Loan No. 1285TZL
LOAN AGREEMENT
by and among
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
a California limited partnership
and
MONTROSE OFFICE PARK JOINT VENTURE,
a Maryland joint venture
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION
Executed as of December 13, 1996
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . .1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . .1
1.2 Exhibits and Schedules Incorporated. . . . . . . . . .6
ARTICLE II. LOAN . . . . . . . . . . . . . . . . . . . . . . . .6
2.1 Loan . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2 Loan Documents . . . . . . . . . . . . . . . . . . . .6
2.3 Effective Date . . . . . . . . . . . . . . . . . . . .6
2.4 Maturity Date. . . . . . . . . . . . . . . . . . . . .7
2.5 Credit for Principal Payments. . . . . . . . . . . . .7
2.6 Full Repayment and Reconveyance. . . . . . . . . . . .7
2.7 Voluntary Prepayment . . . . . . . . . . . . . . . . .7
2.8 . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Limitation on Partners' Liability . . . . . . . . . . . . .7
ARTICLE III. DISBURSEMENT . . . . . . . . . . . . . . . . . . .9
3.1 Conditions Precedent . . . . . . . . . . . . . . . . .9
3.2 Disbursement of the Loan . . . . . . . . . . . . . . 10
ARTICLE IV. INSURANCE . . . . . . . . . . . . . . . . . . . . 10
4.1 Property Insurance . . . . . . . . . . . . . . . . . 10
4.2 Flood Hazard Insurance . . . . . . . . . . . . . . . 10
4.3 Liability Insurance. . . . . . . . . . . . . . . . . 10
4.4 General. . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Flood Zone Notification. . . . . . . . . . . . . . . 11
ARTICLE V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 11
5.1 Authority/Enforceability . . . . . . . . . . . . . . 11
5.2 Binding Obligations. . . . . . . . . . . . . . . . . 11
5.3 Formation and Organizational Documents . . . . . . . 11
5.4 No Violation . . . . . . . . . . . . . . . . . . . . 11
5.5 Compliance with Laws . . . . . . . . . . . . . . . . 12
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . 12
5.7 Financial Condition. . . . . . . . . . . . . . . . . 12
5.8 No Material Adverse Change . . . . . . . . . . . . . 12
5.9 Accuracy . . . . . . . . . . . . . . . . . . . . . . 12
5.10 Tax Liability . . . . . . . . . . . . . . . . . . . 12
5.11 No Defaults . . . . . . . . . . . . . . . . . . . . 13
5.12 Management Agreements . . . . . . . . . . . . . . . 13
5.13 Chief Executive Office. . . . . . . . . . . . . . . 13
5.14 Ownership Structure . . . . . . . . . . . . . . . . 13
5.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . 13
5.16 Leases. . . . . . . . . . . . . . . . . . . . . . . 14
5.17 Equipment Leases. . . . . . . . . . . . . . . . . . 14
5.18 Required Permits. . . . . . . . . . . . . . . . . . 15
ARTICLE VI. HAZARDOUS MATERIALS . . . . . . . . . . . . . . . 15
6.1 Special Representations and Warranties . . . . . . . 15
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(a) Hazardous Materials . . . . . . . . . . . . . . 16
(b) Hazardous Materials Laws. . . . . . . . . . . . 16
(c) Hazardous Materials Claims. . . . . . . . . . . 16
6.2 Hazardous Materials Covenants. . . . . . . . . . . . 16
(a) No Hazardous Activities . . . . . . . . . . . . 16
(b) Compliance. . . . . . . . . . . . . . . . . . . 17
(c) Notices . . . . . . . . . . . . . . . . . . . . 17
(d) Remedial Action . . . . . . . . . . . . . . . . 17
6.3 Inspection By Lender . . . . . . . . . . . . . . . . 17
6.4 Hazardous Materials Indemnity. . . . . . . . . . . . 17
6.5 Legal Effect of Section. . . . . . . . . . . . . . . 18
ARTICLE VII. COVENANTS OF BORROWERS . . . . . . . . . . . . . 18
7.1 Expenses . . . . . . . . . . . . . . . . . . . . . . 18
7.2 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Liens. . . . . . . . . . . . . . . . . . . . . . . . 19
7.4 Indebtedness . . . . . . . . . . . . . . . . . . . . 21
7.5 Conduct of Business. . . . . . . . . . . . . . . . . 21
7.6 Performance by Third Parties . . . . . . . . . . . . 21
7.7 Distributions to Partners and Affiliates . . . . . . 21
7.8 Leases . . . . . . . . . . . . . . . . . . . . . . . 22
7.9 Management Agreements. . . . . . . . . . . . . . . . 22
7.10 Insurance and Condemnation Proceeds . . . . . . . . 22
7.11 Use of the Property . . . . . . . . . . . . . . . . 23
7.12 ADA Compliance. . . . . . . . . . . . . . . . . . . 24
7.13 Required Notices. . . . . . . . . . . . . . . . . . 24
7.14 Chief Executive Office. . . . . . . . . . . . . . . 24
7.15 Ownership Structure . . . . . . . . . . . . . . . . 24
7.16 . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Further Assurances. . . . . . . . . . . . . . . . . . . . 24
7.17 Assignment. . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII. REPORTING COVENANTS . . . . . . . . . . . . . . 25
8.1 Financial Information. . . . . . . . . . . . . . . . 25
8.2 Operating Budgets. . . . . . . . . . . . . . . . . . 26
8.3 Books and Records. . . . . . . . . . . . . . . . . . 26
ARTICLE IX. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . 26
9.1 Default. . . . . . . . . . . . . . . . . . . . . . . 26
(a) Monetary. . . . . . . . . . . . . . . . . . . . 26
(b) Performance of Obligations. . . . . . . . . . . 27
(c) Attachment. . . . . . . . . . . . . . . . . . . 27
(d) Representations and Warranties. . . . . . . . . 27
(e) Voluntary Bankruptcy; Insolvency; Dissolution . 27
(f) Involuntary Bankruptcy. . . . . . . . . . . . . 28
(g) Partners and Guarantors . . . . . . . . . . . . 28
(h) Loss of Priority. . . . . . . . . . . . . . . . 28
(i) Change in Control . . . . . . . . . . . . . . . 28
(j) Due on Sale . . . . . . . . . . . . . . . . . . 28
(k) Benefit Plans . . . . . . . . . . . . . . . . . 29
(l) ERISA . . . . . . . . . . . . . . . . . . . . . 29
(m) Additional Defaults . . . . . . . . . . . . . . 29
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9.2 Acceleration Upon Default; Remedies. . . . . . . . . 29
9.3 Disbursements to Third Parties . . . . . . . . . . . 30
9.4 Repayment of Funds Advanced. . . . . . . . . . . . . 30
9.5 Rights Cumulative, No Waiver . . . . . . . . . . . . 30
ARTICLE X. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . 30
10.1 Indemnity . . . . . . . . . . . . . . . . . . . . . 30
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Attorney-in-Fact. . . . . . . . . . . . . . . . . . 31
10.4 Actions . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Relationship of Parties . . . . . . . . . . . . . . 32
10.6 Delay Outside Lender's Control. . . . . . . . . . . 32
10.7 Attorneys' and Paralegals' Fees and Expenses;
Enforcement. . . . . . . . . . . . . . . . . . . . . 32
10.8 Immediately Available Funds . . . . . . . . . . . . 32
10.9 Lender's Consent. . . . . . . . . . . . . . . . . . 32
10.10 Loan Sales and Participations; Disclosure of
Information. . . . . . . . . . . . . . . . . . . . . 33
10.11 Lender's Agents. . . . . . . . . . . . . . . . . . 33
10.12 . . . . . . . . . . . . . . . . . . . . . . . . . 33
WAIVER OF RIGHT TO TRIAL BY JURY. . . . . . . . . . . . . 33
10.13 Severability . . . . . . . . . . . . . . . . . . . 34
10.14 Successors and Assigns . . . . . . . . . . . . . . 34
10.15 Time . . . . . . . . . . . . . . . . . . . . . . . 34
10.16 Headings . . . . . . . . . . . . . . . . . . . . . 34
10.17 Governing Law. . . . . . . . . . . . . . . . . . . 34
10.18 Integration; Interpretation. . . . . . . . . . . . 35
10.19 Counterparts . . . . . . . . . . . . . . . . . . . 35
10.20 Joint and Several Liability. . . . . . . . . . . . 35
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EXHIBITS AND SCHEDULES
EXHIBIT A - LEGAL DESCRIPTION OF THE GATEWAY PROPERTY
EXHIBIT B - LEGAL DESCRIPTION OF THE PARK PLAZA PROPERTY
EXHIBIT C - LEGAL DESCRIPTION OF THE MEMPHIS PROPERTY
EXHIBIT D - LEGAL DESCRIPTION OF THE SEATTLE PROPERTY
EXHIBIT E - LEGAL DESCRIPTION OF THE ROCKVILLE PROPERTY
EXHIBIT F - DOCUMENTS
EXHIBIT G - OWNERSHIP STRUCTURE
EXHIBIT H - LEASES
EXHIBIT I - EQUIPMENT LEASES
EXHIBIT J - REQUIRED PERMITS
SCHEDULE 5.6 - LITIGATION
SCHEDULE 6.1 - HAZARDOUS MATERIALS
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is executed as of
December 13, 1996, by and among PRUDENTIAL-BACHE/EQUITEC
REAL ESTATE PARTNERSHIP, a California limited partnership
("Borrower A") and MONTROSE OFFICE PARK JOINT VENTURE, a
Maryland joint venture ("Borrower B"; Borrower A and
Borrower B are hereinafter sometimes collectively referred
to as "Borrowers" and each individually as a "Borrower"),
and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Lender").
RECITALS
A. Borrower A owns the property commonly known as the
Gateway Building, Sacramento, California and described on
Exhibit A attached hereto and made a part hereof (the
"Gateway Property").
B. Borrower A owns the property commonly known as Park
Plaza, Sacramento, California and described on Exhibit B
attached hereto and made a part hereof (the "Park Plaza
Property").
C. Borrower A owns the property commonly known as
Poplar Towers, Memphis, Tennessee and described on Exhibit C
attached hereto and made a part hereof (the "Memphis
Property").
D. Borrower A owns the property commonly known as
Totem Valley, Seattle, Washington and described on Exhibit D
attached hereto and made a part hereof (the "Seattle
Property").
E. Borrower B owns the property commonly known as the
Montrose Office Building, Rockville, Maryland and described
on Exhibit E attached hereto and made a part hereof (the
"Rockville Property").
F. Borrowers desire to borrow from Lender, and Lender
agrees to loan to Borrowers, the amounts described below.
NOW, THEREFORE, Borrowers and Lender hereby agree as
follows:
ARTICLE I. DEFINITIONS
1.1 Defined Terms. The following capitalized terms
used in this Agreement shall have the meanings defined or
referenced below. Certain other capitalized terms used only
in specific sections of this Agreement are defined in such
sections.
"ADA" - means the Americans with Disabilities Act, 42 U.S.C.
S 12101, et. seq. as hereinafter amended or modified.
"Affiliate" - means, as applied to any person or entity, any
other person or entity directly or indirectly controlling,
controlled by, or under common control with, that person or
entity. For purposes of this definition, "control"
(including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control
with"), as applied to any person or entity, means (i) the
possession, directly or indirectly, of the power to vote 5%
or more of the stock, voting trust certificates or other
securities having voting power for the election of directors
of such person or entity, (ii) the status of a general
partner of a general or limited partnership, (iii) the
status of member of a limited liability company, or (iv) the
possession of the power to otherwise direct or cause the
direction of the management and policies of that person or
entity, whether through the ownership of voting stock,
voting trust certificates or other securities or of
partnership interests or by contract or otherwise.
"Agreement" - means this Agreement, as it may hereafter be
amended, supplemented, restated, replaced or modified from
time to time.
"Bankruptcy Code" - means the Bankruptcy Reform Act of 1978
(11 USC S 101-1330) as hereinafter amended or recodified.
"Benefit Plan" - means a "defined benefit plan" as defined
in Section 3(35) of ERISA, and any other "pension plan" as
defined in Section 3(2) of ERISA, subject to Section 302 of
ERISA.
"Borrower A" - means Prudential-Bache/Equitec Real Estate
Partnership, a California limited partnership.
"Borrower B" - means Montrose Office Park Joint Venture, a
Maryland joint venture.
"Borrowers" - means (a) collectively, Borrower A and
Borrower B and (b) individually, either one of the foregoing
entities.
"Business Day" - means a day of the week (but not a
Saturday, Sunday or holiday) on which the offices of Lender
are open to the public for carrying on substantially all of
Lender's business functions. Unless specifically referenced
in this Agreement as a Business Day, all references to
"days" shall be to calendar days.
"Code" - means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, any
successor statute and any regulations or guidance
promulgated thereunder.
2
"Default" - shall have the meaning ascribed to such term in
Section 9.1.
"Distributions" - shall have the meaning ascribed to such
term in Section 7.7.
"Effective Date" - means the date the Loan (or any part
thereof) is disbursed to Borrowers or as Borrowers may
otherwise direct.
"Equipment Leases" - shall have the meaning ascribed to such
term in Section 5.17.
"ERISA" - means the Employee Retirement Income Security Act
of 1974, as amended to the date hereof and from time to time
hereafter, any successor statute and any applicable
regulations or guidance promulgated thereunder.
"ERISA Affiliate" - means (i) any corporation which is or
was a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as
Borrowers or either one of them; (ii) a partnership or other
trade or business (whether or not incorporated) which is or
was under common control (within the meaning of Section
414(c) of the Code) with Borrowers or either one of them;
and (iii) any entity that is or was a member of the same
affiliated service group (within the meaning of Section
414(m) of the Code) as Borrowers or either one of them, any
corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above.
"ERISA Assumption" - means that, except for funds that
Lender may be considered to receive from Borrowers, no part
of the funds to be used by Lender for the Loan are, under
the Code, ERISA, any amendments thereto, any successor
statutes, any regulations or guidance promulgated
thereunder, or any other law, the assets of any Plan.
"Fixed Rate" - shall have the meaning ascribed to such term
in the Note.
"Fixed Rate Period" - shall have the meaning ascribed to
such term in the Note.
"Fixed Rate Price Adjustment" - shall have the meaning
ascribed to such term in the Note.
"Gateway Property" - shall have the meaning ascribed to such
term in Recital A.
3
"Guarantors" - means (a) collectively, Glenborough
Corporation, a California corporation, and Xxxxxx Xxxxxxxxxx
and (b) individually, either one of the foregoing.
"Guaranty" - means that certain Guaranty of Non-Recourse
Exceptions dated as of the date hereof executed by
Guarantors.
"Hazardous Materials" - shall have the meaning ascribed to
such term in Section 6.1(a).
"Hazardous Materials Claims" - shall have the meaning
ascribed to such term in Section 6.1(c).
"Hazardous Materials Indemnity" - means that certain
Hazardous Materials Indemnity Agreement (Unsecured) dated as
of the date hereof executed by Guarantors.
"Hazardous Materials Laws" - shall have the meaning ascribed
to such term in Section 6.1(b).
"Leases" - means all agreements of any kind relating to the
use or occupancy of the Property or any portion thereof,
whether such leases, licenses and agreements are now
existing or entered into after the Effective Date, together
with all amendments and modifications thereto.
"Lender" - means Xxxxx Fargo Bank, National Association, its
successors and assigns.
"Liabilities" - means the principal of, and all interest on,
the Loan, all fees, expense reimbursements, taxes,
indemnification obligations and all other amounts of any
kind or nature payable by Borrowers to Lender pursuant to
this Agreement or any other Loan Document.
"Loan" - means the aggregate principal sum that Lender
agrees to lend and that Borrowers agree to borrow pursuant
to the terms and conditions of this Agreement: Twenty-Six
Million Six Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00).
"Loan Documents" - means this Agreement and those documents,
as hereafter amended, supplemented, restated, replaced or
modified from time to time, properly executed and in
recordable form, if necessary, listed on Exhibit F as Loan
Documents, all in form and substance acceptable to Lender.
"Loan Year" - means, a one (1) year period of time
commencing on the Effective Date, and each one (1) year
period of time commencing on the anniversary of said date.
4
"Maturity Date" - shall have the meaning ascribed to such
term in Section 2.4.
"Memphis Property" - shall have the meaning ascribed to such
term in Recital C.
"Note" - means that certain Amended, Restated and
Consolidated Promissory Note of even date herewith, in the
original principal amount of the Loan, executed by Borrowers
in favor of Lender, as hereafter amended, supplemented,
restated, replaced or modified from time to time. The Note,
among other things, amends, restates and consolidates the
indebtedness outstanding under that certain Promissory Note
dated as of December 17, 1986, in the original principal
amount of Fourteen Million Two Hundred Ten Thousand and
No/100s Dollars ($14,210,000.00) made and given by Borrower
B to and in favor of The Variable Life Insurance Company, a
Texas corporation (the "Original Maryland Note"), which
Original Maryland Note, and the indebtedness evidenced
thereby, has been assigned to Lender and the request of the
Borrowers.
"Other Related Documents" - means those documents, as
hereafter amended, supplemented, restated, replaced or
modified from time to time, properly executed and in
recordable form, if necessary, listed on Exhibit F as Other
Related Documents, all in form and substance acceptable to
Lender.
"Park Plaza Property" - shall have the meaning ascribed to
such term in Recital B.
"Permitted Encumbrances" means, as to each Property, (a) the
liens, encumbrances and other matters described on Schedule
B to the title insurance policies insuring the liens of the
deeds of trust listed on Exhibit F with respect to such
Property, (b) the liens, encumbrances and security interests
in favor of Lender under the Loan Documents, (c) the liens
and security interests created pursuant to the Equipment
Leases with respect to such Property, and (d) any other
liens, encumbrances or other similar matters which are
permitted under the Loan Documents or otherwise approved by
Lender.
"Plan" - means a "plan" as that term is defined in Section
3(3) of ERISA or Section 4975 of the Code.
"Plan Asset Regulation" - means the United States Department
of Labor regulations at 29 C.F.R. 2510.3-101.
"Properties" - means (a) collectively, the Gateway Property,
the Park Plaza Property, the Memphis Property, the Seattle Property
5
and the Rockville Property and (b) individually,
any one of the foregoing.
"Property Proceeds" - shall have the meaning ascribed to
such term in Section 7.10.
"Required Permits" - shall have the meaning ascribed to such
term in Section 5.18.
"Rockville Property" - shall have the meaning ascribed to
such term in Recital E.
"Seattle Property" - shall have the meaning ascribed to such
term in Recital D.
1.2 Exhibits and Schedules Incorporated. Exhibits X,
X, X, X, X, X, X, X, X and J and Schedules 5.6 and 6.1, all
attached hereto are hereby incorporated into this Agreement.
ARTICLE II. LOAN
2.1 Loan. Subject to the terms of this Agreement,
Lender agrees to lend to Borrowers and Borrowers agree to
borrow from Lender the principal sum of Twenty-Six Million
Six Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00), said sum to be evidenced by the Note. The
Loan shall be fully disbursed on the date that all of the
conditions contained in this Agreement are either satisfied
or waived by Lender.
2.2 Loan Documents. Borrowers shall deliver to Lender,
concurrently with this Agreement, each of the documents,
properly executed and in recordable form, as applicable,
described on Exhibit F as Loan Documents, together with
those documents described on Exhibit F as Other Related
Documents. Notwithstanding the foregoing, Borrowers shall
deliver to Lender within ninety (90) days after the date
hereof the Non-Disturbance, Attornment, Estoppel and
Subordination Agreements listed in Paragraph A. on
Exhibit F and Borrowers shall deliver to Lender within sixty
(60) days after the date hereof the consent of Burlington
Northern Railroad Company as listed in Paragraph A. on
Exhibit F.
2.3 Effective Date. The date of the Loan Documents is
for reference purposes only. The effective date of delivery
and transfer to Lender of the security under the Loan Docu-
ments and of Borrowers' and Lender's obligations under the
Loan Documents shall be the date (the "Effective Date") the
Loan (or any part thereof) is disbursed to Borrowers or as
Borrowers may otherwise direct.
6
2.4 Maturity Date. Subject to Lender's rights to
accelerate the Loan in accordance with the terms and
provisions of the Loan Documents, the entire principal
balance of the Loan (together with all accrued and unpaid
interest and all other Liabilities) shall be due and payable
on December 9, 1997 (the "Maturity Date"). All payments due
to Lender under this Agreement, whether at the Maturity Date
or otherwise, shall be paid in immediately available funds.
2.5 Credit for Principal Payments. Any payment made
upon the outstanding principal balance of the Loan shall be
credited as of the Business Day received, provided such
payment is received by Lender no later than 11:00 a.m.
(Pacific Standard Time or Pacific Daylight Time, as
applicable) and constitutes immediately available funds.
2.6 Full Repayment and Reconveyance. Upon receipt of
all sums owing and outstanding under the Loan Documents
(other than the Guaranty and the Hazardous Materials
Indemnity), Lender shall issue a full reconveyance or
release (as applicable) of the Properties from the liens
created by the Loan Documents; provided, however, that as a
condition precedent to such reconveyance or release, Lender
shall have received all escrow, closing and recording costs,
the costs of preparing and delivering such reconveyance and
any sums then due and payable under the Loan Documents. In
no event shall Lender be required to issue a reconveyance or
release (as applicable) of any one or more of the Properties
until receipt by Lender of all sums owing and outstanding
under the Loan Documents and satisfaction of the foregoing
conditions precedent.
2.7 Voluntary Prepayment. The Loan (or any part
thereof) may be prepaid provided, that Borrowers pay Lender
(as a condition to Lender's acceptance of the prepayment)
the Fixed Rate Price Adjustment provided for in the Note.
No prepayment fees (other than the Fixed Rate Price
Adjustment provided for in the Note) shall be payable in
connection with any such prepayment.
2.8 Limitation on Partners' Liability. With the
exception of Non-Recourse Exception Matters (as defined
below), Lender's recovery against Borrowers under the Loan
Documents shall be limited solely to the collateral given to
Lender as security for Borrowers' performance under the Loan
Documents and to the general assets of Borrowers themselves.
Such recovery shall not be a lien, or the basis of a claim
of lien or levy of execution, against the general assets of
any partner (other than Borrower A) of any Borrower.
Notwithstanding the foregoing, any general partner of any
Borrower and the general assets of any general partner of
any Borrower shall be fully liable to Lender to the
7
same extent that any Borrower would be liable absent the
foregoing limitation of this paragraph for the following
(collectively, the "Non-Recourse Exception Matters"): (a)
fraud or willful misrepresentation on the part of any
Borrower or any partner; (b) waste; (c) failure of any
Borrower or any partner to pay any income or other taxes,
assessments or other charges attributable to any Borrower or
any partner which can create liens on any portion of one or
more of the Properties (to the full extent of any such
taxes, assessments or other charges); (d) any
misrepresentation on the part of any Borrower with respect
to the matters set forth in Section 5.16 of this Agreement;
(e) any amounts received in contravention of any covenant
set forth in Section 7.7 of this Agreement, including,
without limitation, the amount of any money or value of any
property received by any Borrower or any partner as a
distribution from any Borrower if such distribution was
prohibited under the terms of this Agreement (to the full
extent of such distribution); (f) any breach by any Borrower
of any covenant under Article VI, any representation or
warranty of any Borrower under such Article proving to have
been untrue when made, or the presence of any Hazardous
Materials in, on or about any of the Properties; (g) any
failure by any Borrower to comply with any provision of any
Loan Document prohibiting the sale or further mortgaging or
voluntarily encumbering of any one or more of the Properties
(or any direct or indirect interest therein or any direct or
indirect interest in any Borrower); (h) any failure of any
Borrower after a Default has occurred and is continuing, to
apply on a current basis and prior to other application, the
proceeds of rents and other income of any of the Properties
or other collateral towards the payment of current costs
which at that time have been accrued and are unpaid in
connection with the maintenance or operation of any of the
Properties; (i) insurance and/or condemnation proceeds which
are received by any Borrower and which are not delivered to
Lender or otherwise applied as required under the terms of
the Loan Documents; (j) security deposits which are received
by any Borrower from tenants of any of the Properties and
which are not delivered to Lender following the foreclosure
or other transfer of any of the Properties to Lender or
otherwise applied as required under the terms of the Loan
Documents; (k) all loss, damage, cost and expense (including
attorneys' fees and expenses) incurred by Lender as a result
of an uninsured casualty or from a casualty or liability
that is not insured in the amount and to the extent required
under the Loan Documents; or (l) any breach by any Borrower
of any covenant under Section 7.2. In addition, the
limitations hereof shall not be deemed to limit: (i) any
right Lender might otherwise have to obtain injunctive
relief against one or both of the Borrowers, any partner of
one or both Borrowers or any other person or entity; (ii)
any suit or action in connection with the preservation,
enforcement or foreclosure of the liens, mortgages,
assignments and security interests now
8
or at any time hereafter securing the payment and performance of all
Liabilities and other obligations under this Agreement or
any of the other Loan Documents; or (iii) the collection of
amounts which may become owing or payable under or on
account of insurance, condemnation awards or damages for
other public actions or surety bonds maintained or provided
by one or both Borrowers; provided, however, that the
assertion by Lender of any such right, suit, action or
collection of amounts shall not result in a monetary claim
upon the general assets of any partner of one or both
Borrowers except as otherwise provided herein. The parties
acknowledge that the terms "partner" or "general partner" or
similar terms when used in this Agreement or in the other
Loan Documents in connection with a joint venture shall be
deemed to include, without limitation, any joint venturer in
such joint venture.
ARTICLE III. DISBURSEMENT
3.1 Conditions Precedent. Lender's obligation to make
the Loan shall be subject to satisfaction of each of the
following conditions precedent:
(a) There shall exist no Default under this Agree-
ment or under any of the other Loan Documents or the Other
Related Documents, or any event, omission or failure of
condition which would constitute a Default after notice or
lapse of time, or both.
(b) Lender shall have received all of the Loan
Documents, the Other Related Documents and all other docu-
ments, instruments, policies, and forms of evidence or other
materials required by Lender under the terms of this
Agreement or any of the other Loan Documents.
(c) Lender shall have received and approved: (i) a
soils report for each of the Properties and (ii) an
environmental questionnaire and environmental site
assessment with respect to the presence, if any, of
Hazardous Materials on each of the Properties.
(d) Lender shall have received a commitment for an
ALTA mortgagee policy of title insurance with respect to
each of the Properties (i) issued by a title insurance
company acceptable to Lender, (ii) in an amount acceptable
to Lender (not to exceed in the aggregate the amount of the
Loan), (iii) subject only to matters approved by Lender in
writing, (iv) containing those endorsements required by
Lender and (v) otherwise in form and substance acceptable to
Lender. During the term of the Loan, Borrowers shall
deliver to Lender (at Borrowers' sole cost and
9
expense), within five (5) days of Lender's written request, such
endorsements to the title insurance policy as Lender may
reasonably require in connection with (A) any amendment or
modification to the Loan Documents, (B) any protective
advance of funds made by Lender (of any type or nature) or
(C) any advance of funds made by Lender after the occurrence
of a Default (whether as a protective advance, payment due
to third parties or otherwise).
3.2 Disbursement of the Loan. Any disbursements of the
Loan which are made by means of wire transfer shall be
subject to the provisions of any funds transfer agreement
which is identified on Exhibit F attached hereto.
ARTICLE IV. INSURANCE
Borrowers shall, while any obligation of Borrowers under
any Loan Document remains outstanding, maintain at
Borrowers' sole expense, with licensed insurers reasonably
approved by Lender, the following policies of insurance in
form and substance reasonably satisfactory to Lender:
4.1 Property Insurance. With respect to each of the
Properties, a hazard insurance policy, containing such
endorsements as Lender may reasonably require. Lender shall
be named on the policies under a Lender's Loss Payable
Endorsement (form #438BFU or equivalent).
4.2 Flood Hazard Insurance. With respect to each of
the Properties, a policy of flood insurance, as required by
applicable governmental regulations, or as deemed reasonably
necessary by Lender.
4.3 Liability Insurance. With respect to each of the
Properties, a policy of comprehensive general liability
insurance with limits as reasonably required by Lender,
insuring against liability for injury and/or death to any
person and/or damage to any property.
4.4 General. Borrowers shall provide to Lender the
originals of all required insurance policies, or other
evidence of insurance reasonably acceptable to Lender. All
insurance policies shall provide that the insurance shall
not be cancelable or materially changed without ten (10)
days prior written notice to Lender. Lender shall be named
under a Lender's Loss Payable Endorsement (form #438BFU or
equivalent) on all property insurance policies which
Borrowers maintain.
10
4.5 Flood Zone Notification. If required by applicable
law, each Borrower, as lessor or seller of one or more of
the Properties (or any portion thereof) under any existing
or future Lease or sale agreement, shall promptly give
written notice to all lessees or purchasers of the fact that
said Property is located in a flood hazard area. Borrowers
acknowledge that such written notices, if required by
applicable law, have been given by them or will be promptly
given.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender's entry into this
Agreement, Borrowers represent and warrant to Lender as of
the Effective Date that:
5.1 Authority/Enforceability. Borrowers are in
compliance with all laws and regulations applicable to their
organization, existence and transaction of business (the
failure of which could adversely affect the value of one or
more of the Properties, the Lender's interest therein or the
ability of Borrowers to operate the Properties in a first
class manner) and Borrowers have all necessary rights and
powers to own the Properties and to perform their
obligations hereunder and under the other Loan Documents.
5.2 Binding Obligations. Borrowers are authorized to
execute, deliver and perform their obligations under the
Loan Documents, and such obligations shall be valid and
binding obligations of Borrowers.
5.3 Formation and Organizational Documents. To the
extent required by Lender, Borrowers have delivered to
Lender all formation and organizational documents of
Borrowers and of such other entities as provided for on
Exhibit F, and all such formation and organizational
documents remain in full force and effect and have not been
amended or modified since they were delivered to Lender.
Borrowers shall promptly provide Lender with copies of any
amendments or modifications of the formation or organiza-
tional documents.
5.4 No Violation. Borrowers' execution, delivery and
performance under the Loan Documents do not: (a) require
any consent or approval not heretofore obtained under any
partnership agreement, joint venture agreement, articles of
incorporation, bylaws, operating agreement or other
document; (b) violate any governmental requirement or any
other statute, law, regulation or ordinance or any order or
ruling of any court or governmental entity; or (c) conflict
with, or constitute a breach or default or permit the
acceleration of obligations under any agreement, contract,
lease, or other document; in each case, by which one or
11
both of the Borrowers, one or more partners of any Borrower or
one or more of the Properties is bound or affected.
5.5 Compliance with Laws. Borrowers have all permits,
licenses, exemptions and approvals necessary for the current
use of the Properties.
5.6 Litigation. Except as disclosed in Schedule 5.6
attached hereto and made a part hereof, there are no claims,
actions, suits or proceedings pending, or to either
Borrower's knowledge threatened, against one or both of the
Borrowers or affecting one or more of the Properties.
5.7 Financial Condition. All financial statements and
information heretofore delivered to Lender by Borrowers,
including, without limitation, information relating to the
financial condition of Borrowers, the Guarantors, the
Properties and the partners of Borrowers, fairly and
accurately represent the financial condition of the subject
thereof and have been prepared in accordance with generally
accepted accounting principles consistently applied.
Borrowers acknowledge and agree that Lender may request and
obtain additional information from third party credit
reporting agencies or any such similar service regarding any
of the above, including, without limitation, credit reports.
5.8 No Material Adverse Change. There has been no
material adverse change in the financial condition of either
of the Borrowers, either of the Guarantors or any partner of
either of the Borrowers since the dates of the latest
financial statements furnished to Lender by either of the
Borrowers and, except as otherwise disclosed to Lender in
writing, neither of the Borrowers, neither of the Guarantors
nor any partner of either of the Borrowers has entered into
any material transaction which is not disclosed in such
financial statements.
5.9 Accuracy. All reports, documents, instruments,
information and forms of evidence delivered to Lender by
either or both of the Borrowers concerning the Loan or
security for the Loan or required by the Loan Documents are
accurate and correct in all material respects and
sufficiently complete to give Lender true and accurate
knowledge of their subject matter, and do not contain any
material misrepresentation or omission.
5.10 Tax Liability. Borrowers have filed all required
federal, state, county and municipal tax returns and have
paid all taxes and assessments owed and payable, and neither
of the Borrowers has any knowledge of any basis for any
additional payment with respect to any such taxes and
assessments.
12
5.11 No Defaults. Neither of the Borrowers, nor any
Guarantor, nor any partner of either of the Borrowers is in
default under any contract, agreement or other document by
which it or its property is bound, which default could
materially and adversely affect the ability of either of the
Borrowers or either of the Guarantors to perform their
obligations under the Loan Documents.
5.12 Management Agreements. There are no property
management or leasing agreements respecting any of the
Properties, and Glenborough Corporation acts as property
manager for the Borrowers under the terms of the partnership
agreement for Borrower A and the joint venture agreement of
Borrower B.
5.13 Chief Executive Office. The chief executive
office and principal place of business of both of the
Borrowers is located as follows:
Glenborough Corporation
000 Xxxxx Xx Xxxxxx Xxxx
00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
5.14 Ownership Structure. The ownership structure of
Borrowers and their partners (including the percentage
ownership interests) is set forth on Exhibit G attached
hereto and made a part hereof.
5.15 ERISA. (a) Borrowers do not maintain or have any
obligation or liability with respect to, and Borrowers have
never maintained or had any obligation or liability with
respect to, any Benefit Plan.
(b) Neither (i) the assets of any of the
Borrowers, nor (ii) the assets of any person or entity which
owns an equity interest in either of the Borrowers are
pursuant to ERISA or the Code considered for any purpose of
ERISA or Section 4975 of the Code to be assets of a Plan.
Neither the execution or delivery of this Agreement or of
any of the other Loan Documents by Borrowers, nor the
performance by Borrowers of their obligations under this
Agreement or under any of the other Loan Documents, nor any
transaction contemplated under this Agreement or under any
of the other Loan Documents, nor the exercise by Lender of
any of its rights or remedies under this Agreement or under
any of the other Loan Documents is or will be a "prohibited
transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code. For purposes of the preceding
representation and warranty, it is assumed that the ERISA
Assumption is accurate.
13
5.16 Leases. The Leases listed on the rent roll
attached hereto as Exhibit H and made a part hereof are, as
of the date hereof, the only Leases of the Properties and
none of such Leases have been modified, altered or amended
except as set forth on Exhibit H. All information contained
on Exhibit H is true, accurate and complete. Except as
otherwise disclosed on Exhibit H, each of the Leases is in
full force and effect and is enforceable in accordance with
its terms, and no breach, default or event which would
constitute a breach or default after notice or the passage
of time, or both, exists under any of the Leases on the part
of any party thereto. Except as otherwise set forth on
Exhibit H: (a) the lessees under the Leases have accepted
and are in possession of their respective premises, all
leasehold improvements in such premises have been completed
and no additional work or payments with respect to the same
are required on the part of the lessors; (b) no party under
any of the Leases has any charge or claim of offset under
any Lease or otherwise, against rents or other amounts due
or to become due under the Leases; (c) no party under any of
the Leases has paid, or is entitled to any credit for, any
security deposit; (d) no party under any of the Leases has
any right to renew or extend the term of its Lease or to
terminate its Lease prior to the stated termination date;
(e) no party under any of the Leases has any right or option
to purchase all or any portion of any of the Properties or
to participate in the proceeds of any sale of the same; and
(f) no rent or other payment under any of the Leases has
been paid more than one (1) month in advance. None of either
Borrower's interest under any of the Leases has been
transferred or assigned.
5.17 Equipment Leases. (a) (i) one of the Borrowers or
its predecessor in interest as lessee, has heretofore
executed and delivered certain equipment leases described on
Exhibit I attached hereto and made a part hereof and (ii)
one or both of the Borrowers may hereafter execute and
deliver additional equipment leases for equipment to be used
at, on or in connection with one or more of the Properties
(the equipment leases referred to in clause (i) and clause
(ii) above are hereinafter collectively referred to as the
"Equipment Leases").
(b) Borrowers represent and warrant that (i) one
of the Borrowers is lessee under each Equipment Lease; (ii)
no Equipment Lease is in default (and no condition exists
that after the giving of notice, the passage of time or
both, would constitute a default); (iii) no Equipment Lease
has been heretofore sold, assigned, transferred or set over
by either Borrower and so long as any Liabilities shall
remain outstanding will not at any time be sold, assigned,
transferred or set over by either Borrower or by any person
or persons whomsoever; (iv) to the extent the Equipment
Leases are assignable, one of the
14
Borrowers has good right to assign, transfer and set over the
Equipment Leases and to grant to and confer upon Lender the rights,
interests, powers and/or authorities granted and conferred in the deeds
of trust executed in connection herewith for each of the
Properties; (v) the equipment that is the subject of the
Equipment Leases will not be removed from the Property
relating to such Equipment Leases without consent of Lender,
unless said equipment is replaced with equipment of like or
better utility that is owned by one of the Borrowers (and
subject to the lien of the deed of trust relating to the
applicable Property) or leased (and subject to the
assignment set forth in the deed of trust for such
Property); and (vi) Exhibit I sets forth all of the
Equipment Leases that exist as of the Effective Date.
5.18 Required Permits. Certain governmental licenses,
permits and authorizations (herein called "Required
Permits") are required (or may be required from time to
time) for the lawful operation of each of the Properties.
Borrowers represent and warrant that (i) one of the
Borrowers is the licensee or permittee under each Required
Permit (and all of the Required Permits are in full force
and effect); (ii) each Required Permit has been duly issued
and all fees in connection therewith paid, and no default
exists thereunder; (iii) no Required Permit has been
heretofore sold, assigned, transferred or set over by any
instrument (other than other Loan Documents) now in force
and so long as any of the Liabilities shall remain
outstanding will not, without Lender's prior consent, at any
time be sold, assigned, transferred or set over by any of
the Borrowers or by any person or persons whomsoever; and
(iv) to the extent permitted by law, one of the Borrowers
has good right to assign, transfer and set over the
assignable Required Permits and to grant to and confer upon
Lender the rights, interests, powers and/or authorities
granted and conferred in the deeds of trust executed in
connection herewith for each of the Properties. Borrowers
hereby represent and warrant that the Required Permits
listed on Exhibit J attached hereto and made a part hereof
constitute all of the licenses, permits, authorizations and
approvals required to lawfully operate each of the
Properties for its full intended purpose and use.
ARTICLE VI. HAZARDOUS MATERIALS
6.1 Special Representations and Warranties. Without in
any way limiting the other representations and warranties
set forth in this Agreement, and after reasonable
investigation and inquiry, Borrowers hereby represent and
warrant, in each case, to the best of Borrowers' knowledge
as of the Effective Date, as follows:
15
(a) Hazardous Materials. Except as disclosed on
Schedule 6.1 attached hereto and made a part hereof, none of
the Properties is (or has been) a site for the use,
generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal, transportation or
presence of any oil, flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, hazardous
wastes, toxic or contaminated substances or similar
materials, including, without limitation, any substances
which are "hazardous substances," "hazardous wastes,"
"hazardous materials" or "toxic substances" under the
Hazardous Materials Laws, as described below, and/or under
any other applicable environmental laws, ordinances or
regulations (collectively, the "Hazardous Materials"),
except for any such Hazardous Materials that are used in the
ordinary course of business and in compliance with all
applicable Hazardous Materials Laws and all manufacturers'
specifications.
(b) Hazardous Materials Laws. Except as disclosed
on Schedule 6.1 attached hereto and made a part hereof, each
of the Properties is in compliance with all laws, ordinances
and regulations relating to Hazardous Materials ("Hazardous
Materials Laws"), including, without limitation: the Clean
Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 et seq.; the Resource Conservation and Recovery
Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the
Comprehensive Environment Response, Compensation and
Liability Act of 1980, as amended (including the Superfund
Amendments and Reauthorization Act of 1986, "CERCLA"), 42
U.S.C. Section 9601 et seq.; the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq.; the
Occupational Safety and Health Act, as amended, 29 U.S.C.
Section 651, the Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. Section 11001 et seq.; the Mine
Safety and Health Act of 1977, as amended, 30 U.S.C. Section
801 et seq.; the Safe Drinking Water Act, as amended, 42
U.S.C. Section 300f et seq.; and all applicable state and
local laws, orders and regulations.
(c) Hazardous Materials Claims. There are no
claims or actions ("Hazardous Materials Claims") pending or
threatened against either of the Borrowers or affecting any
one or more of the Properties by any governmental entity or
agency or by any other person or entity relating to
Hazardous Materials or pursuant to the Hazardous Materials
Laws.
6.2 Hazardous Materials Covenants. Borrowers covenant
and agree as follows:
(a) No Hazardous Activities. Except as disclosed
on Schedule 6.1, none of the Borrowers shall cause or permit any of
16
the Properties to be used as a site for the use,
generation, manufacture, storage, treatment, release,
discharge, disposal, transportation or presence of any Haz-
ardous Materials, except for any such Hazardous Materials
that are used in the ordinary course of business and in
compliance with all applicable Hazardous Materials Laws and
all manufacturers' specifications.
(b) Compliance. Borrowers shall comply and cause
the Properties to comply with all Hazardous Materials Laws.
(c) Notices. Borrowers shall promptly notify
Lender in writing of: (i) any knowledge by Borrowers of any
Hazardous Materials on, under or about any of the
Properties; (ii) any knowledge by Borrowers that any of the
Properties do not comply with any Hazardous Materials Laws;
(iii) any Hazardous Materials Claims initiated or, to
Borrowers' knowledge, threatened; and (iv) any knowledge by
Borrowers of any Hazardous Materials on any real property
adjoining any of the Properties.
(d) Remedial Action. In response to the presence
of any Hazardous Materials on, under or about any of the
Properties, Borrowers shall immediately take, at Borrowers'
sole expense, all remedial action required by any Hazardous
Materials Laws and any judgment, consent decree, settlement
or compromise in respect to any Hazardous Materials Claims.
6.3 Inspection By Lender. Upon reasonable prior notice
to Borrowers, Lender, its employees and agents, may from
time to time (whether before or after the commencement of a
nonjudicial or judicial foreclosure proceeding) enter,
inspect and take samples of any one or more of the
Properties for the purpose of determining the existence,
location, nature and magnitude of any past or present
release or threatened release of any Hazardous Materials
into, onto, beneath or from any one or more of the
Properties.
6.4 Hazardous Materials Indemnity. Borrowers hereby
agree to defend, indemnify and hold harmless Lender, its
directors, officers, employees, agents, successors, assigns
and participants (collectively, the "Indemnified Parties")
from and against any and all losses, damages, liabilities,
claims, actions, judgments, court costs and legal or other
expenses (including, without limitation, reasonable
attorneys' and paralegals' fees and expenses, both internal
and external) which one or more of the Indemnified Parties
may incur as a direct or indirect consequence of the use,
generation, manufacture, storage, disposal, threatened
disposal, transportation or presence of Hazardous Materials
in, on, under or about any one or more of the Properties.
Borrowers shall promptly pay to the Indemnified Parties
(upon demand) any amounts owing under this indemnity,
17
together with interest from the date of demand until paid at
the rate of interest applicable to the principal balance of
the Note. Notwithstanding the foregoing, this indemnity
shall not apply to, losses, damages, costs, expenses,
liabilities or claims arising out of any environmental
condition solely caused by or solely resulting from the
gross negligence or willful misconduct of any Indemnified
Party or its agents. BORROWER'S DUTY AND OBLIGATIONS TO
DEFEND, INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES
SHALL SURVIVE THE CANCELLATION OF THE NOTE AND THE RELEASE
OF THE LIENS CREATED BY ANY OF THE LOAN DOCUMENTS.
6.5 Legal Effect of Section. Borrowers and Lender
agree that Borrowers' duty to indemnify Lender hereunder
shall survive: (i) any judicial or non-judicial foreclosure
under any of the Loan Documents, or transfer of any one or
more of the Properties in lieu thereof; (ii) the release and
reconveyance or cancellation of any of the Loan Documents;
and (iii) the payment in full of the Liabilities.
ARTICLE VII. COVENANTS OF BORROWERS
7.1 Expenses. Borrowers shall promptly pay Lender upon
demand all reasonable costs and expenses (both internal and
external) incurred by Lender in connection with or as a
result of: (a) the preparation of the Loan Documents; (b)
the disbursement of the Loan; (c) the satisfaction of the
conditions to the disbursement of the Loan; (d) the
administration of the Loan; (e) any request by Borrowers or
their agents for approval, consent or any other action to be
taken by Lender under (or in connection with) any of the
Loan Documents or the transactions contemplated thereby;
(f) the enforcement or satisfaction by Lender of any of
Borrowers' obligations under this Agreement or the other
Loan Documents; and (g) any Default. For all purposes of
this Agreement, Lender's costs and expenses under this
Section 7.1 shall include, without limitation, all internal
and external appraisal fees, cost engineering and inspection
fees, reasonable legal and paralegal fees and expenses,
accounting fees, environmental consultant fees, auditor
fees, and the cost to Lender of any title insurance premiums
and title surveys, in each case incurred in connection with
the actions described in clauses (a) through (g) above.
Borrowers recognize and agree that (in addition to the
foregoing) formal written appraisals of one or more of the
Properties by a licensed independent appraiser may be
required by Lender's internal procedures and/or federal
regulatory reporting requirements on an annual and/or
specialized basis and that Lender may, at its option from
time to time, require an inspection and appraisal to be made
of one or more of the Properties by an appraiser selected by
Lender (provided, however,
18
prior to the occurrence of a Default Borrower shall not be required
to pay for more than the initial appraisal performed for
each of the Properties).
7.2 ERISA. (a) Borrowers shall at all times comply with
all applicable provisions of ERISA with respect to any
retirement or other employee benefit plan to which either or
both of them are a party as employer, and as soon as
possible after either Borrower knows, or has reason to know,
that any Reportable Event (as defined in ERISA) with respect
to any such plan of either Borrower has occurred, it shall
furnish to Lender a written statement setting forth details
as to such Reportable Event and the action, if any, which
Borrowers propose to take with respect thereto, together
with a copy of the notice of such Reportable Event furnished
to the Pension Benefit Guaranty Corporation.
(b) Borrowers shall at no time maintain, or have
any obligation or liability with respect to, any Benefit
Plan. Borrowers shall take and cause to be taken all
necessary actions so that at no time shall any ERISA
Affiliate maintain, or have any obligation or liability with
respect to, any Benefit Plan.
(c) Borrowers shall take and cause to be taken all
necessary actions so that (i) at all times neither (A) the
assets of either or both of the Borrowers, nor (B) the
assets of any person or entity which directly or indirectly
owns an equity interest in either or both of the Borrowers
are pursuant to ERISA or the Code considered for any purpose
of ERISA or Section 4975 of the Code to be assets of a Plan,
and (ii) assuming the accuracy of the ERISA Assumption,
regardless of whether the ERISA Assumption is in fact
accurate, at all times neither the execution or delivery of
this Agreement or of any of the other Loan Documents by
Borrowers, nor the performance by Borrowers of their
obligations under this Agreement or under any other Loan
Document, nor any transaction contemplated under this
Agreement or under any other Loan Document, nor the exercise
by Lender of any of its rights or remedies under this
Agreement or under any of the other Loan Documents will be a
"prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code. Borrowers shall
deliver to Lender such certifications or other evidence from
time to time as reasonably requested by Lender that a
Default described in Section 9.1(l) has not occurred.
7.3 Liens. Borrowers covenant and agree that, except
for the Permitted Encumbrances and except as may otherwise
be expressly permitted under the Loan Documents (and subject
to the limitations provided for therein), Borrowers will not
create or permit to exist any lien upon or with respect to
any of the property that secures the Loan. Notwithstanding
anything to the
19
contrary contained herein or in any of the
other Loan Documents, Borrowers shall have the right to
contest by appropriate legal proceedings diligently
prosecuted and in a manner that shall prevent interference
with the use of the Properties for their intended purpose
and foreclosure or other action adversely affecting Lender's
liens thereon (a) any governmental requirement, act or
action affecting any of the Properties, (b) any real estate
taxes and assessments imposed or assessed upon any of the
Properties or which may be or become a lien thereon, and
(c) any mechanic's, materialman's or other liens or claims
for lien (including subordinate liens) upon any of the
Properties (all herein called "Contested Items"), and the
existence of a Contested Item shall not constitute a Default
hereunder, if all of the following conditions are satisfied:
(i) Borrowers shall give notice of any
Contested Item to Lender at the time the same shall
be asserted.
(ii) Borrowers shall deposit with Lender (or
with the appropriate government authority, if
applicable) the full amount of such Contested Item
or which may be claimed by any governmental
authority or which might result from an adverse
conclusion of such contest, together with such
amount as Lender may reasonably estimate as
interest or penalties which might arise during the
period of contest; provided that in lieu of such
payment Borrowers may furnish to Lender a bond or
title indemnity in such amount and form, and issued
by a bond or title insurance company, as may be
reasonably satisfactory to Lender.
(iii) Borrowers shall diligently prosecute
the contest of any Contested Item by appropriate
legal proceedings having the effect of staying the
foreclosure or forfeiture of the Properties (and
any interference with the use of the Properties for
their intended purpose) and shall permit Lender to
be represented in any such contest and shall pay
all expenses incurred by Lender in so doing,
including, but not limited to, reasonable fees and
expenses of Lender's counsel (all of which shall
constitute so much additional Liabilities bearing
interest at the rate of interest applicable under
the Note until paid, and payable upon demand).
(iv) Borrowers shall pay such Contested Item
together with interest and penalties thereon (A) if
and to the extent that any such Contested Item
shall be determined adverse to Borrowers, or
(B) upon demand by
20
Lender if, in the reasonable
opinion of Lender, and notwithstanding any such
contest any of the Properties shall be in jeopardy
or in danger of being forfeited or foreclosed;
provided, that if Borrowers shall fail to do so,
Lender may, but shall not be required to, pay such
Contested Item and interest and penalties thereon
and such other sums as may be necessary in the
judgment of Lender to obtain the release and
discharge of such item; and any amount expended by
Lender in so doing shall be so much additional
Liabilities bearing interest at the rate of
interest applicable under the Note until paid, and
payable upon demand; and provided further that
Lender may in such case use and apply for said
purpose the monies deposited as provided in
subsection (ii) above or may demand payment upon
any bond or title indemnity furnished as aforesaid.
7.4 Indebtedness. Borrowers covenant and agree that,
except as may be otherwise expressly permitted under the
Loan Documents (and subject to the limitations provided for
therein) or as otherwise approved in writing by Lender,
Borrowers shall not incur any indebtedness (which shall be
deemed to include, but not be limited to, guarantee
obligations and capital lease obligations) other than
indebtedness incurred in the normal day to day operation of
the Properties.
7.5 Conduct of Business. Borrowers covenant and agree
that they will not conduct any business other than the
operation of the Properties. Borrowers covenant and agree
that they will not acquire (whether directly or indirectly)
any interests in real estate that are not owned by Borrowers
on the Effective Date (said prohibition shall be deemed to
include, but shall not be limited to, the acquisition of an
interest in a partnership, corporation or limited liability
company that directly or indirectly owns an interest in real
estate).
7.6 Performance by Third Parties. To the extent that
any of the obligations of Borrowers hereunder (or under any
of the other Loan Documents) are obligations that need to be
performed by (or with the assistance or cooperation of)
third parties, Borrowers covenant and agree to cause such
third parties to perform said obligations.
7.7 Distributions to Partners and Affiliates.
Borrowers will retain all rents and other revenues, income
and receipts from the Properties in (i) accounts of Borrower
B, as to the Rockville Property, and (ii) accounts of
Borrower A, as to the other Properties, will not commingle
such rents and other revenues, income and receipts with
assets of any Affiliates of any Borrower, and will use such
rents and other revenues, income
21
and receipts solely for Property operations and debt service
on the Loan, with any and all excess amounts being held in
reserve for the same. Borrowers covenant and agree that neither
Borrower will make any distributions, loans or payments (of any
type or nature) to or at the direction of any Affiliate of or
partner of either of the Borrowers or any Affiliate of any of the
foregoing (collectively, "Distributions"). Neither Borrower
shall pay to any Borrower, any partner of any Borrower or
any Affiliate of any of the foregoing any overhead fees,
leasing fees, management fees, marketing fees, consulting
fees (or any fees similar to any of the foregoing) during
the term of the Loan; provided, however, the foregoing
provision of this Section 7.7 shall not prohibit Borrowers
from paying (so long as no Default exists hereunder) the
partnership administration fees, asset management and
administration fees and property management fees expressly
provided to be paid to certain of the general partners of
the Borrowers (or to the general partners of such general
partners) under the partnership agreement of Borrower A and
the joint venture agreement of Borrower B.
7.8 Leases. Borrowers covenant and agree that
Borrowers shall not enter into any Lease: (i) for space of
ten thousand (10,000) or more square feet; (ii) for a term
of five (5) or more years; or (iii) at a rental rate of less
than fair market value or under other terms and conditions
that are less advantageous to the lessor than those
customary in leases of similar space for a similar term
under the then-current market conditions; in each case
unless Lender, in its reasonable discretion, has approved of
the transaction as a whole and all of the terms thereof.
Borrowers further covenant and agree that subject to the
limitations contained herein, Borrowers shall use their best
efforts to keep all of the space in the Properties leased at
all times at rentals that are not less than the market
rental value for the Properties.
7.9 Management Agreements. Borrowers covenant and
agree that except for the partnership agreement of Borrower
A and the joint venture agreement of Borrower B, neither of
which shall be amended without the prior written consent of
Lender (which consent shall not be unreasonably withheld or
delayed), Borrower shall not enter into any agreement for
the management, leasing or operation of the Properties (or
any portion thereof), without first obtaining Lender's prior
written consent (which consent shall not be unreasonably
withheld or delayed).
7.10 Insurance and Condemnation Proceeds. (a)
Borrowers covenant and agree that the following shall be
paid directly to Lender (i) all awards of damages and all
other compensation payable directly or indirectly by reason
of a condemnation affecting any of the Properties, (ii) all
other claims and awards
22
for damages to, or decrease in value
of, any of the Properties, (iii) all proceeds of any
insurance policies payable by reason of a loss sustained to
any of the Properties and (iv) all interest which may accrue
on any of the foregoing (collectively, the "Property
Proceeds"). Borrowers covenant and agree to notify Lender
within five (5) Business Days of the occurrence of any event
that may result in Property Proceeds. Lender may (at its
discretion) apply all or any portion of the Property
Proceeds that it receives to its expenses in settling,
prosecuting and defending any claim related thereto and may
apply the balance of the Property Proceeds to the
Liabilities in any order, and/or Lender may release all or
any part of the Property Proceeds to Borrower upon any
conditions Lender may reasonably impose. Lender may
commence, appear in, defend and prosecute any action related
to the Property Proceeds and may adjust, compromise, settle
and collect all Property Proceeds.
(b) At its sole option, Lender may permit Property
Proceeds held by Lender to be used for repair or restoration
but may condition such application upon reasonable
conditions, including, without limitation: (i) that no
Default exists (and no event has occurred that with the
giving of notice or the passage of time (or both) would
constitute a Default), (ii) the deposit with Lender of such
additional funds which Lender reasonably determines are
needed to pay all costs of the repair or restoration, (iii)
the establishment of an arrangement for lien releases and
disbursement of funds reasonably acceptable to Lender, (iv)
the delivery to Lender of plans and specifications for the
work, a contract for the work signed by a contractor
reasonably acceptable to Lender, a cost breakdown for the
work and a payment and performance bond for the work, all of
which shall be reasonably acceptable to Lender and (v) the
delivery to Lender of evidence reasonably acceptable to
Lender (A) that after completion of the work the income from
the Property affected will be sufficient to pay all expenses
for such Property, (B) that upon completion of the work, the
size, capacity and total value of such Property will be at
least as great as it was before the damage or condemnation
occurred, (C) that there has been no material adverse change
in the financial condition or credit of Borrowers since the
Effective Date and (D) of the satisfaction of any additional
conditions that Lender may reasonably establish and that are
customarily imposed by Lender. Borrowers acknowledge that
the conditions described above are reasonable.
7.11 Use of the Property. Borrowers covenant and agree
(a) to continue the current use and operation of the
Properties, (b) not to change the use thereof without the
prior written consent of Lender and (c) subject to Section
7.3, to operate the Properties in compliance with all laws,
statutes, ordinances, rules and regulations applicable
thereto (the failure of which
23
could adversely affect the
value of the Properties, the Lender's interest therein or
the ability of Borrowers to operate the Properties in a
first-class manner). Borrowers further covenant and agree
to maintain all of the licenses, permits and approvals
necessary for the current use of the Properties.
7.12 ADA Compliance. Borrowers shall make all changes
and alterations to the Properties as and when required by
the ADA.
7.13 Required Notices. Borrowers covenant and agree to
notify Lender, within five (5) Business Days from the
occurrence of any event known to either of the Borrowers (or
the receipt of any notice by either or the Borrowers) that
could have an adverse affect on either of the Borrowers,
either of the Guarantors, any partner of Borrowers or any of
the Properties (or any portion thereof), including, but not
limited to (a) the assertion of any claim (other than
insured claims) affecting any of the Borrowers, any of the
Guarantors, any partner of Borrowers or any of the
Properties, (b) the filing of any action or proceeding
affecting any of the Borrowers, any of the Guarantors, any
partner of Borrowers or any of the Properties, (c) the
occurrence of any damage to any of the Properties, (d) any
condemnation offer or action affecting any of the
Properties, (e) notices regarding violations of laws
affecting any of the Borrowers, any or the Guarantors, any
partner of Borrowers or any of the Properties, or (f)
notices alleging a default (by any party thereto) under
either the partnership agreement of Borrower A or the joint
venture agreement of Borrower B.
7.14 Chief Executive Office. Borrowers covenant and
agree that they will notify Lender of any change in the
location of the chief executive office of Borrowers or
either of them within five (5) days from the date of said
change.
7.15 Ownership Structure. From time to time and within
five (5) days after a request from Lender, Borrowers shall
deliver to Lender a certificate that sets forth (as of the
date of said certificate) any changes to Exhibit G.
7.16 Further Assurances. Upon Lender's request and at
Borrowers' sole cost and expense, Borrowers shall execute,
acknowledge and deliver any other instruments and perform
any other acts necessary or proper, as reasonably determined
by Lender, to carry out the purposes of this Agreement and
the other Loan Documents and to perfect and preserve any
liens created by the Loan Documents.
7.17 Assignment. Without the prior written consent of
Lender, Borrowers shall not assign Borrowers' interest under
any of the Loan Documents, or in any monies due or to become due
24
thereunder, and any assignment without such consent
shall be void. In this regard, Borrowers acknowledge that
Lender would not make this Loan except in reliance on
Borrowers' expertise, reputation, prior experience and
Lender's knowledge of Borrowers.
ARTICLE VIII. REPORTING COVENANTS
8.1 Financial Information. (a) Borrowers shall furnish
(or cause to be furnished) to Lender, the following
financial statements and information at the following times:
(i) Within fifteen (15) days after the end of each
calendar month an operating statement for each
of the Properties (prepared in accordance with
generally accepted accounting principles
consistently applied) for the preceding
calendar month, certified as true and correct
by a senior financial officer of each of the
Borrowers or one of the partners of each of
the Borrowers.
(ii) Within fifteen (15) days after the end of
each calendar month, a rent roll for each
of the Properties certified by a senior
financial officer of each of the Borrowers
or one of the partners of each of the
Borrowers. The rent roll shall be in a
form acceptable to Lender and shall show
the following information with regard to
each tenant: the name of the tenant, the
space (and size of the space) that is
leased to the tenant, the monthly or other
periodic rental amounts, the status of the
rental payments, whether or not there is a
security deposit and the amount currently
held, the commencement date and expiration
date of the Lease and the existence and
nature of any options.
(iii) Within ninety (90) days after the end of each
fiscal year of each of the Borrower's
operation, an audited balance sheet and an
audited income and expense statement, prepared
in accordance with generally accepted
accounting principles consistently applied by
a certified public accountant of recognized
standing.
(iv) With respect to each of the Guarantors,
within ninety (90) days after the end of
each fiscal year of each such Guarantor's
operation, an audited balance sheet and an
audited income and expense statement,
prepared in accordance with generally
accepted accounting principles consistently
25
applied by a certified public
accountant of recognized standing.
(v) Such other financial information and reports
as Lender may from time to time reasonably
require.
(b) All financial statements shall be delivered in
duplicate. All financial statements shall be accompanied by
a certificate of a senior financial officer of the general
partner of each Borrower dated within five (5) days of the
date such statements are delivered to Lender, stating that
he (or she) knows of no Default nor of any event which has
occurred that after the giving of notice or passage of time,
or both, would constitute a Default, or if such Default has
occurred and is continuing, specifying the nature and period
of existence thereof and what action Borrowers have taken or
propose to take with respect thereto, and except as
otherwise specified, stating that Borrowers have fulfilled
all of their obligations under this Agreement and the other
Loan Documents which are required to be fulfilled on or
prior to the date of such certificate.
8.2 Operating Budgets. On or before the first day of
the calendar month that precedes the first calendar month of
a fiscal year, Borrowers shall provide Lender with an
operating budget for each of the Properties for the
immediately following fiscal year. Without limiting the
terms, provisions and limitations contained in this
Agreement and in the other Loan Documents, the budgets
provided to Lender under this paragraph are for Lender's
information only and are not subject to Lender's prior
approval (nor shall any changes thereto be subject to
Lender's prior approval). Subject to the terms, provisions
and limitations contained in this Agreement and in the other
Loan Documents, Borrowers covenant and agree to operate the
Properties substantially in accordance with said operating
budgets.
8.3 Books and Records. Borrowers shall maintain com-
plete books of account and other records for each of the
Properties, and the same shall be available for inspection
and copying by Lender at reasonable times and upon
reasonable prior notice.
ARTICLE IX. DEFAULTS AND REMEDIES
9.1 Default. The occurrence of any one or more of the
following shall constitute an event of default (hereinafter,
"Default") under this Agreement and the other Loan
Documents:
(a) Monetary. Borrowers' or any Guarantor's
failure to pay within five (5) days after receipt of written
notice that the same is due, any sums payable under the Note
or under any of
26
the other Loan Documents (said written
notice shall be deemed to include any monthly invoice or
billing statement sent by Lender to Borrowers); or
(b) Performance of Obligations. Borrowers' or any
Guarantor's failure within thirty (30) days after written
notice to cure any non-monetary default hereunder (or under
any other Loan Document) for which no other grace period is
specifically provided herein or therein; provided, however,
that: (i) if such default is not susceptible of cure within
such thirty (30) day period, such thirty (30) day period
shall be extended to a ninety (90) day period, but only if
(A) Borrowers or such Guarantor shall commence such cure
within such thirty (30) day period and shall thereafter
prosecute such cure to completion, diligently and without
delay, and (B) no other Default (or event that after the
giving of notice, the passage of time or both would
constitute a Default) shall have occurred; and (ii) the
grace period provided in this section shall in no event
apply to any default relating to (1) maintaining the
insurance required hereunder, (2) the payment of money to
any person or entity, (3) the fraudulent or intentional
misapplication of any funds (including, but not limited to,
insurance and condemnation proceeds, rents and other
revenues received by Borrowers or any Guarantor), (4)
Sections 9.1(c) through (m) of this Agreement or (5) any
other Default for which this Agreement or the applicable
Loan Document specifically provides that no period of grace
shall be applicable; or
(c) Attachment. The sequestration or attachment
of, or any levy or execution upon, any of the Properties,
any other collateral provided by Borrowers under any of the
Loan Documents, or any substantial portion of the other
assets of Borrowers, which sequestration, attachment, levy
or execution is not released, expunged or dismissed prior to
the earlier of (A) thirty (30) days after the sequestration,
attachment, levy or execution or (B) the sale of the assets
affected thereby; or
(d) Representations and Warranties. (i) The
failure of any material representation or warranty made by
any Borrower, any partner of any Borrower or any Guarantor
in any of the Loan Documents and the continuation of such
failure for more than fifteen (15) days after written notice
from Lender requesting that Borrowers cure such failure; or
(ii) any material adverse change in the financial condition
of any Borrower, any partner of any Borrower or any
Guarantor from the financial condition represented to Lender
as of the Effective Date; or
(e) Voluntary Bankruptcy; Insolvency; Dissolution.
(i) The filing of a petition by any Borrower for relief
under the Bankruptcy Code, or under any other present or
future state or
27
federal law regarding bankruptcy,
reorganization or other debtor relief law; (ii) the filing
of any pleading or an answer by any Borrower in any
involuntary proceeding under the Bankruptcy Code or other
debtor relief law which admits the jurisdiction of the court
or the petition's material allegations regarding said
Borrower's insolvency; (iii) a general assignment by any
Borrower for the benefit of creditors; or (iv) any Borrower
applying for, or the appointment of, a receiver, trustee,
custodian or liquidator of such Borrower or of any of its
property; or
(f) Involuntary Bankruptcy. The failure of any
Borrower to effect a full dismissal of any involuntary
petition under the Bankruptcy Code or under any other debtor
relief law that is filed against such Borrower, prior to the
earlier of the entry of any court order granting relief
sought in such involuntary petition, or thirty (30) days
after the date of filing of such involuntary petition; or
(g) Partners and Guarantors. The occurrence of
any of the events specified in Section 9.1(e) or (f) as to
any partner of any Borrower or as to any Guarantor; or
(h) Loss of Priority. Lender's loss of a valid
first lien on any collateral securing the Loan (other than
with respect to liens permitted under the Loan Documents or
otherwise approved by Lender); or
(i) Change in Control. If at any time all or any
portion of any direct or indirect ownership interest in any
Borrower, a partner of any Borrower (or a partner,
shareholder or member of a partner of any Borrower) is
conveyed, transferred, sold, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether
directly, indirectly, conditionally, unconditionally, by
operation of law or otherwise) (any of the foregoing being a
"Change in Control"). Notwithstanding the foregoing, the
following Change in Control shall not be deemed to be a
Default hereunder: a conveyance, transfer, sale, assignment
or other disposition (but not a pledge, hypothecation or
encumbrance) of any direct or indirect ownership interest in
any Borrower, a partner of any Borrower (or a partner,
shareholder or member of a partner of any Borrower) to an
affiliate of the transferor of said interest (provided that
said affiliate is directly or indirectly wholly-owned by the
same persons that own the transferor);
(j) Due on Sale. Except as may be expressly
permitted by this Agreement or the other Loan Documents, the
conveyance, transfer, sale or other disposition of any of
the Properties (or any portion thereof, other than obsolete
personal property or personal property that is replaced with
property of equivalent
28
value and utility) or the mortgaging,
encumbering or pledging by any Borrower of any of the
Properties (or any portion thereof), all whether
voluntarily, involuntarily or by operation of law, and
without the prior written consent of Lender; or
(k) Benefit Plans. Any Borrower has any
obligation or liability, contingent or otherwise, which
could have a material adverse effect on its ability to make
payments to repay the Loan hereunder or a lien on any
property of such Borrower arises under ERISA or the Code
which is not released or otherwise satisfied to the
satisfaction of Lender within thirty (30) days, with respect
to any Benefit Plan; or
(l) ERISA. (i) At any time (A) the assets of any
Borrower, or (B) the assets of any person or entity which
owns an equity interest in any Borrower are pursuant to
ERISA or the Code considered for any purpose of ERISA or
Section 4975 of the Code to be assets of a Plan; provided,
however, that a Default shall not be considered to have
occurred as set forth in this clause (i) unless Lender
determines in good faith that, or Lender determines in its
sole discretion exercised in good faith upon consideration
of but not limited to the facts presented by such Borrower
and without any duty of investigation that Lender cannot
within fifteen (15) days of Lender learning of such Plan
asset status determine whether, such Plan asset status has,
or may reasonably be likely to have, an adverse effect on
the performance by such Borrower of its monetary obligations
under this Agreement or under any other Loan Document or the
exercise by Lender of any of its remedies under this
Agreement or under any of the other Loan Documents; or (ii)
at any time the performance by any Borrower of any of its
obligations under this Agreement or under any other Loan
Document, or any of the transactions contemplated under this
Agreement or under any other Loan Document, or the exercise
by Agent or Lender of any of its rights or remedies under
this Agreement or under any of the Loan Documents will be a
"prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code unless at such time the
ERISA Assumption is inaccurate; or
(m) Additional Defaults. If at any time there is
a violation of Section 7.4, 7.5, 7.7, 7.8, 7.10, 7.11(a),
7.11(b) or 7.18 of this Agreement or Section 14 or 19 of the
Guaranty.
9.2 Acceleration Upon Default; Remedies. Upon the
occurrence of any Default specified in this Article 9,
Lender may, at its sole option, declare all sums owing to
Lender under the Note, this Agreement and the other Loan
Documents immediately due and payable. Upon such accelera-
tion, Lender may, in addition to all other remedies
permitted under this Agreement and the other Loan Documents
and at law or equity, charge, setoff and
29
otherwise apply all or any part of the funds on deposit in the
Operating Account against the Liabilities or any part thereof.
To the extent permitted by applicable law, Lender may also exercise
all of the rights and remedies of a secured party under the
applicable Uniform Commercial Code.
9.3 Disbursements to Third Parties. Upon the
occurrence of a Default occasioned by Borrowers' failure to
pay money to a third party as required by this Agreement,
Lender may but shall not be obligated to make such payment
with Lender's funds or with funds from Borrowers that are on
deposit with Lender. Borrowers shall immediately repay such
funds upon written demand of Lender (together with interest
thereon at the rate set forth in the Note from the date of
the disbursement until the outstanding balance thereof is
paid in full). The Default with respect to which any such
payment has been made by Lender shall not be deemed cured
until such repayment has been made by Borrowers to Lender.
Any amounts advanced by Lender under this section shall be
deemed to be a protective advance that is fully secured by
the Loan Documents.
9.4 Repayment of Funds Advanced. Any funds expended by
Lender in the exercise of its rights or remedies under this
Agreement and the other Loan Documents shall be payable to
Lender upon demand, together with interest at the rate
applicable to the principal balance of the Note from the
date the funds were expended.
9.5 Rights Cumulative, No Waiver. All of Lender's
rights and remedies provided in this Agreement and the other
Loan Documents, together with those granted by law or at
equity, are cumulative and may be exercised by Lender at any
time. Lender's exercise of any right or remedy shall not
constitute a cure of any Default unless all sums then due
and payable to Lender under the Loan Documents are repaid
and Borrowers have cured all other Defaults. No waiver
shall be implied from any failure of Lender to take, or any
delay by Lender in taking, action concerning any Default or
failure of condition under the Loan Documents, or from any
previous waiver of any similar or unrelated Default or
failure of condition. Any waiver or approval under any of
the Loan Documents must be in writing and shall be limited
to its specific terms.
ARTICLE X. MISCELLANEOUS PROVISIONS
10.1 Indemnity. Borrowers hereby agree to defend,
indemnify and hold harmless Lender, its directors, officers,
employees, agents, successors and assigns from and against
any and all losses, damages, liabilities, claims, actions,
judgments,
30
court costs and legal or other expenses
(including, without limitation, reasonable attorneys' and
paralegals' fees and expenses, both internal and external)
which Lender may incur as a direct or indirect consequence
of: (a) the purpose to which Borrowers apply the Loan
proceeds, (b) the failure of Borrowers to perform any
obligations as and when required by this Agreement or any of
the other Loan Documents, (c) any failure at any time of any
of Borrowers' representations or warranties to be true and
correct or (d) any act or omission by Borrowers or a
constituent partner of Borrowers relating to the Loan, the
Properties or any of the obligations of Borrowers under the
Loan Documents. Borrowers shall immediately pay to Lender
upon demand any amounts owing under this indemnity, together
with interest from the date of demand until paid at the rate
of interest applicable to the principal balance of the Note.
BORROWERS' DUTIES AND OBLIGATIONS TO DEFEND, INDEMNIFY AND
HOLD HARMLESS LENDER SHALL SURVIVE CANCELLATION OF THE NOTE
AND THE RELEASE OF THE LIENS CREATED BY THE LOAN DOCUMENTS.
10.2 Notices. All notices, demands, or other
communications under this Agreement and the other Loan
Documents shall be in writing and shall be delivered to the
appropriate party at the address set forth on the signature
page of this Agreement (subject to change from time to time
by written notice to all other parties to this Agreement).
All communications shall be deemed served upon delivery of,
upon receipt of a telecopy, or if mailed, upon the first to
occur of receipt or the expiration of three (3) days after
the deposit in the United States Postal Service mail,
postage prepaid and addressed to the address of Borrowers or
Lender at the address specified; provided, however, that
non-receipt of any communication as the result of any change
of address of which the sending party was not notified or as
the result of a refusal to accept delivery shall be deemed
receipt of such communication.
10.3 Attorney-in-Fact. Borrowers hereby irrevocably
appoint and authorize Lender, as Borrowers'
attorney-in-fact, which agency is coupled with an interest,
to execute and/or record in Lender's or Borrowers' name, any
notices, instruments or documents that Lender deems
reasonably necessary to protect Lender's interest under any
of the Loan Documents. Copies of any such notices,
instruments or documents executed by Lender pursuant to such
power of attorney shall promptly be provided to Borrowers
(provided, however, the failure of Lender to promptly
provide any such notices, instruments or documents shall not
affect the validity of any such notices, instruments or
documents or the power of attorney provided for herein).
10.4 Actions. No person other than Lender and
Borrowers and their permitted successors and assigns shall
have any right
31
of action under any of the Loan Documents.
Borrowers agree that Lender may commence, appear in and
defend any action or proceeding purporting to affect the
Loan Documents and Borrowers shall immediately reimburse
Lender upon demand for all such expenses so incurred or paid
by Lender, including, without limitation, reasonable
attorneys' and paralegals' fees and expenses (both internal
and external) and court costs.
10.5 Relationship of Parties. The relationship of
Borrowers and Lender under the Loan Documents is, and shall
at all times remain, solely that of borrower and lender, and
Lender neither undertakes nor assumes any responsibility or
duty to Borrowers or to any third party with respect to the
Properties.
10.6 Delay Outside Lender's Control. Lender shall not
be liable in any way to Borrowers or any third party for
Lender's failure to perform or delay in performing under the
Loan Documents (and Lender may suspend or terminate all or
any portion of Lender's obligations under the Loan
Documents) if such failure to perform or delay in performing
results directly or indirectly from, or is based upon, the
action, inaction, or purported action, of any governmental
or local authority, or because of war, rebellion, insurrec-
tion, strike, lock-out, boycott or blockade (whether
presently in effect, announced or in the sole judgment of
Lender deemed probable), or from any act of God or other
cause or event beyond Lender's control.
10.7 Attorneys' and Paralegals' Fees and Expenses;
Enforcement. If any attorney is engaged by Lender to
enforce, interpret or defend any provision of this
Agreement, any of the other Loan Documents or Other Related
Documents, or as a consequence of any Default under the Loan
Documents, with or without the filing of any legal action or
proceeding, Borrowers shall immediately pay to Lender, upon
demand, the amount of all reasonable attorneys' and
paralegals' fees and expenses (both internal and external)
and all costs incurred by Lender in connection therewith,
together with interest thereon from the date of such demand
until paid at the rate of interest applicable to the
principal balance of the Note as specified therein.
10.8 Immediately Available Funds. Unless otherwise
expressly provided for in this Agreement, all amounts
payable by Borrowers to Lender shall be payable only in
United States currency, immediately available funds.
10.9 Lender's Consent. Wherever in this Agreement
there is a requirement for Lender's consent and/or a
document to be provided or an action taken "to the
satisfaction of Lender", it is understood by such phrase
that Lender shall exercise its
32
consent, right or judgment in
a reasonable manner given the specific facts and
circumstance applicable at the time.
10.10 Loan Sales and Participations; Disclosure of
Information. Borrowers agree that Lender may elect at any
time, to sell, assign, transfer or grant participations in
all or any portion of its rights and obligations under the
Loan Documents, and that any such sale, assignment, transfer
or participation may be to one or more financial
institutions, private investors, trusts and/or other
entities, at Lender's sole discretion. Borrowers further
agree that Lender may disseminate to any such actual or
potential purchaser(s), assignee(s), transferee(s) or
participant(s) all documents and information (including,
without limitation, all financial information) which has
been or is hereafter provided to or known to Lender with
respect to: (a) the Properties and their operation, (b) any
party connected with the Loan (including, without
limitation, Borrowers, any partner of either of the
Borrowers and any Guarantor) and/or (c) any lending
relationship other than the Loan which Lender may have with
any party connected with the Loan. In the event of any such
sale, assignment, transfer or participation, Lender and the
parties to such transaction shall share in the rights and
obligations of Lender as set forth in the Loan Documents
only as and to the extent they agree among themselves. In
connection with any such sale, assignment, transfer or
participation, Borrowers further agree that the Loan
Documents shall be sufficient evidence of the obligations of
Borrowers to each purchaser, assignee, transferee or
participant, and upon written request by Lender, Borrowers
shall enter into such amendments or modifications to the
Loan Documents as may be reasonably required in order to
evidence any such sale, assignment, transfer or
participation. The indemnity obligations of Borrowers under
the Loan Documents shall also apply with respect to any
purchaser, assignee, transferee or participant. Borrowers
covenant and agree that they will cooperate with Lender in
connection with any of the transactions contemplated by this
section (said cooperation shall be deemed to include, but
shall not be limited to, the execution and delivery of any
documents reasonably requested by Lender).
10.11 Lender's Agents. Lender may designate an agent
or independent contractor to exercise any of Lender's rights
under this Agreement and under any of the other Loan
Documents. Any reference to Lender in any of the Loan
Documents shall include Lender's agents, employees or
independent contractors.
10.12 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO
THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR
33
FUTURE MODIFICATION THEREOF OR
(B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED)
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT
THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
10.13 Severability. If any provision or obligation
under this Agreement and the other Loan Documents shall be
determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable, that provision shall be
deemed severed from the Loan Documents and the validity,
legality and enforceability of the remaining provisions or
obligations shall remain in full force as though the
invalid, illegal, or unenforceable provision had never been
a part of the Loan Documents.
10.14 Successors and Assigns. Except as otherwise
expressly provided under the terms and conditions of this
Agreement, the terms of the Loan Documents shall bind and
inure to the benefit of the successors and assigns of the
parties.
10.15 Time. Time is of the essence of each and every
term of this Agreement.
10.16 Headings. All article, section or other headings
appearing in this Agreement and any of the other Loan
Documents are for convenience of reference only and shall be
disregarded in construing this Agreement and any of the
other Loan Documents.
10.17 Governing Law. (a) This Agreement and all of the
other Loan Documents (except as may otherwise be provided
for therein) shall be governed by, and construed and
enforced in accordance with the laws of the State of
California, except to the extent preempted by Federal laws.
Borrowers, Guarantors and all persons and entities in any
manner obligated to Lender under the Loan Documents consent
to the jurisdiction of any Federal or State Court within the
State of California or in any state where any collateral
securing the Loan is located having proper venue and also
consent to service of process by any means permitted by law.
34
(b) Each of the Borrowers, each of the Guarantors
and any other persons and entities in any manner obligated
to Lender under the Loan Documents agree that Lender shall
have the right to proceed against any one or more of the
Borrowers, one or more of the Guarantors or such other
persons or entities in a court in any location selected by
Lender to enable Lender to realize on the collateral for the
Loan, or to enforce a judgment or other court order entered
in favor of Lender or to enforce any of Lender's other
rights hereunder or under any of the other Loan Documents.
(c) Each of the Borrowers, each of the Guarantors
and any other persons and entities in any manner obligated
to Lender under the Loan Documents waive any objection that
they may have to the location of the court in which Lender
has commenced a proceeding hereunder or under any of the
other Loan Documents or the transactions contemplated
thereby.
10.18 Integration; Interpretation. The Loan Documents
contain or expressly incorporate by reference the entire
agreement of the parties with respect to the matters contem-
plated therein and supersede all prior negotiations and
agreements, written or oral. The Loan Documents shall not
be modified except by written instrument executed by all
parties. Any reference in any of the Loan Documents to any
Property or Properties shall include all or any part of such
Property or Properties. Any reference to the Loan Documents
includes all amendments, restatements, renewals and
extensions now or hereafter approved by Lender in writing.
10.19 Counterparts. This Agreement, any of the other
Loan Documents (except for the Note), any Other Related
Documents and any subsequent modifications, amendments,
waivers, consents or supplements thereof, if any, may be
executed in any number of counterparts, each of which when
executed and delivered shall be deemed to be an original and
all such counterparts together, shall constitute one and the
same instrument.
10.20 Joint and Several Liability. The obligations of
the Borrowers hereunder and under the other Loan Documents
to which they are a party are joint and several. Lender may
release or settle with either of the Borrowers or either of
the Guarantors (or with respect to the assets of any one or
more of the foregoing) without affecting the continuing
liability of the other Borrowers. Lender may proceed
against any one or more of the Borrowers without proceeding
against any of the other Borrowers.
35
IN WITNESS WHEREOF, Borrowers and Lender have executed
this Agreement as of the date appearing on the first page of
this Agreement.
"Lender"
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxx
--------------------------
Its: SVP
Notices to Lender:
Xxxxx Fargo Bank, National Association
000 Xxxxxxxxxx Xxxxxx, MAC 0167-171
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
With a Copy to:
Xxxxx Fargo Bank, National Association
Disbursement Center
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Manager
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
With a Copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxx
Telecopy No.:(000) 000-0000
Confirmation No.: (000) 000-0000
With a Copy to:
Xxxxx Fargo Bank, National Association
000 Xxxxx Xxxxx Xxxxxx
9th Floor, MAC 2064-092
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
36
"Borrowers"
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP, a
California limited partnership
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Xxxxxxxxxxx
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a California corporation,
its general partner
By: /s/ Xxxxxx Xxxxxxxxxx
-------------------------
Its: Chairman/CEO
-------------------------
By: /s/ Xxxxxx Xxxxxxxxxx
----------------------------
Xxxxxx Xxxxxxxxxx, its general partner
MONTROSE OFFICE PARK JOINT VENTURE, a Maryland joint venture
By: Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership, its joint venturer
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C.A. Xxxxxxxxxxx
------------------------
Its: Vice President
------------------------
By: Glenborough Corporation, a California
corporation,
its general partner
By: /s/ Xxxxxx Xxxxxxxxxx
------------------------
Its: Chairman/CEO
------------------------
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxxxx, its general partner
AND
37
By: Montrose Office Park Limited Partnership, a Maryland
limited partnership, its joint venturer
By: Prudential-Bache/Equitec Real Estate
Partnership, a
California limited partnership, its general
partner
By: Prudential-Bache Properties, Inc., a
Delaware
corporation, its general partner
By: /s/ C. A. Xxxxxxxxxxx
------------------------
Its: Vice President
------------------------
By: Glenborough Corporation, a California
corporation, its general partner
By: /s/ Xxxxxx Xxxxxxxxxx
------------------------
Its: Chairman/CEO
------------------------
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxxxx, its general partner
Notices to Borrowers:
c/o Glenborough Corporation
000 Xxxxx Xx Xxxxxx Xxxx
00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
38
EXHIBIT A
GATEWAY PROPERTY
Gateway Executive Center
000 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx
00
XXXXXXX X
XXXX XXXXX XXXXXXXX
Xxxx Plaza Professional Center
0000 X Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx
40
EXHIBIT C
MEMPHIS PROPERTY
Poplar Towers
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx
41
EXHIBIT D
SEATTLE PROPERTY
Totem Valley Business Center
00000 X.X. 000xx Xxxxx
Xxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxxx
42
EXHIBIT E
ROCKVILLE PROPERTY
Montrose Office Park
0000-0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx Xxxxxx, Maryland
43
EXHIBIT F
DOCUMENTS
A. Loan Documents. The documents listed below, numbered 1
through 18 inclusive, and amendments, modifications and
supplements thereto which have received the prior
written consent of Lender, together with any documents
executed in the future that are approved by Lender and
that recite that they are "Loan Documents" for purposes
of this Agreement are collectively referred to herein as
the Loan Documents.
1. Loan Agreement.
2. Amended, Restated and Consolidated Promissory Note.
3. Letter regarding the Loan Fee.
4. Guaranty of the Non-Recourse Exceptions.
5. Hazardous Materials Indemnity Agreement.
6. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Gateway Property.
7. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Park Plaza Property.
8. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Memphis Property.
9. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Seattle Property (including leasehold Deed of Trust
component for parking lot leased from Burlington
Northern and with consent of Burlington Northern).
10. Amended and Restated Deed of Trust, with Absolute
Assignment of Leases and Rents, Security Agreement,
Assignment of Equipment Leases, Assignment of Permits
and Fixture Filing for the Rockville Property.
11. Assignment of Deed of Trust and Other Loan Documents,
with Allonge.
12. Deed of Appointment of Substitute Trustee.
13. Consent and Agreement of Partners.
F-1
14. UCC Financing Statements (Personal Property), to be
filed with:
(a) the California Secretary of State (Borrower A and
Borrower B);
(b) the Department of Assessments and Taxation of the
State of Maryland (Borrower B);
(c) the Tennessee Secretary of State (Borrower A);
(d) the Department of Licensing of the State of
Washington (Borrower A);
(e) the New York Department of State (Borrower A and
Borrower B); and
(f) the City Register of New York County, New York
(Borrower A and Borrower B).
15. UCC Financing Statements (Fixture Filing), to be filed
with:
(a) the Recorder of Deeds for Sacramento County,
California (Borrower A);
(b) the Circuit Court Clerk for Xxxxxxxxxx County,
Maryland (Borrower B);
(c) the Register of Deeds of Shelby County, Tennessee
(Borrower A); and
(d) the County Auditor of King County, Washington
(Borrower A).
16. Assignment of existing Maryland UCC Financing
Statements.
17. Non-Disturbance, Attornment and Subordination Agreement
executed by each of the following:
(a) Memphis Property:
(i) First Commercial Bank;
(ii) Xxxxx and Company;
(b) Park Plaza Property:
(i) California State USDA Office;
(ii) Allnet Communications Services;
(c) Gateway Property:
(i) California Optometric Association;
(ii) California Employment Development
Department;
(d) Seattle Property:
(i) Optical Vision;
(e) Montrose Property:
(i) PB Farradyne, Inc.;
(ii) Systems Flow, Inc.;
(iii) R.C. Publications;
(iv) SPC Financial;
(v) Technical Resources;
(vi) TAF Associates;
(vii) Registry;
(viii) BK Dynamics;
(ix) Dennisberg Advertising;
(x) Signal Transcription;
(xi) M-Cubed Information Systems;
F-2
(xii) Analysis & Technology (Vector); and
(xiii) Toll Brothers.
18. Subordination, Standstill, Contribution and Indemnity
Agreement.
F-3
B. Other Related Documents (Which Are Not Loan Documents):
1. Funding documentation required by the Lender:
(a) Funds Transfer Agreement for Disbursement of Loan
Proceeds; and
(b) Disbursement Authorization.
2. Copies of the following documents, certified by the
Borrowers to be true, accurate, complete and in full
force and effect:
(a) Limited Partnership Agreement for Borrower A;
(b) Joint Venture Agreement for Borrower B;
(c) A rent roll in form and substance acceptable
to the Lender for each of the Properties;
(d) All of the leases for equipment at each of the
Properties;
(e) All of the licenses and permits required to operate
each of the Properties;
(f) All construction and other warranties and
guaranties covering each of the Properties or any
portion thereof;
(g) All maintenance and service agreements for each of
the Properties; and
(h) All labor agreements with any labor organizations
representing any employees at any of the
Properties.
3. Copy of the Limited Partnership Agreement for Montrose
Office Park Limited Partnership, a Maryland limited
partnership ("Montrose LP") certified by Montrose LP to
be true, accurate, complete and in full force and
effect.
4. Copies of the following documents, certified by the
Corporate Secretary for Prudential-Bache Properties,
Inc., a Delaware corporation ("PBP") to be true,
accurate, complete and in full force and effect:
(a) Certificate of Incorporation for PBP;
(b) By-laws of PBP;
(c) Corporate Resolutions for PBP; and
(d) Incumbency Certificate for PBP.
5. Copies of the following documents, certified by the
Corporate Secretary for Glenborough Corporation, a
California corporation ("Glenborough") to be true,
accurate, complete and in full force and effect:
(a) Articles of Incorporation for Glenborough;
(b) By-laws of Glenborough;
(c) Corporate Resolutions for Glenborough; and
(d) Incumbency Certificate for Glenborough.
6. Consent of the Investment Committee of Borrower A
necessary to authorize this transaction on behalf of
Borrower A and as a joint venturer of Borrower B.
F-4
7. Certified copy of the Certificate of Limited Partnership
for Borrower A (filed with the California Secretary of
State).
8. Certified copy of the Amended Trade Name Designation for
Borrower B (filed with the Circuit Court Clerk for
Xxxxxxxxxx County, Maryland). [This requirement may be
deleted if local counsel confirms that it is
unnecessary.]
9. Certified copy of the Certificate of Limited Partnership
for Montrose LP (filed with the Department of
Assessments and Taxation of the State of Maryland.
10. Good Standing Certificate for Borrower A, issued by the
California Secretary of State.
11. Good Standing Certificate for PBP, issued by the
Delaware Secretary of State.
12. Good Standing Certificate for Glenborough, issued by the
California Secretary of State.
13. Good Standing Certificate for Montrose LP, issued by the
Department of Assessments and Taxation of the State of
Maryland.
14. Evidence that Borrower A is qualified to do business and
in good standing in the States of Tennessee, Washington
and Maryland.
15. Evidence that PBP is qualified to do business and in
good standing in the States of California, Tennessee,
Washington and Maryland.
16. Evidence that Glenborough is qualified to do business
and in good standing in the States of Tennessee,
Washington and Maryland.
17. Legal opinion(s) (including local counsel opinions) from
counsel to the Borrowers, the partners of Borrower A,
the joint venturers of Borrower B and the Guarantors.
F-5
EXHIBIT G
OWNERSHIP STRUCTURE
EXHIBIT H
LEASES
EXHIBIT I
EQUIPMENT LEASES
None.
EXHIBIT J
REQUIRED PERMITS
Occupancy certificates for the Properties.
SCHEDULE 5.6
LITIGATION
None.
SCHEDULE 6.1
HAZARDOUS MATERIALS
Hazardous materials actually disclosed in the written
environmental assessment reports respecting the various
Properties provided to Lender by Lender's environmental
consultants prior to the date of execution of this
Agreement.
287487.02 XXXXXXX, XXXXXX X. CH January 16, 1997 (10:24p)
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