CHANGE IN TERMS AGREEMENT
EXHIBIT
10.56.4
THIS
CHANGE IN TERMS AGREEMENT (this “CIT”) is made by and between Heritage Bank of
Commerce, a California banking corporation (“Bank”), with its headquarters
address at 000 Xxxxxxx Xxxxxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000, and Mission West
Properties, Inc., a Maryland corporation (“Borrower”), with its principal
address at 00000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000. This CIT
is executed on October 13, 2009 and is made effective upon the satisfaction of
all of the conditions precedent set forth herein (the “Effective Date”) at San
Jose, California.
RECITALS
A. As
of March 4, 2008, Bank and Borrower entered into certain agreements (the “March
2008 Loan Documents”) including but not limited to a Revolving Credit Loan
Agreement (the “Loan Agreement”), pursuant to which Bank agreed, subject to the
terms and conditions set forth therein, to lend up to the sum of Ten Million
Dollars ($10,000,000.00) to Borrower, and pursuant to which Borrower agreed to
repay the loan on or before June 15, 2009.
B. Thereafter,
pursuant to a Change in Terms Agreement dated April 17, 2008 (the “April 2008
CIT”), Bank and Borrower made certain changes to the March 2008 Loan Documents,
including but not limited to revising the Loan Agreement to provide for a
Commitment Amount (as defined in the April 2008 CIT), to Seventeen Million Five
Hundred Thousand and 00/100 Dollars ($17,500,000.00). Borrower
executed an Amended and Restated Revolving Credit Note dated April 17, 2008
pursuant to the April 2008 CIT (the “Note”).
C. Thereafter,
pursuant to a Change in Terms Agreement dated June 5, 2009 (the “June 2009 CIT”)
Bank and Borrower made certain changes to the March 2008 Loan Documents,
including but to limited to revising the Loan Agreement to extend the maturity
date to September 15, 2009.
D. Thereafter,
pursuant to a Change in Terms Agreement dated August 20, 2009 (the “August 2009
CIT”) Bank and Borrower made certain changes to the March 2008 Loan Documents,
including but to limited to revising the Loan Agreement to extend the maturity
date to October 15, 2009.
E. The
Termination Date (as defined in the August 2009 CIT), is October 15, 2009.
Borrower has requested, and Bank has agreed, subject to the terms and conditions
of this CIT, to extend the Termination Date to September 15, 2011.
AGREEMENT
In
consideration of the covenants, terms and conditions set forth herein, and in
consideration and for other good and valuable consideration, the parties hereto
agree as set forth below.
1. Incorporation by
Reference. The Recitals set forth above are true and correct
and are incorporated herein by reference in this CIT, together with the March
2008 Loan Documents, the April 2008 CIT, the June 2009 CIT, the August 2009 CIT
and any other documents executed by and between Bank and Borrower in connection
with or after the March 2008 Loan Documents (sometimes, collectively, the “Loan
Documents”). All capitalized terms not defined herein shall have the
meaning given in the Loan Documents.
2. Amendment of Definition of
Termination Date. The definition of “Termination Date” in
Section 1.1 of the Loan Agreement is hereby deleted and replaced by the
following:
“‘Termination
Date’ shall mean September 15, 2011.”
3. Amendment of Interest
Rate. Section 2.2 of the Loan Agreement shall be deleted in
its entirety and replaced with the following:
“2.2 Interest
Rate. Except as otherwise provided herein (including without
limitation Section
2.5 relating to the Default Rate), each Revolving Loan will bear interest
on the unpaid principal amount thereof at the greater of (i)
the Variable Rate or (ii) four percent (4.00%) per annum.”
4. Minimum Annual
Fee. Section 2.9.1 of the Loan Agreement (as amended by the
April 2008 CIT) shall be deleted in its entirety and replaced with the
following:
“2.9.1 Minimum Annual
Fee. The Borrower shall pay to the Bank a minimum annual fee
of Seventeen Thousand Five Hundred and 00/100 Dollars ($17,500.00) (the “Minimum
Annual Fee”). The Minimum Annual Fee shall be payable in advance, in
the manner provided in Section 2.11 herein,
on October 15, 2009 for the first partial year hereunder, and on September 15,
2010 and each September 15 thereafter for any subsequent year. The
Minimum Annual Fee shall be pro-rated for any partial year.”
5. Warranties and
Representations. Article 4 of the Loan Agreement is hereby
amended by adding the following to the end thereof:
“4.16. Title to the
Property. (a) MWP XX XX (defined in Section 7(c) below of
this CIT), holds marketable and indefeasible fee simple absolute title to the
Property (defined in Section 7(c) below of this CIT), (b) MWP XX XX has the
right and is lawfully authorized to encumber the Property, (c) the Property is
subject only to those exceptions to title identified in that certain preliminary
report prepared by First American Title Insurance Company dated August 12, 2009
(Update), Order Number NCS-303379-SC, which has been previously provided to Bank
(the “Permitted Exceptions”), and (d) the Property is free from all due and
unpaid taxes, assessments and mechanics’ and materialmen’s
liens.
4.17. Existing Leases and Existing
Tenants. Borrower further represents and warrants to Bank that portions
of the Property are currently leased to (i) Silicon Valley Colocation, (ii)
Forward Technology, and (iii) BT INS (collectively, the “Existing Tenants”),
pursuant to written leases, and any amendments thereto, copies of which have
been provided to Bank (the “Existing Leases”). The Existing Leases
are in full force and effect; no event of default (and no event which, with the
giving of notice and the passage of time would become an event of default)
exists under any of the Existing Leases, and no changes or amendments have been
made to any of the Existing Leases. There are no occupants of the
Property other than the Existing Tenants.”
6. Events of
Default. Section 7.1 of the Loan Agreement is hereby amended
by adding the following to the end thereof:
“7.1.11 If
MWP XX XX fails to satisfy or perform any of the covenants of the Agreement Not
to Encumber or the Deed of Trust (both defined in Section 7(c) below of this
CIT).
7. Conditions Precedent.
The effectiveness of this CIT and Bank’s obligations hereunder are conditioned
upon the satisfaction of each and all of the following conditions on or before
October 15, 2009:
(a) Borrower
shall have executed and delivered this CIT to Bank;
(b) Borrower
shall have provided to Bank a copy of resolutions of the Board of Directors of
Borrower in form and substance satisfactory to Bank in its sole and absolute
discretion authorizing the execution, delivery, and performance of this CIT,
which shall have been certified by the Secretary or Assistant Secretary of
Borrower as of the date of delivery as being complete, accurate, and in
effect.
(c) Borrower
shall have caused Mission West Properties, X.X. XX, a Delaware limited
partnership (“MWP XX XX”) to have duly executed, acknowledged and delivered to
Bank (i) an Agreement Not to Convey or Encumber (the “Agreement Not to
Encumber”) and (ii) an Accommodation Deed of Trust - Variable Interest Rate –
Revolving Line of Credit (the “Deed of Trust”), with respect to that certain
real property owned by MWP XX XX and located at 0000 Xxxxxxx Xxxxx and 1688
– 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx (the “Property”), both of which
shall be in form and substance satisfactory to Bank in its sole and absolute
discretion;
(d) Borrower
shall have caused MWP XX XX to have provided to Bank a copy of a resolutions of
the general partner of MWP XX XX in form satisfactory to the Bank in its sole
and absolute discretion authorizing the execution, delivery, and performance of
the Agreement Not to Encumber and the Deed of Trust.
(e) Borrower
shall have caused MWP XX XX to procure and deliver to Bank and thereafter
maintain a policy or policies of insurance in form and content and by an insurer
or insurers satisfactory to Bank, naming Bank as Loss Payee, Mortgagee or
Additional Insured (as applicable), including a clause giving Bank a minimum of
thirty (30) days’ notice if such insurance is cancelled, as
follows: (i) builder’s “all risk” insurance in non-reporting form, in
an amount not less than the full insurable completed value of the improvements
located on the Property on a replacement cost basis, with the normal conditions
including fire, extended coverage, vandalism, malicious mischief, course of
construction endorsement and a lender’s loss payable endorsement naming Bank as
loss payee; (ii) commercial general liability insurance on an “occurrence”
basis, indicating coverage satisfactory to Bank, and naming Bank as an
additional insured; (iii) workers’ compensation insurance, issued to MWP XX XX,
as may be required by applicable workers’ compensation insurance laws; (iv) any
additional or different coverage as may be specified in Bank’s Agreement to
Provide
Insurance; and (v) any and
all additional insurance that Bank in its reasonable judgment may from time to
time require (including, without limitation, flood coverage), against insurable
hazards which at the time are commonly insured against in the case of property
similarly situated. The Bank expressly will not require earthquake
insurance. Should the Property be located in an area designated by
the Director of the Federal Emergency Management Agency as a special flood
hazard area, MWP XX XX agrees to obtain and maintain Federal Flood
Insurance, if available, for the full unpaid principal balance of the loan and
any prior liens on the Property securing the loan, up to the maximum policy
limits set under the National Flood Insurance Program, or as otherwise required
by Lender, and to maintain such insurance for the term of the
loan. Borrower shall deliver (or shall cause MWP LP to deliver) to
Bank a Lender’s Loss Payable Endorsement (438BFU or CP 12-18). At
Bank’s request, Borrower shall supply Bank with a counterpart original of any
policy.
(f) Borrower
shall have paid the sum of Two Thousand Five Hundred and 00/100 Dollars
($2,500.00) to Bank as and for a portion of Bank’s attorneys’ fees incurred in
preparing this Agreement and any related documents.
(g) Borrower
shall have paid to Bank the sum of Sixteen Thousand Five Hundred and 00/100
Dollars ($16,500.00) in order to bring its currently due Minimum Annual Fee to
the required amount of Seventeen Thousand Five Hundred and 00/100 Dollars
($17,500.00) to Bank. (The next payment of the Minimum Annual Fee
shall be due on September 15, 2010.)
8. Agreement Not to Encumber
and Deed of Trust; Substitution of Collateral.
(a) Bank
and Borrower agree that (i) Bank may record the Agreement Not to Encumber in the
Official Records, Office of the County Recorder of Santa Xxxxx County, State of
California (“Official Records”) on or promptly following the Effective Date, and
(ii) Bank shall not record the Deed of Trust in the Official Records unless and
until the occurrence of an Event of Default.
(b) Upon
the occurrence of an Event of Default, (i) Bank may record the Deed of Trust in
the Official Records without notice to Borrower or Owner.
(c) If
Bank is entitled to and does record the Deed of Trust, then concurrently with
the recordation of the Deed of Trust, or within a reasonable time thereafter,
Borrower shall deliver or cause to be delivered to Bank a 2006 ALTA Loan Policy,
with creditor’s rights exclusion deleted 1970 or its equivalent with a liability
limit of not less than the face amount of the Note, issued by First American
Title Insurance Company (or such other title insurer acceptable to Bank),
insuring Bank’s interest under the Deed of Trust as a valid first lien on the
Property, together with such reinsurance or coinsurance agreements or
endorsements to said policy as Bank may require, with exceptions other than
Permitted Exceptions.
(d) If
Bank is entitled to and does record the Deed of Trust, then concurrently with
the recordation of the Deed of Trust, or within a reasonable time thereafter,
Borrower shall use commercially reasonable efforts to cause (or shall cause MWP
XX XX to cause) each of the Existing Tenants (and/or any replacement tenant for
an Existing Tenant and any new tenants of the Property) to deliver to Bank an
estoppel certificate and a subordination, non-disturbance and attornment
agreement in form and substance acceptable to Bank.
(e) Provided
no Event of Default has occurred and is continuing, Borrower shall have the
right to substitute a different property (the “Substitute Property”) for the
Property, subject to satisfaction of each of the following terms and
conditions:
(i) Borrower
shall submit to Bank a written request for consent to the proposed substitution
of collateral (the “Substitution Request”), together with all documentation
reasonably required for Bank to make the determinations set forth in subsection
(ii) below not later than sixty (60) days prior to the date of the proposed
Substitution. Upon receipt of the Substitution Request and all items
required in this Section 8(e), Bank shall submit the Substitution Request for
internal approval.
(ii) The
Substitute Property shall be satisfactory to Bank in its reasonable discretion
(unless otherwise specifically specified), including without
limitation:
(A) The
Substitute Property shall have an appraised value (which shall be determined by
an appraiser engaged by and solely approved by Bank) which results in a maximum
loan-to-value ratio of no greater than sixty percent (60%). Such
appraisal shall be at Borrower’s expense and conducted in a manner consistent
with Bank’s then-current underwriting practices, using a method which (1)
conforms to then-current regulatory requirements, (2) is determined by Bank to
be reasonable and appropriate under the circumstances, and (3) takes into
account then-current market conditions, including vacancy factors, estimated
date of stabilization, rental rates and concessions, all as determined by
Bank. Bank shall have received from Borrower such statements of
income and expenses, certified rent rolls and such other documents as requested
by Bank to conduct such appraisal.
(B) Unless
otherwise agreed by Bank, the Substitute Property shall be similar to, but of no
less quality than, the Property with respect to (a) amount and stability of cash
flow from the property, (b) tenants’ credit, quality and
uses of the
property, and diversification of the tenants, and (c) the property’s age, size,
building construction design and quality, and level of improvements, all as
determined by Bank in its reasonable discretion.
(C) The
property type and submarket location of the Substitute Property shall be
satisfactory to Bank in its sole and absolute discretion.
(iii) The
Substitute Property shall not be subject to any liens or encumbrances and the
condition of title to the Substitute Property (including without limitation the
existence of any easements or other rights necessary for the use or operation of
the Substitute Property) shall be acceptable to Bank in its sole and absolute
discretion.
(iv) The
Substitute Property shall be a separate legally subdivided parcel or parcels and
be taxed as a separate tax parcel or parcels.
(v) If
Bank approves the Substitution Request, then Borrower shall (or shall cause the
fee owner of the Substitute Property to): (A) duly execute, acknowledge and
deliver to Bank a deed of trust in the same form and substance as the Deed of
Trust, encumbering the Substitute Property, and Bank shall return the original
Deed of Trust to Borrower; (b) duly execute, acknowledge and delivered to Bank
an Agreement Not to Convey or Encumber describing the Substitute Property in the
same form and substance as the Agreement Not to Encumber, and Bank shall,
concurrently with the recordation thereof, release or terminate the Agreement
Not to Encumber describing the Property; and (C) upon the delivery to Bank of
such documents, all references in this CIT to the Property, the Deed of Trust
and/or the Agreement Not to Encumber shall mean and refer to the Substitute
Property and the Deed of Trust and the Agreement Not to Encumber describing the
Substitute Property.
(vi) Borrower
shall pay all of Bank’s expenses in connection with the collateral substitution,
including without limitation, the fees and costs of all appraisers, attorneys,
engineers, architects and surveyors, and all escrow fees and recording charges
incurred by Bank in connection with such collateral substitution.
9. Legal
Effect. Except as specifically provided herein, all of the
terms and conditions of the Loan Documents remain in full force and
effect.
10. Integration. This
CIT is an integrated agreement. Except as specifically set forth
herein, and except for the Loan Documents as modified hereby, it supersedes all
prior representations and agreements, if any, between the parties to this
CIT. This CIT and the Loan Documents as modified hereby contain the
entire and only understanding of the parties with respect to the subject matter
hereof and thereof, and may not be altered, amended or extinguished, except by a
writing signed by all parties.
IN
WITNESS WHEREOF, the parties hereto have executed and entered into this CIT
effective as of the Effective Date first written above.
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BANK:
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HERITAGE
BANK OF COMMERCE
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a
California banking corporation
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By:
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/s/ Xxxxxxx Xxxx
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Xxxxxxx
Xxxx
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Its:
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Senior
Vice President / Regional Manager
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BORROWER:
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MISSION
WEST PROPERTIES, INC.
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a
Maryland corporation
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By:
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/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx
X. Xxxxxx
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Its:
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President
and Chief Operating
Officer
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