entitled
under this Agreement; provided, however, Lender shall only enforce such judgment
against the proceeds and/or condemnation awards; or (g) impair the right of
Lender to enforce the provisions of Sections 7.10, 9.2, 9.3 and 9.4 of the
Mortgages.
9.4.3 EXCEPTIONS TO EXCULPATION. Notwithstanding the provisions of
-------------------------
this Section 9.4 to the contrary, Borrower and each Individual Borrower shall be
-----------
personally and jointly and severally liable to Lender for the losses
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it incurs due to: (i) fraud or intentional misrepresentation by Borrower or any
Individual Borrower in connection with the Loan; (ii) Borrower's misapplication
or misappropriation of Rents received by Borrower after the occurrence of an
Event of Default; (iii) Borrower's or any Individual Borrower's misappropriation
of tenant security deposits or Rents collected more than thirty (30) days in
advance of when due under the applicable Lease; (iv) the misapplication or the
misappropriation of insurance proceeds or condemnation awards; (v) Borrower's
failure to comply with the provisions of Section 6.1(k) or (vi) the breach of
-------------
any provision in the Environmental Indemnity or Sections 8.1 or 8.2 of the
Mortgages or any related indemnification.
9.4.4 BANKRUPTCY CLAIMS. Nothing herein shall be deemed to be a
-----------------
waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b)
or any other provisions of the Bankruptcy Code to file a claim for the full
amount of the Debt or to require that all collateral shall continue to secure
all of the Debt owing to Lender in accordance with the Note, this Agreement and
the other Loan Documents.
SECTION 9.5 INTENTIONALLY OMITTED.
---------------------
SECTION 9.6 SERVICER.
--------
At the option of Lender, the Loan may be serviced, at Lender's
expense, by a servicer and one or more special servicer (collectively, the
"SERVICER") selected by Lender and Lender may delegate all or any portion of its
---------
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to one or more servicing agreements (collectively, the
"SERVICING AGREEMENT") between Lender and Servicer. Lender will deliver, or
--------------------
cause Servicer to deliver, to Borrower a copy of the monthly servicing report
prepared by Servicer with respect to the Loan.
SECTION 9.7 PARTICIPATION. This Loan is subject to the right of
-------------
Borrower and Xxxxxxxx Properties Acquisition Partners, L.P. to purchase one or
more participation interests (each, a "PARTICIPATION") pursuant to that certain
letter agreement dated as of the date hereof between Borrower and Lender.
X. MISCELLANEOUS
-------------
SECTION 10.1 SURVIVAL
--------
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the
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legal representatives, successors and assigns of Lender.
SECTION 10.2 LENDER'S DISCRETION.
-------------------
Whenever pursuant to this Agreement or any other Loan Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
SECTION 10.3 GOVERNING LAW.
-------------
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE
BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
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 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 LIENS AND SECURITY INTERESTS CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS WITH RESPECT TO THE REAL
PROPERTY SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN
WHICH THE APPLICABLE INDIVIDUAL 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 AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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(B) TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY LEGAL SUIT, ACTION
OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
XXX XXXX XX XXX XXXX, XXXXXX XX XXX XXXX, PURSUANT TO SECTION 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY
NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT CT CORPORATION SYSTEMS AT 0000 XXXXXXXX, XXX XXXX,
XXX XXXX 00000 AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT
AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR. SOLELY AS A COURTESY TO BORROWER, LENDER WILL USE
REASONABLE EFFORTS TO DELIVER A COPY OF ANY PROCESS SERVED UPON SAID AGENT TO
BORROWER AT BORROWER'S ADDRESSES SET FORTH IN SECTION 10.6, PROVIDED THAT ANY
------------
FAILURE ON THE PART OF LENDER TO SO DELIVER ANY SUCH COPY SHALL IN NO MANNER
LIMIT THE EFFECTIVENESS OF ANY PROCESS SERVED UPON SAID AGENT.
SECTION 10.4 MODIFICATION, WAIVER IN WRITING
-------------------------------
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other
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circumstances.
SECTION 10.5 DELAY NOT A WAIVER
------------------
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
SECTION 10.6 NOTICES.
-------
All notices or other written communications hereunder or under any
other Loan Document shall be deemed to have been properly given, if in writing
(i) upon delivery, if delivered in person or by facsimile transmission with
receipt acknowledged by the recipient thereof, (ii) one (1) Business Day after
having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Borrower: Xxxxxxxx Properties Natomas, L.P.,
Xxxxxxxx Properties Corporetum, L.P.,
Xxxxxxxx Properties Seven Mile, L.P. and
Xxxxxxxx Properties Gateway II, L.P.
0000 Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. August and Mr. Xxxx
Xxxxx
Facsimile No. (000) 000-0000
With a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No. (000) 000-0000
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If to Lender: Xxxxxx Brothers Realty Corporation
Three World Financial Center
New York, New York 10281
Attention: Mr. Xxxxxxx XxXxxxx
Facsimile No. (000) 000-0000
With a copy to: Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxxxxxxx Xxxxx, Esq.
Facsimile No. (000) 000-0000
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
SECTION 10.7 TRIAL BY JURY.
-------------
TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY AGREES NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY BORROWER.
SECTION 10.8 HEADINGS.
--------
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 10.9 SEVERABILITY.
------------
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
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SECTION 10.10 WAIVER OF NOTICE.
----------------
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
SECTION 10.11 REMEDIES OF BORROWER.
--------------------
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
SECTION 10.12 EXPENSES; INDEMNITY.
-------------------
(a) Borrower covenants and agrees to pay, or if Borrower fails to pay
to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Lender in connection with (i) Borrower's ongoing
performance of and compliance with Borrower's agreements and covenants contained
in this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements, other than any such
costs and expenses incurred in connection with the Securitization or other sale
or transfer of the Loan; (ii) Lender's ongoing performance and compliance with
all agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
other than (x) any such costs and expenses incurred in connection with the
Securitization or other sale or transfer of the Loan, (y) any fees payable to
the Servicer or (z) any amounts payable to the Rating Agencies in connection
with any rating surveillance services on any certificates issued in a
Securitization; (iii) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Lender; (iv) the filing and recording fees and expenses, title
insurance premiums and reasonable fees and expenses of counsel for providing to
Lender
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all required legal opinions, and other similar expenses incurred in creating,
perfecting and insuring the Liens in favor of Lender pursuant to this Agreement
and the other Loan Documents; (v) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Properties, or any other
security given for the Loan; and (vi) enforcing any obligations of or collecting
any payments due from Borrower under this Agreement, the other Loan Documents or
with respect to the Properties or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender.
(b) Borrower shall indemnify, defend and hold harmless Lender from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against Lender in any manner relating to or arising
out of (i) any breach by Borrower of its material obligations under, or any
material misrepresentation by Borrower contained in, this Agreement or the other
Loan Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
-----------------------
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender.
SECTION 10.13 EXHIBITS AND SCHEDULES INCORPORATED.
---------------------------------------
The Exhibits and Schedules annexed hereto are hereby incorporated
herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
SECTION 10.14 NO JOINT VENTURE OR PARTNERSHIP;
NO THIRD PARTY BENEFICIARIES
----------------------------
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Properties other than that of
mortgagee or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and the Borrower and nothing contained in this Agreement or
the other Loan
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Documents shall be deemed to confer upon anyone other than the Lender and the
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
SECTION 10.15 PUBLICITY.
---------
All news releases, publicity or advertising by Borrower or their
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to the
Lender, Xxxxxx, or any of their Affiliates shall be subject to the prior written
approval of Lender, which approval shall not be unreasonably withheld.
SECTION 10.16 CROSS-DEFAULT; CROSS-COLLATERALIZATION;
WAIVER OF MARSHALLING OF ASSETS.
-------------------------------
(a) The Borrower acknowledges that Lender has made the Loan to the
Borrower upon the security of its collective interest in the Properties and in
reliance upon the aggregate of the Properties taken together being of greater
value as collateral security than the sum of the Properties taken separately.
The 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 each of the other Mortgages
which secure the Note; (ii) an Event of Default under the Note or this Loan
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 Properties as security for the Note.
(b) To the fullest extent permitted by law, Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Mortgages, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
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Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Mortgages, any equitable right otherwise
available to the Borrower which would require the separate sale of the
Properties or require Lender to exhaust its remedies against any Individual
Property or any combination of the Properties before proceeding against any
other Individual Property or combination of Properties; and further in the event
of such foreclosure the Borrower does hereby expressly consents to and
authorizes, at the option of the Lender, the foreclosure and sale either
separately or together of any combination of the Properties.
SECTION 10.17 WAIVER OF COUNTERCLAIM.
----------------------
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.
SECTION 10.18 CONFLICT; CONSTRUCTION OF DOCUMENTS;
------------------------------------
In the event of any conflict between the provisions of this Loan
Agreement and any of the other Loan Documents, the provisions of this Loan
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Borrower acknowledges that, with respect to the Loan, Borrower
shall rely solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Lender's exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of the Borrower or its affiliates.
SECTION 10.19 BROKERS AND FINANCIAL ADVISORS.
------------------------------
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower and
Lender hereby agree to indemnify and hold the other harmless from and against
any and all claims, liabilities, costs and expenses of any kind in any way
relating to or arising from a claim by any Person that such Person acted on
behalf of the indemnifying party in connection with the transactions
contemplated herein. The
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provisions of this Section 10.19 shall survive the expiration and termination of
-------------
this Agreement and the payment of the Debt.
SECTION 10.20 PRIOR AGREEMENTS.
----------------
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written are superseded by the terms of this Agreement
and the other Loan Documents.
SECTION 10.21 JOINT AND SEVERAL LIABILITY.
---------------------------
If Borrower consists of more than one Person, the obligations and
liabilities of each such Person pursuant to this Agreement and the other Loan
Documents shall be joint and several.
SECTION 10.20 WAIVER OF CERTAIN RIGHTS AND DEFENSES UNDER
-------------------------------------------
CALIFORNIA LAW.
--------------
Each Individual Borrower hereby agrees that (a)Ethe terms and
provisions of this Loan Agreement shall remain in full force and effect and each
of the Mortgages shall remain in full force and effect until such Mortgage is
released in accordance with the Loan Documents notwithstanding (i)Eany
modification of any Mortgage by an Individual Borrower whether material or
otherwise; (ii)Eany release of any Individual Borrower from any liability with
respect to the Loan; or (iii)Eany release or subordination of any real or
personal property now or hereafter held by Lender as security for the
performance of the Loan; (b)Eeach Individual Borrower expressly waives any and
all benefits which might otherwise be available to it under California Civil
Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850, 2899 and 3433; and
(c)Eeach Individual Borrower hereby waives any and all defenses, including,
without limitation, such Individual Borrower's defense of estoppel discussed in
Union Bank vs. Gradsky, 265 Cal.App.2d 40 (1968), based upon a foreclosure
----------------------
against all or any part of the real property security for the indebtedness
evidenced by the Note pursuant to the power of sale contained in any of the
Mortgages as opposed to proceeding by way of judicial foreclosure. Each
Individual Borrower waives all rights and defenses arising out of an election of
remedies by Lender (including, without limitation, the election of a nonjudicial
foreclosure with respect to security for a guaranteed obligation) that has
destroyed such Individual Borrower's rights of subrogation and reimbursement
against the other Individual Borrowers by the operation of Section 580d of the
California Code of Civil Procedure or otherwise. Each Individual Borrower
acknowledges that the provisions of this Section 10.22 are intended to
constitute a waiver of any rights and defenses each Individual Borrower may now
or hereafter have as a "guarantor" to the extent the Mortgage executed by such
Individual Borrower is construed to be in whole or in part a guaranty of the
other Individual Borrowers' obligations under the Loan Documents.
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SECTION 10.23 COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, each of
which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement.
SECTION 10.24 EFFECTIVENESS OF LOAN DOCUMENTS
-------------------------------
This Agreement and each of the other Loan Documents shall not be
effective until a duplicate original executed by the parties thereto is
delivered to Lender at its address at Three World Financial Center, New York,
New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
XXXXXXXX PROPERTIES NATOMAS, L.P.,
a Delaware limited partnership
By: Xxxxxxxx Properties, L.L.C.,
a Delaware limited liability company,
general partner
By: Xxxxxxxx Properties Acquisition
Partners, L.P.,
a Delaware limited partnership,
managing member
By: Xxxxxxxx Properties I, Inc.,
a Delaware corporation,
general partner
By:___________________________
Name:
Title:
XXXXXXXX PROPERTIES CORPORETUM, L.P.,
a Delaware limited partnership
By: Xxxxxxxx Properties, L.L.C.,
a Delaware limited liability company,
general partner
By: Xxxxxxxx Properties Acquisition
Partners, L.P.,
a Delaware limited partnership,
managing member
By: Xxxxxxxx Properties I, Inc.,
a Delaware corporation,
general partner
By:___________________________
Name:
Title:
XXXXXXXX PROPERTIES SEVEN MILE, L.P.,
a Delaware limited partnership
By: Xxxxxxxx Properties, L.L.C.,
a Delaware limited liability company,
general partner
By: Xxxxxxxx Properties Acquisition
Partners, L.P.,
a Delaware limited partnership,
managing member
By: Xxxxxxxx Properties I, Inc.,
a Delaware corporation,
general partner
By:_____________________________
Name:
Title:
XXXXXXXX PROPERTIES GATEWAY II, L.P.,
a Delaware limited partnership
By: Xxxxxxxx Properties, L.L.C.,
a Delaware limited liability company,
general partner
By: Xxxxxxxx Properties Acquisition
Partners, L.P.,
a Delaware limited partnership,
managing member
By: Xxxxxxxx Properties I, Inc.,
a Delaware corporation,
general partner
By:_____________________________
Name:
Title:
XXXXXX BROTHERS REALTY CORPORATION
By:______________________________
Name:
Title:
SCHEDULE I
----------
LIST OF PROPERTIES AND RELEASE AMOUNTS
PROPERTY RELEASE AMOUNT
-------- --------------
Natomas Corporate Center, $51,900,000
Sacramento, CA
SCH I-1
SCHEDULE II
-----------
LIST OF ADDITIONAL PROPERTIES
PROPERTY
--------
Corporetum, Lisle, IL
Seven Mile Crossing, Livonia, MI
SCH II-1
SCHEDULE III
------------
LITIGATION
None.
SCH III-1
SCHEDULE IV
-----------
FORM OF ESTOPPEL CERTIFICATE
SCH IV-1
SCHEDULE V
----------
FORM OF SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
SCH V-1
SCHEDULE VI
-----------
LEASES WITHOUT PROVISIONS FOR
SUBORDINATION OR ATTORNMENT
SCH VI-1
