EXHIBIT 10.5
LOAN AGREEMENT
Loan No. 754055/754056/752507
THIS LOAN AGREEMENT, made as of September 3, 2004, is by and between
PRINCIPAL COMMERCIAL FUNDING, LLC, a Delaware limited liability company, as
initial holder of Note A and Note B (each defined below), and PRINCIPAL LIFE
INSURANCE COMPANY, an Iowa corporation, as initial holder of Note C (defined
below), with an address at 000 Xxxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000-0000
(together with their respective successors and assigns, the "Lender"), and NNN
CONGRESS CENTER, LLC, NNN CONGRESS CENTER 1, LLC, NNN CONGRESS CENTER 2, LLC,
NNN CONGRESS CENTER 3, LLC, NNN CONGRESS CENTER 4, LLC, NNN CONGRESS CENTER 5,
LLC, NNN CONGRESS CENTER 6, LLC, NNN CONGRESS CENTER 7, LLC, NNN CONGRESS CENTER
8, LLC, NNN CONGRESS CENTER 10, LLC, NNN CONGRESS CENTER 11, LLC, NNN CONGRESS
CENTER 12, LLC, NNN CONGRESS CENTER 13, LLC, NNN CONGRESS CENTER 14, LLC, NNN
CONGRESS CENTER 15, LLC, NNN CONGRESS CENTER 16, LLC, NNN CONGRESS CENTER 17,
LLC, and GREIT - CONGRESS CENTER, LLC each a Delaware limited liability company
and tenant in common, with an address at 0000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx
Xxx, Xxxxxxxxxx 00000 ("Borrower" to be construed as "each and every Borrower"
or collectively, the "Borrowers" as the context so requires).
RECITALS
A. The Borrowers desire to obtain a loan (the "Loan") from Lender in the
original principal amount of Ninety Seven Million Five Hundred Thousand Dollars
($97,500,000.00) (the "Loan Amount");
B. The Loan will be evidenced initially by three secured promissory notes
issued by the Borrowers to each Lender (as its name appears thereon); Note A
will be issued in the original principal amount of Eighty Million Dollars
($80,000,000.00), Note B will be issued in the original principal amount of
Fifteen Million Dollars ($15,000,000.00), and Note C will be issued in the
original principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000.00);
C. Lender is willing to make the Loan on the condition that the Borrowers,
among other things, joins in the execution and delivery of this Agreement; and
D. Lender and the Borrowers contemplate that all or any portion of
Lender's interest in the Loan, the Loan Documents and the Environmental
Indemnity may be assigned, in whole or in part, by Lender, including without
limitation, in connection with one or more Securitization Transactions.
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NOW, THEREFORE, in consideration of the making of the Loan by Lender, and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
ARTICLE I
CERTAIN DEFINITIONS
"Acceptable Delaware LLC" shall mean a limited liability company formed
under Delaware law which (i) has at least one springing member, which, upon the
dissolution of all of the members or the withdrawal or the disassociation of all
of the members from such limited liability, shall immediately become the sole
members of such limited liability company, and (ii) otherwise meets the Rating
Agency criteria then applicable to such entities.
"Account Collateral" has the meaning set forth in Section 5.3(A) of this
Agreement.
"Affiliate(s)" means any person or Entity directly or indirectly
controlling, controlled by, or under common control with the Borrowers or any
person or Entity owning a material interest in the Borrowers, either directly or
indirectly, and shall include without limitation, Interest Owners and SPE Equity
Owners.
"Agent" means NNN Congress Center, LLC, as such person or Entity has been
authorized by the Borrowers (as evidenced by the Borrowers' execution of this
Loan Agreement) to receive service of process with respect this Agreement and
any other Loan Document for and on behalf of each of the Borrowers hereunder.
"Agreement" means this Loan Agreement, as the same may from time to time
hereafter be modified, supplemented or amended.
"Approved Accounting Method" has the meaning set forth in Section 5.1 of
this Agreement.
"Assignment of Leases" means that certain Assignment of Leases and Rents
dated as of the date hereof executed by the Borrowers and delivered to Lender as
security for the Loan, as the same may be modified, supplemented or amended.
"Authorized Representative" means (a) the Chief Financial Officer
(currently Xxxxxxx Xxxxxx) of Triple Net Properties, LLC, proved that at all
relevant times, Triple Net Properties, LLC is the manager, special member,
and/or vice president of each of the Borrowers, or (b) such other representative
of the Borrowers approved in writing by the Lender.
"Cash Flow Available for Debt Service" means for any twelve (12) month
period, as specified by Lender, an amount equal to: (a) the sum of Operating
Income less (b) the sum of Operating Expenses adjusted to deduct any
underwritten reserves for Tenant Improvements,
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Leasing Commissions, and Replacement Reserves, as determined by Lender, and any
other underwriting adjustments deemed necessary by Lender.
"Closing Date" means September 3, 2004.
"Code" has the meaning set forth in Section 3.1(F) of this Agreement.
"Collateral" means, collectively, the Premises, the Account Collateral and
all proceeds and products of the foregoing, all whether now owned or hereafter
acquired, and all other property and other rights (whether by contract or
otherwise) which is or hereafter may become subject to a lien in favor of
Lender.
"Collateral Release" means a release of the Premises in accordance with
Section 2.1(D) of this Agreement.
"Collateral Release Deposit" has the meaning set forth in Section 2.1(D)
of this Agreement.
"Collection Account" has the meaning set forth in Section 5.2(C) of this
Agreement.
"Collection Account Agreement" means the collection account agreement
executed by the Borrowers, Property Manager, Lender and the Collection Account
Bank in connection with the Loan, as the same may from time to time hereafter be
modified, supplemented or amended.
"Collection Account Bank" means LaSalle Bank National Association.
"Debt Service" means, for any twelve (12) month period, as specified by
Lender, the sum of interest and principal, as applicable, due and payable under:
(a) the Notes, (b) and if the context requires, any proposed Note C Advance,
and/or (c) any Mezzanine Financing.
"Debt Service Coverage Ratio" means the ratio obtained by dividing (a)
Cash Flow Available for Debt Service by (b) Debt Service.
"Default Rate" has the meaning as set forth in the Mortgage.
"Entity" means a (a) corporation, (b) limited or general partnership, (c)
limited liability company, or (d) trust.
"ERISA" has the meaning set forth in Section 3.1(G) of this Agreement.
"Event of Default" or "Events of Default" has the meaning set forth in the
Mortgage.
"Governmental Authority" means any national, federal, state, regional or
local government, or any other political subdivision of any of the foregoing, in
each case with
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jurisdiction over any Borrowers, the Premises, or any SPE Equity Owner, or any
Person with jurisdiction over any Borrowers, the Premises or any SPE Equity
Owner, exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantor" means, individually and collectively, Triple Net Properties,
LLC, a Virginia limited liability company, G REIT, Inc., a Virginia corporation,
T REIT, Inc., a Virginia corporation, and NNN 2002 Value Fund, LLC, a Virginia
limited liability company.
"Improvements" has the meaning set forth in the Mortgage.
"Indebtedness" has the meaning set forth in the Mortgage.
"Independent" "Independent" means, when used with respect to any Person, a
Person who: (i) does not have any direct financial interest or any material
indirect financial interest in the Company or in any Affiliate of the Company
(including, without limitation, the Member), (ii) is not connected with the
Company or any Affiliate of the Company (including, without limitation, the
Member), as an officer, employee, promoter, underwriter, trustee, partner,
member, manager, creditor, director or person performing similar functions, and
(iii) is not a member of the immediate family of a Person defined in (i) or (ii)
above.
"Independent Director" means a duly appointed member of the board of
directors of the relevant entity who shall not have been, at the time of such
appointment, at any time after appointment, or at any time in the preceding five
(5) years, (i) a direct or indirect legal or beneficial owner in such entity or
any of its Affiliates, (ii) a creditor (provided that the Independent Director
may be a creditor by virtue of reasonable fees charged for its services as
Independent Director of such entity), supplier, employee, officer, director,
manager or contractor of such entity or any of its Affiliates, (iii) a person
who controls such entity or any of its Affiliates, or (iv) a member of the
immediate family of a person defined in (i), (ii) or (iii) above, provided
however, that notwithstanding the foregoing, an entity may have the same
Independent Director as an Affiliate of the entity provided that such
Independent Director is (A) obtained through a third party service and (B) would
otherwise satisfy the criteria set forth herein relating to Independent
Directors.
"Independent Eligible Trustee" means an Independent bank (within the
meaning of Section 2(a)(5) of the Investment Company Act of 1940 and meets the
requirements of Section 26(a)(l) thereof), organized and doing business under
the laws of any state or the United States of America, which is organized under
such laws to exercise corporate trust powers, and is otherwise reasonably
acceptable to Lender.
"Independent Manager" means a duly appointed member of the board of
managers (or a duly appointed independent manager) of the relevant entity who
shall not have been, at the time of such appointment, at anytime after
appointment, or at any time in the preceding five (5) years, (i) a direct or
indirect legal or beneficial owner in such entity or any of its Affiliates, (ii)
a creditor (provided that the Independent Director may be a creditor by virtue
of reasonable fees
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charged for its services as Independent Director of such entity), supplier,
employee, officer, director, manager or contractor of such entity or any of its
Affiliates, (iii) a person who controls such entity or any of its Affiliates, or
(iv) a member of the immediate family of a person defined in (i), (ii) or (iii)
above, provided however, that notwithstanding the foregoing, an entity may have
the same Independent Manager as an Affiliate of the entity provided that such
Independent Manager is (A) obtained through a third party service and (B) would
otherwise satisfy the criteria set forth herein relating to Independent
Managers.
"Interest Owner(s)" means any person or entity owning an interest
(directly or indirectly) in any Borrower.
"Investor" has the meaning set forth in Section 5.5(A) of this Agreement.
"Late Charges" has the meaning as set forth in the Mortgage,
"Legal Requirements" has the meaning set forth in the Mortgage.
"Loan to Value Ratio" means the ratio obtained by dividing (a) the
aggregate outstanding principal balance under the Notes and any, if the context
requires, proposed Note C Advance or Mezzanine Financing by (b) either the
"as-is" or "as-stabilized" value of the Premises, as selected by Lender in
Lender's sole discretion, as set forth in either (i) the appraisal obtained in
connection with its underwriting of the Loan or any update thereto or (ii) any
such new appraisal required by Lender, in Lender's sole discretion, in
connection with a request by the Borrowers for the Note C Advance or any
Mezzanine Financing. Any such appraisal of the Premises shall be obtained by
Lender at the Borrowers' expense and acceptable to Lender in all material
respects.
"Leases" has the meaning provided in the Assignment of Leases.
"Leasing Commissions" means leasing commissions incurred by or on behalf
of the Borrowers in connection with the leasing of the Premises or any portion
thereof (including any so-called "override" leasing commissions which may be due
to any leasing or rental agent engaged by or on behalf of the Borrowers for the
Premises if an agent other than such agent also is entitled to a leasing
commission, provided that (a) such leasing commissions and "override" leasing
commissions are reasonable and customary for properties similar to the Premises
and the portion of the Premises leased for which a commission is due and, unless
otherwise agreed by Lender, do not exceed the amounts of the leasing commissions
payable to the Property Manager pursuant to Section 9.2 of the Management
Agreement; (b) the amount of such leasing commissions and "override" leasing
commissions are determined pursuant to arms length transactions between the
Borrowers and such any leasing agent to which a commission is due; (c) the Lease
has been approved by Lender in accordance with this Agreement; (d) unless
otherwise agreed by Lender, the tenant under the Lease for which such Leasing
Commission is claimed has taken occupancy of the leased space and commenced
paying rent; and (e) unless
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otherwise agreed by Lender, the related Lease has an effective rental rate, net
of any concessions, of at least 95% of the pro forma rents at the Premises.
"Loan Documents" means this Agreement, Note A, Note B, Note C, the
Mortgage, the Assignment of Leases, the Collection Account Agreement, the
Property Reserves Agreement, each guaranty executed by a Guarantor, the
Assignment of Management Agreement and Subordination of Management Fees
Agreement executed by Lender, the Borrowers and Property Manager, and all other
documents, instruments and agreements evidencing or securing the Loan.
"Lockout Date" means the earlier of: (i) the date which is two (2) years
after the date of the then most recent Securitization Transaction; or (ii) the
date which is four (4) years after the date of the first full debt service
payment under the Notes.
"Make Whole Premium" has the meaning set forth in Section 2. l(D)(iv) of
this Agreement.
"Management Agreement" means that certain Management Agreement, dated
February 6, 2003, by and between the Property Manager and the Borrowers.
"Material Adverse Effect" means a material adverse effect upon (i) the
business or the financial position or results of operation of the Borrowers,
(ii) the ability of any Borrower to perform, or of Lender to enforce, any of the
Loan Documents or Environmental Indemnity or (iii) the value of (x) the
Collateral taken as a whole or (y) the Premises.
"Maturity Date" means October 1, 2014
"Mezzanine Financing" has the meaning set forth in Section 2.1(H) of this
Agreement.
"Mortgage" means the mortgage, deed of trust, trust deed or deed to secure
debt as applicable, dated the date hereof, executed by the Borrowers and
delivered to Lender as security for the Loan, as the same may be modified,
supplemented or amended.
"Notes" means and refers collectively to Note A, Note B, and Note C, and a
"Note" shall mean any of Note A, Note B, or Note C, as the context so requires.
"Note A" means the secured promissory note (Note A) in the original
principal amount of Eighty Million Dollars ($80,000,000.00) evidencing a portion
of the Loan, dated as of the date hereof, made by the Borrowers to the Lender
named thereon, as such promissory note may be modified, amended, supplemented,
extended, split or consolidated in writing, and any note(s) issued in exchange
therefore or in replacement thereof.
"Note B" means the secured promissory note (Note B) in the original
principal amount of Fifteen Million Dollars ($15,000,000.00) evidencing a
portion of the Loan, dated as of the date hereof, made by the Borrowers to the
Lender named thereon, as such promissory note may be
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modified, amended, supplemented, extended, split or consolidated in writing, and
any note(s) issued in exchange therefore or in replacement thereof.
"Note C" means the secured promissory note (Note C) in the original
principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00)
evidencing a portion of the Loan, dated as of the date hereof, made by the
Borrowers to the Lender named thereon, as such promissory note may be modified,
amended, supplemented, extended, split or consolidated in writing, and any
note(s) issued in exchange therefore or in replacement thereof.
"Note C Advance" means any advance made by the holder of the Note C (in
its sole and absolute discretion) under the Note C in accordance with the terms
of Section 2.1(B) of this Agreement.
"Operating Account" means that certain deposit account maintained by the
Borrowers with the Collection Account Bank, from which the Borrowers will pay
all amounts due to Lender under the Loan Documents and all other costs and
expenses of operating and managing the Premises.
"Operating Income" means the sum of gross cash income, revenues and
consideration received or paid to or for the account or benefit of the Borrowers
resulting from or attributable to the operation or leasing of the Premises
determined in accordance with GAAP derived from (a) rents paid under Qualified
Leases and (b) amounts (to the extent included in Operating Expenses) payable by
tenants to the Borrowers on account of maintenance or service charges, taxes,
assessments, utilities and maintenance of the Premises; but excluding any income
or revenues from a sale, refinancing, casualty or condemnation, payment of rents
more than one (1) month in advance, lease termination payments, or payments from
any other events not related to the ordinary course of operations of the
Premises. Operating Income may be adjusted by Lender to normalize income at
market levels in accordance with Lender's customary underwriting procedures,
which adjustments may include, without limitation, any adjustment to reflect
vacancy rates at the higher of (A) the actual vacancy rate or (B) the market
vacancy rate for comparable properties, along with adjustments of rental income
to reflect then-current market characteristics.
"Operating Expenses" means all cash expenses actually incurred by or
charged to the Borrowers (appropriately pro-rated for any expenses that,
although actually incurred in a particular period, also relate to other
periods), with respect to the ownership, operation, leasing and management of
the Premises in the ordinary course of business, determined in accordance with
GAAP, including, without limitation: (a) personal property taxes and real estate
taxes; (b) sales taxes or any tax on rents; (c) wages, salaries, payroll taxes
and employee benefits; (d) costs of utility services; (e) maintenance, repair
and custodial costs; (f) premiums payable for insurance carried on or with
respect to the Premises; (g) office supplies, other administrative expenses and
professional fees; (h) costs of advertising and marketing for the Premises; (i)
costs of telephone service; (j) costs of garbage removal; (k) an allowance for
income items that are determined to be uncollectible; (1) any compensation, fees
or reimbursements paid to the
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property manager of the Premises which such fee shall be limited to three
percent (3%) of gross rental income per annum; and (m) and an annual replacement
reserve of $.25 per square feet. Notwithstanding the foregoing, Operating
Expenses specifically exclude (1) costs of Tenant Improvements and Leasing
Commissions, (2) capital expenditures, (3) depreciation, (4) payments made in
connection with the payment of the outstanding principal balance of the Loan,
(5) costs of restoration following a casualty or condemnation, (6) funds
disbursed from any reserve account, and (7) any other non-cash items. Operating
Expenses may be adjusted by Lender in accordance with Lender's customary
underwriting procedures.
"Permitted Encumbrances" has that meaning set forth in the Mortgage.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, or any
other Entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Pledge Agreement" has the meaning set forth in Section 2.1(D) of this
Agreement.
"Premises" has the meaning set forth in the Mortgage.
"Property Manager" has the meaning set forth in the Collection Account
Agreement.
"Property Reserves" has the meaning set forth in Section 5.2(B) of this
Agreement.
"Pro Rata Share" means: (i) with respect to Note A, a fraction (expressed
as a percentage), the numerator of which is the outstanding principal balance of
Note A as of the date of determination, and the denominator of which is the sum
of (x) the outstanding principal balance of the Note A on such date of
determination, (y) the outstanding principal balance of the Note B on such date
of determination, and (z) the outstanding principal balance of the Note C on
such date of determination; and (ii) with respect to Note B, a fraction
(expressed as a percentage), the numerator of which is the outstanding principal
balance of Note B as of the date of determination, and the denominator of which
is the sum of (x) the outstanding principal balance of the Note A on such date
of determination, (y) the outstanding principal balance of the Note B on such
date of determination, and (z) the outstanding principal balance of the Note C
on such date of determination; and (iii) with respect to Note C, a fraction
(expressed as a percentage), the numerator of which is the outstanding principal
balance of Note C as of the date of determination, and the denominator of which
is the sum of (x) the outstanding principal balance of the Note A on such date
of determination, (y) the outstanding principal balance of the Note B on such
date of determination, and (z) the outstanding principal balance of the Note C
on such date of determination.
"Qualified Lease" means any fully executed Lease, which is in full force
and effect, that has been approved by Lender as required under this Agreement,
with a remaining term of no less than three (3) years, under which the tenant is
in occupancy pursuant to the terms of the Lease,
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and for which no uncured defaults exist under such Lease. In order for a Lease
to be a Qualified Lease, the tenant under such Lease must not have provided
written or verbal notice of termination, vacancy or the intention to go dark.
"Qualified Institutional Lender" shall mean either a mezzanine lender
approved in writing by Lender, in its reasonable discretion, or: (a) any of the
following (i) a bank, banking association, savings and loan association,
investment bank, insurance company, real estate investment trust, trust company,
commercial credit corporation, pension plan, pension fund or pension advisory
firm, mutual fund, government entity or plan that (A) has total assets (in name
or under management) in excess of $600,000,000 and (except with respect to a
pension advisory firm or similar fiduciary) capital surplus, statutory surplus
or shareholder's equity of at least $200,000,000, and (B) is regularly engaged
in the business of making or owning commercial loans, (ii) an investment
company, money management firm or "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act of 1933, as amended, that (A) has
total assets in excess of $600,000,000 and capital surplus, statutory surplus or
shareholders' equity of at least $200,000,000 and (B) is regularly engaged in
the business of making or owning loans of similar types to the Loan, or (iii) an
institution substantially similar to any of the foregoing described in clauses
(a)(i), or (a)(ii) of this definition; or (b) any entity controlled by any of
the entities described in clause (a)(i) above. For purposes of this definition
only, "control" means the ownership, directly or indirectly, in the aggregate of
more than 50% of the beneficial ownership interests of an entity and the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such entity, whether through the
ability to exercise voting power, by contract or otherwise. "Controlled" has the
meaning correlative thereto.
"Rating Agency(ies)" shall mean each statistical rating agency that has
assigned a rating to any participation interest, certificate or security issued
in connection with a Securitization Transaction.
"Release Date" has the meaning set forth in Section 2.1(D) of this
Agreement.
"Rents" has the meaning provided in the Assignment of Leases.
"Scheduled Collateral Release Payments" has the meaning set forth in
Section 2.1 (D) of this Agreement.
"Security Deposit" means all security deposits held or to be held with
respect to the Premises, pursuant to the applicable Leases.
"Securitization Transaction" has the meaning set forth in Section 5.5(A)
of this Agreement.
"Single-Purpose Entity" has the meaning set forth in the Mortgage.
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"SPE Equity Owner" means, the sole managing member of each and any of the
Borrowers.
"State" means the slate or commonwealth where the Premises is located.
"Successor Borrower" has the meaning set forth in Section 2.1(D) of this
Agreement.
"Taking" has the meaning provided in the Mortgage.
"Tax and Insurance Escrows" has the meaning set forth in Section 5.2(A) of
this Agreement.
"Tenant Improvements" means improvements made to the Premises to prepare
the same for tenant occupancy in connection with each Lease and made by or on
behalf of the Borrowers in conformity with the terms of the related Lease and
this Agreement.
"TIC Agreement" mean that certain Amended and Restated Tenants in Common
Agreement, by and among the Borrowers, effective as of the date of the recording
of such agreement.
"Title insurance Policy" means a loan policy of title insurance for the
Premises issued by Title Insurance Company with respect to the Premises in an
amount (not less than the Loan Amount) acceptable to Lender and insuring the
first priority lien in favor of Lender created by the Mortgage, in each case
acceptable to Lender in Lender's discretion.
"Transfer" has the meaning set forth in the Mortgage.
"UCC" means, with respect to any Collateral, the Uniform Commercial Code
in effect in the jurisdiction in which the relevant Collateral is located.
"U.S. Obligations" has the meaning set forth in Section 2.1(D) of this
Agreement.
ARTICLE II
GENERAL TERMS
Section 2.1 Loan Commitment: Disbursement to Borrowers; Prepayment.
(A) The Loan. Subject to, and upon the terms and conditions set
forth herein, Lender hereby agrees to make the Loan to the Borrowers on the
Closing Date, in the Loan Amount, which Loan will mature on the Maturity Date.
(B) Advances of the Loan Amount. The Borrowers shall have the right
to request and receive only one borrowing in respect of the Loan, which will not
be subject to
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future advances and any amount borrowed and repaid in respect of the Loan may
not be reborrowed. Borrower shall, on the Closing Date, receive the Loan Amount,
subject to the direction given by Borrower as to the application of Loan
proceeds. Subject to the applicable provisions of this Agreement, Note C and the
other Loan Documents, the Borrowers may request the holder of Note C to make the
Note C Advance; it being agreed and understood by the parties hereto that the
holder of the Note C has no obligation whatsoever to accept or consider a
request for a Note C Advance.
(i) Note C Advance. On or before October 1, 2006, provided
that no Event of Default has occurred and is continuing, the Borrowers may
submit to the holder of Note C, a written request for an additional advance from
the holder of Note C to the Borrowers in an amount not to exceed the lesser of
(a) Seven Million Five Hundred Thousand Dollars ($7,500,000.00); (b) an amount
such that the resulting Loan to Value Ratio will be less than or equal to 75%,
or (c) an amount such that the resulting projected Debt Service Coverage Ratio
for the twelve month period commencing on November 1, 2006, as determined by
Lender, will not be less than 1.25:1.00 (the "Note C Advance"). The holder of
Note C shall have no obligation to make a requested Note C Advance and any
decision to consider or make such a Note C Advance shall be in the Note C
holder's sole and absolute discretion.
(ii) Event of Default; No Waiver; Additional Conditions. The
making of any Note C Advance by Lender at the time when a default or Event of
Default has occurred and is then continuing shall not be deemed a waiver or cure
by Lender of that default or Event of Default, nor shall Lender's rights and
remedies by prejudiced in any manner thereby. In addition to conditions set
forth above in this Section 2.1(B), and any other condition that the Note C
holder might require in connection with a possible Note C Advance, the Borrowers
shall satisfy customary conditions that are standard for prudent, institutional
commercial mortgage lenders prior to any Note C Advance, including, without
limitation amending the Loan Documents to reflect the Note C Advance; the
delivery of a title insurance policy or endorsement with respect to such
advance; insuring the lien of the Mortgage subject only to Permitted
Encumbrances; delivery of necessary legal opinions and financial information
regarding the Borrowers, Guarantors and Premises; if required by any Rating
Agency(ies) associated with a Securitization Transaction, evidence in writing
from the applicable Rating Agencies to the effect that such Note C Advance will
not result in a re-qualification, reduction or withdrawal of any rating in
effect immediately prior to such defeasance issued in connection with the
applicable Securitization Transaction; execution and delivery of such other
documents, instruments and agreement as may be requested by the Note C holder
and/or Lender, in its sole and absolute discretion; and payment for all of
Lender's costs and expenses in connection with such advance. Any amounts
advanced pursuant to the Note C Advance and repaid cannot be re-borrowed.
(iii) Separate Contract for Note C Advances. The Note C
holder's obligations to perform in accordance with this Section 2.1(B) and, if
agreed to by the Note C holder (in its sole and absolute discretion) to make any
Note C Advance in accordance with the terms and provisions of this Agreement are
an independent contract made by Note C holder to the Borrowers separate and
apart from any other obligation of the Note A holder, the Note B
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holder, and/or Lender to the Borrowers under the other provisions of this
Agreement and the other Loan Documents. The obligations of the Borrowers, under
this Agreement and the other Loan Documents shall not be reduced, discharged or
released because or by reason of any existing or future offset, claim or defense
of the Borrowers, or any other party, against the Note A holder, the Note B
holder, and/or Lender by reason of the Note C Holder's failure to perform its
obligations, if any, under this Section 2.1(B). Notwithstanding anything to the
contrary contained herein and for the avoidance of doubt, neither the holder of
Note A nor the holder of Note B shall have any obligation or liabilities
hereunder with respect to the provisions of this Section 2.1(B).
(C) The Notes and Other Loan Documents. The Loan shall be evidenced
by the Notes (made, in the aggregate, in the Loan Amount) and evidenced or
secured by the other Loan Documents executed and delivered in connection with
the Loan. Each of the Notes shall bear interest as provided in each such Note,
and shall be subject to the payment of interest and the repayment and prepayment
of the Indebtedness as provided for herein. Each of the Notes shall be entitled
to the benefits of this Agreement and shall be secured by the Mortgage and the
other Loan Documents given to further secure the Loan.
(D) Early Release of the Premises.
(i) Collateral Release Requirements. At any time from and
after the Lockout Date and provided no Event of Default has occurred and is
continuing, the Borrowers may obtain a Collateral Release upon satisfaction of
the following conditions precedent: (a) the Borrowers shall have provided Lender
with not less than thirty (30) days and not more than sixty (60) days prior
written Notice specifying the date which shall be a date upon which a scheduled
debt service payment installment is due (the "Release Date") on which the
Collateral Release is to be made; (b) the Borrowers shall have paid to Lender
all interest accrued and unpaid on the principal balance of Note A, Note B and
Note C to and including the Release Date; (c) the Borrowers shall have paid to
Lender all other Indebtedness due and payable under the Loan Documents through
and including the Release Date; (d) the Borrowers shall have paid to Lender the
Collateral Release Deposit (hereinafter defined); and (e) the Borrowers shall
have delivered to Lender the following:
(1) a security agreement, in form and substance
satisfactory to Lender, creating a first priority lien on the Collateral Release
Deposit and the U.S. Obligations (hereinafter defined) purchased on behalf of
the Borrowers with the Collateral Release Deposit in accordance with this
Section 2.1(D) (the "Pledge Agreement"), which Pledge Agreement shall provide,
among other things, that any excess payments of principal and interest received
by Lender under the U.S. Obligations over the amount needed to make payments of
principal, interest, all other Indebtedness and other sums due from the
Borrowers under the Notes shall be refunded to the Borrowers;
12
(2) a release of the Premises from the lien of the
Mortgage (for execution by Lender) in a form satisfactory to Lender and
appropriate for the jurisdiction in which the Premises is located;
(3) an officer's certificate of the Borrowers certifying
that the requirements set forth in this Section 2.1(D) have been satisfied;
(4) an opinion of counsel for the Borrowers in form
satisfactory to Lender stating that: (i) the Successor Borrower (as hereinafter
defined) has been duly formed and is authorized to enter into and has properly
executed the Pledge Agreement; and (ii) Lender has a perfected first priority
security interest in the Collateral Release Deposit and the U.S. Obligations
purchased by Lender on behalf of the Borrowers;
(5) if required by any rating agency(s) associated with a
Securitization Transaction, evidence in writing from the applicable Rating
Agencies to the effect that such release will not result in a re-qualification,
reduction or withdrawal of any rating in effect immediately prior to such
defeasance issued in connection with the applicable Securitization Transaction;
(6) an independent accountant's mathematical verification
report in form and substance reasonably acceptable to Lender;
(7) such other certificates, documents or instruments as a
prudent, institutional, commercial lender may reasonably request, and;
(8) a reasonable fee for the handling and processing of
the Collateral Release.
(ii) Lender as Agent/Attorney-in-Fact. the Borrowers hereby
appoint Lender as their agent and attorney-in-fact for the purpose of using the
Collateral Release Deposit to purchase U.S. Obligations which provide payments
which are (a) payable on or prior to, but as close as possible to, all
successive scheduled dates upon which principal and interest are due and payable
under each of Note A, Note B, and Note C after the Release Date to and including
the Maturity Date and (b) in amounts necessary to meet the scheduled payments of
principal and interest due under each of Note A, Note B, and Note C on such
dates (the "Scheduled Collateral Release Payments"). The Borrowers, pursuant to
the Pledge Agreement or other appropriate documents, shall authorize and direct
that the payments received from the U.S. Obligations be made directly to Lender
and applied to satisfy the obligations of the Borrowers under each of the Notes.
(iii) Successor Borrower Requirements. Upon compliance with
the requirements of this Section 2.1(D), the Premises shall be released from the
lien of the Mortgage and the pledged Collateral Release Deposit and the U.S.
Obligations purchased therewith shall be the sole source of collateral securing
Note A, Note B, and Note C. In connection with such release, Lender, or its
designee, shall establish or designate a successor entity (the "Successor
Borrower")
13
and the Borrowers shall transfer and assign all obligations, rights and duties
under and to the Notes together with the pledged Collateral Release Deposit
and/or U.S. Obligations to such Successor Borrower. Such Successor Borrower
shall assume the obligations of the Borrowers under the Notes and the Pledge
Agreement and the Borrowers shall be relieved of their obligations thereunder.
The Borrowers shall pay $1,000 to any such Successor Borrower on the Release
Date as consideration for assuming the obligations under the Notes and the
Pledge Agreement. Notwithstanding anything in the Loan Documents to the
contrary, no other assumption fee shall be payable upon a transfer of the Notes
in accordance with this Section 2.1(D)(iii), but the Borrowers shall pay the fee
set forth in item (8) of this Section 2.1(D) above and all costs and expenses
incurred by Lender, including Lender's attorneys' fees and expenses, incurred in
connection with this Section 2.1(D). Following the delivery of the Collateral
Release Deposit to Lender, the Borrowers shall not have any right to prepay any
of the Notes.
(iv) Make Whole Premium. In the event an Event of Default and
acceleration occur, the Borrowers shall pay to Lender a "Make Whole Premium."
The Make Whole Premium (for the Loan, or for each of the Notes, as applicable)
shall be an amount equal to the greater of one percent (1%) of the outstanding
principal amount of the Loan or a premium calculated as provided in
subparagraphs (l)-(3) below:
(1) Determine the "Reinvestment Yield." The Reinvestment
Yield will be equal to the yield on the U.S. Treasury Issue* ("Primary Issue")
published one week prior to the date of prepayment and converted to an
equivalent monthly compounded nominal yield. In the event there is no market
activity involving the Primary Issue at the time of prepayment, the Lender shall
choose a comparable Treasury Bond, Note or Xxxx ("Secondary Issue") which the
Lender reasonably deems to be similar to the Primary Issue's characteristics
(i.e., rate, remaining time to maturity, yield). * At this time there is not a
U.S. Treasury Issue for this prepayment period. At the time of prepayment,
Lender shall select in its sole and absolute discretion a U.S. Treasury Issue
with similar remaining time to maturity as each of the Notes.
(2) Calculate the "Present Value of the Loan." The Present
Value of the Loan is the present value of the payments to be made in accordance
with Note A and/or Note B and/or Note C, as applicable (all installment payments
and any remaining payment due on the Maturity Date) discounted at the
Reinvestment Yield for the number of months remaining from the date of
prepayment to the Maturity Date. In the event of a partial prepayment as a
result of the aforementioned application of proceeds, the Present Value of the
Loan shall be calculated in accordance with the preceding sentence multiplied by
the fraction which results from dividing the amount of the prepaid proceeds by
the principal balance immediately prior to prepayment.
(3) Subtract the amount of the prepaid proceeds from the
Present Value of the Loan as of the date of prepayment. Any resulting positive
differential shall be the premium.
14
Notwithstanding anything in this Section 2.1(D)(iv) to the contrary, during the
period commencing after July 1, 2014 and ending on the Maturity Date, the Make
Whole Premium shall not be subject to the one percent (1%) minimum and shall be
calculated only as provided in (1) through (3) above. The amount of any Make
Whole Premium received from the Borrowers shall be applied by Lender in respect
of Note A, Note B, and Note C, pro rata based on the principal amount of Note A,
Note B or Note C prepaid (as applicable); provided, however, that upon the
occurrence of an Event of Default or any monetary default under the Loan
Documents, such Make Whole Premium shall be applied in accordance with Section
2.1 (G) hereof.
(v) Additional Defined Terms. For purposes hereof, the
following terms shall have the following meanings:
(a) The term "Collateral Release Deposit" shall mean an
amount equal to the sum of (1) the amount which will be sufficient to purchase
U.S. Obligations necessary to meet the Scheduled Collateral Release Payments and
(2) any revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with the transfer of the Notes or otherwise required to
accomplish the agreements of this Section 2.1(D), all fees, costs and expenses
incurred or to be incurred by Lender in the purchase of such U.S. Obligations
and the assumption payments referred to above;
(b) The term "U.S. Obligations" shall mean direct
non-callable obligations of the United States of America.
(E) Loan Prepayment.
(i) The Borrowers shall not have the right or privilege to
prepay all or any portion of the unpaid principal balance of any of Note A, Note
B, or Note C until after July 1, 2014, provided that if there is no Event of
Default, the aggregate principal balance of the Notes may be prepaid, at par, in
whole but not in part, upon not less than thirty (30) days prior written notice
to Lender specifying the date on which prepayment is to be made, which
prepayment must occur only on a date that monthly debt service is otherwise due
and payable unless the Borrowers pay to Lender all interest that would have
accrued for the entire month in which Note A, Note B, and Note C are all prepaid
absent such prepayment. If prepayment occurs on a date other than a scheduled
monthly payment date, (a) the Borrowers shall make the scheduled monthly payment
in accordance with the terms of the Notes, regardless of any prepayment; (b)
payment of all accrued and unpaid interest on the aggregate outstanding
principal balance of the Notes to and including the date on which prepayment is
to be made; and (c) payment of all other Indebtedness then due under the Loan
Documents. Lender shall not be obligated to accept any prepayment of the
principal balance of the Notes unless it is accompanied by all sums due in
connection therewith.
(F) Application of Principal .and Interest Prior to an Event of
Default. Notwithstanding anything to the contrary contained herein or in any
other Loan Document, but
15
subject nevertheless to Section 2.1(G) hereof, at all times prior to the
occurrence of an Event of Default and provided that no monetary default under
the Loan Documents exists:
(i) all scheduled and unscheduled payments of principal
(including, without limitation, the principal portion of the amount of any
prepayments) on the Loan received from or on behalf of the Borrowers shall be
applied by Lender to the payment of principal on Note A, Note B, and Note C pro
rata (not to exceed the unpaid principal balance of Note A, Note B, or Note C,
as applicable), in accordance with the applicable Pro Rata Share of principal
allocable to Note A, Note B, and Note C;
(ii) all payments in respect of accrued and unpaid
interest on the Loan (including, without limitation, the interest portion of the
amount of any prepayments) received from or on behalf of the Borrowers shall be
applied by Lender pro rata to (x) the payment of all accrued and unpaid interest
on the outstanding principal amount of Note A at the then-applicable rate of
interest set forth in Note A, (y) the payment of all accrued and unpaid interest
on the outstanding principal amount of Note B at the then-applicable rate of
interest set forth in Note B, and (z) the payment of all accrued and unpaid
interest on the outstanding principal amount of Note C at the then-applicable
rate of interest set forth in Note C;
(iii) all amounts other than the amounts described in
clauses (i) and (ii) of this Section 2.1(F) shall be applied by Lender to Note
A, Note B, and Note C, in each case, in accordance with the terms and provisions
of this Agreement and the other Loan Documents, or otherwise in the sole and
absolute discretion of Lender.
(G) Application of Amounts Following an Event Of Default.
(i) Notwithstanding anything to the contrary contained
herein or in any other Loan Document, upon the occurrence of an Event of Default
or monetary default, Lender shall be entitled (but shall not be required) to
apply (1) all payments in respect of accrued and unpaid interest (including,
without limitation, the interest portion of the amount of any prepayment and any
interest at the Default Rate) on the Loan, (2) Late Charges in respect of the
Loan, (3) all scheduled and unscheduled payments of principal (including,
without limitation, the principal portion of the amount of any prepayments) on
the Loan, (4) any Make Whole Premium received in connection with a prepayment of
the Loan, (5) Rents and (6) any other amounts of any nature received from the
Borrowers in respect of the Loan ("Default Collections") to Note A and/or Note B
and/or Note C, and/or any other Indebtedness, in any order determined by Lender
in Lender's sole and absolute discretion.
(ii) Each of the Borrowers acknowledges and agrees that,
not in limitation of Lender's rights and remedies set forth in Section 2.1
(G)(i), (1) Lender may apply Default Collections to (among other things) the
outstanding principal amount of Note A first and fully, prior to application of
any such amounts to the outstanding principal amounts of Note B and Note C, and
may apply Default Collections to (among other things) the outstanding principal
amount of Note B. fully, prior to application of any such amounts to the
outstanding principal amount of Note C, (2) each such application of Default
Collections may result in (among other
16
things) an increase in the weighted average interest rate of Note A, Note B and
Note C (as a collective whole) from the weighted average interest rate of Note
A, Note B and Note C (as a collective whole) in effect immediately prior to such
application of Default Collections and (3) subject to the limitations in Section
6 of the Notes, the Borrowers shall be responsible for payment of all such
increases in the weighted average interest rate of Note A, Note B and Note C (as
a collective whole).
(H) Mezzanine Financing. In the event that the Borrowers request the
Note C Advance as provided for in Section 2.1(B) hereof, and the Note C Holder
declines to make such Note C Advance or the Note C holder and the Borrowers
cannot mutually agree upon the term and conditions for such Note C Advance,
Lender shall permit the Borrowers to obtain mezzanine financing ("Mezzanine
Financing") provided, that, all the following terms and conditions are
satisfied:
(i) no Event of Default shall have occurred and be
continuing;
(ii) Lender shall have received at least thirty (30) days
and no more than ninety (90) days prior written notice;
(iii) if the interest rate on the Mezzanine Financing
shall be a floating rate, the borrower under such Mezzanine Financing is
required to enter into and maintain during the term of the Mezzanine Financing
an interest rate cap agreement;
(iv) the term of the Mezzanine Financing (including any
extension options) shall be co-terminus with the term of the Loan;
(v) the borrower of such Mezzanine Financing may not be
any of the same Borrowers hereunder;
(vi) the Loan to Value Ratio (taking into account the
Mezzanine Financing) for the twelve month period commencing on November 1, 2006,
as determined by Lender at the time of the funding of such Mezzanine Financing,
shall not exceed 75% provided that in no case shall the principal amount of the
Mezzanine Financing (including but not limited to all earn-outs or other
advances) exceed Seven Million Five Hundred Thousand Dollars ($7,500,000.00);
(vii) the Debt Service Coverage Ratio (taking into account
the Mezzanine Financing) for the twelve month period commencing on November 1,
2006, as determined by Lender, shall be greater than or equal to 1.25:1.00;
(viii) such Mezzanine Financing shall be secured by only a
pledge of direct or indirect ownership interest in each of the Borrowers and in
any such case such Mezzanine Financing shall not encumber nor result in any lien
or charge upon or against the Premises or the Rents;
17
(ix) the mezzanine lender shall (a) be a Qualified
Institutional Lender and shall be approved by Lender with such approval not to
be unreasonably withheld, (b) represent and warrant to Lender that, as of the
date of the funding of the Mezzanine Financing, it is solvent and not involved
in any voluntary or involuntary action or proceeding as debtor under any
applicable federal bankruptcy law, or any similar federal or state law, and (c)
agree in the Mezzanine Intercreditor Agreement (defined below) that any
subsequent transfer of the Mezzanine Financing shall be to a Qualified
Institutional Lender;
(x) the loan documents evidencing the Mezzanine Financing
shall be approved by Lender with such approval not be unreasonable withheld;
(xi) the mezzanine lender shall enter into a intercreditor
agreement with Lender (the "Mezzanine Intercreditor Agreement") in form and
substance reasonably acceptable to Lender and the Rating Agencies;
(xii) the Borrowers may not assume or guarantee the
Mezzanine Financing;
(xiii) at Lender's option, if required by any Rating
Agency(ies) associated with a Securitization Transaction, evidence in writing
from the applicable Rating Agencies to the effect that such Mezzanine Financing
will not result in a re-qualification, reduction or withdrawal of any rating in
effect immediately prior to obtaining such Mezzanine Financing issued in
connection with the applicable Securitization Transaction;
(xiv) the Borrowers shall pay or cause to be paid to
Lender a fee in the amount of $10,000.00 for the handling and processing of such
Mezzanine Financing and shall reimburse Lender for all reasonable out-of-pocket
costs and expenses incurred by Lender (including, without limitation reasonable
attorneys' fees and disbursements) in connection with the request for such
Mezzanine Financing and the Borrowers shall pay or cause to be paid to Lender
any title premiums, recording charges, filing fees, taxes or other expenses
payable in connection with the Mezzanine Financing, as applicable;
(xv) the Borrowers shall deliver or cause to be delivered
to Lender, at the Borrowers' sole cost and expense, revised and/or up-dated
versions of the opinions of counsel given in connection with the closing of the
Loan (including without limitation, a new non-consolidation opinion) acceptable
to Lender reflecting the Mezzanine Financing;
(xvi) the Borrowers shall provide or cause to be provided
to Lender, at Borrowers' sole cost and expense, satisfactory UCC searches,
together with tax lien, bankruptcy, judgment and litigation searches with
respect to the Premises and the Borrowers in the state of Illinois and in the
jurisdiction where each of the Borrowers are formed and where each of the
Borrowers have their principal place of business;
(xvii) the Borrowers shall deliver or cause to be
delivered such amendments or modifications to the Loan Documents as may be
required by Lender or the
18
Rating Agencies, including without limitation, an amendment to the Collection
Account Agreement;
(xviii) the Borrowers shall deliver or cause to be
delivered to Lender an officers' certificate certifying that the requirements
set forth in this Section 2.1(H) have been satisfied;
(xix) the right to obtain such Mezzanine Financing is
personal to the Borrowers, as a collective whole, and may not be exercised by
any successors or assigns or individual Interest Owners; and
(xx) the Mezzanine Financing shall have closed and be
fully funded on or before January 1, 2007.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to make the Loan to the Borrowers and in
consideration of Lender's reliance thereon, the Borrowers hereby represent,
warrant and covenant, as follows:
Section 3.1. Representations, Warranties and Covenants Relating to
Borrowers.
(A) Organization.
(i) Each of the Borrowers is and, until the Indebtedness is
paid in full, will continue to (a) be a duly organized and validly existing
Entity in good standing under the laws of the state of its formation, (b) if
applicable, be duly qualified as a foreign Entity in each jurisdiction in which
the nature of its business, the Premises or any of the other Collateral makes
such qualification necessary or desirable, (c) have the requisite Entity power
and authority to carry on its business as now being conducted, (d) have the
requisite Entity power to execute, deliver and perform its obligations under the
Loan Documents and Environmental Indemnity, and (e) comply with the provisions
of all of its organizational documents and the Legal Requirements of the state
of its formation.
(ii) Each of the Borrowers, at all times since its formation
has been and until the Indebtedness is paid in full, will continue to be a
Single-Purpose Entity.
(iii) The SPE Equity Owner, if any, is and, until the
Indebtedness is paid in full, will continue to (a) be a duly organized and
validly existing Entity in good standing under the laws of the state of its
formation, (b) be duly qualified as a foreign Entity in each jurisdiction in
which the nature of its business, the Premises or any of the Collateral makes
such qualification necessary or desirable, (c) have the requisite Entity power
and authority to carry on its business as now being conducted, (d) have the
requisite Entity power to execute, deliver and perform its
19
obligations under the Loan Documents and Environmental Indemnity, and (e) comply
with the provisions of all of its organizational documents and the Legal
Requirements of the state of its formation.
(B) Authorization. The execution, delivery and performance of the
Loan Documents and Environmental Indemnity and the borrowing evidenced by the
Notes (i) are within the applicable powers of each of the Borrowers and each
other party to the Loan Documents and Environmental Indemnity (other than
Lender); (ii) have been authorized by all requisite action; (iii) have received
all necessary approvals and consents, corporate, governmental or otherwise; (iv)
will not violate, conflict with, result in a breach of or constitute (with
notice or lapse of time or both) a default under any provision of law, any order
or judgment of any court or Governmental Authority, the articles of
incorporation, by-laws, partnership, operating or trust agreement, or other
governing instrument of the Borrowers or any other party to the Loan Documents
or the Environmental Indemnity (other than Lender), or any indenture, agreement
or other instrument to which any of the Borrowers or any other party to the Loan
Documents and Environmental Indemnity (other than Lender) is a party or by which
each such party or any of their respective assets or the Premises is or may be
bound or affected; (v) will not result in the creation or imposition of any
lien, charge or encumbrance whatsoever upon any of such party's assets, except
the liens and security interests created by the Loan Documents; and (vi) will
not require any authorization or license from, or any filing with, any
Governmental Authority or other body (except for the recordation of the Mortgage
and any other Loan Document intended to be recorded in the appropriate land
records in the State and except for UCC filings relating to the security
interest created hereby).
(C) Enforceability. The Loan Documents and Environmental Indemnity
constitute the legal, valid and binding obligations of each of the Borrowers and
the other parties to the Loan Documents and Environmental Indemnity (other than
Lender), enforceable against each such party in accordance with their respective
terms, except as may be limited by (i) bankruptcy, insolvency, reorganization or
other similar laws affecting the rights of creditors generally, and (ii) general
principles of equity (regardless of whether considered in a proceeding in equity
or at law). Such Loan Documents and Environmental Indemnity are, as of the date
hereof, not subject to any right of rescission, set-off, counterclaim or defense
by any of the Borrowers or any other party to the Loan Documents and
Environmental Indemnity (other than Lender), including the defense of usury, nor
will the operation of any of the terms of any of the Notes, the Mortgage, or
such other Loan Documents and Environmental Indemnity, or the exercise of any
right thereunder, render the Mortgage unenforceable against any of the
Borrowers, in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense by any of the Borrowers, including the defense of usury,
and none of the Borrowers nor any other party to the Loan Documents and
Environmental Indemnity (other than Lender) have asserted any right of
rescission, set-off, counterclaim or defense with respect thereto.
(D) Financial Condition. (i) Each of the Borrowers and the SPE
Equity Owner, if any, are each solvent and no bankruptcy, reorganization,
insolvency or similar proceeding under any state or federal law with respect to
any of the Borrowers or the SPE Equity Owner, if any, has
20
been initiated, (ii) no Borrower has entered into this Loan transaction with the
intent to hinder, delay or defraud any creditor, (iii) each of the Borrowers has
received reasonably equivalent value for the making of the Loan and (iv) no
Borrower has any known contingent liabilities except as may be created by
execution of the Loan Documents or Environmental Indemnity, as applicable.
(E) Litigation. There are no actions, suits or proceedings at law or
in equity by or before any Governmental Authority now pending and served or, to
the knowledge of any of the Borrowers, threatened against any of the Borrowers
or the Premises or the SPE Equity Owner, if any, that would have a Material
Adverse Effect.
(F) Not Foreign Person. No Borrower is a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, together with applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form (the "Code").
(G) ERISA. As of the date hereof and until the Indebtedness is paid
in full: (i) no Borrower is or will be an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA, (ii) no assets of any of the
Borrowers constitute or will constitute "plan assets" of one or more such plans
for purposes of Title I of ERISA, (iii) none of the Borrowers is or will be a
"governmental plan" within the meaning of Section 3(32) of ERISA, (iv)
transactions by or with any of the Borrowers are not and will not be subject to
state statutes applicable to the Borrowers regulating investments of and
fiduciary obligations with respect to governmental plans, (v) each of the
Borrowers have made and will continue to make all required contributions to all
employee benefit plans, if any, established for or on behalf of any of the
Borrowers or to which any of the Borrowers is required to contribute (vi) each
of the Borrowers have and will continue to administer each such plan, if any, in
accordance with its terms and the applicable provisions of ERISA and any other
federal or state law; and (vii) none of the Borrowers have or will permit any
liability under Sections 4201, 4243, 4062 or 4069 of Title IV of ERISA or taxes
or penalties relating to any employee benefit plan or multi-employer plan to
become delinquent or assessed, respectively, which would have a Material Adverse
Effect.
(H) Investment Company Act; Public Utility Holding Company Act. No
Borrower is and, until the Indebtedness is paid in full, no Borrower will be (i)
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended, (ii) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or (iii)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
(I) Agreements. No Borrower is a party to any agreement or
instrument or subject to any restriction which is likely to have a Material
Adverse Effect. No Borrower is in default in any respect in the performance,
observance or fulfillment of any of the material
21
obligations, covenants or conditions contained in any indenture, agreement or
instrument to which it is a party or by which such Borrower or the Premises is
bound.
(J) Location of Chief Executive Offices and Borrowers' Trade Names.
The location of each of the Borrower's principal place of business and chief
executive office is 0000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx
00000, and no Borrower has any other place of business. No Borrower conducts its
business "also known as", "doing business as" or under any other name. No
Borrower shall change its principal place of business or chief executive office
or conduct its business under any other name, without first notifying Lender in
writing at least thirty (30) days prior to any such change.
(K) No Defaults. No default or Event of Default exists under or with
respect to any Loan Documents.
(L) Labor Matters. No Borrower is a party to any collective
bargaining agreements.
(M) Intellectual Property. All trademarks, trade names and service
marks that any of the Borrowers owns or has pending, if any, or under which any
of the Borrowers is licensed, if any, are in good standing and uncontested.
There is no right under any trademark, trade name or service xxxx necessary to
the business of any of the Borrowers as presently conducted or as any of the
Borrowers contemplates conducting its business. To the best of the Borrowers'
knowledge, no Borrower has infringed, is infringing, or has received notice of
infringement with respect to asserted trademarks, trade names and service marks
of others. To the Borrowers' knowledge, there is no infringement by others of
trademarks, trade names and service marks of any of the Borrowers.
Section 3.2. Representations, Warranties and Covenants Relating to
The Premises.
(A) Title Issues.
(i) The Borrowers own good, indefeasible, marketable and
insurable fee simple title to the Premises (or tenant-in-common interest
therein), free and clear of all liens, other than the Permitted Encumbrances
applicable to the Premises, and until the Indebtedness is paid in full the
Borrowers shall not permit any liens (other than the Permitted Encumbrances, any
title matters or exceptions approved in writing by Lender subsequent to the date
hereof, taxes which are not yet due or delinquent, or any lien that is contested
by the Borrowers in accordance with and subject to paragraph 1(e) of the
Mortgage) to attach to the Premises. The Borrowers have the right to mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer and convey the same.
There are not now, and until the Indebtedness is paid in full, there will not be
any outstanding options or agreements to purchase or rights of first refusal
affecting the Premises[, except those explicitly set forth in the current Leases
for the Premises relating solely to the rights of the applicable tenants to
lease additional space in the Premises. The Permitted Encumbrances do not and,
until the Indebtedness is paid in full, will not materially and adversely affect
(a) the ability of the Borrowers
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to pay in full all sums due under all of the Notes or any of its other
obligations in a timely manner (b) the use of the Premises for the use currently
being made thereof, the operation of the Premises as currently being operated or
the value of the Premises, or (c) the value or marketability of the Premises.
(ii) No Taking has been commenced or, to the Borrowers'
knowledge, is contemplated with respect to all or any portion of the Premises or
for the relocation of roadways providing access to the Premises.
(iii) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements have been
paid in full. The Borrowers have paid in full for, and are the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Premises, free and clear of any and all
security interests, liens or encumbrances, except the lien and security interest
created by the Loan Documents securing the Loan.
(iv) The Premises is and, until the indebtedness is paid in
full, will be assessed for real estate tax purposes as one or more wholly
independent tax lot or lots, separate from any adjoining land or improvements
not constituting a part of such lot or lots, and no other land or improvements
is and, until the Indebtedness is paid in full, will be assessed and taxed
together with the Premises or any portion thereof.
(v) Except as disclosed in the Title Insurance Policy, there
are no pending or, to the knowledge of the Borrowers, proposed special or other
assessments for public improvements or otherwise affecting the Premises, nor, to
the knowledge of the Borrowers, are there any contemplated improvements to the
Premises that may result in such special or other assessments and until the
Indebtedness is paid in full, the Borrowers shall not permit any taxes,
assessments, fees, water, sewer or other charges by Governmental Authorities
relating to the Premises to become delinquent.
(vi) The Mortgage creates a valid and enforceable first
mortgage lien on the Premises as security for the repayment of the Indebtedness,
subject only to the Permitted Encumbrances, any title matters or exceptions
approved in writing by Lender subsequent to the date hereof, and taxes which are
not yet due or delinquent. Each Loan Document securing the Loan establishes and
creates a valid, effective, and enforceable lien on and a security interest in,
or claim to, the rights and property described therein. All personal property
and fixtures covered by each such Loan Document are subject to a UCC financing
statement filed and/or recorded, as appropriate, or irrevocably delivered to an
authorized agent of the company issuing the Title Insurance Policy for such
recordation or filing in all places necessary to perfect a valid first priority
lien with respect to the rights and property that are the subject of each such
Loan Document to the extent governed by the UCC.
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(B) Status of the Premises.
(i) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or the Federal
Emergency Management Agency or any successor thereto as an area having special
flood or seismic hazards, or, if now or hereafter located within any such area,
Borrower has obtained and will maintain the applicable flood hazard and/or
earthquake insurance prescribed in the Mortgage.
(ii) The Borrowers have obtained and, until the Indebtedness
is paid in full, will maintain all necessary certificates, licenses, permits and
other approvals, governmental and otherwise, necessary for the operation of the
Premises; and the conduct of their business and all required zoning, building
code, land use, environmental and other similar permits or approvals, all of
which are and, until the Indebtedness is paid in full, will remain in full force
and effect and not subject to revocation, suspension, forfeiture or
modification.
(iii) As of the date hereof, and until the Indebtedness is
paid in full: (a) the Premises and the present and contemplated use, occupancy,
operation and construction thereof are and will remain in full compliance with
all covenants and restrictions and all applicable licenses, permits and other
approvals and all zoning ordinances, building codes, land use and environmental
laws and other similar laws, (b) none of the Improvements lie or will lie
outside of the boundaries of the Land or the applicable building restriction
lines to the extent that such would have a Material Adverse Effect, and (c) no
improvements on adjoining properties materially encroach upon the Land.
(iv) The Premises is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by public
utilities and the Premises has accepted or is equipped to accept such utility
service. The Premises is served by public water and sewer systems. All of the
foregoing utilities are located in the public right-of-way abutting the
Premises, and all such utilities are connected so as to serve the Premises
either (a) without passing over other property or, (b) if such utilities pass
over other property, they do so pursuant to valid easements.
(v) All public roads and streets necessary for service of and
access to the Premises for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally open
for use by the public.
(vi) The Premises is free from (a) damage caused by fire or
other casualty; and (b) material structural defects; and all building systems
contained therein are in good working order in all material respects, subject to
ordinary wear and tear.
(vii) Any and all liquid and solid waste disposal, septic and
sewer systems located on the Premises are in a good and safe condition and
repair and in compliance with all Legal Requirements.
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(C) Status of the Leases and Rents.
(i) No Prior Assignment. As of the date hereof, (i) Lender is
the assignee of the Borrowers' interest under the Leases, and (ii) there are no
prior assignments of the Leases or any portion of the Rents due and payable or
to become due and payable which are presently outstanding.
(ii) Security Deposits. As of the date hereof, the Borrowers
are in compliance with all applicable Legal Requirements relating to all
Security Deposits.
(iii) Leases. (a) the Borrowers are the sole owners of the
entire lessor's interest in the Leases; (b) the Leases are the valid, binding
and enforceable obligations of the Borrowers and, to the best of each Borrower's
knowledge, the applicable tenant or lessee thereunder; (c) the terms of all
alterations, modifications and amendments to the Leases are reflected in the
certified rent roll delivered to and approved by Lender, (d) none of the Rents
reserved in the Leases have been assigned or otherwise pledged or hypothecated
other than to Lender; (e) none of the Rents have been collected for more than
one (1) month in advance; (f) the premises demised under the Leases have been
completed and the tenants under the Leases have accepted the same and have taken
possession of the same on a rent-paying basis; (g) there exists no offset or
defense to the payment of any portion of the Rents; (h) no Lease contains an
option to purchase, right of first refusal to purchase, expansion right, or any
other similar provision; and (i) no Person has any possessory interest in, or
right to occupy the Premises, except under and pursuant to a Lease; and (j) all
leasing broker fees and commissions payable by the Borrowers with respect to the
Lease(s) have been paid in full, in cash or other form of immediately available
funds.
(D) Tenancy in Common:
(i) The TIC Agreement is in full force and effect and there
are no defaults under such agreement, nor have events occurred that with the
passage of time, the giving of notice or both would result in such a default;
(ii) No Borrower has filed (nor intends to file) an action to
partition ownership of the Premises nor has any Borrower exercised or attempted
to exercise the buy/sell procedures set forth in Section 10 of the TIC Agreement
nor has the Property Manager nor any Affiliate of the Property Manager exercised
or attempted to exercise the purchase option described in Section 11 of the TIC
Agreement.
Section 3.3 Full and Accurate Disclosure. No statement of fact made
by or on behalf of the Borrowers in the Loan Documents, the Environmental
Indemnity or in any other document or certificate delivered to Lender by the
Borrowers contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
misleading. There is no fact presently known to the Borrowers which has not been
disclosed to Lender which will have a Material Adverse Effect, nor as far as the
Borrowers can foresee, might have a Material Adverse Effect.
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Section 3.4. Survival of Representations and Warranties. The
Borrowers agree that (A) all of the representations and warranties of the
Borrowers set forth in this Agreement, in the other Loan Documents and
Environmental Indemnity delivered as of the date hereof are made as of the date
hereof (except as expressly otherwise provided) and (B) all representations,
warranties and covenants made by the Borrowers shall survive the delivery of
each of Note A, Note B, and Note C, and continue for so long as any Indebtedness
remains owing, provided, however, that the representations and warranties set
forth in the Environmental Indemnity shall survive in perpetuity and shall not
be subject to the limitation of liability provisions set forth in Section 6.16
of this Agreement. All representations, warranties, covenants and agreements
made in this Agreement or in the other Loan Documents shall be deemed to have
been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.
ARTICLE IV
DEFAULTS AND REMEDIES
Section 4.1. Remedies. Upon the occurrence of an Event of Default,
all or any one or more of the rights, powers and other remedies available to
Lender against the Borrowers under this Agreement, Note A, Note B, Note C, the
Mortgage or any of the other Loan Documents, or at law or in equity may be
exercised by Lender at any time and from time to time, without notice or demand,
whether or not all or any portion of the Indebtedness shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to the Premises or all or any portion of
the Collateral. Any such actions taken by Lender shall be cumulative and
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Lender may determine in its
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
ARTICLE V
SPECIAL PROVISIONS
Section 5.1. Financial Reporting. Each of the Borrowers shall keep
adequate books and records of account in accordance with generally accepted
accounting principles or in accordance with other methods of accounting
acceptable to Lender in its sole discretion, consistently applied ("Approved
Accounting Method") and shall furnish to Lender the following, which shall be
prepared, dated and certified by the Borrowers' Authorized Representative as
true, correct and complete in the form required by Lender, unless otherwise
specified below:
(A) (i) Within ninety (90) days after the end of each fiscal year
for the Borrowers, detailed financial reports covering the full and complete
operation of the Premises, prepared in accordance with the Approved Accounting
Method, including, without limitation,
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income and expense statements, all prepared by an independent certified public
accountant reasonably acceptable to Lender, and within ninety (90) days after
the end of each fiscal year for each Guarantor, a fiscal year end balance sheet
and income statement for each Guarantor, prepared in accordance with the
Approved Accounting Method, by an independent certified public accountant
reasonably acceptable to Lender, and (ii) within 120 days after the end of each
calendar year, a copy of each of the Borrower's and the Guarantor's signed
federal income tax return for the immediately preceding calendar year; provided,
however, that if a Borrower is treated as a so-called "disregarded entity" for
tax purposes and does not file its own tax returns, such Borrower shall not be
required to deliver a federal income tax return to Lender as required hereunder;
(B) Within thirty (30) days after the end of each fiscal quarter of
the Borrowers, a detailed rent roll, certified as true, correct and complete by
Borrowers' Authorized Representative, of the leasing status of the Premises as
of the end of such quarter identifying the lessee (and assignee, subtenants and
licensees, if any) and location of demised premises; square footage leased; base
and additional rental amounts including any increases; rental concessions,
allowances, abatements and/or rental deferments; pass-through amounts; purchase
options; commencement and expiration dates; early termination dates; renewal
options and annual renewal rents; total net rentable area of the Premises; the
existence of any affiliation between any Borrower and tenant; a detailed listing
of tenant defaults;
(C) Within thirty (30) days after the end of each fiscal quarter of
the Borrowers, the reports described in Section 5.1 (A) above, prepared on both
a quarterly and year-to-date basis. Said reports may be internally prepared by
the Borrowers;
(D) Within fifteen (15) days following Lender's request, (i) a
detailed annual budget and operating plan for the current fiscal year, in form
and content reasonably acceptable to Lender, to include, without limitation, a
comparison showing corresponding information for the Borrowers' preceding fiscal
year; (ii) detailed annual operating statements for the Premises and detailed
annual financial reports for each of the Guarantors for the immediately
preceding fiscal year; and (iii) an aged accounts receivable report;
(E) At any time prior to a Securitization Transaction, within ten
(10) days following Lender's request, (i) a detailed rent roll certified by
Borrowers' Authorized Representative as true, correct and complete and (ii) a
statement of monthly income amounts for the Premises, in each case, for each of
the twelve months preceding such request; and
(F) Such other financial statements, and such other information and
reports as may, from time to time, be reasonably required by Lender.
Section 5.2. Reserves and Cash Management.
(A) Tax and Insurance Escrows. The Borrowers shall deposit with and
pay to Lender, on the Closing Date $429,871.89 with respect to estimated taxes
and assessments assess or
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levied against the Premises and $85,474.11 with respect to insurance premiums
and on each payment date specified in each of Note A, Note B, and Note C, sums
calculated by Lender for payment of: (i) the estimated taxes and assessments
assessed or levied against the Premises and (ii) the estimated premiums for
insurance required by the Loan Documents (collectively, the "Tax and Insurance
Escrows"). Lender shall use the Tax and Insurance Escrows to pay the taxes,
assessments and premiums when the same become due. The Borrowers agree they are
liable for any taxes, assessments and/or insurance premiums identified as being
paid for by the Borrowers on Lender's written Tax and Insurance Escrow analysis
previously provided to the Borrowers and the Borrowers agree to make any such
payments when the same become due. The Borrowers shall procure and deliver to
Lender, in advance, statements for such charges. Absent an Event of Default, if
the total payments made by the Borrowers under this Section exceed the amount of
payments actually made by Lender for taxes, assessments and insurance premiums,
such excess shall be credited by Lender on subsequent deposits to be made by the
Borrowers. If, however, the Tax and Insurance Escrows are insufficient to pay
the taxes, assessments and insurance premiums when the same shall be due and
payable, Borrower will pay to Lender any amount necessary to make up the
deficiency, within three (3) business days after Lender has notified the
Borrowers of such deficiency, but in all events prior to the date when payment
of such taxes, assessments and insurance premiums shall be delinquent. If at any
time the Borrowers shall tender to Lender, in accordance with the provisions of
Note A, Note B, Note C, and the other Loan Documents, full payment of the entire
Indebtedness, Lender shall, in computing the amount of such Indebtedness, credit
to the account of the Borrowers any balance remaining in the Tax and Insurance
Escrows. If there is an Event of Default resulting in a public sale of the
Premises, or if Lender otherwise acquires the Premises after an Event of
Default, Lender shall apply, at the time of commencement of such proceedings, or
at the time the Premises is otherwise acquired, the then remaining balance in
the Tax and Insurance Escrows as a credit toward any delinquent or accrued taxes
and then, in such priority as Lender elects, to the other Indebtedness.
Any funds held under this Section 5.2(A) shall not constitute any
deposit or account of the Borrowers or moneys to which the Borrowers are
entitled upon demand, or upon the mere passage of time, or sums to which the
Borrowers are entitled to any interest or crediting of interest by virtue of
Lender's mere possession of such deposit. Lender shall not be required to
segregate such deposits and may hold such deposits in its general account or any
other account and may commingle such deposits with any other moneys of Lender or
moneys which Lender is holding on behalf of any other person or entity.
(B) Property Reserves. The Borrowers shall deposit with Lender
certain funds to be held by Lender as required by and in accordance with the
provisions of the Property Reserves Agreement (collectively, the "Property
Reserves").
(C) The Borrowers acknowledge that they have opened a trust account
(the "Collection Account") at the Collection Account Bank, in the name of
Lender, as described in the Collection Account Agreement. Borrower agrees to
cause the Collection Account to be operated and maintained as required by and in
accordance with the provisions of the Collection Account Agreement, which
provisions are incorporated herein by reference. In consideration of the
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establishment of and Lender's continued administration and handling of the
accounts established under the Collection Account Agreement, the Borrowers
hereby agree that Lender shall be paid the following non-refundable fees: (i) a
one-time Five Hundred and 00/100 Dollar ($500.00) fee for establishing the
Collection Account Agreement, which Lender hereby acknowledges receipt of same;
and (ii) a monthly fee of Twenty-five and 00/100 Dollars ($25.00) for Lender's
continued administration and handling of the Collection Account Agreement, which
Lender shall deduct from any funds received by Lender from the Collection
Account.
Section 5.3 Security Agreement.
(A) Pledge of Accounts. To secure the full and punctual payment and
performance of all of the Indebtedness, Borrowers hereby assign, convey, pledge
and transfer to Lender and grant to Lender a first and continuing lien on and
security interest in and to all of Borrowers' right, title and interest in (i)
the Tax and Insurance Escrows; (ii) the Property Reserves, if any; (iii) all
funds from time to time deposited or held in any of the foregoing, all
investments made with respect thereto and all interest, if any, earned thereon;
(iv) all other amounts required under the Loan Documents to be deposited with
and/or held by Lender, including but not limited to insurance proceeds and
proceeds payable to the Borrowers pursuant to a Taking; (v) the Collection
Account and all amounts on deposit therein; and (vi) to the extent not covered
by the foregoing clauses, all products and proceeds of any or all of the
foregoing (collectively, the "Account Collateral"). The Borrowers agree that the
Account Collateral shall not constitute any deposit or account of the Borrowers
or moneys to which the Borrowers are entitled upon demand, or upon the mere
passage of time, or sums to which the Borrowers are entitled to any interest or
crediting of interest by virtue of Lender's mere possession of such deposits.
Lender shall not be required to segregate any Account Collateral and may hold
such deposits in its general account or any other account and may commingle such
deposits with any other moneys of Lender or moneys which Lender is holding on
behalf of any other person or entity.
(B) Lender Appointed Attorney-In-Fact. The Borrowers hereby
irrevocably constitute and appoint Lender as Borrowers' true and lawful
attorney-in-fact, with full power of substitution, at any time after the
occurrence of an Event of Default to execute, acknowledge and deliver any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of the Borrowers with respect to the Account Collateral, and do in the
name, place and stead of the Borrowers, all such acts, things and deeds for and
on behalf of and in the name of the Borrowers with respect to the Account
Collateral, which the Borrowers could or might do or which Lender may deem
necessary or desirable to more fully vest in Lender the rights and remedies
provided for herein with respect to the Account Collateral and to accomplish the
purposes of this Agreement. The foregoing powers of attorney are irrevocable and
coupled with an interest. Beyond the exercise of reasonable care in the custody
thereof, Lender shall not have any duty as to any Account Collateral or any
income thereon in Lender's possession or control or in the possession or control
of any agents for, or of Lender, or the preservation of rights against any
Person or otherwise with respect thereto, it being understood that so long as
Lender exercises reasonable care, Lender shall not be liable or responsible for
any loss, damage or diminution in value by reason of the act or omission of
Lender, or Lender's agents, employees or bailees.
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Section 5.4 Assignment and Assumption of the Loan. The Borrowers
shall not Transfer all or any portion of the Premises (or their tenant-in-common
interest therein) nor shall any of the Interest Owners Transfer all or any
portion of their equity held in the Borrowers to another Person(s) except as may
be expressly permitted in the Mortgage.
Section 5.5 Transfer of Loan by Lender.
(A) Lender may, at any time, sell, transfer or assign Note A and/or
Note B and/or Note C, the other Loan Documents and the Environmental Indemnity,
and/or interests in the other Loan Documents and the Environmental Indemnity
related to Note A and/or Note B and/or Note C, and any or all servicing rights
with respect thereto, or grant participations therein or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest
in one or more rated or unrated public offerings or private placement (each, as
designated by Lender, a "Securitization Transaction"); including, without
limitation, (i) allocate specific collateral given for the Loan as security for
performance of Note A, and/or Note B, and/or Note C, and/or (ii) at Lender's
option split Note A (or any portion thereof), and/or Note B (or any portion
thereof), and/or Note C (or any portion thereof); provided, however, that the
Borrowers shall not be required to execute and deliver any secured promissory
note resulting from the splitting of a Note if the effect is to increase the
Borrowers' payment obligations under such replacement Notes or change, in the
aggregate, the Loan's amortization schedule or the amount of the final payment
due and payable on the Maturity Date; and/or (iii) consolidate Note A (or any
portion thereof) with Note B (or any portion thereof), and/or consolidate Note B
(or any portion thereof) with Note C. Borrower agrees to cooperate with all
requests of Lender to accomplish the foregoing, including, without limitation,
execution and prompt delivery to Lender of modifications to the Loan Documents
as Lender shall reasonably require. Borrower's failure to deliver any of the
documents required by Lender hereunder for a period of ten (10) business days
after such notice by Lender shall, at Lender's option, constitute an Event of
Default hereunder. Lender may forward to each purchaser, transferee, assignee,
servicer, participant, investor in such Securitization Transaction or any Rating
Agency (as hereinafter defined) rating such Securitization Transaction
(collectively, the "Investor") and each prospective Investor and the advisor of
each of the foregoing, all documents and information which Lender now has or may
hereafter acquire relating to the Indebtedness and to any of the Borrowers, any
guarantor, if any and the Premises, whether furnished by the Borrowers, any
guarantor, if any or otherwise, as Lender determines necessary or desirable.
(B) The Borrowers agree that they shall cooperate with Lender and
use Borrowers' reasonable efforts to facilitate the consummation of any
Securitization Transaction, including, without limitation, by: (i) promptly and
reasonably providing such information as may be requested in connection with the
preparation of any documentation related to such Securitization Transaction;
(ii) providing within ten (10) days of Lender's request the reports described in
Section 5.1.(B) above and monthly income information for each of the preceding
twelve (12) months; and (iii) permitting Lender, or its designees to inspect the
Premises during normal business hours upon two (2) days' advance notice from
Lender requesting same and to discuss with the Borrowers or its agents
information and documentation with respect to the operation and management of
the
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Premises. Lender shall make reasonable efforts to ensure that the lessees'
business operations are not disrupted.
(C) Lender agrees that any costs and expenses incurred by Lender
under this Section 5.5 shall be the responsibility of and paid for by Lender;
provided, however, that the Borrowers agree to pay to Lender upon demand, all
costs and expenses incurred by Lender (or by any trustee and servicers acting on
Lender's behalf) under any the documents governing any Securitization
Transaction in connection with an Event of Default, including, without
limitation, all amounts in the nature of special servicing compensation and
work-out fees and interest on property protective advances.
Section 5.6 Insurance Requirements. The Borrowers shall at all times
keep or cause to be kept in full force and effect the insurance required by the
Mortgage.
Section 5.7 Management of Premises. Notwithstanding anything to the
contrary contained in the Management Agreement or the TIC Agreement, in the
event that (a) an Event of Default has occurred; (b) Property Manager engages in
any act of fraud, gross negligence or willful misconduct; (c) Property Manager
is in default under the Management Agreement; (d) the Debt Service Coverage
Ratio, as determined by Lender, at any time shall fall below 1.20:1.00
(provided, however, if the Borrowers fail to deliver to Lender, when due any
financial reports required by Lender hereunder or under any of the Loan
Documents in order to calculate the Debt Service Coverage Ratio, upon the
occurrence of such failure, the Debt Service Coverage Ratio shall be deemed
automatically to have fallen below 1.20:1.00); or (e) the Property Manager shall
become insolvent, Lender shall have the right to terminate the Property Manager
upon thirty (30) days prior written notice to the Property Manager and/or may
otherwise direct the Borrowers to terminate the Management Agreement and replace
the Property Manager with a management company acceptable to Lender. If a
successor manager is required pursuant hereto, the Borrowers shall immediately
seek to appoint a successor manager acceptable to Lender in Lender's reasonable
discretion which successor manager shall be a reputable management company
having at least seven (7) years' experience in the management of commercial
properties with similar uses as the Premises and in the jurisdiction in which
the Premises is located and shall not be paid management fees in excess of fees
which are market fees in the surrounding geographic area.
Section 5.8 Guarantor Financial Covenants. The Borrowers hereby
acknowledge and agree that Triple Net Properties, LLC, in its capacity as a
Guarantor, is required pursuant to the provisions of the guaranty it executed
and delivered to Lender, on or about the date hereof, in connection with the
Loan, to maintain certain financial covenants during the term of the Loan and in
the event that such covenants are breached (and such breach remains uncured
beyond all applicable cure periods set forth in such guaranty) such breach shall
be an Event of Default hereunder and under the other Loan Documents. The
provisions of the aforementioned guaranty are incorporated herein by reference,
as if set forth in full herein.
Section 5.9 Parking Requirements. As long as that certain lease
agreement, dated on or about May 1, 2001, with the United States of America (via
the General Services
31
Administration on behalf of the United States Secret Service), as amended,
remains in effect and requires Borrowers to provide off-site parking, the
Borrowers shall cause that certain parking agreement, dated on or about April
30, 2001, between Protected Parking Inc. and Borrowers' predecessor-in-interest,
as may be amended from time to time, to remain in effect and shall not default
in their obligations thereunder. The Borrowers may replace such parking lease
with another parking lease acceptable to the GSA and reasonably acceptable to
Lender.
ARTICLE VI
MISCELLANEOUS
Section 6.1 No Liability of Lender. The Borrowers acknowledge and
agree that Lender's acceptance or approval of any action of the Borrowers or any
other matter requiring Lender's approval, satisfaction, acceptance or consent
pursuant to this Agreement, the other Loan Documents or the Environmental
Indemnity, including any report certificate, financial statement, appraisal or
insurance policy, will not be deemed a warranty or representation by Lender of
the sufficiency, legality, effectiveness or other import or effect of such
matter.
Section 6.2 No Third Parties Benefited. This Agreement is between
and for the sole benefit of the Borrowers and Lender, and Lender's successors
and assigns, and creates no rights whatsoever in favor of any other Person and
no other Person will have any rights to rely hereon.
Section 6.3 Time is of the Essence. Time is of the essence of each
of the Borrowers' obligations under this Agreement. The waiver by Lender of any
default or Event of Default under this Agreement will not be deemed a waiver of
any subsequent default or Event of Default.
Section 6.4 Binding Effect; No Borrower Assignment This Agreement
will be binding upon and inure to the benefit of the Borrowers and Lender and
their respective heirs, executors, administrators, successors and assigns,
provided however the Borrowers may not assign its rights or interests in this
Agreement without the prior consent of Lender, which may be withheld in Lender's
discretion as provided in the Mortgage.
Section 6.5 Execution in Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, and such
counterparts when taken together shall constitute but one agreement.
Section 6.6 Integration; Amendments; Consents. This Agreement,
together with the other Loan Documents and the Environmental Indemnity,
constitutes the entire agreement of the parties with respect to the Loan, and
supersedes any prior negotiations or agreements, and supersedes any loan
application submitted by the Borrowers to Lender and any commitment letter for
the Loan delivered by Lender to the Borrowers. No modification, extension,
discharge, termination or waiver of any provision of this Agreement or the other
Loan Documents will be
32
effective unless in writing, signed by the Person against whom enforcement is
sought, and will be effective only in the specific instance for which it is
given.
Section 6.7 Governing Law. The Loan will be deemed to have been made
in the State, and this Agreement, the other Loan Documents and the Environmental
Indemnity will be governed by and construed and enforced in accordance with the
laws of the State without regard to the State's conflicts of laws principles.
The Borrowers and Lender each unconditionally and irrevocably waives any right
to assert that the law of any other jurisdiction governs this Agreement, the
other Loan Documents, and the Environmental Indemnity.
Section 6.8 Jurisdiction. The Borrowers irrevocably (a) agrees that
any suit, action or other legal proceeding arising out of or relating to this
Agreement, Note A, Note B, Note C, the Mortgage, the other Loan Documents and
the Environmental Indemnity may be brought in a court of record in the State or
in the Courts of the United States located in the State, (b) submits to the
jurisdiction of each such court in any such suit, action or proceeding and (c)
waives any objection which it may have to the laying of venue of any such suit,
action or proceeding in any of such courts and any claim that any such suit,
action or proceeding has been brought in an inconvenient forum. Borrower
irrevocably consents to the service of any and all process in any such suit,
action or proceeding by service of copies of such process to the Borrowers at
its address provided in the Mortgage. Nothing in this Section 6.8 will affect
the right of Lender to serve legal process in any other manner permitted by law
or affect the right of Lender to bring any suit, action or proceeding against
Borrower or Borrower's assets in the courts of any other jurisdiction.
Section 6.9 Severability of Provisions. If a court of competent
jurisdiction finds any provision of this Agreement, the other Loan Documents or
the Environmental Indemnity to be invalid or unenforceable as to any Person or
circumstance in any state, such finding will not render that provision invalid
or unenforceable as to any other Person or circumstance or in any other state.
Where permitted by Legal Requirements, any provision found invalid or
unenforceable will be deemed modified to the extent necessary to be within the
limits of enforceability or validity; however, if such provision cannot be
deemed so modified, it will be deemed stricken and all other provisions of this
Agreement in all other respects will remain valid and enforceable.
Section 6.10 Preferences. Lender will have no obligation to marshal
any assets for the benefit of the Borrowers or any other Person or in
satisfaction of any or all of the Indebtedness. Lender will have the continuing
and exclusive right to apply or reverse and reapply any and all payments by the
Borrowers to any portion of the Indebtedness. To the extent the Borrowers make a
payment to Lender or Lender receives any proceeds from the Collateral, which
payment or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other Person under any bankruptcy, insolvency or other
law, or for equitable cause, then, to the extent of such payment or proceeds
released by Lender, the Indebtedness will be revived and continue in full force
and effect, as if such payment or proceeds had not been received by Lender.
33
Section 6.11 Joint and Several Obligations. If this Agreement is
executed by more than one Person as Borrower, the Indebtedness and all other
obligations of the Borrowers under the Loan Documents will be joint and several
obligations.
Section 6.12 No Joint Venture or Partnership. The Borrowers and
Lender intend that the relationship created under this Agreement, the other Loan
Documents and the Environmental Indemnity be solely that of borrower and lender.
Nothing is intended to create a joint venture, partnership, tenancy-in-common,
or joint tenancy relationship between the Borrowers and Lender nor to grant to
Lender any interest in the Premises other than that of mortgagee or secured
party.
Section 6.13 Waiver of Counterclaim. The Borrowers hereby waive, to
the extent permitted by applicable law, the right to assert any counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against the Borrowers by Lender under any of the Loan Documents or the
Environmental Indemnity.
Section 6.14 Headings, etc. The headings and captions of various
paragraphs of this Agreement are for convenience of reference only and are not
to be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
Section 6.15 Capitalized Terms. Capitalized terms used herein and
not otherwise defined shall have those meanings given to them in the other Loan
Documents.
Section 6.16 Liability.
Notwithstanding any provision to the contrary in this Agreement,
Note A, Note B, Note C, or the Loan Documents and except as otherwise provided
for below, the liability of the Borrowers under the Loan Documents shall be
limited to the interest of the Borrowers in the Premises and the Rents. In the
event of foreclosure of the liens evidenced by the Loan Documents, no judgment
for any deficiency upon the Indebtedness evidenced by the Loan Documents shall
be sought or obtained by Lender against the Borrowers. Nothing herein shall in
any manner limit or impair (i) the lien or enforcement of the Loan Documents
pursuant to the terms thereof or (ii) the obligations of any indemnitor or
guarantor, if any.
Notwithstanding any provision hereinabove to the contrary, the
Borrowers shall be personally liable to Lender for:
(a) any loss or damage to Lender arising from (i) the sale or
forfeiture of the Premises resulting from the Borrowers' failure to pay any of
the taxes or (ii) the Borrowers' failure to insure the Premises in compliance
with the provisions of the Loan Documents;
(b) environmental loss or damage;
(c) nonpayment of taxes, insurance premiums and utilities for the
Premises and any penalty or late charge associated with nonpayment thereof;
34
(d) material failure to manage, operate, and maintain the Premises
in a commercially reasonable manner for similar property types in the
surrounding geographic area:
(e) any sums paid by Lender in fulfilling the obligations of the
Borrowers as lessor under any Lease of the Premises prior to a sale of the
Premises pursuant to foreclosure or power of sale, a bona fide sale (permitted
by the terms of paragraphs 2(f) and 2(m) of the Mortgage (it being agreed that
"Mortgage" as used herein shall be construed to mean "mortgage" or "deed of
trust" or "trust deed" as the context so requires) or consented to in writing by
Lender) to an unrelated third party or upon conveyance to Lender of the Premises
by a deed acceptable to Lender in form and content (each of which shall be
referred to as a "Sale" for purposes of this paragraph) or expended by Lender
after a Sale of the Premises for obligations of the Borrowers which arose prior
to a Sale of the Premises;
(f) any rents or other income regardless of type or source of
payment or other considerations in lieu thereof (including, but not limited to,
common area maintenance charges, lease termination payments, refunds of any
type, prepayment of rents, settlements of litigation, or settlements of past due
rents) from the Premises which the Borrowers have received or will receive after
an Event of Default under the Loan Documents which are not applied to payment of
Operation Expenses provided that (x) the Borrowers have furnished Lender with
evidence reasonably satisfactory to Lender of the Operation Expenses and payment
thereof and (y) any payments to parties related to the Borrowers shall be
considered an Operation Expense only to the extent that the amount expended for
the Operation Expense does not exceed the then current market rate for such
Operation Expense;
(g) any security deposits of tenants not otherwise applied in
accordance with the terms of the Lease(s), together with any interest on such
security deposits required by law or the leases, not turned over to Lender upon
conveyance of the Premises to Lender pursuant to foreclosure or power of sale or
by a deed acceptable to Lender in form and content;
(h) misapplication or misappropriation of any reserve account
including tax reserve accounts and tenant improvement reserve accounts, security
deposits, prepaid rents or insurance or condemnation proceeds held by the
Borrowers or any other entity or person in connection with the operation of the
Premises; and
(i) any loss or damage to Lender arising from any fraud or willful
misrepresentation by or on behalf of the Borrowers, Interest Owners or any
guarantor regarding the Premises, the making or delivery of any of the Loan
Documents or in any materials or information provided by or on behalf of the
Borrowers, Interest Owners or guarantor, if any, in connection with the Loan.
The Borrowers' personal liability for items specified in (c), (d)
and (e) above shall be limited to the amount of rents, issues, proceeds and
profits from the Premises ("Rents and Profits") received by the Borrowers for
the twenty-four (24) months preceding an Event of Default and thereafter; but
less any such Rents and Profits applied to (A) payment of principal, interest
and other charges when due under the Loan Documents, or (B) payment of expenses
for
35
the operation, maintenance, taxes, assessments, utility charges and insurance of
the Premises including sufficient reserves for the same or replacements or
renewals thereof ("Operation Expense(s)") provided that (x) the Borrowers have
furnished Lender with evidence reasonably satisfactory to Lender of the
Operation Expenses and payment thereof, and (y) any payments to parties related
to the Borrowers shall be considered an Operation Expense only to the extent
that the amount expended for the Operation Expense does not exceed the then
current market rate for such Operation Expense. Notwithstanding anything
contained in paragraphs 6.16(a)(i) and 6.16(c) hereinabove as it relates solely
to taxes, assessments and insurance premiums, to the extent Lender is impounding
for taxes, assessments and insurance premiums in accordance with the Loan
Documents and the Borrowers have fully complied with all terms and conditions of
the Loan Documents relating to impounding for the same, then the Borrowers shall
not be personally liable for Lender's failure to apply any of said impound
amounts held by Lender in accordance with the Loan Documents.
Notwithstanding anything to the contrary in the Loan Documents, the
limitation on liability contained in the first paragraph of this paragraph 6.16
SHALL BECOME NULL AND VOID and shall be of no further force and effect in the
event:
(w) of any breach or violation of paragraphs 2(f) and 2(m) (due on
sale or encumbrance) of the Mortgage, other than (i) the filing of a nonmaterial
mechanic's lien affecting the Premises or a mechanic's lien affecting the
Premises for which the Borrowers have complied with the provisions of paragraph
l(e) of the Mortgage, or (ii) the granting of any utility or other nonmaterial
easement or servitude burdening the Premises, or (iii) any transfer or
encumbrance of a nonmaterial economic interest in the Premises not otherwise set
forth in (i) or (ii);
(x) of the failure of the Borrowers or the SPE Equity Owner, if any,
to remain a Single-Purpose Entity;
(y) of any filing by the Borrowers or the SPE Equity Owner, if any,
of a petition in bankruptcy or insolvency or a petition or answer seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the Bankruptcy laws of the United States or under any
other applicable federal, state or other statute or law;
(z) the Management Agreement is modified, amended replaced,
cancelled or terminated (either by affirmatively terminating or by failing not
to annually renew), without Lender's prior written consent;
(aa) The Borrowers give any approval or consent for the substitution
for or replacement of the Property Manager (it being understood and agreed that
any substitution for or replacement of the current Property Manager may only
occur with Lender's consent and/or approval), without Lender's prior written
consent;
36
IN WITNESS WHEREOF, the Borrowers and Lender have hereunto caused this
Agreement to be executed on the date first above written.
LENDER:
PRINCIPAL COMMERCIAL FUNDING, LLC,
a Delaware limited liability company
By: PRINCIPAL REAL ESTATE INVESTORS, LLC, a Delaware limited liability
company, its authorized signatory
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Counsel
By: /s/ Xxxxxxx X. Skrivenet
------------------------
Counsel
PRINCIPAL LIFE INSURANCE COMPANY,
an Iowa corporation
By: PRINCIPAL REAL ESTATE INVESTORS, LLC, a Delaware limited liability
company, its authorized signatory
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Counsel
By: /s/ Xxxxxxx X. Skrivenet
------------------------
Counsel
(Signatures Continue on Next Page)
[Signature Page - Loan Agreement]
BORROWERS:
NNN CONGRESS CENTER, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company,
its Manager
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 1, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 2, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
[Signatures Continue on the Following Page]
[Signature Page - Loan Agreement]
NNN CONGRESS CENTER 3, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 4, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 5, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 6, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
[Signatures Continue on the Following Page]
[Signature Page - Loan Agreement]
NNN CONGRESS CENTER 7, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 8, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 10, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 11, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
[Signatures Continue on the Following Page]
[Signature Page - Loan Agreement]
NNN CONGRESS CENTER 12, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 13, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 14, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 15, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
[Signatures Continue on the Following Page]
[Signature Page - Loan Agreement]
NNN CONGRESS CENTER 16, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NNN CONGRESS CENTER 17, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
GREIT - CONGRESS CENTER, LLC, a Delaware limited liability company
By TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company, as
authorized Vice President
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
[Signature Page - Loan Agreement]
