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SENIOR SECURED CREDIT AGREEMENT
$100,000,000
DATED AS OF OCTOBER 13, 1997
BETWEEN
ROYALE INVESTMENTS, INC.,
FCO, L.P.,
FCO HOLDINGS, INC.,
BLUE XXXX INVESTMENT COMPANY, L.P.,
SOUTH BRUNSWICK INVESTORS, L.P.,
COMCOURT INVESTORS, L.P.,
AND
0000 XXXXX XXXXX, L.P.
as Loan Parties,
and
BANKERS TRUST COMPANY,
as Lender
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CREDIT AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION......................................................2
1.1 Appendix of Defined Terms..............................................2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement; Pro Forma .............................2
1.3 Certain References, Captions, Persons, and Expressions.................2
1.4 Drafter................................................................2
1.5 Knowledge..............................................................2
ARTICLE 2 TERMS OF THE LOAN...................................................3
2.1 Agreement to Lend and Borrow...........................................3
2.2 Disbursement of Funds..................................................3
2.3 Evidence of Indebtedness and Maturity..................................3
2.4 Extension of Maturity Date.............................................3
2.5 Fees...................................................................4
2.6 Interest on the Loan...................................................4
2.7 Repayments and Prepayments; General Provisions
Regarding Payments...................................................5
2.7.1 Scheduled Payments of the Loan.....................................5
2.7.2 Prepayments........................................................5
2.7.3 Application of Payments to Principal and Interest..................5
2.7.4 General Provisions Regarding Payments..............................5
2.8 Releases of Properties.................................................6
2.8.1 Conditions to Release..............................................6
2.8.2 Release of Blue Xxxx Vacant Land...................................7
2.8.3 Effect of Release..................................................7
2.9 Use of Loan Proceeds...................................................7
2.9.1 Loans..............................................................7
2.9.2 Margin Regulations.................................................7
2.10 Special Provisions Governing Eurodollar Rate..........................8
2.10.1 Special Eurodollar Interest Rate Provisions.......................8
2.10.2 Determination of Applicable Interest Rate.........................9
2.10.3 Inability to Determine Applicable Interest Rate...................9
2.10.4 Illegality or Impracticability of Eurodollar Rate.................9
2.10.5 Compensation For Breakage or Non-Commencement
of Interest Periods.............................................9
2.10.6 Booking of Eurodollar Rate Loans..................................9
2.10.7 Assumptions Concerning Funding of Eurodollar Rate Loans..........10
2.10.8 Increased Costs; Taxes; Capital Adequacy.........................10
2.10.9 Withholding of Taxes.............................................11
2.10.10 Capital Adequacy Adjustment.....................................12
2.10.11 Obligation of the Lender to Mitigate............................13
ARTICLE 3 CONDITIONS.........................................................13
3.1 Conditions Precedent to Lender's Obligations..........................13
3.1.1 Corporate Documents...............................................13
3.1.2 Partnership Documents.............................................14
3.1.3 Operating Statements..............................................15
3.1.4 Officer's Certificates............................................15
3.1.5 Establishment of Rent Reserve Account and
Tenanting Costs Account.........................................15
3.1.6 Payment of Fees...................................................15
3.1.7 No Material Adverse Effect........................................15
3.1.8 Security Interests................................................16
3.1.9 Insurance.........................................................18
3.1.10 Management Agreements............................................18
3.1.11 Material Leases; Tenant Estoppel Certificates....................18
3.1.12 Environmental Audits.............................................18
3.1.13 Engineering Reports..............................................19
3.1.14 Appraisals.......................................................19
3.1.15 Opinions of Loan Parties' Counsel; Auditor's Letter..............19
3.1.16 Opinion of Lender's Counsel......................................19
3.1.17 No Adverse Litigation............................................20
(i)
3.1.18 Existing Indebtedness............................................20
3.1.19 Contingent Obligations...........................................20
3.1.20 Payment of Fees and Expenses.....................................20
3.1.21 Completion of Proceedings........................................20
3.1.22 Other Documents..................................................20
3.2 Conditions Subsequent to Lender's Obligations.........................20
3.2.1 Formation of FCOLP and FCO; Assignment of
Partnership Interests in Borrowers to FCOLP and FCO.............21
3.2.2 Execution of this Agreement.......................................21
3.2.3 Pledge of Partnership Interests...................................21
3.2.4 Stock Certificates................................................21
3.2.5 Other Documents...................................................21
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.....................................22
4.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries...........................................22
4.1.1 Organization and Powers...........................................22
4.1.2 Qualification and Good Standing...................................22
4.1.3 Conduct of Business...............................................22
4.1.4 Formation.........................................................22
4.2 Authorization of Borrowing, etc.......................................22
4.2.1 Authorization of Borrowing........................................23
4.2.2 No Conflict.......................................................23
4.2.3 Governmental Consents.............................................23
4.2.4 Binding Obligation................................................23
4.3 Financial Condition; Contingent Obligations...........................24
4.3.1 Financial Condition...............................................24
4.3.2 Contingent Obligations............................................24
4.4 Existing General Partners.............................................24
4.5 Properties; Agreements; Licenses......................................24
4.5.1 Title to Properties; Liens........................................24
4.5.2 Material Leases...................................................25
4.6 Litigation; Adverse Facts.............................................25
4.7 Taxes.................................................................25
4.7.1 Payment of Taxes..................................................26
4.7.2 REIT Status.......................................................26
4.7.3 Foreign Person....................................................26
4.7.4 Classification as a Partnership...................................26
4.8 Performance of Agreements; Materially Adverse Agreements..............26
4.9 Governmental Regulation; Securities Activities........................27
4.10 Employee Benefit Plans...............................................27
4.11 Certain Fees.........................................................27
4.12 Solvency.............................................................27
4.13 Disclosure...........................................................28
4.14 Liens on the Collateral..............................................28
4.14.1 General..........................................................28
4.14.2 Mortgages........................................................28
4.14.3 Assignments of Rents and Leases..................................29
(ii)
4.14.4 Mechanics' Liens.................................................29
4.14.5 Filings and Recordings...........................................29
4.15 Zoning; Authorizations...............................................29
4.15.1 Zoning...........................................................29
4.15.2 Authorizations...................................................29
4.16 Physical Condition; Encroachment; Capital Expenditures...............30
4.16.1 Physical Condition; Encroachment.................................30
4.16.2 Capital Expenditures.............................................30
4.17 Insurance............................................................30
4.18 Leases...............................................................30
4.19 Environmental Reports; Engineering Reports;
Appraisals; Market Studies.........................................31
4.20 No Condemnation or Casualty..........................................31
4.21 Utilities and Access.................................................31
4.22 Wetlands.............................................................31
4.23 Labor Matters........................................................31
4.24 Employment and Labor Agreements......................................32
ARTICLE 5 AFFIRMATIVE COVENANTS..............................................32
5.1 Financial Statements and Other Reports................................32
5.2 Entity Existence; Financial Matters; Control..........................38
5.2.1 Entity Existence..................................................38
5.2.2 Financial Matters.................................................38
5.2.3 Change in Control.................................................38
5.2.4 Employment of Controlling Principals..............................38
5.3 Qualified Income Covenant; Common Stock...............................38
5.4 Taxes and Claims; Tax Consolidation...................................39
5.4.1 Taxes and Claims..................................................39
5.4.2 Tax Consolidation.................................................39
5.5 Maintenance of Properties; Repair; Alteration.........................39
5.6 Rent Reserve Account..................................................40
5.7 Tenanting Costs Reserve Account.......................................40
5.8 Inspection; Lenders' Meeting; Appraisals..............................41
5.8.1 Inspection and Lender Meeting.....................................41
5.8.2 Appraisals........................................................41
5.9 Compliance with Laws, Authorizations, etc.............................42
5.10 Performance of Loan Documents and Related Documents..................42
5.11 Payment of Liens.....................................................42
5.11.1 Removal by Loan Parties..........................................42
5.11.2 Removal by Lender................................................42
5.11.3 Title Searches...................................................43
5.12 Insurance............................................................43
5.12.1 Risks to be Insured..............................................43
5.12.2 Policy Provisions................................................46
5.12.3 Increases in Coverage............................................47
5.12.4 Payment of Proceeds..............................................47
5.12.5 Delivery of Counterpart Policies; Evidence.......................47
5.12.6 Replacement or Renewal Policies..................................47
5.12.7 Material Change in Policy........................................48
5.12.8 Separate Insurance...............................................48
5.13 Casualty and Condemnation; Restoration...............................48
5.13.1 Notice of Casualty...............................................48
5.13.2 Insurance Proceeds...............................................48
5.13.3 Notice of Condemnation; Negotiation and
Settlement of Claims...........................................49
(iii)
5.13.4 Condemnation Proceeds............................................49
5.13.5 Repayment of Loan; Payment of Release Price;
Conditions to Restoration......................................50
5.13.6 Restoration......................................................52
5.13.7 Engineer's Inspection............................................54
5.14 Xxxxxxxx Clause......................................................54
5.15 Further Assurances...................................................55
5.15.1 Assurances.......................................................55
5.15.2 Filing and Recording Obligations.................................55
5.15.3 Costs of Defending and Upholding the Lien........................56
5.15.4 Costs of Enforcement.............................................56
ARTICLE 6 NEGATIVE COVENANTS.................................................56
6.1 Indebtedness of Borrower..............................................57
6.2 Indebtedness of FCOLP.................................................57
6.3 Liens and Related Matters.............................................57
6.3.2 No Further Negative Pledges.......................................58
6.4 Investments...........................................................58
6.5 Contingent Obligations................................................58
6.6 Distributions.........................................................59
6.7 Financial Covenants...................................................59
6.7.1 Adjusted Consolidated Net Worth...................................59
6.7.2 Minimum Property Interest Coverage................................59
6.7.3 Minimum Property Hedged Interest Coverage.........................59
6.7.4 Minimum Consolidated Interest Coverage............................59
6.7.5 Maximum Consolidated Unhedged Floating Rate Debt..................59
6.7.6 Maximum Consolidated Total Indebtedness...........................59
6.8 Fundamental Changes...................................................59
6.9 Zoning and Contract Changes and Compliance............................60
6.10 No Joint Assessment; Separate Lots...................................60
6.11 Transactions with Affiliated Persons.................................61
6.12 Sale or Discount of Receivables......................................61
6.13 Ownership of Subsidiaries............................................61
6.14 Conduct of Business..................................................61
6.14.1 Conduct of Business..............................................61
6.15 Properties...........................................................62
6.15.1 Acquisition of Properties........................................62
6.15.2 Transfer of Properties...........................................62
6.16 Management Agreements................................................62
6.17 Changes in Certain Obligations and Documents;
Issuance of Equity Securities......................................62
6.17.1 Credit Agreement.................................................62
6.17.2 Royale Preferred Stock...........................................62
6.17.3 Equity Securities................................................63
6.17.4 Organization Documents...........................................63
6.18 Fiscal Year..........................................................63
ARTICLE 7 EVENTS OF DEFAULT; REMEDIES........................................64
7.1 Events of Default.....................................................64
7.1.1 Failure to Make Payments When Due.................................64
7.1.2 Other Defaults Under Loan Documents...............................64
7.1.3 Failure of Blue Xxxx Defeasance...................................64
7.1.4 Failure of Formation..............................................64
7.1.5 Default in Other Agreements.......................................64
7.1.6 Breach of Warranty................................................65
7.1.7 Invalidity of Loan Document; Failure of Security;
Repudiation of Obligations......................................65
7.1.8 Prohibited Transfers..............................................65
7.1.9 Involuntary Bankruptcy; Appointment of Receiver, etc..............66
7.1.10 Voluntary Bankruptcy; Appointment of Receiver, etc...............66
7.1.11 Judgments and Attachments........................................66
7.1.12 Dissolution......................................................66
(iv)
7.1.13 Material Adverse Effect..........................................66
7.2 Certain Remedies......................................................67
7.3 Limitation on Recourse Against Non-Recourse Parties...................69
ARTICLE 8 MISCELLANEOUS......................................................70
8.1 Assignments and Participations in Loan................................70
8.1.1 General...........................................................70
8.1.2 Participations....................................................70
8.1.3 Assignments to Federal Reserve Banks..............................70
8.1.4 Information.......................................................70
8.2 Expenses..............................................................70
8.3 Indemnity.............................................................72
8.3.1 Indemnity.........................................................72
8.3.2 Procedure.........................................................73
8.3.3 Contribution......................................................73
8.3.4 No Limitation.....................................................74
8.3.5 Independence of Indemnity; No Enlargement.........................74
8.4 No Joint Venture or Partnership.......................................74
8.5 Amendments and Waivers................................................74
8.6 Independence of Covenants.............................................75
8.7 Notices...............................................................75
8.8 Survival of Representations, Warranties and Agreements................75
8.9 Obligations Several; Independent Nature of the
Lenders' Rights.....................................................75
8.10 Remedies of Borrower.................................................76
8.11 Maximum Amount.......................................................76
8.12 Marshalling; Payments Set Aside......................................77
8.13 Agreement to Contribute..............................................77
8.14 Suretyship Waivers...................................................78
8.15 Severability.........................................................80
8.16 Headings.............................................................80
8.17 Applicable Law.......................................................81
8.18 Successors and Assigns...............................................81
8.19 Consent to Jurisdiction and Service of Process.......................82
8.20 Waiver of Jury Trial.................................................82
8.21 Counterparts; Effectiveness..........................................83
8.22 Material Inducement..................................................83
8.23 Entire Agreement.....................................................84
(v)
EXHIBITS
Exhibit A The Properties
Exhibit B The Note
Exhibit C Property Amounts
Exhibit D Compliance Certificate
(vi)
SCHEDULES
Schedule 2.2 - Disbursement of Funds
Schedule 2.8.2 - Blue Xxxx Vacant Land
Schedule 4.1.1 - Loan Party Jurisdictions
Schedule 4.5.2 - Material Leases
Schedule 4.6 - Litigation
Schedule 4.8 - Materially Adverse Agreements
Schedule 5.1.14 - Form of Financial Plans
Schedule 5.2.3 - Initial Shareholdings of Controlling Principals
Schedule 5.6 - Rent Reserve Account
Schedule 5.7 - Tenant Costs Account
(vii)
SENIOR SECURED CREDIT AGREEMENT
This SENIOR SECURED CREDIT AGREEMENT is dated as of October 13, 1997 and
entered into among ROYALE INVESTMENTS, INC., a Minnesota corporation ("Royale"),
FCO, L.P., a Delaware limited partnership ("FCOLP"), FCO HOLDINGS, INC., a
Delaware corporation ("FCO"), BLUE XXXX INVESTMENT COMPANY, L.P., a Delaware
limited partnership ("Blue Xxxx"), SOUTH BRUNSWICK INVESTORS, L.P., a Delaware
limited partnership ("South Brunswick"), COMCOURT INVESTORS, L.P., a Delaware
limited partnership ("Comcourt"), and 0000 XXXXX XXXXX, L.P., a Pennsylvania
limited partnership ("Flank Drive", or collectively with the foregoing parties,
the"Loan Parties"), and BANKERS TRUST COMPANY ("Lender").
R E C I T A L S
B. Blue Xxxx, South Brunswick, Comcourt and Flank Drive (collectively,
"Borrower") desire to obtain a loan from Lender, among other things, to
refinance certain existing financing secured by real and personal property
located in Blue Xxxx, Pennsylvania, Harrisburg Pennsylvania, and Princeton, New
Jersey.
C. Borrower desires to grant Liens in certain collateral in favor of Lender
to secure its obligations under this Agreement and the other Loan Documents.
D. Immediately following such refinancing the partners of Borrower intend
to admit FCO as a general partner of each Borrower and cause to be contributed
to FCOLP substantially all other Partnership Interests in Borrower. Following
such admission and contribution FCO will be the sole general partner of each
Borrower, having a 0.1% Partnership Interest in each Borrower, and FCOLP will
own all of the limited Partnership Interests in South Brunswick, and
approximately 88% of the limited Partnership Interests in each other Borrower.
The remaining limited Partnership Interests in the other Borrowers will be
contributed to FCOLP approximately 37 months after the Closing.
E. Royale is the sole general partner, and shall become a limited partner,
of FCOLP. Royale is the owner of all of the shares of FCO.
F. In order to induce Lender to make the Loan, Royale has agreed to pledge
to Lender as additional security for the Loan all of its interest in FCOLP and
FCO, and FCOLP has agreed to pledge to Lender as additional security for the
Loan all of its interest in each Borrower.
G. The making of the Loan contemplated by this Agreement is of substantial
benefit to all of the Loan Parties, including the facilitation of the
transactions described in these Recitals.
2
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Loan Parties and Lender agree as
follows:
ARTICLE 1
INTERPRETATION
This Agreement and the other Loan Documents shall be construed and
interpreted in accordance with this Article 1.
1.1 Appendix of Defined Terms
Appendix I to this Agreement, incorporated herein by this reference,
defines certain terms contained therein which are used in this Agreement and the
other Loan Documents. Such terms shall have the meanings ascribed to them in
Appendix I when used in this Agreement or the other Loan Documents with initial
capital letters.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement; Pro Forma
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by the Borrower to Lender pursuant to Section 5.1 shall be prepared in
accordance with GAAP as in effect at the time of such preparation. Except as
otherwise expressly provided herein, calculations in connection with the
definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in Section 5.1.
1.3 Certain References, Captions, Persons, and Expressions.
In any Loan Document, except as otherwise specified therein: (a) all
references to Articles, Sections, clauses, Recitals, Exhibits, Schedules or
Attachments refer to those contained in or annexed to such Loan Document; (b)
all titles or captions are used for convenience and reference only and do not
limit or affect the meaning or effect of the provisions following them; (c) all
references in a Loan Document to any Person, other than the Borrower or any of
its Affiliates, includes the successors and assigns of such Person; (d)
"includes", "including" and similar terms mean "includes/including without
limitation"; and (e) whenever the context so requires, the neuter gender
includes the masculine or feminine and the singular number includes the plural,
and vice versa.
1.4 Drafter.
No inference against or in favor of any party to any Loan Document shall be
drawn from the fact that such party or its counsel has drafted any portion of
any Loan Document.
3
1.5 Knowledge
As used in this Agreement or in any other Loan Document, the phrases "to
the actual knowledge", "to the knowledge of" and any variations thereof shall
mean, as of any date of determination and after inquiry that would be made by a
prudent operator of a business such as the business of the person making the
representation or an owner and manager of properties such as the Properties
owning or managing such Properties for its own account, the actual knowledge or
awareness, as of such date, of (i) Xxx X. Xxxxxxx, Xxxx X. Xxxxxx III and Xxxxx
X. Xxxxx, (ii) or, at such times as any of such persons are not officers or
directors of the relevant entity, the persons who occupy the offices of such
person's or such person's sole general partner's Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer, Chief Financial Officer,
Senior Executive Vice President-Finance, Executive Vice President-Finance and
Development, Senior Vice President-Operations, and such other officers as shall
from time to time perform the functions that are performed by the foregoing
officers as of the date of this Agreement. Each Loan Party represents and
warrants for itself only that the foregoing Persons have executive and
administrative responsibility for its operations and assets and that in the
performance of their duties in the ordinary course of business one or more of
such Persons would customarily have knowledge of the matters referred to herein.
ARTICLE 2
TERMS OF THE LOAN
2.1 Agreement to Lend and Borrow.
Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties of Borrower herein, Lender hereby agrees to
lend to Borrower, and Borrower agrees to borrow from Lender, the Loan Amount.
2.2. Disbursement of Funds. The Loan shall be disbursed at the Closing as
set forth on Schedule 2.2 hereto.
2.3 Evidence of Indebtedness and Maqturity. The Loan shall be evidenced by
the Note in the principal amount of the Loan Amount. The outstanding principal
balance of the Loan, together with accrued interest thereon and all other
amounts payable by Borrower under the terms of the Loan Documents, shall be due
and payable on the Maturity Date.
2.4 Extension of Maturity Date.
2.4.1 At any time prior to the date that is 90 days before the third
Anniversary, Borrower may deliver a written notice to Lender requesting
4
that the Maturity Date be extended from the third Anniversary to the
fourth Anniversary and, if such notice is delivered, the Maturity Date
shall be so extended if the following conditions are satisfied:
2.4.1.1 as of the third Anniversary, no Event of Default or
Potential Event of Default shall have occurred and be
continuing and Borrower shall have delivered an Officers'
Certificate certifying thereto;
2.4.1.2 Borrower shall obtain Interest Rate Agreements in form
and substance reasonably acceptable to Lender (and with
security reasonably acceptable to Lender) sufficient to ensure
compliance with Section 6.7.5; and
2.4.1.3 on or prior to the third Anniversary, Borrower shall
have paid to Lender in immediately available funds a fee equal
to 0.25% of the Outstanding Loan Amount on the third
Anniversary.
2.4.2 If the Maturity Date has been extended pursuant to Section 2.4.1
above, at any time prior to the date that is 90 days before the fourth
Anniversary, Borrower may deliver a written notice to Lender requesting
that the Maturity Date be extended from the fourth Anniversary to the
fifth Anniversary and, if such notice is delivered, the Maturity Date
shall be so extended provided that the following conditions are
satisfied:
2.4.2.1 as of the fourth Anniversary, no Event of Default or
Potential Event of Default shall have occurred and be
continuing and Borrower shall have delivered an Officers'
Certificate certifying thereto;
2.4.2.2 Borrower shall obtain Interest Rate Agreements in form
and substance reasonably acceptable to Lender (and with
security reasonably acceptable to Lender) sufficient to ensure
compliance with Section 6.7.5; and
2.4.2.3 on or prior to the fourth Anniversary, Borrower shall
have paid to Lender in immediately available funds a fee equal
to 0.25% of the Outstanding Loan Amount on the third
Anniversary.
2.5 Fees.
Borrower shall pay the fees described in the Fee Letter in accordance with
the terms thereof.
2.6 Interest on the Loan.
2.6.1 Rates of Interest. Subject to the provisions of Section 2.6.3,
during the Initial Term the Outstanding Loan Amount shall bear interest from the
Closing Date to (but not including) the Maturity Date at the Fixed Rate. During
any Extension Terms the Outstanding Loan Amount shall bear interest from the
third Anniversary to (but not including) the Maturity Date at the Eurodollar
Rate.
2.6.2 Interest Payments. Subject to the provisions of Section 2.6.3,
interest on the Loan shall be payable monthly in arrears on and to each Payment
Date, upon any prepayment of the Loan (to the extent accrued on the amount being
prepaid) and at the Maturity Date.
2.6.3 Default Rate Interest. During the continuation of any Event of
Default, the Outstanding Loan Amount and, to the extent permitted by applicable
5
law, any interest payments thereon not paid when due (other than any excess
interest payable solely pursuant to this Section) and any fees and other amounts
then due and payable hereunder, shall thereafter bear interest (including
post-petition interest in any proceeding under the Bankruptcy Code or other
applicable bankruptcy or insolvency laws) payable upon demand at a rate selected
by Lender at its sole option equal to (i) the sum of 2.0% and the interest rate
otherwise payable under this Agreement with respect to the Outstanding Loan
Amount (or, in the case of any such fees and other amounts, the sum of 2.0% and
the Eurodollar Rate), or (ii) the sum of 2.0% and the Eurodollar Rate, or (iii)
the sum of 2.0% and the Base Rate. Payment or acceptance of the increased rates
of interest provided for in this Section is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Lender or any Lender.
2.6.4 Computation of Interest. Interest on the Loan shall be computed
on the basis of a 360-day year and for the actual number of days elapsed in the
period during which it accrues. In computing interest, the date of the making of
the Loan or the first day of an Interest Period shall be included, and the date
of repayment of the Loan or the expiration date of an Interest Period shall be
excluded.
2.7 Repayments and Prepayments; General Provisions Regarding Payments.
2.7.1 Scheduled Payments of the Loan. On each Scheduled Principal Payment
Date, Borrower shall make a principal payment in an amount equal to one-twelfth
of the Principal Reduction Amount. Borrower shall repay the Outstanding Loan
Amount and pay all other Obligations in full no later than the Maturity Date.
2.7.2 Prepayments.Borrower may, without prepayment charge or penalty (but
subject to Section 2.10.5), upon not less than three Business Days' prior
notice, prepay the Loan on any Payment Date, in whole or in part in a minimum
amount of $3,000,000 and integral multiples of $500,000 in excess of that amount
(or, if less, the total amount of all outstanding Loans). If a prepayment is
made during an Extension Term, such prepayment shall be accompanied by the
payment of any amounts payable under Section 2.10.5 if then known, or if not
then known, then promptly following Lender's demand therefor. If such notice of
prepayment is given, the principal amount of the Loan specified in such notice
shall become due and payable on the prepayment date specified therein. Amounts
prepaid may not be reborrowed.
2.7.3 Application of Payments to Principal and Interest. All payments in
respect of the principal amount of the Loans shall include payment of accrued
interest on the principal amount being repaid or prepaid, and all such payments
shall be applied to the payment of unpaid interest before application to
principal.
2.7.4 General Provisions Regarding Payments
2.7.4.1 Manner and Time of Payment. All payments by Borrower of
principal, interest, fees and other Obligations hereunder and under the
Note and the other Loan Documents shall be made in same day funds and
6
without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Lender not later than 12:00 Noon (New York
time) on the date due at its office located at One Bankers Trust Plaza, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; funds received by Lender after
that time shall be deemed to have been paid on the next succeeding Business
Day.
2.7.4.2 Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder.
2.8 Releases of Properties.
2.8.1 At any time and from time to time after the Closing Date, in
connection with the refinancing, sale or other permanent disposition of any
Property, Borrower may obtain a Release of the Lien of the Security Documents on
such Property, subject to the following terms and conditions:
2.8.1.1 Borrower shall have delivered written notice to Lender (a) not
less than 30 days prior to the proposed Release Date specifying the
proposed Release Date and such Property, and (b) not less than 5 days prior
to the actual Release Date specifying such actual Release Date and such
Property;
2.8.1.2 no Event of Default shall have occurred and be continuing as
of the date of the delivery of the release notices (other than an Event of
Default or Potential Event of Default that either (x) pertains solely to
the Property or portion thereof which is the subject of such Release, or
(y) which will be cured by such Release and the transactions consummated in
connection therewith) and no Event of Default shall be continuing as of the
Release Date after giving effect to such Release and the transactions
consummated in connection therewith;
2.8.1.3 Borrower shall concurrently prepay the Loan in an amount equal
to the Release Price for such Property, plus such other amounts, if any, as
may be due by virtue of a prepayment of the Loan under Section 2.7.2;
2.8.1.4 Borrower shall have delivered to Lender (a) an Officers'
Certificate dated and effective as of the Release Date, certifying as to
the matters referred to in Section 2.8.1.2, and (b) an Officer's
Certificate, certified by the Chief Executive Officer or Chief Financial
Officer of Borrower, in detail reasonably satisfactory to Lender and
accompanied by the financial statements and other information used by
Borrower to calculate the information contained therein, demonstrating that
such Release will not cause violation of the covenants set forth in Section
6.7 of this Agreement.
2.8.1.5 Borrower, at its sole cost and expense, shall have (a)
delivered to Lender one or more endorsements to the Title Policy insuring
7
that, after giving effect to such Release, the insured Liens created by the
Mortgages on the Properties which are not being Released are in full force
and effect and unaffected by such Release, (b) prepared any and all
documents and instruments necessary to effect such Release, all of which
shall be reasonably satisfactory in form and substance to Lender, and (c)
paid all costs and expenses incurred by Lender and its counsel in
connection with the review, execution and delivery of the release
documents; and
2.8.1.6 all other proceedings taken or to be taken in connection with
such Release and all documents incidental thereto shall be reasonably
satisfactory in form and substance to Lender and Lender's counsel, Lender
and such counsel shall have received all such counterpart originals or
certified copies of such documents as Lender may reasonably request and
counsel for Lender shall have received such documents and evidence that
such counsel shall require in order to establish compliance with the
conditions set forth in this Section.
Borrower may obtain a Release of the Lien of the Security Documents in respect
of a portion of any Property, if title to such portion has been permanently
Taken, by complying with the foregoing terms and conditions on the applicable
Release Date.
2.8.2 Release of Blue Xxxx Vacant Land. Blue Xxxx shall be entitled to a
release of the portion of the Blue Xxxx Property described on Schedule 2.8.2
upon compliance with the conditions set forth in Section 2.8.1, except that no
prepayment of the Loan shall be required in connection therewith, provided that
Blue Xxxx also provides to Lender evidence reasonably satisfactory to Lender
that, after giving effect to such release, the remainder of the Blue Xxxx
Properties may continue to be improved, used and occupied as it is currently
improved, used and occupied without restriction or additional improvement or
expense, in accordance with applicable law.
2.8.3 Effect of Release. Upon any Release of any Property in accordance
with this Section 2.8, such property shall cease to be a Property for the
purposes of this Agreement (other than for purposes of any indemnity contained
herein or in any of the other Loan Documents to the extent such indemnification
applies to such Property). From and after release of all Properties owned by any
Borrower, such Borrower shall cease to be a Borrower hereunder and shall
thereafter have no liability for obligations of the Loan Parties arising from
and after the date of such release.
2.9 Use of Loan Proceeds.
2.9.1 Loans. Subject to the other provisions of this Agreement, the
proceeds of the Loans shall be applied by Borrower (i) first, to the repayment
(or, in the case of the Blue Xxxx Properties, provision reasonably acceptable to
Lender for the repayment) of existing Indebtedness secured by Liens on the
Properties, and (ii) then to such other uses as Borrower shall deem appropriate.
2.9.2 Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by any Loan Party or any of its Subsidiaries in any
8
manner that might cause the borrowing to violate Regulation G, Regulation U,
Regulation T or Regulation X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board or to violate the Exchange Act, in
each case as in effect on the date or dates of such borrowing.
2.10 Special Provisions Governing Eurodollar Rate.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to the Eurodollar Rate Loans
as to the matters covered:
2.10.1 Special Eurodollar Interest Rate Provisions.
2.10.1.1 Applicable Rate. From time to time upon Borrower's request
during the Extension Term Lender shall advise Borrower of the interest rate
applicable to such Loan. Lender shall advise Borrower of the amount of each
interest payment in advance of each Payment Date in accordance with the
customary procedures of Lender with respect thereto, but the failure of
Lender to provide such advice accurately or timely shall not vary the
obligation of Borrower to pay the same in accordance with the terms of this
Agreement.
2.10.1.2 Interest Periods. At least five Business Days before the
Closing and expiration of each applicable Interest Period, Borrower shall
deliver to Lender a Notice of Interest Period Selection selecting an
interest period (each an "Interest Period") to be applicable to the Loan,
which Interest Period shall be at Borrower's option either a one, three or
six month period; provided, however, that:
(a) the initial Interest Period shall commence on the third
Anniversary;
(b) each successive Interest Period shall commence on the day on
which the next preceding Interest Period expires;
(c) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, unless the Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month
after which no further Business Day occurs in such month, in which
case such Interest Period shall expire on the next preceding Business
Day;
(d) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(e) no Interest Period with respect to any portion of the Loans
shall extend beyond the Maturity Date; and
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(f) if Borrower fails to properly select an Interest Period,
Borrower shall be deemed to have selected an Interest Period of one
month.
2.10.2 Determination of Applicable Interest Rate. As soon as practicable
after 10:00 A.M. (New York time) on each Interest Rate Determination Date,
Lender shall determine the Eurodollar Rate for the applicable Interest Period
and shall promptly give notice thereof (in writing or by telephone confirmed in
writing) to Borrower. Lender's determination shall be final, conclusive and
binding upon all parties, absent manifest error.
2.10.3 Inability to Determine Applicable Interest Rate; Existence of
Default. If on any Interest Rate Determination Date Lender determines in good
faith that by reason of circumstances affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the Eurodollar Rate,
Lender shall on such date give notice to Borrower of such determination,
whereupon any Notice of Interest Period Selection given by Borrower with respect
to the Loans in respect of which such determination was made shall be deemed to
contain a request that the interest rate applicable to the Loan be the Base
Rate. Lender's determination shall be final and conclusive and binding upon all
parties hereto, absent manifest error.
2.10.4 Illegality or Impracticability of Eurodollar Rate. If at any time
Lender determines in good faith that the application of its Eurodollar Rate (i)
has become unlawful as a result of compliance by Lender in good faith with any
law, treaty, governmental rule, regulation, guideline or order (or would
conflict with any such treaty, governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply therewith would
not be unlawful) or (ii) has become impracticable, or would cause such Lender
material hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank Eurodollar market,
or the position of Lender in that market, then, and in any such event, Lender
shall give notice to Borrower of such determination. Thereafter, the Eurodollar
Rate shall be suspended until such notice shall be withdrawn by Lender the
applicable interest rate shall automatically convert to the Base Rate. Lender's
determination shall be final and conclusive and binding upon all parties hereto,
absent manifest error.
2.10.5 Compensation For Breakage or Non-Commencement of Interest Periods.
Borrower shall compensate Lender, upon written request by Lender setting forth
the basis for requesting such amounts, for all reasonable costs, expenses and
liabilities (including any interest paid by Lender to lenders of funds borrowed
by it to make or carry its Eurodollar Rate Loans and any costs, expense or
liability sustained by Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason a continuation of the Eurodollar Rate does not occur on a date specified
therefor in a Notice of Interest Period Selection, (ii) if any prepayment occurs
on a date that is not the last day of an Interest Period, (iii) if any
prepayment (including any prepayment pursuant to Section 2.7.2) is not made by
Borrower on any date specified in a notice of prepayment given by Borrower or
(iv) as a consequence of any other default by Borrower.
2.10.6 Booking of Eurodollar Rate Loans. Lender may make, carry or transfer
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the Loan at, to, or for the account of any of its branch offices or the office
of an Affiliate of Lender, provided that at the time of such making or transfer
Borrower would not thereby be made subject to (x) suspension of the
applicability of the Eurodollar Rate under Section 2.10.4, (y) payment
obligations under Section 2.10.8, or (z) withholding for Taxes under Section
2.10.9.
2.10.7 Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this Agreement shall be made as though
Lender had actually funded the Loan through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of the Loan and
having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of that Lender to a
domestic office of that Lender located in the United States of America.
Nevertheless, Lender may fund the Loan in any manner it sees fit and the
foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under this Agreement.
2.10.8 Increased Costs; Taxes; Capital Adequacy.
2.10.8.1 Compensation for Increased Costs and Taxes. Subject to Section
2.10.9 (which shall be controlling with respect to the matters covered thereby),
if Lender shall in good faith determine that any law, treaty or governmental
rule, regulation or order, or any change therein or in the governmental
interpretation, administration or application thereof (including the adoption of
any new law, treaty or governmental rule, regulation or order), or any
determination of a Governmental Authority, in each case that becomes effective
after the date hereof, or compliance by such Lender with any guideline, request
or directive issued or made after the date hereof by any central bank or other
Governmental Authority or quasi-governmental authority (whether or not having
the force of law):
(a) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of
such Lender), with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(b) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve),
special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities
in or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of
Lender (other than any such reserve or other requirements with respect
to the Loan that are already reflected in the definition of Adjusted
Eurodollar Rate); or
(c) imposes any other condition (other than with respect to a Tax
matter) on or affecting Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
11
and the result of any of the foregoing is to increase the cost to Lender of
agreeing to make, making or maintaining Loans hereunder then bearing the
Eurodollar Rate or to reduce any amount received or receivable by such Lender
(or its applicable lending office) with respect thereto; then, in any such case,
Borrower shall promptly pay to Lender, upon receipt of the statement referred to
in the next sentence, such additional amount or amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Lender in its sole discretion shall determine) as may be necessary to
compensate Lender for any such increased cost or reduction in amounts received
or receivable hereunder. Lender shall deliver to Borrower (with a copy to
Lender) a written statement setting forth in reasonable detail the basis for
calculating the additional amounts owed to Lender under this Section, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
2.10.9 Withholding of Taxes
2.10.9.1 Payments to Be Free and Clear. All sums payable by Borrower
under this Agreement and the other Loan Documents shall be paid free and
clear of and (except to the extent required by law) without any deduction
or withholding on account of any Tax (excluding Taxes imposed on any
Lender's or Participant's overall net income) imposed, levied, collected,
withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of
Borrower.
2.10.9.2 Grossing-up of Payments. If Borrower or any other Loan Party
is required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by Borrower to Lender under any of
the Loan Documents:
(a) Borrower shall notify Lender of any such requirement or any
change in any such requirement promptly after Borrower becomes aware
of it;
(b) Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Borrower) for its own account or (if that liability
is imposed on Lender) on behalf of and in the name of Lender;
(c) the sum payable by Borrower in respect of which such
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Lender receives on the due date a
net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from
12
which it is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which it is
required by Section 2.10.9.2(b) above to pay, Borrower shall deliver
to Lender evidence satisfactory to Lender of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided, however, that no such additional amount shall be required to
be paid to any Lender except to the extent that any change after the
date hereof (in the case of Lender) or after the date a Participant
became a Participant pursuant to Section 8.1 (in the case of each
Participant) in any such requirement for a deduction, withholding or
payment shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this
Agreement (in the case of Lender) or at the date a Participant became
a Participant pursuant to Section 8.1 (in the case of each
Participant) in respect of payments to such Participant.
2.10.9.3 U.S. Tax Certificates. Each Lender or Participant that is
organized under the laws of any jurisdiction other than the United States
of America or any state or other political subdivision thereof shall
deliver to Borrower, on the date on which it becomes a Lender or a
Participant pursuant to Section 8.1, and at such other times as may be
necessary in the determination of Borrower or Lender (each in the
reasonable exercise of its discretion), such certificates, documents or
other evidence, properly completed and duly executed by such Lender or
Participant (including Internal Revenue Service Form 1001 or Form 4224 or
any other certificate or statement of exemption required by Treasury
Regulations Section 1.1441-4(a) or Section 1.1441-6(c) or any successor
thereto) to establish that such Lender or Participant is not subject to
deduction or withholding of United States federal income tax under Section
1441 or 1442 of the Internal Revenue Code or otherwise (or under any
comparable provisions of any successor statute) with respect to any
payments to such Lender or Participant of principal, interest, fees or
other amounts payable under any of the Loan Documents.
2.10.10 Capital Adequacy Adjustment. If any Participant shall have
reasonably determined that the adoption, effectiveness, phase-in or
applicability (after the date of this Agreement) of any law, rule or
regulation (or any provision thereof) regarding capital adequacy, or any
change therein or in the interpretation or administration thereof by any
Governmental Authority, including any central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Participant (or its applicable lending office) with any guideline,
request or directive regarding capital adequacy (whether or not having the
force of law (after the date of this Agreement)) of any such Governmental
Authority, has or would have the effect of reducing the rate of return on
the capital of such Participant or any corporation controlling such
Participant as a consequence of, or with reference to, such Participant's
interest in the Loan or other obligations hereunder with respect to the
Loan to a level below that which such Participant or such controlling
corporation could have achieved but for such adoption, effectiveness,
phase-in, applicability, change or compliance (taking into consideration
the policies of such Participant or such controlling corporation with
regard to capital adequacy), then from time to time, within five Business
13
Days after receipt by Borrower from such Participant of the statement
referred to in the next sentence, Borrower shall pay to such Participant
such additional amount or amounts as will compensate such Participant or
such controlling corporation on an after-tax basis for such reduction. Such
Participant shall deliver to Borrower (with a copy to Lender) a written
statement, setting forth in reasonable detail the basis of the calculation
of such additional amounts, which statement shall be conclusive and binding
upon all parties hereto absent manifest error.
2.10.11 Obligation of the Lender to Mitigate.
Lender agrees that, as promptly as practicable after the officer of
Lender responsible for administering the Loans becomes aware of the
occurrence of an event or the existence of a condition that would entitle
Lender to (x) suspend the applicability of the Eurodollar Rate under
Section 2.10.4, (y) receive payments under Section 2.10.8, or (z) withhold
Taxes under Section 2.10.9, it will, to the extent not inconsistent with
its formally-adopted internal policies of general application and any
applicable legal or regulatory restrictions, use reasonable efforts to (i)
maintain the Loan or interest of Lender through another lending office of
Lender, or (ii) take such other measures as such Lender may deem
reasonable, if as a result thereof the effect of the matters described in
clauses (x), (y) and (z) above would be materially reduced and if, as
determined by such Lender in its reasonable judgment, the making, funding
or maintaining of the Loan through such other lending office or in
accordance with such other measures, as the case may be, would not
otherwise materially adversely affect the Loan or the interests of Lender;
provided, however, that Lender will not be obligated to utilize such other
lending office pursuant to this Section unless Borrower agrees to pay all
incremental expenses incurred by Lender as a result of utilizing such other
lending office as described in clause (i) above. A certificate as to the
amount of any such expenses payable by Borrower pursuant to this Section
(setting forth in reasonable detail the basis for requesting such amount)
submitted by Lender to Borrower shall be conclusive absent manifest error.
ARTICLE 3
CONDITIONS
3.1 Conditions Precedent to Lender's Obligations.
Lender's obligations under this Agreement are conditioned upon the
satisfaction prior to or concurrent with the Closing, at the expense of
Borrower, of the conditions specified in this Section 3.1, in each case as
reasonably determined by Lender:
3.1.1 Corporate Documents. Each Loan Party that is a corporation and each
corporate general partner of a Partnership Loan Party shall deliver or cause to
be delivered to Lender (with sufficient originally executed copies for each
Lender and Lender's counsel) the following, each dated the Closing Date unless
otherwise noted:
3.1.1.1 executed originals of each Loan Document to which it is a
party;
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3.1.1.2 certified copies of its Certificate of Incorporation, together
with a good standing certificate (including verification, where generally
available, of tax good standing) from the Secretary of State (or similar
official) of its jurisdiction of incorporation and each other state in
which a Property owned by such Loan Party is located), each dated not more
than 60 days prior to the Closing Date;
3.1.1.3 copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
3.1.1.4 resolutions of its Board of Directors approving and
authorizing (a) the execution, delivery and performance of each Loan
Document to which it is a party and (b) the consummation of the
transactions contemplated hereby and thereby, in each case certified as of
the Closing Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment; and
3.1.1.5 signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is a
party.
. Each Partnership Loan Party shall deliver to Lender (with sufficient
originally executed copies for Lender and Lender's counsel) the following, each
unless otherwise noted dated the Closing Date:
3.1.2.1 executed originals of each Loan Document to which it is a
party;
3.1.2.2 a conformed copy of its partnership agreement, certified by
each general partner of such partnership as of the Closing Date as being in
full force and effect without modification or amendment;
3.1.2.3 with respect to each Partnership Loan Party that is a limited
partnership, its Certificate of Limited Partnership, certified by the
Secretary of State (or similar official) of its jurisdiction of formation
and a certificate of existence or good standing, as the case may be, from
the Secretary of State (or similar official) of such jurisdiction, each
dated not more than 60 days prior to the Closing Date, and a good standing
certificate or certificate of existence, as the case may be, from the
Secretary of State (or similar official) of each state or other
jurisdiction in which a Property owned by such entity is located;
3.1.2.4 all documents of such Partnership Loan Party and its partners
(to the extent required by the applicable organizational documents)
approving or authorizing (a) the execution, delivery and performance of the
Loan Documents to which it is a party, and (b) the consummation of the
transactions contemplated hereby and thereby, each certified as of the
Closing Date by the general partner of such Partnership Loan Party; and
15
3.1.2.5 a signature and incumbency certificate of the Person(s)
executing on behalf of such Partnership Loan Party any Loan Documents.
3.1.3 Operating Statements. Borrower shall have delivered to Lender the
following information, current as of a date not less than 45 days before the
Closing, and each in form and substance satisfactory to Lender:
3.1.3.1 quarterly rent roll for each Property;
3.1.3.2 quarterly operating statements for each Property;
3.1.3.3 current operating plans and budgets for each Property, with a
year to date analysis of variations from such plans and budgets; and
3.1.3.4 current capital expense budgets for each Property, with a year
to date analysis of variations from such budgets.
3.1.4 Officer's Certificates. Each Loan Party shall have delivered to
Lender an Officers' Certificate of the Chief Executive Officer or the Chief
Financial Officer of such Loan Party, or its general partner certifying as to
the following:
3.1.4.1 the accuracy of the financial and operating statements
delivered to Lender as of the Closing Date;
3.1.4.2 the Adjusted Consolidated Net Worth of the Loan Parties as of
the Closing Date;
3.1.4.3 since January 1, 1997, no Material Adverse Effect has
occurred; and
3.1.4.4 compliance of the Loan Parties with all of their obligations
hereunder as of such date, together with a calculation testing compliance
with financial and monetary covenants attached thereto in a form reasonably
satisfactory to Lender, each as of the Closing Date.
3.1.5 Establishment of Rent Reserve Account and Tenanting Costs Account.
Borrower shall have established the Rent Reserve Account and Tenanting Costs
Reserve Account.
3.1.6 Payment of Fees. Payment of all fees payable as of the Closing Date
pursuant to the Fee Letter.
3.1.7 No Material Adverse Effect. Since January 1, 1997, no condition or
event has occurred that has had or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
16
3.1.8 security Interests. Borrower shall have taken or caused to be taken
all such actions as may be necessary or reasonably requested by Lender to give
Lender a valid, enforceable and perfected first priority Lien (or, in the case
of the Blue Xxxx Properties, provision shall have been made for Lender to obtain
a first priority Lien within 60 days after the Closing Date) on or first
priority security interest in the Collateral owned by Borrower as of the Closing
Date. Such actions shall include the following:
3.1.8.1 the delivery to Lender of fully executed and
acknowledged counterparts of the Mortgage, the Assignment of Rents and
Leases, the Security Agreement, and all other Security Documents with
respect to the Properties and the other Collateral owned by Borrower as
of the Closing Date, and the delivery of evidence satisfactory to
Lender that counterparts of the Mortgage, the Assignment of Rents and
Leases and all other of such documents as Lender desires to have
recorded have been or will be recorded in all places necessary or
desirable to create and maintain (a) valid and enforceable first
priority Liens on the fee simple interests of Borrower in the
Properties in favor of Lender, as mortgagee, (b) valid and enforceable
first priority Liens on the Rents and Leases in favor of Lender, (c)
valid and enforceable first priority Liens in all fixtures at the
Properties, in favor of Lender, as secured party, and (d) valid and
enforceable first priority Liens in all other items of Collateral owned
by Borrower as of the Closing Date in favor of Lender;
3.1.8.2 (a) the delivery to Lender for filing
pursuant to the Security Documents of properly executed financing
statements under the Uniform Commercial Code (or any equivalent or
similar legislation), or any other documents required to be filed by
other Applicable Laws, satisfactory in form and substance to Lender in
each jurisdiction as may be necessary (in Lender's reasonable judgment)
effectively to perfect and maintain the security interests in the
Collateral created by the Security Documents executed by Borrower and
(b) the delivery of evidence that such financing statements or other
documents will have been or will be recorded in all places necessary or
desirable, in the reasonable judgment of Lender, to create and maintain
valid and enforceable first priority Liens on such Collateral in favor
of Lender;
3.1.8.3 the delivery to Lender of a title commitment (together
with copies of all documents listed therein as exceptions to title)
dated not more than 40 days prior to the Closing Date with respect to
each Property and pro forma Title Policies dated not more than 20 days
prior to the Closing Date with respect to each such Property, each
reasonably satisfactory in form and substance to Lender;
3.1.8.4 the delivery to Lender of the Title Policies or marked
title commitments insuring fee simple or leasehold title to each of the
Properties vested in Borrower and insuring the first priority of the
Liens created under the Mortgages in an aggregate amount not less than
$100,000,000, in each case subject only to Permitted Encumbrances, and
such other title exceptions as are satisfactory to Lender. Such Title
Policies shall be reinsured with title insurance companies acceptable
17
to Lender in amounts as required by Lender subject to facultative
reinsurance agreements in form satisfactory to Lender. Such Title
Policies shall also contain such endorsements and affirmative insurance
provisions as Lender may reasonably require and to the extent the same
are available in the applicable jurisdiction, including "comprehensive"
endorsements, revolving credit endorsements, affirmative insurance
against mechanic's liens, survey exceptions, violations of covenants,
conditions and restrictions, encroachments, gap insurance, contiguity
endorsements, tie-in endorsements, access endorsements, "Last-dollar"
endorsements, survey endorsements, contingent loss/first loss
endorsements, variable rate mortgage endorsements, and any other
endorsements reasonably required by Lender to address issues raised by
Lender's due diligence or as a matter of Applicable Law. In addition,
Borrower shall have paid to the Title Company and to the appropriate
Governmental Authority all expenses and premiums of the Title Company
in connection with the issuance of such Title Policies and in
connection with any Loan hereunder an amount equal to the recording and
stamp taxes (including mortgage recording, intangible and similar
taxes) payable in connection with recording each Mortgage, the
Assignment of Rents and Leases in the appropriate county land or
recorder's offices or otherwise payable in connection with the Loan;
3.1.8.5 the delivery to the Title Company of such certificates
and affidavits as the Title Company may reasonably require in
connection with the issuance of the Title Policies;
3.1.8.6 the delivery to Lender of a Survey with
respect to each of the Properties, dated or re-dated to within 180 days
prior to the Closing Date, which Surveys shall be reasonably
satisfactory in form and substance to Lender;
3.1.8.7 unless a title insurance zoning endorsement
is issued to Lender by the Title Company, the delivery to Lender of a
letter, to the extent generally available, from the applicable
Governmental Authority with respect to each of the Properties and
reasonably satisfactory to Lender stating that all Improvements on each
such Property have been constructed and are being used and operated in
material compliance with (a) all applicable zoning, subdivision, local
environmental, building and land use laws, ordinances, rules and
regulations of all Governmental Authorities or quasi-governmental
authorities having jurisdiction with respect to each such Property and
all applicable fire and building maintenance codes, and (b) all
building permits issued in respect of each such Property for work then
being conducted and the certificate of occupancy (if available) for
each such Property;
3.1.8.8 the delivery to Lender of an opinion of
counsel in each state or other jurisdiction in which each Property is
located, dated the Closing Date, addressed to Lender and in form and
substance reasonably satisfactory to Lender;
3.1.8.9 the delivery to Lender of evidence reasonably
satisfactory to Lender that all other filings, recordings and other
actions Lender deems necessary or advisable to establish, perfect and
preserve the Liens granted to Lender in the Collateral owned by
Borrower as of the Closing Date shall have been made.
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3.1.9 Insurance. Borrower shall have delivered to Lender (i) duplicate
originals or true and complete copies of each policy or other evidence of
insurance required by this Agreement evidencing (a) the issuance of such
policies, (b) that Borrower is not then in default in the payment of any premium
and (c) coverage which meets all of the requirements set forth in this
Agreement; and (ii) an Officers' Certificate dated the Closing Date to the
effect that the insurance coverage required by this Agreement is in full force
and effect and that all premiums therefor have been paid. To the maximum extent
permitted by law, Borrower hereby irrevocably waives, releases and discharges
any and all rights of action, demands and other claims of any kind or nature
against Lender arising from any failure of Lender or the Lenders to comply with
the National Flood Insurance Act of 1968 (42 U.S.C. " 4001, et seq.), the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of
1994, including any failure of Lender or the Lenders to provide Borrower with
written notification within ten days prior to the Closing Date whether any
Property is in a special flood hazard area or whether federal disaster relief
assistance will be available in the event of flood damage to any Property.
3.1.10 Management Agreements. Borrower shall have delivered to Lender
executed or conformed, certified copies of each of the Management Agreements and
all amendments thereto entered into on or before the Closing Date, which
Management Agreements shall be reasonably satisfactory in form and substance to
Lender. The Management Agreements shall be in full force and effect and no term
or condition thereof shall have been amended or modified, or waived in any
material respect after the execution thereof (other than the waiver of any
Management Fee previously due and payable).
3.1.11 Material Leases; Tenant Estoppel Certificates. Borrower shall have
delivered to Lender (i) a Rent Roll for each Property, accompanied by an
Officers' Certificate with respect thereto, (ii) executed or conformed,
certified copies of each Material Lease with respect to each Property and all
amendments thereto entered into on or before the Closing Date, which Material
Leases shall be reasonably satisfactory in form and substance to Lender; the
Material Leases, as so amended, shall be in full force and effect and no term or
condition thereof shall have been further amended or modified, or waived after
the execution thereof; and no Person shall have failed in any material respect
to perform any material obligation or covenant or satisfy any material condition
required by the Material Leases to be performed or complied with on or before
the Closing Date; and (iii) original counterparts of Tenant Subordination
Agreements and estoppel certificates with respect to Leases demising at least
75% of the net rentable square footage of each Property (and including all
Material Leases), reasonably satisfactory in form and substance to Lender, duly
executed and delivered by each Tenant party to such Material Lease.
3.1.12 Environmental Audits. Borrower shall have delivered to Lender
evidence satisfactory to Lender, in its sole discretion, that (i) there are no
material pending or threatened claims, suits, actions or proceedings arising out
of or relating to the existence of any Hazardous Materials at, in, on, from,
around or under any of the Properties; (ii) each such Property is in compliance
in all material respects with all applicable Environmental Laws with respect to
such Property; and (iii) no Hazardous Materials exist at, in, on, from, around
or under any such Property, except in compliance in all material respects with
19
applicable Environmental Laws and all other Hazardous Materials have been
removed from each Property to the extent required by Applicable Law. Such
evidence shall include a comprehensive environmental audit (which shall include
a Phase I environmental audit and, either if recommended or suggested by an
Approved Environmental Consultant or, if not so recommended or suggested, if
determined by Lender in its sole discretion to be necessary or desirable after
considering factors reasonably related to such determination, a Phase II
environmental audit), satisfactory in form and substance to Lender, conducted
and certified by an Approved Environmental Consultant. Such evidence shall also
include (a) a reliance letter from such Approved Environmental Consultant with
respect to each such environmental audit addressed to Lender, which reliance
letter shall be satisfactory in form and substance to Lender, (b) certification
that all required approvals from all Governmental Authorities having
jurisdiction with respect to the environmental condition of the Properties, if
any, have been obtained, and (c) such other environmental reports, inspections
and investigations as Lender shall in its sole discretion require after
considering factors reasonably related to such determination, prepared, in each
instance, by an Approved Environmental Consultant, which approvals, reports,
inspections and investigations shall be satisfactory in form and substance to
Lender, in its sole discretion. On or before the Closing Date, Borrower shall
have delivered to Lender evidence satisfactory to Lender, in its sole
discretion, that Borrower has complied with the recommendations and suggestions
of all environmental consultant(s) referred to above.
3.1.13 Engineering Reports. Borrower shall have delivered to Lender (i) a
written Engineering Report with respect to each Property prepared by an Engineer
acceptable to Lender, which Engineering Report shall contain current repair
recommendations for the first five years, and shall in all other respects be
reasonably satisfactory in form and substance to Lender; and (ii) a reliance
letter from such Engineer with respect to each such Engineering Report addressed
to Lender, which letter shall be in form and substance reasonably satisfactory
to Lender.
3.1.14 Appraisals. Lender shall have received (i) an Appraisal of each
Property prepared by an Appraiser designated by Lender, which Appraisal shall be
reasonably satisfactory in form and substance to Lender and shall satisfy all
applicable regulatory requirements; and (ii) copies of all appraisals, market
studies, and similar information with respect to each of the Properties in the
possession or under the control of the Loan Parties or any of their Subsidiaries
or partners.
3.1.15 Opinions of Loan Parties' Counsel; Auditor's Letter. On the Closing
Date Borrower shall have delivered to Lender and its counsel executed copies of
each of the favorable written opinions, each dated as of the Closing Date, of
Saul, Ewing, Xxxxxx and Xxxx, as counsel for Borrower, and Maun & Simon, as
counsel for Royale, FCOLP and FCO, which shall be in form and substance
reasonably approved by Lender and its counsel.
3.1.16 Opinion of Lender's Counsel. The Lenders shall have received
executed copies of the favorable written opinion of O'Melveny & Xxxxx LLP,
counsel to Lender, dated as of the Closing Date.
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3.1.17 No Adverse Litigation. There shall not be pending or, to the
knowledge of Borrower, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Royale or any of its
Subsidiaries, or the Controlling Principals or any property of Royale or any of
its Subsidiaries that has not been disclosed by Borrower in writing pursuant to
Section 4.6 prior to the execution of this Agreement and that is reasonably
likely to have a Material Adverse Effect, and there shall have occurred no
development not so disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in the
reasonable opinion of Lender, is likely to have a Material Adverse Effect; and
no injunction or other restraining order shall have been issued and no hearing
to cause an injunction or other restraining order to be issued shall be pending
or noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, the transactions contemplated by this Agreement or the
making of the Loan on the terms and conditions contained in this Agreement and
the other Loan Documents.
3.1.18 Existing Indebtedness. Borrower shall have caused the holders of all
Indebtedness secured by the Properties to deliver to Lender and the Title
Company pay-off or demand letters and other similar materials with respect to
such Indebtedness sufficient to enable the Title Company to use the proceeds of
the loan to pay off such Indebtedness and obtain releases and reconveyances of
mortgages, fixture filings, financing statements and other liens within
seventy-five days after the Closing, or, in the case of the Blue Xxxx
Properties, within seventy-five days after the Closing.
3.1.19 Contingent Obligations. Lender shall have received and approved a
list of any Contingent Obligations of the Borrower.
3.1.20 Payment of Fees and Expenses. Borrower shall have paid to Lender,
for distribution (as appropriate) to the Lenders and Lender, the fees payable
pursuant to Section 2.5 and the expenses payable pursuant to Section 8.2.
3.1.21 Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Lender and its
counsel shall be reasonably satisfactory in form and substance to Lender and
such counsel, and Lender and such counsel shall have received all such
counterpart originals or certified copies of such documents as Lender may
reasonably request.
3.1.22 Other Documents. Each Loan Party shall have delivered to Lender such
other information and documents as Lender may reasonably request.
3.2 Conditions Subsequent to Lender's Obligations.
Lender's obligations under this Agreement are also conditioned upon the
satisfaction after the Closing, at the expense of Borrower, of the conditions
specified in this Section 3.2, in each case as reasonably determined by Lender:
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3.2.1 Formation of FCOLP and FCO; Assignment of Partnership Interests in
Borrowers to FCOLP and FCO. Within one day after the Closing, FCOLP and FCO
shall have been duly formed and qualified to do FCO. business in each
jurisdiction in which they are to do business, and the Loan Parties shall have
delivered to Lender an executed or conformed, certified copy of each of the
Formation Documents entered into on or prior to the Closing Date. Such
documents, as so amended, shall be in full force and effect and no term or
condition thereof shall have been further amended or modified, or waived after
the execution thereof. No Person shall have failed in any material respect to
perform any material obligation or covenant or satisfy any material obligation
or covenant or satisfy any material condition required thereunder to be
performed or complied with on or before the Closing Date. Royale shall have
delivered to Lender an Officers' Certificate of Royale certifying that, as of
the Closing Date, each transaction constituting the Formation has been duly
authorized by all necessary action of the parties thereto, and has been
consummated in accordance with, and is enforceable pursuant to, all Applicable
Laws. The admission of FCO as a general partner, and the assignment of all or
substantially all of the limited Partnership Interests, in each Borrower to
FCOLP and FCO in accordance with the Formation Agreement shall have occurred,
and all other transactions constituting the Formation shall have occurred.
3.2.2 Execution of this Agreement. Within one day after the Closing,
Royale, FCOLP and FCO shall have executed and delivered counterpart original
execution copies of this Agreement.
3.2.3 Pledge of Partnership Interests. Within one day after the Closing:
(a) the delivery to Lender of the Pledges, duly executed by Royale, FCOLP and
FCO; (b) the delivery to Lender for filing pursuant to the Security Documents of
properly executed financing statements under the Uniform Commercial Code (or any
equivalent or similar legislation), or any other documents required to be filed
by other Applicable Laws, satisfactory in form and substance to Lender in each
jurisdiction as may be necessary (in Lender's reasonable judgment) effectively
to perfect and maintain the security interests in the Collateral created by the
Pledges; and (c) the delivery of evidence that such financing statements or
other documents will have been or will be recorded in all places necessary or
desirable, in the reasonable judgment of Lender, to create and maintain valid
and enforceable first priority Liens on such Collateral in favor of Lender.
3.2.4 Stock Certificates. Within one day after the Closing, the delivery to
Lender pursuant to the Pledges of the stock certificates of FCO (which
certificates shall be accompanied by irrevocable undated stock powers duly
endorsed in blank and irrevocable proxies, all satisfactory in form and
substance to Lender).
3.2.5 Other Documents. The delivery to Lender of evidence reasonably
satisfactory to Lender that all other filings, recordings and other actions
Lender deems necessary or advisable to establish, perfect and preserve the Liens
granted to Lender in such Collateral (including any uncertificated partnership
interests) as of the Closing Date shall have been made.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the
Loan and to induce Participants to purchase participations therein, Royale, as
to itself only, and each of the other Loan Parties, as to all other Loan Parties
(but not as to Royale), represents and warrants to Lender that, as of the
Closing Date, the following statements in this Article 4 are true, correct and
complete on the Closing Date.
4.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries
4.1.1 Organization and Powers. Each Loan Party (other than a Partnership
Loan Party or a Trust Loan Party) and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (which jurisdiction is set forth on Schedule 4.1.1
annexed hereto). Each such Loan Party and each such Subsidiary has the requisite
corporate power and authority to own and operate its properties (including the
Properties), to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents to which it is a party, to carry out
the transactions contemplated hereby and thereby. Each Partnership Loan Party is
a limited partnership duly formed and validly existing under the laws of its
jurisdiction of organization (which jurisdiction is set forth on Schedule 4.1.1)
and each Partnership Loan Party has all requisite partnership power and
authority to own and operate its properties (including the Properties), to carry
on its business as now conducted and proposed to be conducted, to enter into
each Loan Document and Related Document to which it is a party and to carry out
the transactions contemplated hereby and thereby and, in the case of Borrower,
to issue and pay the Note.
4.1.2 Qualification and Good Stnading. Each Loan Party and each of its
Subsidiaries is qualified to do business and in good standing in every
jurisdiction necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. The jurisdictions in which each Loan Party
and each of its Subsidiaries owns property or otherwise conducts business as of
the Closing Date are set forth on Schedule 4.1.1 annexed hereto.
4.1.3 Conduct of Business. The Loan Parties are engaged only in the
businesses permitted to be engaged in by them pursuant to Section 6.14.
4.1.4 Formation. Each of the transactions constituting the Formation has
been duly authorized by all necessary corporate or partnership action of Royale,
FCOLP, Borrower and other Persons. Each of the transactions constituting the
Formation has been consummated in accordance with, and is effective under, all
Applicable Laws.
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4.2 Authorization of Borrowing, etc.
4.2.1 Authorization of Borrowing. The execution, delivery and performance
of this Agreement and the other Loan Documents to which each Loan Party is a
party and the issuance, delivery and payment of the Note have been duly
authorized by all necessary corporate, partnership or other action on the part
of each Loan Party, as the case may be.
4.2.2 No Conflict. The execution, delivery and performance by each Loan
Party of each Loan Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate any
provision of law applicable to any Loan Party, the Certificate of Incorporation
or Bylaws, partnership agreement, or other organizational document of any Loan
Party or any order, judgment or decree of any court or other agency of
government binding on any Loan Party, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Loan Party, which default, individually or in the
aggregate, could have a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of any
Loan Party or any of its Subsidiaries (other than Liens securing the
Obligations), or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of any Loan Party the
absence of which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, other than (i) approvals or consents which
will be or have been obtained on or before the Closing Date and disclosed in
writing to Lender, and (ii) failure to comply with certain covenants contained
in the agreements evidencing and securing the indebtedness secured by the Blue
Xxxx Properties in favor of Blue Xxxx Funding, Inc., and now held by United
States Trust Company of New York.
4.2.3 Governmental Consents. The execution, delivery and performance by
each Loan Party of each Loan Document to which it is a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any Governmental Authority, except for (i) such of
the foregoing which will have been made or obtained on or before the Closing
Date and (ii) the recordings and filings required to perfect the Liens granted
pursuant to the Security Documents. As of the Closing Date, all consents or
approvals from or notices to or filings with any federal, state, or other
(domestic or foreign) regulatory authorities required to be obtained on or
before such date in connection with the documents or transactions described or
referred to in the preceding sentence will have been accomplished in all
material respects in compliance in all material respects with all Applicable
Laws. None of the transactions constituting the Formation or the consummation of
the other transactions contemplated by this Agreement, the other Loan Documents
violates any Applicable Law or regulation in any respect, which could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
4.2.4 Binding Obligation. This Agreement is, and the other Loan Documents
when executed and delivered hereunder will be, the legally valid and binding
obligations of the applicable Loan Parties, enforceable against the applicable
Loan Parties in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or law).
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4.3 Financial Condition; Contingent Obligations
4.3.1 Financial Condition. Borrower has heretofore delivered to Lender, at
Lender's request, the following financial statements and information: (i) the
audited balance sheet of Royale at June 30, 1997 and the related consolidated
statements of income, stockholders' equity and cash flows of Royale for the 12
months then ended, (ii) the unaudited statements of Property Gross Revenues and
Operating Expenses for each of the Properties for the calendar year ended
December 31, 1994, December 31, 1995 and December 31, 1996, respectively, and
(iii) the consolidated financial statements of Royale and its Subsidiaries
required to be delivered to Lender pursuant to this Agreement. The statements
referred to in clause (i) of the preceding sentence were prepared in conformity
with GAAP and fairly present, in all material respects, the consolidated
financial position of Royale and its Subsidiaries as at the date thereof and the
consolidated results of operations of Royale and its Subsidiaries for the period
then ended, subject to changes resulting from audit and normal year end
adjustments and there are no material differences between such consolidated
financial position and consolidated results of operations of Royale and its
Subsidiaries as presented in such consolidated financial statements and the
consolidated financial position and consolidated results of operations of
Borrower and its Subsidiaries as at the date of such consolidated financial
statements and for the period then ended. Royale and its Subsidiaries do not
have any Contingent Obligation, contingent liability or liability for taxes,
long-term lease or other long-term commitment not customarily involved in their
respective businesses that is not reflected in the foregoing financial
statements or the notes thereto and which is material in relation to the
business, operations, properties, assets or condition (financial or otherwise)
of Royale and its Subsidiaries.
4.3.2 Contingent Obligations. On the Closing Date, the Loan Parties and
their respective Subsidiaries will not be directly or indirectly liable with
respect to any Contingent Obligations. Other than in FCOLP and FCO, there have
been no Investments made by the Loan Parties and their respective Subsidiaries,
nor any Guaranties with respect to which the Loan Parties and their respective
Subsidiaries are liable as of the Closing Date, including all such Investments
and Guaranties that would be subject to Sections 6.4 and 6.7 if the same were
made or incurred on or after the Closing Date.
4.4 Existing General Partners. The general partners of Borrower who have
executed this Agreement as general partner of Borrower have no material assets
other than their respective interests in each Borrower.
4.5 Properties; Agreements; Licenses
4.5.1 Title to Properties; Liens. There are no outstanding options, rights
of first refusal, rights of first offer or similar rights to purchase or
otherwise acquire Borrower's interest in any Property, other than options and
rights owned by Loan Party or Subsidiary thereof, as applicable. Each Borrower
has good and marketable fee simple title to the Properties and good title to the
25
remainder of the Collateral purported to be owned by it, free and clear of all
Liens, in each case except Permitted Encumbrances and Liens permitted under the
Loan Documents. All material fixtures, furnishings, attachments and equipment
necessary for the operation, use and occupancy of each such Property have been
installed or incorporated into such Property and each Borrower, as applicable,
is the sole owner of all of the same, free and clear of all chattel mortgages,
conditional vendor's liens and other liens, and security interests other than
Permitted Encumbrances and Liens permitted pursuant to Section 6.3. Except as
heretofore disclosed in writing by Borrower to Lender, no tax liens have been
filed against any Borrower and/or any of the Properties, other than Liens for
non-delinquent real property taxes.
4.5.2 Material Leases. Each Material Lease with respect to each Property
and all amendments thereto that have been or shall be entered into on or before
the Closing Date are listed on Schedule 4.5.2 annexed hereto. The Material
Leases, as so amended, shall be in full force and effect and no term or
condition thereof has been further amended or modified, or waived after the
execution thereof except in accordance with this Agreement; and no Person will
have failed in any respect to perform any obligation or covenant or satisfy any
condition required by the Material Leases to be performed or complied with,
except where failure to so comply will not then have had and could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
4.6 Litigation; Adverse Facts.
Except as set forth in Schedule 4.6 annexed hereto, as amended or
supplemented from time to time (which amendment or supplement shall be
reasonably satisfactory to Lender), there is no action, suit, proceeding,
arbitration or governmental investigation at law or in equity or before or by
any Governmental Authority, or to the knowledge of any of the Loan Parties,
changes to Applicable Law, pending or, to the knowledge of any of the Loan
Parties, threatened against or affecting any Loan Party or any of its
Subsidiaries, any Property or any other property of Royale or any of its
Subsidiaries that has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. No Loan Party nor
any of its Subsidiaries is (i) in violation in any material respect of any
Applicable Law or (ii) subject to or in default with respect to any Applicable
Law in either case that has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. To the knowledge of
the Loan Parties, there are no pending or threatened actions, suits or
proceedings to revoke, attack, invalidate, rescind or modify the zoning
affecting any Property or any Authorizations heretofore issued with respect to
any Property or asserting that such Authorizations or the zoning affecting any
Property or any other property of any Loan Party or any of its Subsidiaries do
not permit the continued use of such Property or property as contemplated by the
Loan Documents. Except as set forth on Schedule 4.6, to the knowledge of
Borrower, no Person has asserted any claimed violation of Applicable Laws
arising from the operation, use or occupancy of the Properties which has not
been cured which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
26
4.7 Taxes.
4.7.1 Payment of Taxes. Except to the extent set forth on the financial
statements delivered pursuant to this Agreement, all material federal, state and
local Tax returns and reports relating to any Loan Party or any of its
Subsidiaries or the Properties required to be filed have been timely filed, and
all material Taxes, Impositions, assessments, fees and other governmental
charges upon any Loan Party or any of its Subsidiaries or upon the Properties
which are due and payable have been paid prior to delinquency. Neither Royale
nor Borrower knows of any proposed Tax assessment against any Loan Party or any
of its Subsidiaries or the Properties that could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. Neither any
Loan Party nor any of its Subsidiaries (i) has executed or filed with the
Internal Revenue Service or any other Governmental Authority any agreement or
other document that remains in effect extending, or having the effect of
extending, the period for assessment or collection of any Taxes, assessments,
fees or other governmental charges or (ii) has any obligation under any written
Tax sharing agreement or agreement regarding payments in lieu of Taxes (other
than obligations pursuant to partnership agreements to make distributions of
cash for the payment of taxes).
4.7.2 REIT Status. Except as disclosed in that certain letter of Coopers &
Xxxxxxx LLP, dated October 13, 1997, relating to a so-called "demand letter"
issue, Royale has at all times maintained its qualification as a REIT under the
Internal Revenue Code.
4.7.3 Foreign Person. None of the Loan Parties is a "foreign person" within
the meaning of Section 1445 or 7701 of the Internal Revenue Code.
4.7.4 Classification as a Partnership. Each of the Loan Parties that is a
Partnership Loan Party is properly classified as a partnership for federal
income tax purposes.
4.8 Performance of Agreements; Materially Adverse Agreements.
No Loan Party nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions contained in any Contractual Obligation, and no condition exists
that, with the giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or indirect, of such
default or defaults, if any, could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. Except as disclosed
on Schedule 4.8 annexed hereto, no Loan Party nor any of its Subsidiaries is a
party to or otherwise subject to any agreement or instrument (other than the
Loan Documents), any charge or other internal restriction or any Contractual
Obligation which by its terms or effect (i) prohibits or restricts such Loan
Party or Subsidiary from acquiring, loaning or disposing of any Property or
other asset, or any interest therein, or acquiring or entering into, or
providing any services under any management agreement or (ii) otherwise
restricts the conduct by such Loan Party or any of its Subsidiaries of any
business, except in each case where the consequences, direct or indirect, of any
violation thereof could not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect. No Loan Party nor any of its
Subsidiaries is a party to or is otherwise subject to any agreement or
instrument, any charter or other internal restriction or any Contractual
Obligation which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
27
4.9 Governmental Regulation; Securities Activities
No Loan Party nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which could limit its ability to incur
Indebtedness or which could otherwise render all or any portion of the
Obligations unenforceable. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
4.10 Employee Benefit Plans.
No Loan Party maintains any Employee Benefit Plan that is subject to
any provision of the Employee Retirement Income Security Act of 1974, as amended
from time to time.
4.11 Certain Fees.
No broker's or finder's fee or commission will be payable by any Loan
Party or any of its Subsidiaries with respect to this Agreement or any of the
transactions contemplated hereby (other than the fees payable pursuant to this
Agreement), and Borrower hereby indemnifies Lender against, and agrees that it
will hold Lender harmless from, any claim, demand or liability for any such
broker's or finder's fees or commissions payable by Borrower alleged to have
been incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
4.12 Solvency.
After giving effect to the Formation and the consummation of the other
transactions contemplated by this Agreement and the other Loan Documents, as of
the Closing Date, with respect to all Loan Parties on a consolidated basis, (i)
(a) the then-current fair saleable value of the property of the Loan Parties
(including any rights to contribution from the other Loan Parties under the Loan
Documents) is (y) greater than the total amount of liabilities (including
contingent liabilities) of the Loan Parties and (z) not less than the amount
that will be required to pay the probable liabilities on the Loan Parties'
then-existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to the
Loan Parties; (b) the Loan Parties' capital is (or will be, as the case may be),
not unreasonably small in relation to its business or any contemplated or
undertaken transaction; and (c) the Loan Parties do not intend to incur, or
believe (nor should they reasonably believe) that they will incur debts beyond
their ability to pay such debts as they become due; and (ii) the Loan Parties
are (or will be, as the case may be), "solvent" within the meaning given that
term and similar terms under Applicable Laws relating to fraudulent transfers
and conveyances. For purposes of clause (i) of the preceding sentence, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
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4.13 Disclosure.
No representation or warranty of any Loan Party contained in this
Agreement, the other Loan Documents and the Related Documents to which it is a
party or in any other document, certificate or written statement furnished to
Lender or the Lenders by or on behalf of any Loan Party for use in connection
with the transactions contemplated by the Loan Documents and the Related
Documents contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact (known to such Loan Party, in the
case of any document not furnished by it) necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made or will be made, as the case may be.
The projections and pro forma financial information contained in such materials
are based or will be based upon good faith estimates and assumptions believed to
be reasonable at the time made, it being recognized by Lender that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
materially from the projected results. There is no fact known to any Loan Party
(other than matters of a general economic nature) that has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect and that has not been disclosed in any of the Loan
Documents and the Related Documents to which any Loan Party is a party as of the
date hereof or in such other documents, certificates and statements furnished to
the Lenders for use in connection with the transactions contemplated hereby.
4.14 Liens on the Collateral
4.14.1 General. Except as expressly provided in the legal opinions
delivered pursuant to this Agreement, the provisions of this Agreement and the
Security Documents are effective to create and maintain, upon proper filing or
recording or taking of possession, as applicable, in favor of Lender valid and
legally enforceable Liens on all of the Properties and all of the remainder of
the Collateral and, when all necessary and appropriate recordings and filings
have been effected in all necessary and appropriate public offices, and payment
is made of any applicable mortgage recording, intangible and/or similar taxes,
this Agreement and the Security Documents will constitute perfected Liens on all
of such Properties and all of the remainder of the Collateral prior and superior
to all other Liens except Permitted Encumbrances.
4.14.2 Mortgages. Each Mortgage upon execution and delivery by the
applicable Loan Party will be a valid and enforceable first priority Lien on the
Property that such Mortgage purports to encumber, except for Permitted
Encumbrances, and such Mortgage, when such Mortgage is recorded in the real
property records of the county in which such Property is located and upon
payment of any applicable mortgage recording, intangible and/or similar taxes,
will be a perfected, valid and enforceable first priority Lien on such Property
in favor of Lender, which Property will then be free and clear of all Liens
having priority over the first Lien of such Mortgage, except for Permitted
Encumbrances.
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4.14.3 Assignments of Rents and Leases. Except as expressly provided in the
legal opinions delivered pursuant to this Agreement, each Assignment of Rents
and Leases, upon execution and recordation of such Assignment of Rents and
Leases in the real property records of the county in which the Property affected
by such Assignment of Rents and Leases is located and upon payment of any
applicable recording or intangible taxes, will be, as to each Property, a
perfected, valid and enforceable first priority present assignment of or Lien on
the Leases affecting such Property and of the Rents of and from such Property,
which Properties will then otherwise be free and clear of all Liens having
priority over the Assignment of Rents and Leases, except for Permitted
Encumbrances. As of the Closing Date, Borrower represents that upon recordation
of each Assignment of Rents and Leases Lender has taken all actions necessary to
obtain, and as of the Closing Date Lender has, a valid and perfected first
priority (or, to the extent described in the immediately preceding sentence,
second priority) assignment of or Lien on the Rents from the Properties and of
all security for the Leases affecting such Properties, including cash or
securities deposited as security under such Leases subject to the prior right of
the Tenants making such deposits.
4.14.4 Mechanics' Liens. Except as bonded or contested in accordance with
the provisions of this Agreement or as insured over by Title Policies that are
then in effect, no mechanic's liens have been filed and remain in effect against
any Property.
4.14.5 Filings and Recordings. All filings (including all financing
statements and all assignments of financing statements under the Uniform
Commercial Code) have been delivered to Lender for filing in each public office
in which such filings and recordings are required or advisable to perfect the
Liens on each of the Properties and the other Collateral granted by the Loan
Parties pursuant to the Security Documents and, except for the filing of
continuation statements with respect to such financing statements as may be
required or advisable to be filed at periodic intervals, no periodic refiling or
periodic recording is presently required to protect and preserve such Liens and
security interests.
4.15 Zoning; Authorizations
4.15.1 Zoning. The use and operation by each Borrower of its Property as a
multi- or single- tenant office building or buildings, with related uses,
separate and apart from any other properties, constitutes a legal use under
applicable zoning regulations and complies in all material respects with all
Applicable Laws and all applicable Insurance Requirements, and does not violate
any Authorizations or other material approvals, material restrictions of record
or any material agreement affecting any Property (or any portion thereof) to
which such Borrower is a party or by which such Borrower or such Property (or
portion thereof) is bound, except for violations and failures to comply which
could not reasonably be expected to result, either individually or in the
aggregate, in a Material Adverse Effect. Neither the zoning nor any right of
access to or use of any Property is to any material extent dependent upon or
related to any real property other than such Property.
4.15.2 Authorizations. There have been issued in respect of each Property
all Authorizations necessary to own, operate, use and occupy such Property in
the manner operated by Borrower as of the Closing Date (including any required
30
permits relating to Hazardous Materials). No Borrower has any knowledge that any
Authorization necessary or required to own, operate, use and occupy any Property
in the manner currently operated by the Tenants under any Material Lease and
contemplated to be operated by the Tenants on and after the Closing Date
(including any required permits relating to Hazardous Materials) has not been
issued and is not in full force and effect, other than any such Authorizations
which, if not obtained, could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. No Borrower, nor,
to the knowledge of Borrower, any prior owner thereof, has received any notice
of violation or revocation thereof except for those which could not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect.
4.16 Physical Condition; Encroachment; Capital Expenditures
4.16.1 Physical Condition; Encroachment. Except as disclosed on the
Engineering Reports delivered pursuant to this Agreement, each Property is free
of material structural defects and is in good repair (normal wear and tear
excepted) and all building systems contained therein and all other material
items of Collateral are in good working order in all material respects subject
to ordinary wear and tear, except as disclosed in the Engineering Reports, and
is free and clear of any damage that would affect materially and adversely the
value of such Property or the use of such Property for its intended purposes. To
the knowledge of Borrower, other than as described in the Title Policy and in
any Survey, no Improvement at any Property encroaches upon any building line,
setback line, side yard line or any recorded or visible easement.
4.16.2 Capital Expenditures. Neither Borrower nor any Property is subject
to any agreement pursuant to which any Borrower shall have incurred or may incur
any obligation to make capital improvements to any Property, except as set forth
on Schedule 5.7.
4.17 Insurance.
All insurance required to be maintained by the Loan Parties and their
respective Subsidiaries pursuant to this Agreement or any other Loan Document is
in full force and effect in accordance with the terms thereof. As to each
Property located in an area identified by the Federal Emergency Management
Agency as having special flood hazards, if flood insurance is available, a flood
insurance policy is in effect. All premiums have been paid with respect to each
insurance policy required to be maintained by the Loan Parties and their
Subsidiaries pursuant to this Agreement or any other Loan Document.
4.18 Leases
There is no default or event which with notice or lapse of time or both
would constitute a default under any of the provisions of any Material Lease
affecting any Property that has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. No
litigation is currently pending or has been threatened by any Tenant in
connection with any Material Lease affecting any Property that has had, or could
31
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. All Material Leases and other Leases material to the
operation of the Properties are in full force and effect, except to the extent
such failure could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
4.19 Environmental Reports; Engineering Reports; Appraisals; Market Studies
Borrower has delivered to Lender correct and complete copies of all
environmental audits, engineering reports, appraisals and market studies with
respect to each Property that any Loan Party or any of its Subsidiaries has in
its possession. To Borrower's knowledge, the information contained in such
audits, reports, appraisals and market studies remains true, correct and
complete.
4.20 No Condemnation or Casualty
No condemnation or other like proceedings (including relocation of any
roadways abutting any Property or change in grade of such roadways or denial of
access to any Property) that has had, or could reasonably be expected to result
in, a Material Adverse Effect, are pending and served nor, to the knowledge of
any Loan Party, threatened against any Property in any manner whatsoever. No
casualty has occurred to any Property that has had or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
4.21 Utilities and Access
To the extent necessary for the full utilization of each Property in
accordance with its current use, telephone services, gas, steam, electric power,
storm sewers, sanitary sewers and water facilities and all other utility
services are available to each Property, are adequate to serve each such
Property, exist at the boundaries of the Land and are not subject to any
conditions, other than normal charges to the utility supplier, which would limit
the use of such utilities. All streets and easements necessary for the occupancy
and operation of each Property are available to the boundaries of the Land. All
necessary rights-of-way for all roads, which are sufficient to permit each
Property to be utilized fully for its current use, have been completed and are
serviceable, and, to the knowledge of the Loan Parties, all public rights-of-way
through or adjacent to the Properties have been acquired and dedicated and
accepted for maintenance and public use by the applicable Governmental
Authorities.
4.22 Wetlands
Except as disclosed in any of the written environmental audits and reports
delivered pursuant to this Agreement, none of the Improvements on any Property
are constructed on land designated by any Governmental Authority having land use
jurisdiction as wetlands.
4.23 Labor Matters
There are no strikes or other labor disputes against any Loan Party or any
of its Subsidiaries, pending or, to the knowledge of any Loan Party, threatened
32
that have had or could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect. Hours worked by and payments made by
any Loan Party or any of its Subsidiaries to their respective employees are not
in violation in any material respect of the Fair Labor Standards Act or any
other applicable law dealing with such matters.
4.24 Employment and Labor Agreements
Each Loan Party and each of its Subsidiaries is in compliance in all
material respects with the terms and conditions of any employment agreements to
which it is party.
ARTICLE 5
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees that, from and after the Closing
Date and until payment in full of the Loan and the other Obligations (other than
indemnification obligations with respect to claims that have not been asserted
at the time that the Loan and all other Obligations have been paid in full),
each Loan Party shall perform and shall cause each of their respective
Subsidiaries to perform all covenants made by it in this Article 5.
5.1 Financial Statements and Other Reports.
Royale shall maintain and cause each of its Subsidiaries to maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of consolidated and consolidating
financial statements in conformity with GAAP. Borrower shall deliver to Lender:
5.1.1 Quarterly Property Operating Statements: as soon as available
and in any event within 60 days after the end of each calendar quarter,
commencing with respect to the calendar quarter ending December 31, 1997, a
current Rent Roll and a statement of Property Income and Property Operating
Expenses and any other expenses with respect to each Property separately,
in each case for the 12 month period ending on the last day of such
calendar quarter, in reasonable detail satisfactory to Lender and certified
by the Chief Executive Officer or Chief Financial Officer of Royale and
Borrower stating that, subject to normal adjustments following the
preparation of the financial statements referred to below in clauses (iii)
and (iv), respectively, (x) such statements of Property Income and
Operating Expenses and other expenses fairly present, in all material
respects, the results of operations of the Properties indicated for the
periods indicated and (y) all Property Operating Expenses and any other
expenses with respect to each Property which have become due and payable as
of the last day of the calendar month next preceding the delivery of such
income statement have been fully paid or recognized by Borrower;
5.1.2 Quarterly Financial Statements of Royale and Its Subsidiaries:
as soon as available and in any event within 60 days after the end of each
calendar quarter of each calendar year, commencing with respect to the
calendar quarter ending December 31, 1997, (a) the consolidated balance
33
sheet of Royale and its Subsidiaries as at the end of such calendar quarter
and the related consolidated statements of income, reconciliation of
surplus, stockholders' equity and cash flows of Royale and its Subsidiaries
for such calendar quarter and for the period from the beginning of the then
current calendar year to the end of such calendar quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous year and the corresponding figures
from the plan and financial forecast for the current year delivered
pursuant to this Section, and (b) the consolidating financial statements of
Royale and its Subsidiaries (including balance sheets and income statements
segmenting any Subsidiaries of Royale or groups of Subsidiaries of Royale,
as requested by Lender in its reasonable discretion) together with any
adjustments and/or eliminations needed to reconcile such Subsidiary
financial statements to the consolidated financial statements of Royale,
all in reasonable detail (it being understood and agreed that, to the
extent Royale's quarterly report filed on Form 10-Q with the Securities and
Exchange Commission for such period contains the foregoing information,
such quarterly report shall be deemed to comply with the foregoing
requirements) and certified by the Chief Executive Officer or the Chief
Financial Officer of Royale and Borrower stating that (x) such consolidated
and consolidating financial statements fairly present, in all material
respects, the financial condition of Royale and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments and (y) except as noted, there are no material
differences between such consolidated financial statements of Royale and
its Subsidiaries and the consolidated financial statements of Borrower and
its Subsidiaries with respect to such quarter;
5.1.3 Year-End Financial Statements: as soon as available and in any
event within 90 days after the end of each calendar year, commencing with
respect to the calendar year ending December 31, 1997, (a) the consolidated
balance sheet of Royale and its Subsidiaries as at the end of such calendar
year and the related consolidated statements of income, stockholders'
equity and cash flows of Royale and its Subsidiaries for such calendar
year, setting forth in each case in comparative form the corresponding
figures for the previous calendar year and the corresponding figures from
the plan and financial forecast delivered pursuant to this Section for the
calendar year covered by such consolidated financial statements, (b) the
balance sheets and related income statements of each Property, (c) the
consolidating financial statements of Royale and its Subsidiaries
(including balance sheets and income statements segmenting any Subsidiaries
of Royale or groups of Subsidiaries of Royale, as requested by Lender in
its reasonable discretion) together with any adjustments and/or
eliminations needed to reconcile such Subsidiary financial statements to
the consolidated financial statements of Royale, all of the foregoing in
reasonable detail and certified by the Chief Executive Officer or Chief
Financial Officer of Royale and Borrower stating that they present fairly,
in all material respects, the financial condition of Royale and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, and (d) in the case of the
consolidated financial statements referred to in clause (a), a report
thereon of [Royale's accountants] or other independent accountants of
recognized national standing selected by Royale and reasonably satisfactory
to Lender, which report shall be unqualified, shall express no doubts about
the ability of Royale and its Subsidiaries to continue as a going concern
and shall state that such consolidated financial statements fairly present,
in all material respects, the financial position of Royale and its
34
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
5.1.4 Annual Operating Plan: as soon as available and in any event
within 45 days after the end of each calendar year, an annual operating
plan and budget for each Property, showing all anticipated operating
revenues and expenses, capital expenditures, leasing activity, repairs and
improvements, and such other matters as Lender shall reasonably require;
5.1.5 Officers' Certificates: together with each delivery of financial
statements of Royale and its Subsidiaries pursuant to this Section, an
Officers' Certificate of Royale and Borrower stating that (1) the signer
has reviewed the terms of this Agreement and has made, or caused to be made
under his or her supervision, a review in reasonable detail of the
transactions and condition of Royale and its Subsidiaries and the
Collateral during the accounting period covered by such financial
statements, (2) such review has not disclosed the existence during or at
the end of such accounting period, (3) the signer does not have knowledge
of the existence as at the date of such Officers' Certificate, of any
condition or event that constitutes an Event of Default or Potential Event
of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Royale and Borrower have taken, are taking and propose to take with respect
thereto and (4) except for the minority interest reflected on the balance
sheet of Borrower, such financial statements do not differ in any material
respect from the corresponding consolidated financial statements of
Borrower and its Subsidiaries;
5.1.6 Compliance Certificates: a Compliance Certificate demonstrating
in reasonable detail compliance during and at the end of the applicable
accounting periods with the covenants set forth in Section 6.7;
5.1.7 Accountants' Certification: together with each delivery of
financial statements of Royale pursuant to Section 5.1.3 above, a written
statement by the Loan Parties' Accountants or other independent accountants
of recognized national standing selected by Royale and reasonably
satisfactory to Lender giving the report thereon (a) stating in substance
that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, and (b) stating whether, in connection with their audit
examination, any condition or event that constitutes an Event of Default or
Potential Event of Default has come to their attention and, if such a
condition or event has come to their attention, specifying the nature and
period of existence thereof; provided, however, that such accountants shall
not be liable by reason of any failure to obtain knowledge of any such
Event of Default or Potential Event of Default that would not be disclosed
in the course of their audit examination;
35
5.1.8 Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Royale or any of its Subsidiaries by the Loan Parties'
Accountants or any other independent accountants in connection with each
annual, interim or special audit of the consolidated financial statements
of Royale and its Subsidiaries made by such accountants, including any
comment letter submitted by such accountants to management in connection
with their annual audit;
5.1.9 Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in Section 5.1.3, the
consolidated financial statements of the Royale and its Subsidiaries
delivered pursuant to this Section differ in any material respect from the
consolidated financial statements that would have been delivered pursuant
to such subdivisions had no such change in accounting principles and
policies been made, then (a) together with the first delivery of such
financial statements following such change, consolidated financial
statements of Royale and its Subsidiaries for (1) the current calendar year
to the effective date of such change and (2) the two full calendar years
immediately preceding the calendar year in which such change is made, in
each case prepared on a pro forma basis as if such change had been in
effect during such periods, and (b) together with each delivery of such
financial statements following such change, a written statement of the
Chief Financial Officer or Chief Executive Officer of Royale and Borrower
setting forth the differences which would have resulted in the calculation
of the Borrowing Base and the covenants set forth in Section 5 if such
Borrowing Base Certificate or financial statements, as the case may be, had
been prepared without giving effect to such change;
5.1.10 Evidence of Insurance: together with the delivery of the
foregoing statements, evidence reasonably satisfactory to Lender that the
monthly premiums with respect to the insurance required to be maintained
pursuant to the Loan Documents have been paid for the current month;
provided that evidence previously delivered pursuant to this Section with
respect to the prior payment of premiums for the current month need not be
redelivered;
5.1.11 SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Royale to its security
holders, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses, if
any, filed by Royale or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any Governmental
Authority or private regulatory authority, and (c) all press releases and
other statements made available generally by Royale or any of its
Subsidiaries to the public or to the security holders of Royale;
5.1.12 Events of Default, etc.: promptly upon any Loan Party obtaining
knowledge (a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, or becoming aware that Lender has
given any notice or taken any other action with respect to a claimed Event
36
of Default or Potential Event of Default, (b) that any Person has given any
notice to Royale or any of its Subsidiaries or taken any other action with
respect to a claimed default or event or condition of the type referred to
in Article 7 of any condition or event that constitutes or may (upon the
giving or receiving of notice or the lapse of time, later, or otherwise) a
default, a potential event of default, an event of default (in each case,
as defined in the agreement or instrument creating, evidencing or governing
any such Indebtedness) under or with respect to any Indebtedness of Royale
and its Subsidiaries (other than the Indebtedness hereunder), or becoming
aware that any agent, trustee, lender or security holder with respect
thereto has given any notice or taken any other action with respect to such
condition or event, (d) of any condition or event that would be required to
be disclosed in a current report filed by Royale with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, and 6 of such Form as in
effect on the date hereof) if Royale were required to file such reports
under the Exchange Act, or (e) of the occurrence of any event or change
that has had, or could reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect, an Officers' Certificate
specifying the nature and period of existence of such condition, event or
change, or specifying the notice given or action taken by any such Person
and the nature of such claimed Event of Default, Potential Event of
Default, default, event or condition, and what action Royale and Borrower
have taken, are taking and propose to take with respect thereto;
5.1.13 Litigation or Other Proceedings: (a) promptly upon Royale or
Borrower obtaining knowledge of (x) the institution of any action, suit,
proceeding (whether administrative, judicial or otherwise), governmental
investigation or arbitration against or affecting Royale or any of its
Subsidiaries, or any property of Royale or such Subsidiary (collectively,
"Proceedings") not previously disclosed in writing by Royale or Borrower to
the Lenders or (y) any material development in any Proceeding that, in any
case:
(i) if adversely determined, could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse
Effect; or
(ii) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby; or
(iii) threatens the validity or priority of the Liens granted
pursuant to the Loan Documents;
written notice thereof together with such other information as may be
reasonably available to Royale or Borrower to enable Lender and its
counsel to evaluate such matters; and (b) within 20 days after the end
of each calendar quarter of Royale, a schedule of all Proceedings
involving an alleged liability of, or claims against or affecting,
Royale and its Subsidiaries which, if adversely determined, could
reasonably be expected to result in a money judgment in excess of
$1,000,000 individually or $5,000,000 in the aggregate (in either case
37
not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has accepted coverage), and promptly
after request by Lender, such other information as may be reasonably
requested by Lender to enable Lender and its counsel to evaluate any
of such Proceedings;
5.1.14 Financial Plans: as soon as practicable and in any event no
later than November 30 of each year, projected financial statements for
each Property for the three next succeeding calendar years setting forth in
detail each line item appearing in the form of financial statement set
forth in Schedule 5.1.14 annexed hereto, together with an explanation of
the assumptions on which such forecasts are based, and such other
information and projections as Lender may reasonably request for any
Property, all the Properties or Royale or any of its Subsidiaries; 5.1.15
Insurance: as soon as practicable and in any event by the last day of each
calendar year, a report in form and substance reasonably satisfactory to
Lender outlining all material insurance coverage maintained as of the date
of such report by Royale and its Subsidiaries or, in lieu thereof, copies
of such policies, and a report as to all material insurance coverage
planned to be maintained by Royale and its Subsidiaries in the next
succeeding calendar year to the extent varying from the description of that
delivered or described;
5.1.16 Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Royale or any of its Subsidiaries or by
independent consultants, with respect to material environmental matters at
any Property or which relate to an Environmental Claim which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;
5.1.17 Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Royale;
5.1.18 Change in Name or Chief Place of Business: (a) notification of
any change in any Loan Party's name, identity or corporate structure within
60 days of such change and (b) 60 days' prior written notice of any change
in any Loan Party's executive office or chief place of business;
5.1.19 Reduction of Property Amount or Property Adjusted Net Income:
promptly after Borrower's acquiring actual knowledge of the same, an
Officers' Certificate with respect to the occurrence or effectiveness of
any event or condition that could reasonably be expected to cause the
Property Amount or Property Adjusted Net Income with respect to any
Property, as of any date of determination thereafter, to be reduced by more
than the greater of (a) 10% as of such later date of determination or for
any period and (b) $100,000; and
5.1.20 Other Information: with reasonable promptness, (a) information
and other data revised to correct any erroneous information and other data
previously delivered by Royale or Borrower to Lender pursuant to this
38
Agreement or included in any statement, report or certificate previously
delivered by Royale or Borrower to Lender pursuant to this Agreement,
together with such statement, report or certificate that shall have been
revised to reflect such revised information and data, and (b) such other
information and data with respect to the Loan Parties and their respective
Subsidiaries, the Properties (separately and for all Properties), the
Leases, the Management Agreements, the other Collateral and the other
assets and liabilities of the Loan Parties and their respective
Subsidiaries, all in form reasonably satisfactory to Lender, as from time
to time may be reasonably requested by Lender.
5.2 Entity Existence; Financial Matters; Control.
5.2.1 Entity Existence. Each Loan Party shall, and shall cause each of its
Subsidiaries to, at all times preserve and keep in full force and effect its
corporate or limited partnership existence and all Authorizations, rights and
franchises material to its business.
5.2.2 Financial Matters. Royale and its subsidiaries, taken as a whole,
shall (i) maintain financial statements, payroll records, accounting records and
other corporate records and other documents separate from any other Person; (ii)
maintain bank accounts in their own name or names, separate from any other
Person; (iii) pay their own expenses and other liabilities from their own assets
and incur (or endeavor to incur) obligations to other Persons based solely upon
their own assets and creditworthiness and not upon the creditworthiness of any
other Person; and (iv) file their own tax returns or join in the consolidated
tax return of such group as a separate member thereof.
5.2.3 Change in Control. Without Lender's prior written consent, the
Controlling Principals, in the aggregate, shall not cease at any time or for any
reason to maintain, free of any Lien, beneficial ownership (as defined under
Section 13(d) of the Exchange Act) of, and a direct economic interest in, at
least the number of shares of common stock of Royale set forth on Schedule
5.2.3. For purposes of this Section, the computation of such number of common
shares owned shall include the maximum number of such common shares into which
the Controlling Principals are entitled to convert Partnership Interest units in
FCOLP, without giving effect to applicable time limits and other restrictions on
such conversion, or to any right given to Royale or FCOLP to deliver cash in
lieu of shares upon any such conversion. The number of shares set forth on
Schedule 5.2.3 shall be appropriately adjusted for stock splits or similar
adjustments to the capitalization of Royale.
5.2.4 Employment of Controlling Principals. Prior to the first Anniversary,
Royale shall not fail to appoint, or remove from office, Xxxx X. Xxxxxx III as
its chief executive officer or other officer having substantially similar
authority with respect to the operations and direction of Royale, except by
reason of the death or disability of Xxxx X. Xxxxxx III.
5.3 Qualified Income Covenant; Common Stock.
5.3.1 Royale will conduct its affairs and the affairs of its
Subsidiaries in a manner so as to (i) continue to qualify as a REIT under
Sections 856-860 of the Internal Revenue Code and (ii) permit FCO to qualify as
a "qualified REIT subsidiary" under Section 856(i) of the Internal Revenue Code.
39
5.3.2 Royale shall at all times hereafter (i) cause its Common Stock to
be duly listed on the NASDAQ (Small Cap Exchange) or NYSE and (ii) shall timely
file all reports required to be filed by it in connection therewith.
5.4 Taxes and Claims; Tax Consolidation.
5.4.1 Taxes and Claims. Each Loan Party shall, and shall cause each of its
Subsidiaries to, pay or discharge or cause to be paid or discharged all Taxes
and Impositions imposed upon any Loan Party or any of its Subsidiaries, or
payable by any Loan Party or any of its Subsidiaries with respect to any
Property or other assets or in respect of any of the franchises, business,
income or other property of any Loan Party or any of its Subsidiaries before the
same shall become delinquent and before any penalty accrues thereon, and will
pay, discharge or otherwise satisfy or cause to be paid, discharged or otherwise
satisfied at or before maturity or before they become delinquent, all
Indebtedness, obligations and other claims (including claims for labor,
supplies, materials and services that, if unpaid, might become a Lien on the
property of any Loan Party or any of its Subsidiaries) of any Loan Party and its
Subsidiaries; provided, however, that no such charge or claim needs to be paid
if (i) such charge or claim is being diligently contested in good faith by
appropriate proceedings, (ii) reserves reasonably required by Lender shall have
been made therefor by such Loan Party or such Subsidiary, (iii) none of the
Collateral is in jeopardy of being sold, forfeited or lost during or as a result
of such contest, (iv) none of any Loan Party, or any of its Subsidiaries, Lender
or any Lender is reasonably likely to become subject to any civil fine or
penalty not adequately reserved against (in the case of any Loan Party or
Subsidiary thereof) or criminal fine or penalty, in each case as a result of
non-payment of such charge or claim and (v) such contest has not had and could
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Each Loan Party shall, and shall cause each of its
Subsidiaries to, deliver to Lender all receipts evidencing the payment of all
such Taxes and Impositions with respect to any Property and, upon written
request by Lender, all other Taxes, Impositions, assessments, levies, permits,
fees, rents and other public charges imposed upon or in respect of or assessed
against any Loan Party, any of its Subsidiaries or any of their respective
properties or assets except for those being paid or contested as described in
the provisos above.
5.4.2 Tax Consolidation. Each Loan Party will not, and will not permit any
of its Subsidiaries to, file or consent to the filing of any consolidated income
tax return with any Person other than Royale and its Subsidiaries.
5.5 Maintenance of Properties; Repair; Alteration.
Borrower shall (i) maintain or cause to be maintained each Property and all
other items of Collateral in a manner consistent for suburban office properties
and related property, and shall keep or cause to be kept every part thereof in
good condition and repair, reasonable wear and tear excepted, and make all
reasonably necessary repairs, renewals or replacements thereto as may be
reasonably necessary to conduct the business of Borrower; (ii) not remove,
40
demolish or structurally alter, or permit or suffer the removal, demolition or
structural alteration of, any of the Improvements in respect of a Property
except as required of Borrower or permitted for Tenants, or otherwise as
permitted with the prior written consent of Lender, which consent shall not be
unreasonably withheld, conditioned or delayed; (iii) complete promptly and in a
good and workmanlike manner any Improvements which may be now or hereafter
constructed on any Property and promptly restore in like manner any portion of
the Improvements in respect of a Property which may be damaged or destroyed
thereon from any cause whatsoever, and pay when due all claims for labor
performed and materials furnished therefor (subject to the right to contest the
amount of validity thereof in good faith); (iv) comply in all material respects
with all Applicable Laws, applicable Insurance Requirements and all covenants,
conditions and restrictions now or hereafter affecting any Property or other
item of Collateral or any part thereof or requiring any alterations or
Improvements; (v) not commit or permit any waste of the Collateral; and (vi) not
remove any item of the Collateral constituting tangible personal property or
fixtures without replacing it with a comparable item of equal or greater
quality, value and usefulness, except that Borrower may sell or dispose of in
the ordinary course of business any property which is obsolete or no longer
useful in its business.
5.6 Rent Reserve Account.
Pursuant to a separate agreement between Borrower and its constituent
partners, Borrower hereby directs Lender to fund the Rent Reserve Account by
disbursing a portion of the proceeds of the Loan in the amount shown on Schedule
5.6 as the "Initial Deposit" and depositing such proceeds into the Rent Reserve
Account. Lender shall have sole control over such account, and no Loan Party
shall have any right to withdraw funds therefrom except as set forth in this
Section. For so long as no Event of Default has occurred, Lender shall release
funds from the Rent Reserve Account and apply the released funds directly to
scheduled monthly payments of interest on the Loan the amounts shown on Schedule
5.6 at the times shown therein.
5.7 Tenanting Costs Reserve Account.
Borrower hereby directs Lender to fund the Tenanting Costs Reserve
Account by disbursing a portion of the proceeds of the Loan in the amount shown
on Schedule 5.7 as the "Initial Deposit" and depositing such proceeds into the
Tenanting Costs Reserve Account. Lender shall have sole control over such
account, and no Loan Party shall have any right to withdraw funds therefrom
except as set forth in this Section. Lender shall release funds to Borrower from
the Tenanting Costs Reserve Account following delivery to Lender of invoices and
such supporting documentation as Lender shall reasonably require for Tenanting
Costs which have been actually incurred by Borrower. Amounts on deposit in the
Tenanting Costs Reserve Account shall be disbursed upon the request of Borrower
only for the payment of expenses for capital improvements (including tenant
improvements) in space within the Property and leasing commissions with respect
to which funds have been budgeted for under the then-current approved capital
expenditures budget, made in accordance with the terms hereof (collectively, the
"Work") upon satisfaction of the following conditions:
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(i) Prior to the commencement of any such Work, the plans and
specifications for such Work, and the budgeted costs, shall be
submitted to Lender for Lender's approval, which shall not be
unreasonably withheld, conditioned or delayed.
(ii) Disbursements of such funds shall be made to Borrower
within thirty days after Borrower delivers to Lender a properly
completed request certificate in a form reasonably approved by Lender
(the "Request Certificate"), signed on behalf of Borrower by a duly
authorized representative of the general partner of Borrower, which
shall, among other things, certify (i) that Borrower has paid the
amounts being required or shall pay such amounts out of the
disbursement to the applicable general contractor, subcontractor of
materialman, accompanied by any conditional lien waivers or other
conditional releases it may reasonably request and (ii) that the
amounts being requested, together with the amounts disbursed to date
from the Tenanting Costs Reserve Account, do not exceed the budgeted
cost thereof as set forth in the then-current approved capital
expenditures budget.
(iii) Upon completion of such Work, final lien waivers shall
have been obtained from the applicable general contractor and Borrower
shall have furnished evidence reasonably satisfactory to Lender that
the subcontractors and materialmen and subcontractors and
submaterialmen have been paid in full.
5.8 Inspection; Lenders' Meeting; Appraisals.
5.8.1 Inspection and Lender Meeting. As often as may be reasonably
requested, each Loan Party shall, and shall cause each of its Subsidiaries to,
permit (i) any authorized representatives designated by Lender to visit and
inspect any Property, subject to the rights of Tenants, and (ii) any authorized
representatives designated by Lender to inspect the financial and accounting
records, tenant leasing files and other management books and records of such
Loan Party or Subsidiary, and to make copies and take extracts therefrom, and to
discuss its and their affairs, operations, finances and accounts with its and
their officers, property managers and independent accountants; provided that
each such visit, inspection and discussion shall be made upon reasonable notice
and at such reasonable times during normal business hours, with as little
disruption of Borrower's and Tenants' business and operations as is reasonably
practical.
5.8.2 Appraisals. If Lender shall advise Borrower by written notice that
Lender believes that the value of one or more Properties has been adversely
affected, for any reason, since the date of the most recent Appraisal thereof,
promptly thereafter Borrower shall, at its expense, cause the preparation and
delivery to Lender of an Appraisal of each such Property dated not more than 30
days prior to the date of such delivery, which Appraisal shall be prepared by an
Appraiser reasonably designated by Lender and shall be satisfactory in form and
substance to Lender; provided that, unless an Event of Default shall have
occurred and be continuing, no Property shall be appraised pursuant to this
Section more than once each calendar year. If any Loan Party or any of its
Subsidiaries obtains an appraisal of one or more of the Properties other than
pursuant to this Section, Borrower shall deliver a copy of such appraisal to
Lender promptly upon the completion thereof and Lender shall, subject to
Applicable Laws and provided that the Appraiser is satisfactory to Lender and
the appraisal is satisfactory in form and substance to Lender, treat such
appraisal as an "Appraisal."
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5.9 Compliance with Laws, Authorizations, etc.
Each Loan Party shall, and shall cause each of its Subsidiaries and all
Persons occupying any Properties to, comply in all material respects with the
requirements of all Applicable Laws. Each Loan Party shall, and shall cause each
of its Subsidiaries to, keep all material Authorizations which are from time to
time required for the use and operation of each Property in full force and
effect.
5.10 Performance of Loan Documents and Related Documents
Each Loan Party shall, and shall cause each of its Subsidiaries to,
observe and perform, or cause to be observed and performed, all its covenants,
agreements, conditions and requirements contained in each of the Loan Documents
to which it is or will be a party in accordance with the terms thereof and will
maintain the validity and effectiveness of such Loan Documents.
5.11 Payment of Liens
5.11.1 Removal by Loan Parties. If a Lien not permitted under this
Agreement may encumber any Property or other item of Collateral or any portion
thereof, Borrower shall promptly discharge or cause to be discharged by payment
to the lienor or lien claimant or promptly secure removal by bonding or deposit
with the county clerk or otherwise or, at Lender's option, promptly obtain
insurance against, any such Lien or mechanics' or materialmen's claims of lien
filed or otherwise asserted against any Property or any other item of Collateral
or any portion thereof within 60 days after the date of notice thereof, but
compliance with the provisions of this Section shall not be deemed to constitute
a waiver of the provisions of Section 6.3. Borrower shall exhibit to Lender upon
request all receipts or other satisfactory evidence of payment, bonding, deposit
of taxes, assessments, Liens or any other item which may cause any such Lien to
be filed against any Property or other item of Collateral of any Borrower. Each
Borrower shall fully preserve the Lien and the priority of each of the Mortgages
and the other Security Documents without cost or expense to Lender.
5.11.2 Removal of Lender. If any Borrower fails to promptly discharge,
remove or bond off any such Lien or mechanics' or materialmen's claim of lien as
described above within 60 days after the receipt of notice thereof, then Lender
may, but shall not be required to, procure the release and discharge of such
Lien, mechanics' or materialmen's claim of lien and any judgment or decree
thereon, and in furtherance thereof may, in its sole discretion, effect any
settlement or compromise with the lienor or lien claimant or post any bond or
furnish any security or indemnity as Lender, in its sole discretion, may elect.
In settling, compromising or arranging for the discharge of any Liens under this
Section, Lender shall not be required to establish or confirm the validity or
amount of the Lien. Borrower agrees that all costs and expenses expended or
otherwise incurred pursuant to this Section (including reasonable attorneys'
fees and disbursements) by Lender shall be paid by Borrower in accordance with
the terms hereof.
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5.11.3 Title Searches. Lender may, at any time and at the expense of
Borrower, obtain an updated title and/or lien search regarding any Property or
Collateral, or any portion thereof; provided that, unless Lender reasonably
believes that a Lien not otherwise permitted under this Agreement may encumber
any Property or Collateral or any portion thereof or an Event of Default shall
have occurred and be continuing, Lender may so obtain such search with respect
to such Property or Collateral or portion thereof not more than once each
calendar year.
5.12 Insurance
5.12.1 Risks to be Insured. With respect to each Property, each Borrower
shall procure and maintain continuously in effect, insurance coverage issued by
an insurer (i) authorized to issue such insurance in all applicable
jurisdictions, (ii) rated "A" (or its equivalent) or better by Xxxxxx X. Best
Company, Inc., (iii) with a financial size rating of VIII (or its equivalent) or
better, by Xxxxxx X. Best Company, Inc., and (iv) otherwise satisfactory to
Lender; provided, however, that (1) each insurer of Royale's or any of its
Subsidiaries' umbrella liability insurance policies as of the Closing Date (and
any renewal thereof by such insurers), may be rated "A-" (or its equivalent) by
Xxxxxx X. Best Company, Inc.; it being understood and agreed that such
carrier(s) shall comply with the requirement set forth in clause (ii) above, and
(2) as of the Closing Date, the insurers of Royale's or any of its Subsidiaries'
earthquake, flood and wind insurance policies (and any renewals thereof by such
insurers, respectively) may be rated "A-" (or its equivalent) by Xxxxxx X. Best
Company, Inc. and have a financial size rating of "VIII" (or its equivalent) by
Xxxxxx X. Best Company, Inc.; it being understood and agreed that, in the event
Royale or any of its Subsidiaries procures any earthquake, flood or wind
insurance from a carrier other than the carrier providing such insurance on the
Closing Date, such carrier shall comply with the requirements set forth in
clauses (ii) and (iii) above unless otherwise approved by Lender. Each Loan
Party shall pay, and shall cause each of its Subsidiaries to pay, in a timely
manner all premiums due in connection therewith. All insurance policies shall be
issued by insurers doing business as admitted licensed carriers in the state
where such Property is located, and shall be authorized and licensed to issue
insurance in such state unless otherwise approved by Lender in its sole
discretion. The insurance to be procured and maintained by Royale and its
Subsidiaries is the following:
5.12.1.1 Casualty. Borrower shall keep each Property insured for the
benefit of Lender, in each case, as follows:
(a) All Risk of Physical Loss. Insurance with respect to the
Improvements now or hereafter located on the Properties and any
alterations or additions thereto and the furniture, fixtures and
equipment against any peril included within the classification "All
Risks of Physical Loss" with extended coverage (including fire,
lightning, windstorm, sprinkler, hail, explosion, riot, riot attending
a strike, civil commotion, vandalism, malicious mischief, terrorist
44
acts, aircraft, vehicle, sinkholes and smoke) in an amount equal to
the full insurable value of such Improvements and such furniture,
fixtures and equipment. The term "full insurable value" shall mean the
actual replacement cost of such Improvements and such furniture,
fixtures and equipment (without taking into account any depreciation,
and exclusive of excavations, footings and foundations, landscaping
and paving) determined every five years by an insurer upon the request
of Lender, a recognized independent insurance broker or an appraiser
selected (and approved by Lender) and paid by the applicable Loan
Party or its Subsidiary; provided, however, that such amount shall be
sufficient to prevent such Loan Party or such Subsidiary from becoming
a co-insurer, and the policy shall contain a stated value endorsement
to that effect.
(b) Builder's Risk. During any period of construction of
Improvements and any repair, Restoration, Renovation or replacement
thereof, a standard builder's all risk policy (completed value
non-reporting form) or equivalent coverage under the policy described
in subclause (i)(a) above for an amount at least equal to the full
insurable value of the work to be performed and equipment, supplies
and materials to be furnished, as shall be reasonably approved by
Lender for such purpose, the coverage of which shall include the
hazards described in Section 5.12.1.1(a) and building collapse;
provided, however, that such policy may be obtained by a contractor if
it names Lender and Borrower as additional named insureds and if it
otherwise complies with this Agreement. Such policy shall contain a
stated value endorsement so that no co-insurance provision shall be
applicable to any loss thereunder. Such policy shall contain the
provision that "permission is hereby granted to complete and/or
occupy" upon the earlier to occur of substantial completion of any
discrete increment of the work or a Tenant taking occupancy of any
Property (or portion thereof) as to which work was being performed.
(c) Flood. Insurance against damage or loss by flood as to any
Property that is located in an area now or subsequently designated as
an area having special flood hazards and in which flood insurance has
been made available under the National Flood Insurance Act of 1968 or
the Flood Disaster Protection Act of 1973,or the National Flood
Insurance Reform Act of 1994, as such Acts may be amended, modified,
supplemented or replaced from time to time, on such basis and not less
than such amounts as shall be reasonably approved by Lender, but not
less than the amount required by law. If any Loan Party or any of its
Subsidiaries fails to obtain flood insurance as required, Lender may
purchase such flood insurance, and Borrower shall pay all premiums and
other costs and expenses incurred by Lender.
(d) Boilers. Broad form boiler and machinery insurance (without
exclusion for explosion) covering all boilers, boiler tanks, heating
and air conditioning equipment, pressure vessels, auxiliary piping and
similar apparatus, machinery and equipment located in, on or about
each Property insuring against damage or loss from boilers, boiler
45
tanks, heating and air conditioning equipment, pressure vessels,
auxiliary piping and similar apparatus, machinery and equipment and
insurance against loss of occupancy or use arising from any such
breakdown in such amounts as are generally available at reasonable
premiums and are generally required by institutional lenders for
properties comparable to the Properties.
(e) Business Interruption or Rental Income Insurance. Business
interruption and/or loss of rental value or use and occupancy
insurance insuring against business interruption at and against loss
of rental income from each Property due to any of the hazards listed
in Section 5.12.1.1(a) above in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds for a period not less
than one year of loss.
5.12.1.2 Workers' Compensation. Each Loan Party shall maintain, and
shall cause each of its Subsidiaries to maintain, for itself and for each
Property at which such Loan Party or such Subsidiary maintains employees,
statutory workers' compensation insurance (to the extent the risks to be
covered thereby are not already covered by other policies of insurance
maintained by such Loan Party or such Subsidiary), in statutory amounts as
required by law (including employer's liability insurance), except in those
states where such Loan Party elects to not subscribe to the workers'
compensation statute. If the applicable Loan Party elects to not subscribe
to the workers' compensation statute, such Loan Party shall have a benefit
program and employees' legal liability coverage to respond to claims that
would otherwise be covered by a standard policy of workers' compensation.
5.12.1.3 Liability. Royale and its Subsidiaries shall procure and
maintain:
(a) Comprehensive General Liability Insurance. Comprehensive
general liability insurance, on an occurrence basis in the amount of
$1,000,000 per occurrence per Property and $3,000,000 in the aggregate
per Property covering each Loan Party, each of its Subsidiaries and
Lender against claims for bodily injury, death and property damage
(including claims and legal liability to the extent insurable imposed
upon Lender and all court costs and attorneys' fees and expenses),
arising out of or connected with the possession, use, leasing,
operation, maintenance or condition of each Property or occurring in,
upon or about or resulting from each Property, or any drive, sidewalk,
curb or passageway adjacent thereto (to the extent insurable), which
insurance shall include blanket contractual liability coverage which
insures contractual liability (to the extent insurable) under the
indemnification set forth in Section 8.3 of this Agreement (but such
coverage or the amount thereof shall in no way limit such
indemnification), garage liability (if applicable), products liability
(if applicable) and elevator liability (if applicable) coverage and
during any period of construction of any Improvements, owner's and
contractor's protective liability coverage, including completed
operations liability coverage. If any of the coverages referred to in
this Section are obtained under a so called "blanket" policy with more
46
than one Property covered, the policy shall contain an "individual
aggregate per location/project" endorsement.
(b) General Liability and Property Damage. Commercial general
liability and property damage insurance on an occurrence basis in
connection with any construction being performed at any Property, to
be carried by any contractor or construction manager or by any Person,
including any Loan Party or any of its Subsidiaries, performing a
similar function, including "Builders Risk" coverage in the amount of
$1,000,000 per occurrence and $3,000,000 in the aggregate.
(c) Liquor Liability and Dram Shop Insurance. For any Property on
which Borrower operates a liquor business in which liquor is served,
liquor liability and dram shop insurance on such basis and in such
amounts as shall be reasonably required by Lender in a minimum amount
of $1,000,000 per occurrence and $3,000,000 in the aggregate for
Properties.
(d) Umbrella or Excess Liability Insurance. Umbrella or excess
liability insurance, on an incurrence basis in the amount of at least
$50,000,000 per occurrence and in the aggregate per year covering each
Loan Party, each of its Subsidiaries and Lender against claims for
damages in excess of all primary liability policies.
5.12.1.4 Additional Insurance. Each Loan Party shall procure and
maintain, and shall cause each of its Subsidiaries to procure and maintain,
such other insurance with respect to the Properties against loss or damage
of the kinds from time to time customarily insured against and in such
amounts as are generally available at reasonable premiums and are generally
required by institutional lenders for properties comparable to the
Properties.
5.12.2 Policy Provisions. Each policy of insurance maintained in respect of
Borrower and/or any Property pursuant to this Section shall (a) in the case of
each category of public liability insurance, name Borrower as insured and name
Lender as an additional insured, and in the case of all other insurance required
under this Agreement, as an additional insured or as a loss payee, as Lender
shall require; (b) except in the case of public liability insurance and workers'
compensation insurance, provide that all proceeds thereunder shall be payable to
Lender pursuant to a standard first mortgagee endorsement, without contribution,
that all losses with respect to each Property shall be paid directly to Lender,
without contribution by any similar insurance carried by Lender and that
adjustment and settlement of any material loss shall be subject to the
reasonable approval of Lender; (c) include effective waivers by the insurer of
all rights of subrogation against any loss payee, additional insured or named
insured; (d) permit Lender to pay the premiums and continue any insurance upon
failure of such Loan Party or such Subsidiary, as the case may be, to pay
premiums when due, upon the insolvency of such Loan Party or such Subsidiary, as
the case may be, or through foreclosure; (e) to the extent such provisions are
47
reasonably obtainable, provide that such insurance shall not be impaired or
invalidated by virtue of (i) any act, failure to act, negligence of, or
violation of declarations, warranties or conditions contained in such policy by
Borrower, Lender, or any other named insured, additional insured or loss payee,
except for the willful misconduct of Lender knowingly in violation of the
conditions of such policy, (ii) the occupation or use of such Property for
purposes more hazardous than permitted by the terms of the policy, (iii) any
foreclosure or other proceeding or notice of sale relating to such Property or
(iv) any change in the possession of such Property without a change in the
identity of the holder of actual title to such Property; (f) be subject to a
deductible, if any, not greater than $100,000 (or, with respect to coverage for
wind damage, such greater amount as shall not exceed 5.0% of the affected
Property's agreed value); (g) contain an endorsement providing that neither
Lender nor Borrower shall be, or shall be deemed to be, a co-insurer with
respect to any risk insured by such policy; and (h) provide that if all or any
part of such policy shall be canceled or terminated, or shall expire, the
insurer will forthwith give notice thereof to Lender and each additional insured
and loss payee and that no cancellation, termination, expiration, reduction in
amount of, or material change (other than an increase) in, coverage thereof
shall be effective until at least 30 days after receipt by Lender and each
additional insured and loss payee of written notice thereof.
5.12.3 Increases in Coverage.. The policy limits of any policy of insurance
required hereunder shall be increased from time to time to reflect what a
reasonable prudent owner of land and improvements similar in type and locality
to each Property would carry.
5.12.4 Payment of Proceeds. If any such insurance proceeds required to be
paid to Lender are instead made payable to Borrower, Royale or any Subsidiary
thereof, each of Borrower and Royale hereby appoints Lender as its
attorney-in-fact, irrevocably and coupled with an interest, to endorse and/or
transfer any such payment to Lender.
5.12.5 Delivery of Counterpart Policies; Evidence. Each Loan Party shall
deliver, and shall cause each of its Subsidiaries to deliver, to Lender on or
before the Closing Date evidence acceptable to Lender for the valid policies of
insurance required by this Agreement or any other Loan Document to be carried
evidencing (i) the issuance of such policies, (ii) the payment of all premiums
payable for the period ending not earlier than the first Anniversary and (iii)
coverage which meets all of the requirements set forth in this Agreement. At
each time after the Closing Date that any Loan Party or any of its Subsidiaries
is required by this Agreement or by any Security Document or any other Loan
Document to deliver evidence of insurance, such Loan Party shall deliver, or
shall cause such Subsidiary to deliver, such evidence of valid policies of
insurance acceptable to Lender evidencing (a) the issuance of the policies of
insurance required by this Agreement or other Loan Document to be carried, (b)
the payment of all premiums then due to the applicable insurer, (c) coverage
which meets all of the requirements set forth in this Agreement or other Loan
Document, and (d) that the required policies are in full force and effect.
5.12.6 Replacement or Renewal Policies. Not less than 30 days prior to the
expiration, termination or cancellation of any insurance policy which any Loan
Party or any of its Subsidiaries is required to maintain hereunder, such Loan
Party shall obtain, or shall cause such Subsidiary to obtain, a replacement or
renewal policy or policies (or a binding commitment for such replacement or
48
renewal policy or policies), which shall be effective no later than the date of
the expiration, termination or cancellation of the previous policy, and shall
deliver to Lender a valid binder in respect of such policy or policies in the
same form and containing the same information as the expiring policy or policies
required to be delivered by each Loan Party and its Subsidiaries pursuant to
this Section or a copy of the binding commitment for such policy complying with
all the requirements of this Section, followed by a certified true copy of the
policy or policies when issued.
5.12.7 Material Change in Policy. Each Loan Party shall deliver, and shall
cause each of its Subsidiaries to deliver, to Lender concurrently with each
material change in any insurance policy covering any part of the Properties
required to be maintained by each Loan Party and its Subsidiaries hereunder, a
valid binder or policy endorsement with respect to such changed insurance policy
certified by the insurance company issuing such policy, in the same form and
containing the same information as the original evidence of insurance required
to be delivered by each Loan Party and its Subsidiaries pursuant to this
Section.
5.12.8 Separate Insurance. No Loan Party will take out, nor will it permit
any of its Subsidiaries to take out, separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained pursuant
to this Section unless such insurance complies with all of the requirements of
this Section.
5.13 Casualty and Condemnation; Restoration
5.13.1 Notice of Casualty. Upon the occurrence of any damage to or loss or
destruction of all or any portion of any Property, whether or not covered by
insurance, which will cost (or may reasonably be expected to cost) more than
$500,000 to Restore, as reasonably determined by Borrower and so certified in an
Officers' Certificate delivered to Lender, (i) Borrower shall promptly deliver
to Lender written notice of the same which shall, among other things, describe
such casualty, and (ii) as soon as practicable but in any event prior to the
commencement of Restoration of such Property, Borrower shall deliver to Lender a
notice of its intended course of action with respect to such Restoration, in
such detail as Lender shall reasonably require.
5.13.2 Insurance Proceeds. All Insurance Proceeds in respect of a Property
and the right thereto are hereby irrevocably assigned and pledged by each Loan
Party to Lender for the benefit of the Lenders, and Lender on behalf of the
Lenders is authorized, at its option, to collect and receive all of the same and
to give proper receipts and acquittances therefor; provided, however, that if no
Event of Default shall have occurred and be continuing such Loan Party shall
have the right to direct Lender to apply Insurance Proceeds in accordance with
Sections 5.13.6. If no Event of Default shall have occurred and be continuing,
to the extent not inconsistent with the requirements of Sections 5.13.5 and
5.13.6, such Loan Party shall have the right to direct Lender (1) to pay to such
Loan Party all Insurance Proceeds with respect to such casualty affecting a
Property which will cost (or may reasonably be expected to cost) less than
$500,000 to Restore and (2) to pay to such Loan Party all proceeds of any
49
related business interruption insurance. Each Loan Party agrees to execute and
to cause each of its Subsidiaries to execute such further assignments and
pledges of any Insurance Proceeds in respect of the Properties as Lender may
reasonably require and shall otherwise cooperate with Lender in obtaining for
Lender the benefit of any Insurance Proceeds lawfully or equitably payable in
respect of any such Property, subject to the provisos above. If, prior to the
receipt by Lender of such Insurance Proceeds, any Property shall have been
transferred upon foreclosure of the applicable Mortgage (or by deed in lieu
thereof), Lender shall have the right to receive such Insurance Proceeds to the
extent (x) such Insurance Proceeds are attributable to a casualty occurring
prior to foreclosure or delivery of any deed in lieu thereof and (y) of any
deficiency found to be due upon such sale, with legal interest thereon, and
reasonable counsel fees, costs and disbursements incurred by Lender in
connection with the collection of such Insurance Proceeds. Lender may, but shall
not be obligated to, make proof of loss if not made promptly by the applicable
Loan Party or Subsidiary thereof. During the continuance of an Event of Default,
Lender is hereby authorized and empowered by each of Royale and Borrower to
settle, adjust or compromise any claims for damage, destruction or loss
thereunder, with or without the consent of any Loan Party or any of its
Subsidiaries (and each of Royale and Borrower hereby irrevocably appoints and
constitutes Lender as Royale's and Borrower's lawful attorney-in-fact, coupled
with an interest and with full power of substitution, for such purpose). In no
event shall any Loan Party or any of its Subsidiaries settle, adjust or
compromise any claim for Insurance Proceeds in respect of any Property in excess
of $500,000 without the prior written consent of Lender, which shall not be
unreasonably withheld, conditioned or delayed. If any Loan Party or any of its
Subsidiaries receives any Insurance Proceeds resulting from such casualty in
respect of any Property, such Loan Party or Subsidiary shall promptly endorse
and transfer, or cause such Subsidiary to endorse and transfer, such excess
Insurance Proceeds to Lender and each Loan Party covenants that until so paid
over to Lender, such Loan Party or such Subsidiary, as applicable, shall hold
such Insurance Proceeds in trust for the benefit of Lender and shall not
commingle such Insurance Proceeds with any other funds or assets of such Loan
Party or Subsidiary or any other Person.
5.13.3 Notice of Condemnation; Negotiation and Settlement of Claims. The
Loan Parties shall, and shall cause their respective Subsidiaries to, promptly
deliver written notice to Lender upon obtaining knowledge of the institution, or
the proposed institution, of any bona fide action or proceeding for the Taking
of all or any portion of any Property. Lender shall have the right to
participate in any negotiation, action or proceeding relating to any such action
or proceeding affecting any Property, and no settlement or compromise of any
claim in connection with any such action or proceeding shall be made without the
consent of Lender, which consent shall not be unreasonably withheld, conditioned
or delayed. Upon the occurrence of any Taking with respect to a Property which
will cost (or may reasonably be expected to cost) more than $500,000 to Restore,
as reasonably determined by Borrower and so certified in an Officers'
Certificate delivered to Lender, as soon as practicable thereafter but in any
event not less than 20 days prior to the commencement of any Restoration of such
Property, Borrower shall deliver to Lender a notice of its intentions with
respect to such renovation in such detail as Lender shall require.
5.13.4 Condemnation Proceeds. All Condemnation Proceeds in respect of each
of the Properties and the right thereto are hereby irrevocably assigned and
pledged by each Loan Party to Lender for the benefit of the Lenders, and Lender
on behalf of the Lenders is authorized, at its option, to collect and receive
50
all such Condemnation Proceeds and to give proper receipts and acquittances
therefor; provided, however, (x) if no Event of Default shall have occurred and
be continuing, such Loan Party shall have the right to direct Lender to apply
Condemnation Proceeds in accordance with Section 2.7.2 (without application of
the minimum amount requirements contained therein) and (z) if no Event of
Default shall have occurred and be continuing, such Loan Party shall have the
right to direct Lender to pay such Loan Party all Condemnation Proceeds with
respect to a Taking affecting a Property which will cost (or may reasonably be
expected to cost) less than $500,000 to Restore. Each Loan Party agrees to
execute, and to cause each of its Subsidiaries to execute, such further
assignments of any Condemnation Proceeds in respect of any Property as Lender
may reasonably require and shall otherwise cooperate with Lender in obtaining
for Lender the benefit of any Condemnation Proceeds lawfully or equitably
payable in respect of such Property, subject to the provisos above. If, prior to
the receipt by Lender of such Condemnation Proceeds, the portion of the
Property, subject to such action or proceeding shall have been sold on
foreclosure of the applicable Mortgage (or by deed in lieu thereof), Lender
shall have the right to receive such Condemnation Proceeds to the extent (x)
such Condemnation Proceeds are attributable to a Taking occurring prior to
foreclosure or delivery of any deed in lieu thereof and (y) of any deficiency
found to be due upon such sale, with legal interest thereon, and reasonable
counsel fees, costs and disbursements incurred by Lender in connection with the
collection of such Condemnation Proceeds. Lender may, but shall not be obligated
to, make proof of loss if not made promptly by the applicable Loan Party or
Subsidiary thereof. Upon the occurrence and during the continuance of an Event
of Default (but not otherwise), Lender is hereby authorized and empowered by
each Loan Party to settle, adjust or compromise any claims for Condemnation
Proceeds with or without the consent of such Loan Party or any of its
Subsidiaries (and each of the Royale and Borrower hereby irrevocably appoints
and constitutes Lender as its lawful attorney-in-fact, coupled with an interest
and with full power of substitution, for such purpose). In no event shall any
Loan Party or any of its Subsidiaries settle, adjust or compromise any claim for
Condemnation Proceeds in respect of any Property without the prior written
consent of Lender, which shall not be unreasonably withheld, conditioned or
delayed. Each condemnor concerned is hereby authorized and directed to make
payment of all Condemnation Proceeds in respect of each of the Properties
payable by it directly to Lender. If any Loan Party or any of its Subsidiaries
receives any Condemnation Proceeds resulting from such condemnation in respect
of any Property, such Loan Party or such Subsidiary shall promptly endorse and
transfer such excess Condemnation Proceeds to Lender and each Loan Party
covenants that until so paid over to Lender, such Loan Party or Subsidiary, as
the case may be, shall hold such Condemnation Proceeds in trust for the benefit
of Lender and shall not commingle such Condemnation Proceeds with any other
funds or assets of such Loan Party or Subsidiary or any other Person.
5.13.5 Repayment of Loan; Payment of Release Price; Conditions to
Restoration. In the event of any casualty or Taking with respect to a Property,
which will cost (or may reasonably be expected to cost) more than $500,000 to
Restore, as reasonably determined by Borrower and so certified in an Officers'
Certificate delivered to Lender, Borrower shall elect by written notice
delivered to Lender as soon as practicable thereafter, but in any event before
the earlier of (x) 30 days after the occurrence of such casualty or Taking and
(y) the commencement of the Restoration of such Property, either:
51
5.13.5.1 to prepay the Loan in an amount equal to the Net
Insurance/Condemnation Proceeds with respect to such Property; or
5.13.5.2 if all the following conditions shall be satisfied, to
Restore such Property in accordance with Section 5.13.6:
(a) the Maturity Date shall then not have occurred;
(b) no Potential Event of Default (other than any Potential Event
of Default caused solely by an event or condition with respect to
another Property) or Event of Default shall have occurred and be
continuing or would be caused by such Restoration;
(c) Lender shall have determined, in its reasonable discretion
and after considering such written opinions of architects and
engineers and other written information as Borrower shall timely
deliver to Lender, that Restoration of such Property is, under the
circumstances then existing, physically and economically feasible and
can be completed on or before a date not less than three months prior
to the Maturity Date;
(d) Borrower shall have business interruption or rental income
insurance complying with this Agreement in an amount at least equal to
the reduction in Property Adjusted Net Income with respect to such
Property, if any, which Borrower reasonably expects to suffer during
the period of Restoration;
(e) either (1) the Net Insurance/Condemnation Proceeds shall be
sufficient to complete the costs of such Restoration, as determined by
Lender in its reasonable discretion, or (2) Borrower shall have
provided, at Borrower's option, a cash deposit or a letter of credit
satisfactory to Lender, in its reasonable discretion (or other
collateral reasonably satisfactory to Lender), for the amount of any
shortfall in the amount of Net Insurance/Condemnation Proceeds
necessary to cover the costs to complete such Restoration; and
(f) Lender shall have received an Appraisal satisfactory to
Lender demonstrating that the aggregate Appraised Values of all
Properties following such Restoration shall not be less than the
then-current Outstanding Loan Amount.
If the Loan Parties and their respective Subsidiaries shall fail to satisfy the
conditions set forth herein with respect to the related Property, or shall fail
to diligently and continuously prosecute the Work to completion (other than as a
result of Excusable Delay), as determined by Lender, in its reasonable
discretion, then Borrower shall prepay the Loan in an amount equal to the
Release Price with respect to such Property and Lender shall apply any or all
remaining Insurance Proceeds or Condemnation Proceeds, as applicable, towards
such prepayment.
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5.13.6 Restoration with Net Insurance/Condemnation Proceeds. In the event
of any casualty or Taking with respect to a Property, which will cost (or may
reasonably be expected to cost) more than $500,000 to Restore, as reasonably
determined by Borrower and so certified in an Officers' Certificate delivered to
Lender, if any of the Loan Parties and their respective Subsidiaries elects to
Restore a Property, pursuant to this Section and the conditions set forth in
Section 5.13.5.2 are satisfied, all Net Insurance/Condemnation Proceeds shall be
held by Lender in an interest-bearing account at Lender, with all interest to be
held therein until completion and final inspection of the Work, and shall be
applied by Lender to the payment of the cost of Restoring such Property so
damaged or destroyed or of the portion or portions of such Property not so Taken
(the "Work") and shall be paid out from time to time to Borrower as the Work
progresses, subject to retainage as reasonably determined by Lender in
accordance with construction lending practices and otherwise in accordance with
any conditions reasonably imposed by Lender but subject to each of the following
conditions:
5.13.6.1 Subject to Excusable Delays, Borrower shall promptly (and in
any event within 120 days after the applicable casualty or Taking)
commence, or cause the commencement of, Restoration of such Property.
5.13.6.2 If the Work is structural or if the cost of the Work, as
estimated by Borrower, shall exceed 15% of the Property Amount with respect
to such Property the Work shall be in the charge of an architect or
Engineer (who may be an employee or Affiliate of Borrower only if the cost
of the Work does not exceed such lesser amount), and before Borrower
commences any Work, other than temporary work to protect property or
prevent interference with business, Lender shall have approved the plans
and specifications and the general contract for the Work to be submitted by
Borrower, which approval shall not be unreasonably withheld, conditioned or
delayed. Such plans and specifications shall provide for such Work that,
upon completion thereof, the Improvements shall (x) be in compliance in all
material respects with all legal requirements such that all representations
or warranties of the Loan Parties relating to the compliance of such
Property with Applicable Laws in this Agreement or any of the other Loan
Documents would then be true and correct, and (y) be at least equal in
value and general utility to the Improvements which were on such Property
prior to the damage, destruction or Taking. Such plans and specifications
shall be accompanied by (1) a signed estimate of Borrower, or, if an
architect or Engineer is required to supervise the Work, such architect or
Engineer, stating the estimated cost of completing the Work, which estimate
shall bear the architect's or Engineer's seal if not made by Borrower and
(2) to the extent necessary at such stage of the Work, certified copies of
all Authorizations required in connection with the commencement and
performance of the Work.
5.13.6.3 Each request for payment shall be made on seven days' prior
notice to Lender and shall be accompanied by paid invoices and by (a) a
certificate to be made by such architect or Engineer, if one be required
under clause (ii) above, otherwise by an Officers' Certificate of Borrower,
stating that (1) all of the Work completed has been done in substantial
53
compliance with the approved plans and specifications, if any be required
under said clause (ii) above, and (2) the sum requested is justly required
to reimburse Borrower for payments made by Borrower to, or is justly due
to, the contractor, subcontractors, materialmen, laborers, engineers,
architects or other Persons rendering services or materials for the Work
(giving a brief description of such services and materials), and that when
added to all sums previously paid out by Lender does not exceed the cost of
the Work done to the date of such certificate, and (b) an Officers'
Certificate of Borrower stating either that (x) the amount of such proceeds
remaining in the hands of Lender, or (y) the amount of such funds, plus
funds in the hands of the applicable Loan Party or Subsidiary thereof from
other sources irrevocably committed to the completion of the Work in a
manner reasonably satisfactory to Lender (including delivery of such funds
to Lender for application to pay the costs of the Restoration), will be
sufficient on completion of the Work to pay for the same in full (giving in
such reasonable detail as Lender may require an estimate of the cost of
such completion). Lender may require that any such statements be
independently verified by an inspector approved by Lender.
5.13.6.4 Each request shall be accompanied by waivers of lien
satisfactory to Lender covering that part of the Work for which payment or
reimbursement has been made (or other evidence as shall be satisfactory to
Lender in its sole discretion confirming that no rights of mechanics,
contractors, subcontractors, materialmen or suppliers are outstanding in
respect of such Work) and by a search prepared by the Title Company
reasonably satisfactory to Lender establishing that there has not been
filed with respect to such Property any mechanics' or other lien or
instrument for the retention of title in respect of any part of the Work
not discharged of record or bonded to the reasonable satisfaction of Lender
and evidencing the continued priority of the Mortgage and Assignment of
Rents and Leases on such Property.
5.13.6.5 The available Insurance Proceeds or Condemnation Proceeds
which are paid or will be payable by the insurance company (together with
any cash, irrevocable letter of credit, payment or performance bond or
United States government obligation assigned to Lender as collateral, in
each case reasonably acceptable to Lender as to amount, obligor and
maturity) are, in the reasonable judgment of Lender, sufficient to pay in
full the costs of the Restoration.
5.13.6.6 There shall be no Event of Default or Potential Event of
Default (other than any Potential Event of Default caused solely by an
event or condition with respect to another Property).
5.13.6.7 The request for any payment after the Work has been completed
shall be accompanied by (a) a copy of any certificate or certificates
required by law to render occupancy of the improvements being rebuilt,
repaired or restored legal; and (b) final lien waivers for all labor,
materials and supplies from all contractors, subcontractors and
materialmen, except with respect to claims or rights being contested or
bonded in accordance with the provisions hereof.
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5.13.6.8 After commencing the Work, Borrower shall, subject to
Excusable Delays, perform the Work diligently and in good faith in a good
and workmanlike manner to completion in accordance with the approved plans
and specifications, if any.
5.13.6.9 Lender shall have received "agreements to complete" of the
general contractor and any independent architects or Engineers, which
agreements to complete shall be in form and substance reasonably
satisfactory to Lender.
5.13.6.10 Borrower shall have obtained and maintained, or shall have
caused the applicable Loan Party or Subsidiary thereof to obtain and
maintain, completed value builders' risk (all risk) insurance in accordance
with this Agreement.
All costs and expenses of any Restoration, including, without limitation,
any Work, Engineer's fees, architect's fees or contractors fees and the cost and
expenses of complying with this Section, shall be for the account of Borrower.
Upon completion of the Work and payment in full therefor, Borrower shall
promptly deliver to Lender a Completion Certificate with respect thereto,
together with all final lien waivers in form and substance reasonably
satisfactory to Lender, and Lender shall return to Borrower the amount of any
unspent Insurance Proceeds or Condemnation Proceeds then or thereafter in the
hands of Lender on account of the casualty or Taking that necessitated such
Work, together with all undisbursed accrued interest thereon. Nothing in this
Section shall prevent Lender from applying at any time all or any part of the
Insurance Proceeds or Condemnation Proceeds to the curing of any Event of
Default under this Agreement or any other Loan Document.
5.13.7 Engineer's Inspection. At any time after Lender becomes aware of a
casualty or Taking involving an aggregate amount in excess of $500,000 (as
reasonably determined by Borrower and so certified in an Officers' Certificate
delivered to Lender) Lender may hire an independent engineer to inspect the
applicable Property and Lender may deem any related Restoration not complete
unless the engineer reasonably determines that the Restoration was completed in
accordance with this Agreement. The cost of such inspection shall be for the
account of Borrower.
5.14 Xxxxxxxx Clause
In the event of the enactment of or change in (including a change in
interpretation of) any Applicable Law (i) deducting or allowing any Loan Party
or any of its Subsidiaries to deduct from the value of any Property for the
purpose of taxation any Lien thereon, (ii) subjecting any Lender to any tax in
respect of, or changing the basis of taxation in respect of, the Mortgages, or
the manner of collection of such taxes (other than Taxes on net income,
franchise taxes and doing business taxes), or (iii) for the taxation of
mortgages or debts secured by mortgages or in the means of collection of any
such tax, in each such case, so as to affect any Lender or the Note or the
Mortgages or any other Loan Document, and the result is to increase the taxes
imposed upon or the cost to any Lender of maintaining the Loan, or to reduce the
amount of any payments receivable under the Note, the Mortgages or any other
Loan Document, or to invalidate the Lien created by any Security Document, then,
55
in any such event, Borrower shall, within twenty Business Days of receipt of a
request therefor, accompanied by documentation verifying the nature, amount and
due date, pay to such Lender additional amounts to compensate for such increased
costs or reduced amounts; provided, however, that if any Lender makes such a
request, or if the Lien created by any Security Document may be invalidated,
then Borrower shall have the right, and, in the case of such invalidation, shall
have the obligation, to prepay the Loan, in accordance with the provisions of
this Agreement and the Note; provided further, however, that if any such payment
or reimbursement shall be unlawful or would constitute usury or render the Loan
wholly or partially usurious under Applicable Law, then Lender may, in its sole
discretion, declare the Loan so affected immediately due and payable (without
premium or penalty) and/or require Borrower to pay or reimburse the Lenders for
payment of the lawful and non-usurious portion thereof not less than 180 days
after notice of such declaration.
5.15 Further Assurances
5.15.1 Assurances. Without expense or cost to Lender or the Lenders, each
Loan Party shall, and shall cause each of its Subsidiaries to, from time to time
hereafter execute, acknowledge, file, record, do and deliver all and any further
acts, deeds, conveyances, mortgages, deeds of trust, deeds to secure debt,
security agreements, hypothecations, pledges, charges, assignments, financing
statements and continuations thereof, notices of assignment, transfers,
certificates, assurances and other instruments as Lender may from time to time
reasonably require in order to carry out more effectively the purposes of this
Agreement or the other Loan Documents, including to subject any Property or
other items of Collateral, intended to now or hereafter be covered, to the Liens
created by the Security Documents, to perfect and maintain such Liens, and to
assure, convey, assign, transfer and confirm unto Lender the property and rights
hereby conveyed and assigned or intended to now or hereafter be conveyed or
assigned or which any Loan Party or any such Subsidiary may be or may hereafter
become bound to convey or to assign to Lender or for carrying out the intention
of or facilitating the performance of the terms of this Agreement, or any other
Loan Documents or for filing, registering or recording this Agreement or any
other Loan Documents. Without limiting the foregoing, each Borrower shall
deliver to Lender, promptly upon receipt thereof, all instruments received by
Borrower after the Closing Date and take all actions and execute all documents
necessary or reasonably requested by Lender to perfect Lender's security
interest in any such instrument or any other Investment acquired by Borrower.
Promptly upon request or, in an emergency, upon demand, each Loan Party shall
execute and deliver, and hereby authorizes Lender to execute and file in the
name of such Loan Party, to the extent Lender may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments to
evidence more effectively the Lien hereof upon the Collateral.
5.15.2 Filing and Recording Obligations. Each Loan Party shall pay all
filing, registration and recording fees and all expenses incident to the
execution and acknowledgement of any Mortgage or other Loan Document, including
any instrument of further assurance described in Section 5.15.1 and shall pay
all mortgage recording taxes, transfer taxes, general intangibles taxes and
governmental stamp and other taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution, delivery, filing, recording
56
or registration of any Mortgage or other Loan Document, including any instrument
of further assurance described in Section 5.15.1 or by reason of its interest
in, or measured by amounts payable under, the Note, the Mortgages or any other
Loan Document, including any instrument of further assurance described in
Section 5.15.1, and shall pay all stamp taxes and other taxes required to be
paid on the Note or any other Loan Document, but excluding in the case of each
Lender and Lender, Taxes imposed on its income by a jurisdiction under the laws
of which it is organized or in which its principal executive office is located
or in which its applicable lender office for funding or booking its Loan
hereunder is located. If any Loan Party fails to make any of the payments
described in the preceding sentence within 10 days after notice thereof from
Lender (or such shorter period as is necessary to protect the loss of or
diminution in value of any Collateral by reason of tax foreclosure or otherwise,
as determined by Lender, in its sole discretion) accompanied by documentation
verifying the nature and amount of such payments, Lender may (but shall not be
obligated to) pay the amount due and the Loan Parties shall reimburse all
amounts in accordance with the terms hereof upon demand. If Applicable Law
prohibits any Loan Party from paying such taxes, charges, filing, registration
and recording fees, excises, levies, stamp taxes or other taxes, then Lender may
declare the Loan immediately due and payable in accordance with the terms of
this Agreement, without premium or penalty not less than 30 days after such
declaration in a principal amount equal to the Property Amount with respect to
the applicable Property.
5.15.3 Costs of Defending and Upholding the Lien. Lender may, upon at least
five days' prior notice to Borrower, (i) appear in and defend any action or
proceeding, in the name and on behalf of Lender or Borrower in which Lender is
named or which Lender in its sole discretion determines is reasonably likely to
materially adversely affect any Property, any other Collateral, any Mortgage,
the Lien thereof or any other Loan Document and (ii) institute any action or
proceeding which Lender reasonably determines should be instituted to protect
the interest or rights of Lender in any Property or other Collateral or under
this Agreement or any other Loan Document. Borrower agrees that all reasonable
costs and expenses expended or otherwise incurred pursuant to this Section
(including reasonable attorneys' fees and disbursements) by Lender shall be paid
by Borrower or reimbursed to Lender, as the case may be, promptly after demand.
5.15.4 Costs of Enforcement. Borrower agrees to bear and shall pay or
reimburse Lender in accordance with the terms of this Agreement for all
reasonable sums, costs and expenses incurred by Lender (including reasonable
attorneys' fees and the expenses and fees of any receiver or similar official)
of or incidental to the collection of any of the Obligations, any foreclosure
(or Transfer in lieu of foreclosure) of any Mortgage or any other Loan Document
or any sale of all or any portion of any Property or all or any portion of the
other Collateral.
ARTICLE 6
NEGATIVE COVENANTS
Each Loan Party covenants and agrees that, until payment in full of the
Loan and the other Obligations (other than indemnification obligations with
respect to claims that have not been asserted at the time that the Loan and all
other Obligations have been paid in full), the Loan Parties shall perform and
shall cause each of their respective Subsidiaries to perform all of their
covenants in this Article 6.
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6.1 Indebtedness of Borrower.
Borrower shall not directly or indirectly create, incur, assume, Guarantee,
refinance, exchange, refund or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except:
6.1.1 the Obligations; and
6.1.2 Interest Rate Agreements otherwise required or permitted under
this Agreement; and
6.1.3 unsecured intercompany Indebtedness owed to Loan Parties, if all
such Indebtedness is evidenced by one or more promissory notes that are
pledged to Lender pursuant to the Security Documents to secure the
Obligations.
6.2 Indebtedness of FCOLP.
FCOLP shall not directly or indirectly create, incur, assume, Guarantee,
refinance, exchange, refund or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except:
6.2.1 the Obligations;
6.2.2 recourse Indebtedness to which Lender has given its prior
written consent, which it may give or withhold in its sole discretion;
6.2.3 non-recourse Indebtedness secured by property other than the
Collateral to which Lender has given its prior written consent, which shall
not be unreasonably withheld, delayed or conditioned;
6.2.4 non-recourse Guarantees of the Indebtedness of Subsidiaries of
FCOLP secured by pledges of FCOLP's interest in such Subsidiaries;
6.2.5 Interest Rate Agreements otherwise required or permitted under
this Agreement; and
6.2.6 unsecured intercompany Indebtedness owed to Loan Parties, if all
such Indebtedness is evidenced by one or more promissory notes that are
pledged to Lender pursuant to the Security Documents to secure the
Obligations.
6.3 Liens and Related Matters.
6.3.1 Prohibition on Liens. Borrower shall not directly or indirectly,
create, incur, assume or permit to exist any Lien on or with respect to any
58
property or asset of any kind (including any document or instrument in respect
of goods, furniture, fixtures, equipment or accounts receivable) of Borrower,
whether now owned or hereafter acquired, or any income or profits therefrom, or
file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any Lien with respect to any such property,
asset, income or profits under the Uniform Commercial Code of any State or under
any similar recording or notice statute, except Permitted Encumbrances.
6.3.2 No Further Negative Pledges. Except with respect to agreements
entered into in the ordinary course of business which by their terms restrict
the assignment of rights thereunder (but not any other rights or interests and
otherwise consistent with industry practices) as security for the Obligations or
otherwise, Borrower shall not, directly or indirectly, enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, except to the extent that Liens
to secure the Obligations are excluded therefrom.
6.4 Investments.
Borrower shall not, directly or indirectly, make any Investment in any
Person, including any Affiliate or Joint Venture, or any expenditure to acquire
any real property, except (i) any transaction permitted under Sections 6.1, 6.2
and 8.13, (ii) any renovations or improvements permitted under Section 5.5 or
elsewhere in this Agreement, (iii) Investments in wholly-owned Subsidiaries of
FCOLP or in other Borrowers or their wholly-owned Subsidiaries, or (iv)
Investments in Cash or Cash Equivalents. For the purpose of this Section and
without limiting any other method of making an Investment, Borrower and its
Subsidiaries shall be deemed to make an Investment in each Investment owned by a
Person at the time such Person becomes a Subsidiary of Borrower or any of its
Subsidiaries.
6.5 Contingent Obligations
Borrower shall not, directly or indirectly, create or become liable with
respect to any Contingent Obligation, except that:
6.5.1 Borrower may become liable with respect to Contingent
Obligations in respect of the Obligations and the Indebtedness;
6.5.2 Borrower may in the ordinary course of Borrower's business enter
into interest rate hedging agreements with respect to Indebtedness
otherwise permitted under this Agreement;
6.5.3 Borrower may become liable with respect to indemnification
agreements and Guaranties (whether now or existing or hereafter entered
into) with respect to performance, surety and similar bonds or guaranties
of completion provided in the ordinary course of business consistent with
past practices in respect of the restoration or renovation of any Property,
in an aggregate maximum amount not at any time exceeding $1,000,000;
6.5.4 Borrower may become liable to make Investments permitted by, and
in accordance with the terms of, this Article 6.
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6.6 Distributions.
Notwithstanding the terms of any agreement, articles or bylaws to the
contrary, neither FCOLP nor FCO shall, directly or indirectly, declare, order,
pay, make, give or publish notice or fix a date in respect of or set apart any
sum for any Distribution, except, if no Event of Default has occurred and is
then continuing, (i) to the extent the aggregate amount of such Distributions
over the preceding twelve months is less than 90% of Funds From Operations, or
(ii) as may otherwise be required in order to comply with Section 5.3.1.
6.7 Financial Covenants
6.7.1 Adjusted Consolidated Net Worth. The Loan Parties shall not permit at
any time the Adjusted Consolidated Net Worth of Royale and its Subsidiaries to
be less than (i) the Adjusted Consolidated Net Worth of Royale and its
Subsidiaries as of the Closing Date, plus (ii) 80% of any Equity Proceeds
received by Royale and its Subsidiaries (other than from Royale and its
Subsidiaries) after the Closing Date.
6.7.2 Minimum Property Interest Coverage. As of the last day of any
calendar quarter, Borrower shall not permit the ratio of Total Property Adjusted
Net Income to Property Interest Expense to be less than 1.4:1.0 (such amounts to
be determined with reference to the preceding 12-month period ending on such
last day, or, before the first Anniversary, with reference to the period from
the Closing Date to such last day).
6.7.3 Minimum Property Hedged Interest Coverage. As of the last day of any
calendar quarter, Borrower shall not permit the ratio of (i) Property Adjusted
Net Income for all Properties subject to Interest Rate Agreements, to (ii)
Property Hedged Interest Expense to be less than 1.15:1.0 (such amounts to be
determined with reference to the preceding 12-month period ending on such last
day, or, before the first Anniversary, with reference to the period from the
Closing Date to such last day).
6.7.4 Minimum Consolidated Interest Coverage. As of the last day of any
calendar quarter, the Loan Parties shall not permit the ratio of Total
Consolidated Adjusted Net Income to Consolidated Interest Expense to be less
than 1.4:1.0 (such amounts to be determined with reference to the preceding
12-month period ending on such last day, or, before the first Anniversary, with
reference to the period from the Closing Date to such last day).
6.7.5 Maximum Consolidated Unhedged Floating Rate Debt. The Loan Parties
shall not at any time permit Consolidated Total Indebtedness subject to a
variable interest rate that is not subject to Interest Rate Agreements to exceed
15% of Consolidated Total Assets.
6.7.6 Maximum Consolidated Total Indebtedness. The Loan Parties shall not
at any time permit Consolidated Total Indebtedness to exceed 70% of Consolidated
Total Assets.
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6.8 Fundamental Changes.
Except for the Formation, without the prior written approval of Lender,
which approval may be granted, withheld, conditioned or delayed in its sole
discretion, the Loan Parties shall not alter the legal structure of any Loan
Party, or enter into any transaction of merger or consolidation, or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution), or make
or permit any Transfer or acquire by purchase or otherwise, directly or
indirectly, all or substantially all the business, property or fixed assets of,
or stock or other evidence of beneficial ownership of, any Person, make any
Acquisition, acquire or enter into any overall property management agreement
with respect to any Property or Transfer any Property, except that, from time to
time after the Closing Date:
6.8.1 the Loan Parties and their Subsidiaries may lease space in
Improvements and remove, sell or otherwise dispose of items of Collateral
and other property as expressly permitted under the Loan Documents;
6.8.2 Royale and FCOLP may incorporate or otherwise organize, and,
subject to Section 6.4 in the case of FCOLP, capitalize, one or more
Subsidiaries, provided that Royale or FCOLP, as the case may be, shall
within thirty days after such organization deliver to Lender a notice
informing Lender of such organization, the name and state of organization
of such Subsidiary, and such other information as Lender shall reasonably
require; and
6.8.3 the Loan Parties and their respective Subsidiaries may make
Acquisitions and transfer Properties to the extent expressly permitted in
Section 6.4 or otherwise in this Agreement.
6.9 Zoning and Contract Changes and Compliance
Without the prior written approval of Lender, which approval shall not be
unreasonably withheld, conditioned or delayed, Borrower shall not and shall not
initiate or consent to any zoning reclassification of any Property or seek any
material variance under any existing zoning ordinance or use or permit the use
of any Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation. Borrower shall not initiate or consent to any change in
any laws, requirements of Governmental Authorities or obligations created by
private contracts and Material Leases which now or hereafter could reasonably be
likely to materially and adversely affect the ownership, occupancy, use or
operation of any Property without the prior written consent of Lender.
6.10 No Joint Assessment; Separate Lots
Without the prior written approval of Lender, which approval may be
granted, withheld, conditioned or delayed in its sole discretion, Borrower shall
not suffer, permit or initiate the joint assessment of any Property (i) with any
other real property constituting a separate tax lot (other than another
Property) and (ii) with any portion of any Property which may be deemed to
constitute personal property, or any other procedure whereby the lien of any
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Taxes which may be levied against any such personal property shall be assessed
or levied or charged to any Property as a single lien. Borrower represents and
warrants that each Property is comprised of one or more parcels, each of which,
to the knowledge of Borrower, constitutes a separate tax lot (except with
respect to any lot constituting another Property) and none of which constitutes
a portion of any other tax lot, except that the portion of the Property to be
released from the Lien of the Loan Documents pursuant to Section 2.8.2 may not
be a separate tax lot until local property tax authorities have accounted for
the subdivision of such land from the remaining Blue Xxxx Properties.
6.11 Transactions with Affiliated Persons.
Without the prior written approval of Lender, which approval may be
granted, withheld, conditioned or delayed in its sole discretion, the Loan
Parties shall not, and shall not permit any of their respective Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property, the rendering of any service or the making of any Investment or
Guaranty, or the amendment, restatement, supplement or other change of, or
waiver or failure to enforce any obligations under, any agreement) with any
holder of 5% or more of any class of equity Securities of Borrower or Royale or
any Affiliate or Subsidiary of Royale unless the terms thereof are not less
favorable to such Loan Party or Subsidiary, as the case may be, than those that
might be obtained in a comparable transaction at the time on an arms-length
basis from Persons who are not such a holder or Affiliate.
6.12 Sale or Discount of Receivables
The Loan Parties shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, sell with recourse or, except in the
ordinary course of business and consistent with past practices, discount or
otherwise sell for less than the face value thereof, any of its notes or
accounts receivable.
6.13 Ownership of Subsidiaries.
The Loan Parties shall not permit any of their respective Wholly Owned
Subsidiaries to cease to be Wholly Owned Subsidiaries. Borrower shall not cease
to be a Subsidiary of Royale and the financial statements of Borrower shall not
cease to be consolidated with the financial statements of Royale in accordance
with GAAP.
6.14 Conduct of Business
6.14.1 Conduct of Business. The Loan Parties shall not, and shall not
permit any of their respective Subsidiaries to, directly or indirectly, do the
following:
6.14.1.1 engage in any business other than (a) the acquisition,
ownership, renovation, Restoration, management, operation and disposition
of real properties and related assets that are office and retail properties
located in the United States of America, (b) any business that is
ancillary, in purpose and extent, to any business referred to in the
preceding clause; or
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6.14.1.2 terminate, modify, amend, waive any material provision of, or
enter into any Material Lease without Lender's prior written consent, which
shall not be unreasonably withheld, conditioned or delayed, or enter into
any other agreement, or take any other action, if such other agreement or
action would materially change the business conducted at any Property,
including any such Material Lease, agreement or other action, that would
convert or reposition any Property into any office building of a quality
less than as of the Closing Date; or
6.14.1.3 materially deviate from the annual business plan submitted to
Lender pursuant to Section 5.1.4 without first notifying Lender in writing
and providing to Lender an explanation of the reasons for such deviation,
in such detail as Lender shall reasonably require.
6.15 Properties
6.15.1 Acquisition of Properties. Borrower shall not, and shall not permit
any of their respective Subsidiaries to, make an Acquisition of a fee or
leasehold interest in any real property after the Closing Date.
6.15.2 Transfer of Properties. Borrower shall not, and shall not permit any
of their respective Subsidiaries to, Transfer any Property, except to the extent
(i) required in connection with the Formation; or (ii) otherwise expressly
permitted under the Loan Documents, and Borrower complies with the provisions
set forth in Section 2.8 with respect to such Property, including the payment of
any Release Price required thereby.
6.16 Management Agreements
Borrower shall not enter into or otherwise be or become obligated with
respect to, any management agreement with respect to any Property after the
Closing Date, except (i) management agreements that Lender has approved in
writing, and (ii) that may be terminated by Lender without compensation upon the
occurrence of an Event of Default hereunder.
6.17 Changes in Certain Obligations and Documents; Issuance of Equity
Securities
6.17.1 Credit Agreement. Without the prior written approval of Lender,
which approval may be granted, withheld, conditioned or delayed in its sole
discretion, the Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, enter into any agreement (other than this Agreement)
prohibiting or restricting the ability of any of the Loan Parties and any of
their respective Subsidiaries to amend or otherwise modify this Agreement or any
other Loan Document.
6.17.2 Royale Preferred Stock. Without the prior written approval of
Lender, which approval may not be unreasonably withheld, conditioned or delayed
if no optional redemption thereof is permitted until after the fifth
Anniversary, Royale shall not amend, restate, supplement or otherwise change its
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articles of incorporation if the effect of such amendment, restatement,
supplement or change is to provide for the issuance of any preferred stock of
Royale or the filing of any certificate of designation with respect thereto.
6.17.3 Equity Securities. The Loan Parties shall not, and shall not permit
any of their respective Subsidiaries to, issue any Capital Stock or other
Security which, by its terms (or by the terms of any Security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund or
otherwise, or redeemable in Cash at the option of the holder thereof, in whole
or in part, before the date that is 91 days after the Maturity Date.
6.17.4. Without the prior written approval of Lender, which approval may be
granted, withheld, conditioned or delayed in its sole discretion, except as
expressly permitted hereunder, the Loan Parties shall not, and shall not permit
any of their respective Subsidiaries to, amend or otherwise modify their
respective charters or partnership agreements in any material respect except as
expressly permitted under the Loan Documents.
6.18 Fiscal Year
Without the prior written approval of Lender, which approval may be
granted, withheld, conditioned or delayed in its sole discretion, neither Royale
nor any of its Subsidiaries shall change its fiscal year-end from December 31.
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ARTICLE 7
EVENTS OF DEFAULT; REMEDIES
7.1 Events of Default.
If any of the following conditions or events ("Events of Default") shall
occur:
7.1.1 Failure to Make Payments When Due. Failure to pay any installment of
principal of any Loan or any Release Price when due, whether at stated maturity,
by acceleration in accordance with the provisions of the applicable Loan
Document, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or failure to pay interest or any other amount due under this
Agreement within (i) two Business Days after the date of receipt of notice that
such payment has not been received as of the date due, until three such notices
have been delivered under this Agreement, or (ii) thereafter, five days after
the date due; or
7.1.2 Other Defaults Under Loan Documents. Any Loan Party or any of its
Subsidiaries shall default in the performance of or compliance with any term
contained in this Agreement or any other Loan Document other than any such term
in this Agreement or other Loan Document that is referred to in any other clause
of this Section and such default shall not have been remedied or waived within
30 days after the earlier of (i) such Loan Party's or such Subsidiary's
obtaining knowledge of such default or (ii) receipt by such Loan Party or such
Subsidiary of notice from Lender of such default; provided, however, that if
such default cannot be cured solely by the payment of money and the cure of such
default requires a period in excess of 30 days, and such default may reasonably
be expected to be cured on or before the 90th day after such Loan Party or such
Subsidiary obtains knowledge or notice thereof, and if and so long as such Loan
Party or such Subsidiary is diligently and continuously prosecuting such cure,
then such default shall not be an Event of Default unless such Loan Party or
such Subsidiary fails to cure such default before the 90th day after any Loan
Party or any of its Subsidiaries obtains knowledge or notice thereof, as the
case may be; or
7.1.3 Failure of Blue Xxxx Defeasance. The Mortgage encumbering the Blue
Xxxx Properties shall fail to become a first priority lien on or before the
sixtieth day following the Closing.
7.1.4 Failure of Formation. The Formation shall not occur within one day of
the Closing, or a court shall enter a judgment terminating or unwinding the
Formation.
7.1.5 Default in Other Agreements. (i) Failure of any Loan Party or any of
its Subsidiaries to pay when due any principal of or interest on any
Indebtedness the aggregate principal amount of which is equal to or greater than
$250,000, in each case beyond the end of any grace period provided therefor
(without extension); (ii) occurrence of any other event or condition (other than
an event or condition expressly described in another paragraph or provision of
this Section 7.1) which, with the giving of notice or the lapse of time or both,
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with respect to (a) any Indebtedness the aggregate principal amount of which is
equal to or greater than $250,000 or any Contingent Obligation(s) the aggregate
amount of which is equal to or greater than $250,000 or (b) any loan agreement,
mortgage, indenture or other agreement relating to such Indebtedness or
Contingent Obligation(s), would cause, or would permit the holder or holders of
that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such
holder or holders) to cause, that Indebtedness or Contingent Obligation(s) to
become or be declared due and payable (upon the giving or receiving of notice,
lapse of time, both, or otherwise) prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be, in each case beyond
the end of any cure period therefor (without any extension thereof) or (iii) any
principal amount of Indebtedness of any Loan Party or any of its Subsidiaries
becoming or being declared due and payable prior to its stated maturity; or
7.1.6 Breach of Warranty. Any representation, warranty, certification or
other statement of any Loan Party or any of its Subsidiaries made in this
Agreement or in any other Loan Document or in any statement or certificate at
any time given in writing pursuant hereto or thereto or in connection herewith
or therewith shall be false in any material respect on the date as of which made
and such default shall not have been remedied or waived within 30 days after the
earlier of (i) such Loan Party's or such Subsidiary's obtaining knowledge of
such default and (ii) receipt by such Loan Party or such Subsidiary of notice
from Lender of such default; provided, however, that if such default cannot be
cured solely by the payment of money and the cure of such default requires a
period in excess of 30 days, and if such Loan Party or such Subsidiary, as
applicable, is diligently and continuously prosecuting such cure, then such
default shall not be an Event of Default unless such Loan Party or such
Subsidiary fails to cure such default within 90 days, after such Loan Party or
such Subsidiary obtain knowledge or notice thereof, as the case may be; or
7.1.7 Invalidity of Loan Document; Failure of Security; Repudiation of
Obligations. At any time after the execution and delivery thereof, (i) any Loan
Document (other than a Security Document) or any material provision thereof
shall cease to be in full force and effect (other than in accordance with its
terms) or shall be declared null and void; (ii) any Security Document or any
material provision thereof shall cease to be in full force and effect (other
than by reason of a release of Collateral thereunder in accordance with the
terms hereof or thereof or any other termination of such Security Document in
accordance with the terms hereof or thereof) or shall be declared null and void,
or Lender shall not have or shall cease to have a valid and perfected first
priority Lien or security interest, subject only to the Permitted Encumbrances,
in any material Collateral purported to be covered, in each case for any reason
other than the failure of Lender to take any action within its control; or (iii)
any Loan Party shall contest in writing the validity or enforceability of any
Loan Document in writing or deny in writing that it has any further liability,
including with respect to future advances by the Lenders, under any Loan
Document to which it is a party; or
7.1.8 Prohibited Transfers. Any Loan Party attempts to assign its rights
under this Agreement or any other Loan Document or any interest herein or
therein; or
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7.1.9 Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court
having jurisdiction shall enter a decree or order for relief in respect of any
Loan Party or any of its Subsidiaries in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, which decree or order is not stayed; or any
other similar relief shall be granted under any applicable federal or state law;
or (ii) an involuntary case shall be commenced against any Loan Party or any of
its Subsidiaries under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or
order of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over any Loan Party or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of any Loan Party or any of its Subsidiaries for all or a substantial
part of its property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of any Loan
Party or any of its Subsidiaries, and any such event described in this clause
(ii) shall continue for 60 days unless dismissed, bonded or discharged; or
7.1.10 Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Any Loan
Party or any of its Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; or any Loan Party or any of its Subsidiaries shall make any assignment
for the benefit of creditors; or (ii) any Loan Party or any of its Subsidiaries
shall be unable, or shall fail generally, or shall admit in writing its
inability, to pay its debts as such debts become due; or the Board of Directors
of any Loan Party or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
7.1.11 Judgments and Attachments. Any money judgment, writ or warrant of
attachment or similar process involving individually or in the aggregate at any
time an amount in excess of $250,000 (in either case not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Borrower or any of its
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 60 days (or in any event later
than five days prior to the date of any proposed sale thereunder); or
7.1.12 Dissolution. Any order, judgment or decree shall be entered against
any Loan Party or any of its Subsidiaries decreeing the dissolution or split up
of such Loan Party or that Subsidiary and such order shall remain undischarged
or unstayed for a period in excess of 30 days; or
7.1.13 Material Adverse Effect. Any event or change (including, without
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limitation, any event or condition expressly described in another paragraph or
provision of this Section) shall occur that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect;
THEN (i) upon the occurrence of any Event of Default described in Sections 7.1.9
or 7.1.10, the unpaid principal amount of and accrued interest on the Loan and
all other Obligations shall automatically become immediately due and payable,
without notice, presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by Borrower and the obligations of
Lender hereunder shall thereupon terminate, and (ii) during the continuance of
any other Event of Default, Lender may, in its sole discretion, by written
notice to Borrower, declare all or any portion of the amounts described in
clauses (i) above to be, and the same shall forthwith become, immediately due
and payable and the obligations of Lender hereunder shall thereupon terminate.
The occurrence of any condition or event may constitute an Event of Default
(or a Potential Event of Default) under more than one provision of this Section
7.1.
7.2 Certain Remedies
7.2.1 During the continuance of an Event of Default, all or any one or more
of the rights, powers, privileges and other remedies available to Lender or the
Lenders against Borrower under this Agreement, the Note, the Mortgages, the
Security Documents or any of the other Loan Documents, or at law or in equity,
may be exercised by Lender, acting in its own sole discretion at any time and
from time to time, whether or not all or any portion of the Obligations 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 any Property or all or
any portion of the Mortgaged Property. 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 in
its sole discretion may determine, 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.
7.2.2 In the event of the foreclosure or other action by Lender to enforce
its remedies in connection with one or more of the Properties or any other
Collateral or all or any portion of the Properties, whether such foreclosure (or
other remedy) yields net proceeds in an amount less than, equal to or more than
the Property Amount with respect to such Property, Lender shall apply all net
proceeds received to repay the Obligations, the Obligations shall be reduced to
the extent of such net proceeds and the remaining portion of the Obligations
shall remain outstanding and secured by the Mortgages and the other Loan
Documents, it being understood and agreed by Borrower that Borrower is liable
for the repayment of the Obligations and that any "excess" foreclosure proceeds
are part of the cross-collateralized and cross-defaulted security granted to
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Lender on behalf of the Lenders pursuant to the Mortgages; provided, however,
that, if Lender so elects, at its sole discretion, the Loan and the Note shall
be deemed to have been accelerated only to the extent of the net proceeds
actually received by the Lenders with respect to any individual Property (or, in
the event that Lender on behalf of the Lenders is the purchaser of such Property
by Credit Bid at a foreclosure sale, the Loan and the Note shall be deemed to
have been accelerated only at such time as Lender subsequently disposes of such
Property and then only to the extent of the amount of such Credit Bid) and
applied in reduction of the Obligations in accordance with the provisions of
this Agreement and the Note, after payment by Borrower of all transaction costs
and expenses and costs of enforcement.
7.2.3 It is intended that the Liens of the Mortgages shall each be
construed and treated as a separate, distinct Lien for the purpose of securing
the entire Obligations secured thereby and each Loan Party acknowledges and
agrees that each Property is mortgaged and transferred to Lender on behalf of
the Lenders by a separate and distinct mortgage and security agreement, so that
if it should at any time appear or be held that any Mortgage fails to mortgage,
and transfer to Lender on behalf of the Lenders a Lien upon and the title to any
Property, or any part thereof, as against creditors of Borrower other than the
Lenders or otherwise, such failure shall not operate to affect in any way the
transfer of the other Properties or Mortgaged Property or any part thereof to
Lender on behalf of the Lenders; but nothing contained herein or in the
Mortgages shall be construed as requiring Lender on behalf of the Lenders to
resort to any Property for the satisfaction of the Obligations secured thereby
in preference or priority to any other Mortgaged Property thereby conveyed, but
Lender, acting in its sole discretion may seek satisfaction out of all of the
Mortgaged Property or any part thereof.
7.2.4 In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default Lender is hereby authorized by
Borrower at any time or from time to time, without notice to Borrower or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by Lender to or for the credit or the account of Borrower against and on
account of the obligations and liabilities of Borrower to Lender under this
Agreement and the Note, including all claims of any nature or description
arising out of or connected with this Agreement or any other Loan Document,
irrespective of whether or not (i) Lender shall have made any demand hereunder
or (ii) the principal of or the interest on the Loan or any other amounts due
hereunder shall have become due and payable pursuant to Section 7.1 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured.
7.2.5 During the continuance of an Event of Default, Lender, in its sole
discretion, shall have the right, to the extent permitted by law, to impound and
take possession of books, records, notes, and other documents evidencing
Borrower's deposit accounts, accounts receivable and other claims for payment of
money (including Rents) arising in connection with the Properties, to give
notice to the obligors thereunder of Lender's interest therein, and to make
direct collections on such deposit accounts, accounts receivable and claims.
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7.2.6 During the occurrence of an Event of Default and upon the occurrence
and during the continuance of a default in the payment of any principal or
interest of any Indebtedness owed or alleged to be owed by the Loan Parties or
any of their respective Subsidiaries, and following the initiation of any
proceeding or the taking of any other action to collect the payment thereof by
the Person entitled to such payment, Lender may, in its sole discretion, advance
either to such Person or to Borrower, for payment to such Person, all or any
portion of the amount of such payment, whether or not the existence of such
obligation or amount thereof shall be disputed by Borrower or such Subsidiary.
Each such advance, to the extent not paid out of from funds of Royale, Borrower
or any of their respective Subsidiaries, shall be deemed a Loan hereunder and
shall be subject to the provisions of this Agreement.
7.2.7 The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
or the Lenders may have against any Loan Party pursuant to this Agreement or the
other Loan Documents executed by or with respect to such Loan Party, or existing
at law or in equity or otherwise. The rights, powers and remedies of Lender may
be pursued singly, concurrently or otherwise, at such time and in such order as
Lender, acting in its own sole discretion, may determine. No delay or omission
to exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of any Event of Default or
Potential Event of Default with respect to any Loan Party shall not be construed
to be a waiver of any subsequent Event of Default or Potential Event of Default
by such Loan Party or to impair any remedy, right or power consequent thereon.
7.3 Limitation on Recourse Against Non-Recourse Parties.
The Non-Recourse Parties shall not be personally liable for the payment of
any sums now or hereafter owing Lender under the terms of the Loan Documents,
nor subject to mandatory or injunctive relief for enforcement of their
Obligations hereunder. If any Event of Default should occur under the Loan
Documents, Lender agrees that its rights, as to the Non-Recourse Parties only,
shall be limited to proceeding against any Collateral pledged by the
Non-Recourse Parties as security for the Obligations pursuant to the Security
Documents, and that it shall have no right otherwise to proceed directly against
the Non-Recourse Parties for the satisfaction of any monetary obligation of or
enforcement of any monetary claim hereunder, or for other equitable relief.
Nothing contained in this Section shall in any manner constitute or be deemed a
release of the Obligations or otherwise affect or impair the enforceability
against the other Loan Parties or the Collateral of the Loan Documents. Nothing
in this Section shall impair, in any manner, any right, remedy or recourse
Lender may have against the Non-Recourse Parties for fraud or any other claim
that is not to enforce a provision of the Loan Documents against the
Non-Recourse Parties.
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ARTICLE 8
MISCELLANEOUS
8.1 Assignments and Participations in Loan.
8.1.1 General. Lender shall have the right at any time to (i) sell, assign,
transfer or negotiate to any Eligible Assignee, or (ii) sell to any Eligible
Assignee participations in, all or any part of the Loan and the Loan Documents
or participations therein or any other interest herein or in any other
Obligations owed to it. In such event, Borrower shall be entitled to rely on
notices, waivers, consents and other communications from Lender or such other
single Lender or Participant as Lender may designate from time to time by notice
to Borrower. Wherever in this Agreement it is provided that Lender may take an
action or appear in or defend a proceeding, Lenders shall do so by and through
Lender or another single duly appointed agent, and then only under Lender's or
such agent's authority or with the consent of not less than 51% in interest of
the Lenders.
8.1.2 Participations. Borrower and each Lender hereby acknowledge and agree
that, to the extent specified by Lender in writing to the Loan Parties, (i) any
participation will give rise to a direct obligation of Borrower to the
participant and (ii) the participant shall thereafter be considered to be a
"Lender".
8.1.3 Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this Section,
Lender may assign and pledge all or any portion of its Loan and the other
Obligations owed to such Lender to any Federal Reserve Bank as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any operating circular issued by such Federal Reserve Bank.
No Lender shall, as between Borrower and such Lender, be relieved of any of its
obligations hereunder as a result of any such assignment and pledge.
8.1.4 Information. Lender agrees to exercise commercially reasonable
efforts to keep any non-public information delivered or made available to it
pursuant to the Loan Documents, which any Loan Party or its authorized
representative has identified as confidential information, confidential from any
Person other than Persons employed by or retained by Lender who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loan and other extensions of credit or Obligations hereunder;
provided that nothing herein shall prevent Lender from disclosing such
information to any Eligible Assignee that has agreed to be bound by the
provisions of this Section 8.1.4 in connection with the contemplated assignment
or transfer of any interest or participation in the Loan or other Obligations
hereunder or as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process or in connection with the
exercise of any remedy under the Loan Documents.
8.2 Expenses.
Whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to pay promptly (i) all the costs of furnishing all opinions of
counsel for Borrower and the other Loan Parties (including any opinions
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reasonably requested by Lender) as to any legal matters arising hereunder and of
each Loan Party's performance of and compliance with all agreements and
conditions on its part to be performed or complied with under this Agreement and
the other Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements and with respect to the
Security Documents and the Liens created pursuant thereto; (ii) all the actual
costs and expenses of creating, perfecting and maintaining Liens in favor of
Lender for the benefit of the Lenders pursuant to any Loan Document, including
filing and recording fees and expenses, mortgage recording taxes, intangible
taxes and transfer and stamp taxes, title searches, title insurance premiums,
UCC search and filing charges and expenses (including charges and expenses for
UCC searches evidencing the proper filing, recording and indexing of UCC
financing statements and listing all other effective financing statements that
name such Loan Party as debtor, and copies of all such other financing
statements); (iii) all reasonable out-of-pocket costs and expenses incurred by
Lender (including the reasonable fees, expenses and disbursements of any
auditors, accountants, architects, engineers or appraisers and any environmental
or other consultants, advisors and agents employed or retained by Lender or its
counsel) in connection with performing due diligence, including obtaining and
reviewing any Appraisals, any environmental audits or reports, market surveys,
title reports, surveys and similar information; (iv) all reasonable
out-of-pocket fees, expenses and disbursements of counsel for Lender and its
Affiliates (including allocated costs of internal counsel) in connection with
the negotiation, preparation, execution, participation, marketing and
syndication of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and any other documents or matters requested by any Loan
Party; (v) all reasonable out-of-pocket costs and expenses incurred by Lender in
connection with (a) the negotiation, preparation and execution of the Loan
Documents, the syndication of the Loan and due diligence, (b) any consents,
amendments or waivers of or other modifications to any of the Loan Documents,
(c) any Acquisition, Transfer or release of any Property or other Collateral or
any proposal with respect to any of the foregoing, (d) the custody or
preservation of any of the Collateral and (e) the preparation, delivery or
review of other documents or matters requested by any Loan Party, including,
without limitation, all instruments, documents, boundary surveys, footing or
foundation surveys, certificates, plans and specifications, Appraisals, title
and other insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished pursuant to the
terms of the Loan Documents; and (vi) after the occurrence of an Event of
Default, all costs and expenses, including reasonable attorneys' fees (including
allocated costs of internal counsel) and costs of settlement, incurred by Lender
in enforcing any Obligations of or in collecting any payments due from Borrower
hereunder or under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings. Except as expressly
provided to the contrary in this Agreement or any other Loan Document, costs or
expenses that are payable by Borrower after the Closing Date shall be payable by
Borrower within five Business Days after Borrower's receipt of written demand
from Lender to pay same, accompanied by documentation in reasonable detail
sufficient to verify the nature and amount.
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8.3 Indemnity.
8.3.1 Indemnity. In addition to the payment of expenses as required by
Section 8.2, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to defend, indemnify and hold harmless Lender and
its Affiliates and Persons deemed to be "controlling persons" thereof within the
meaning of the Securities Act or the Exchange Act and the respective directors,
officers, employees, agents, attorneys and representatives of the foregoing
(collectively, "Indemnified Persons" and individually, an "Indemnified Person"),
to the full extent lawful, from and against any and all losses, claims, damages,
liabilities, costs and expenses or other obligations of any kind or nature
whatsoever incurred by each such Indemnified Person (including fees, charges and
disbursements of counsel and the allocated costs and expenses of internal
counsel for such Indemnified Person) which are related to, arise out of or
result from (a) any untrue statements or alleged untrue statements or omissions
or alleged omissions to state therein a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case made or, to the extent contemplated by the Loan
Documents, to be made, by or on behalf of any Loan Party or any of its
Affiliates, (x) in the representations and warranties of the Loan Parties
contained in the Loan Documents, (b) information provided by or on behalf of any
Loan Party or any of their Affiliates for use in connection with any
syndication, assignment or participation of any portion of Loan, the Note, the
other Loan Documents or the Obligations, or in connection with any Loan Document
or any transactions contemplated hereby or thereby, (c) the transactions
contemplated by the Loan Documents (including Lender's agreements to make the
Loan or the use or intended use of the proceeds thereof) or any enforcement of
any of the Loan Documents (including any sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Affiliate
Guaranty), (d) any actions taken or omitted to be taken by an Indemnified Person
with the consent of Borrower or in conformity with the instructions of Borrower,
or (e) any other transactions contemplated by the Loan Documents, and Borrower
will reimburse each Indemnified Person for all reasonable costs and expenses,
including fees and disbursements of both outside and internal counsel for such
Indemnified Person, as they are incurred, in connection with investigating,
preparing for, or defending any formal or informal claim, action, suit,
investigation, inquiry or other proceeding, whether or not in connection with
pending or threatening litigation, caused by or arising out of or in connection
with the foregoing, whether or not such Indemnified Person is named as a party
thereto and whether or not any liability results therefrom. Borrower shall not,
however, be responsible for any losses, claims, damages, liabilities, costs or
expenses pursuant to clauses (c), (d) or (e) of the preceding sentence which
have resulted from the bad faith or recklessness of such Indemnified Person as
determined by a final judgment of a court of competent jurisdiction. Neither
Lender nor any other Indemnified Person shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to any of the Loan Parties and
their respective Affiliates or any director, officer, employee, agent or
representative of any of the foregoing, or any other person, for or in
connection with the foregoing, or otherwise arising out of or in any way
relating to the matters contemplated by the Loan Documents or any commitment to
lend except for such liability for losses, claims, damages, liabilities, costs
or expenses of any Indemnified Person pursuant to clauses (c), (d) or (e) of the
preceding sentence to the extent they are determined to have resulted from the
bad faith, recklessness or negligence of such Indemnified Person as determined
by a final judgment of a court of competent jurisdiction and in no event shall
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Lender or any other Indemnified Person be responsible for or liable to any of
the Loan Parties or any of their respective Affiliates or any other Person for
consequential, punitive or exemplary damages. Borrower further agrees that the
Loan Parties shall not, nor shall they permit their respective Subsidiaries to,
without the prior written consent of Lender, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit,
investigation, inquiry or other proceeding in respect of which indemnification
is actually sought hereunder unless such settlement, compromise or consent
includes an unconditional release of Lender and each other Indemnified Person
hereunder from all liability arising out of such claim, action, suit,
investigation, inquiry or other proceeding.
8.3.2 Procedure. If any action, suit, investigation, inquiry or other
proceeding is commenced, as to which an Indemnified Person proposes to demand
indemnification hereunder, such Indemnified Person shall notify Borrower with
reasonable promptness; provided, however, that any failure by such Indemnified
Person to notify Borrower shall not relieve Borrower or any of its Affiliates
from its obligations hereunder (except to the extent that Borrower or such
Affiliate is prejudiced by such failure to so promptly notify). Borrower shall
be entitled to assume the defense of any such action, suit, investigation,
inquiry or other proceeding, including the employment of counsel reasonably
satisfactory to the Indemnified Person and the payment of all reasonable fees
and expenses incurred in connection therewith. The Indemnified Person shall have
the right to employ separate counsel in any such action, suit, investigation,
inquiry or other proceeding, or to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Person unless (i) Borrower has agreed to pay such fees and expenses, (ii)
Borrower shall have failed promptly upon written demand therefor to assume the
defense of such action, suit, investigation, inquiry or other proceeding, and
employ counsel reasonably satisfactory to the Indemnified Person in connection
therewith or (iii) such Indemnified Person shall have been advised by counsel
that there exists actual or potential conflicting interests between Borrower and
such Indemnified Person, including situations in which one or more legal
defenses may be available to such Indemnified Person that are different from or
additional to those available to Borrower, in which case, if such Indemnified
Person notifies Borrower in writing that it elects to employ separate counsel at
the expense of Borrower, Borrower shall not have the right to assume the defense
of such action or proceeding on behalf of such Indemnified Person; provided,
however, that Borrower shall not, in connection with any one such action, suit,
investigation, inquiry or other proceeding or separate but substantially similar
or related actions, suits, investigations, inquiries or other proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
at any time for all such Indemnified Persons (in addition to local counsel),
which firm shall be designated in writing by Lender.
8.3.3 Contribution. In order to provide for just and equitable contribution
with respect to matters subject to this Section, if a claim for indemnification
is made pursuant to these provisions but is found in a final judgment by a court
of competent jurisdiction (not subject to further appeal) that such
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indemnification is not available for any reason, even though the express
provisions hereof provide for indemnification in such case, or is insufficient
to hold an Indemnified Party harmless, then the Loan Parties, on the one hand,
and Lender, on the other hand, shall contribute to such loss, claim, damage,
liability, cost or expense for which such indemnification or reimbursement is
held unavailable or is insufficient in such proportion as is appropriate to
reflect the relative benefits to the Loan Parties and their respective
Affiliates, on the one hand, and Lender, on the other hand, in connection with
the transactions described in the Loan Documents and Formation Documents, as
well as any other equitable considerations. The parties agree that for the
purpose of this Section, the relative benefits to the Loan Parties and their
respective Affiliates, on the one hand, and Lender, on the other hand, shall be
deemed to be in the same proportion as the proceeds received or to be received
by the Loan Parties from the Loan Documents bears to the fees paid or to be paid
to Lender under the Loan Documents. Notwithstanding the foregoing, Lender shall
not be required to contribute under this Section any amount in excess of the
amount of fees actually received by Lender in respect of the Loan Documents.
Borrower and Lender agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation or
by any other method which does not take into account the equitable
considerations referred to in this Section.
8.3.4 No Limitation. The foregoing rights to indemnity and contribution
shall be in addition to any rights that any Indemnified Person and Loan Parties
may have at common law or otherwise and shall remain in full force and effect
following the completion or any termination of the transactions contemplated by
the Loan Documents. Lender shall not be responsible or liable to any person for
consequential damages which may be alleged as a result of the Loan Documents or
any transaction contemplated thereby.
8.3.5 Independence of Indemnity; No Enlargement. Borrower acknowledges and
agrees that the provisions of this Section are separate from and in addition to
the provisions contained in the Environmental Indemnity.
8.4 No Joint Venture or Partnership
Lender and the Loan Parties acknowledge and agree that the relationship
created hereunder or under the other Loan Documents is that of creditor/debtor.
Each of the Loan Parties acknowledges and agrees that (a) they are knowledgeable
and sophisticated business practitioners with particular expertise and broad
experience in the area of real estate acquisition, ownership, operation, finance
and management; (b) Lender does not owe, and expressly disclaims, any fiduciary
or special obligation to the Loan Parties or any of their partners, agents, or
representatives; and (c) nothing contained in this Agreement or any other Loan
Document shall affect the relationship between Lender and Borrower as that of
creditor/debtor hereunder and under the other Loan Documents. Nothing herein or
therein is intended to create a joint venture, partnership, tenancy-in-common,
or joint tenancy relationship between any Loan Party or Subsidiary thereof and
Lender nor to grant Lender any interest in the Mortgaged Property other than
that of mortgagee or lender.
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8.5 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by any Loan
Party therefrom, shall in any event be effective without the written concurrence
of Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section shall be
binding upon each Lender at the time outstanding, each future Lender and, if
signed by Borrower, on Borrower.
8.6 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
8.7 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served or sent by telefacsimile or courier service and shall
be deemed to have been given when delivered in person or by courier service or
upon receipt of the telefacsimile, as the case may be. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature pages hereof or (i) as to Borrower and Lender, such other
address as shall be designated by such Person in a written notice delivered to
the other parties hereto and (ii) as to each other party, such other address as
shall be designated by such party in a written notice delivered to Lender.
8.8 Survival of Representations, Warranties and Agreements.
8.8.1 Except as provided below, all representations, warranties and
agreements made herein shall survive the execution and delivery of this
Agreement and the making of the Loan and shall terminate upon indefeasible
payment in full of the Obligations, notwithstanding anything in this Agreement
or implied by law to the contrary.
8.8.2 Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrower set forth in Sections 4.11 and 8.3 shall
survive the payment in full of the other Obligations and the termination of this
Agreement.
8.9 Obligations Several; Independent Nature of the Lenders' Rights.
The obligations of the Lenders hereunder are several and no Lender shall be
responsible for the obligations of any other Lender hereunder. Nothing contained
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herein or in any other Loan Document, and no action taken by the Lenders
pursuant hereto or thereto, shall be deemed to constitute the Lenders as a
partnership, an association, a Joint Venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
8.10 Remedies of Borrower
In the event that a claim or adjudication is made that Lender or any Lender
or their respective agents has acted unreasonably or unreasonably delayed acting
in any case where by law or under this Agreement, the Note, the Mortgages or the
other Loan Documents, Lender, such Lender or such agent, as the case may be, has
an obligation to act reasonably or promptly, Borrower agrees that none of Lender
or such agents, shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgement. The parties hereto agree that any action or proceeding to
determine whether Lender or any Lender has acted reasonably shall be determined
by an action seeking declaratory judgment.
8.11 Maximum Amount.
8.11.1 It is the intention of Borrower and the Lenders to conform strictly
to the usury and similar laws relating to interest from time to time in force,
and all agreements between the Loan Parties and their respective Subsidiaries
and the Lenders, whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or otherwise, shall the
amount paid or agreed to be paid in the aggregate to the Lenders as interest
(whether or not designated as interest, and including any amount otherwise
designated but deemed to constitute interest by a court of competent
jurisdiction) hereunder or under the other Loan Documents or in any other
agreement given to secure the indebtedness of Borrower to the Lenders, or in any
other document evidencing, securing or pertaining to the indebtedness evidenced
hereby, exceed the maximum amount permissible under applicable usury or such
other laws (the "Maximum Amount"). If under any circumstances whatsoever
fulfillment of any provision hereof, or any of the other Loan Documents, at the
time performance of such provision shall be due, shall involve exceeding the
Maximum Amount, then, ipso facto, the obligation to be fulfilled shall be
reduced to the Maximum Amount. For the purposes of calculating the actual amount
of interest paid and/or payable hereunder in respect of laws pertaining to usury
or such other laws, all sums paid or agreed to be paid to the holder hereof for
the use, forbearance or detention of the indebtedness of Borrower evidenced
hereby, outstanding from time to time shall, to the extent permitted by
Applicable Law, be amortized, pro-rated, allocated and spread from the date of
disbursement of the proceeds of the Note until payment in full of all of such
indebtedness, so that the actual rate of interest on account of such
indebtedness is uniform through the term hereof. The terms and provisions of
this Section shall control and supersede every other provision of all agreements
between Borrower or any endorser of the Note and the Lenders.
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8.11.2 If under any circumstances any Lender shall ever receive an amount
which would exceed the Maximum Amount, such amount shall be deemed a payment in
reduction of the principal amount of the Loan and shall be treated as a
voluntary prepayment and shall be so applied in accordance with this Agreement
hereof or if such excessive interest exceeds the unpaid balance of the Loan and
any other indebtedness of Borrower in favor of such Lender, the excess shall be
deemed to have been a payment made by mistake and shall be refunded to Borrower.
8.12 Marshalling; Payments Set Aside.
Lender shall not be under any obligation to marshal any assets in favor of
Borrower, any other Loan Party or any other party or against or in payment of
any or all of the Obligations. To the extent that Borrower or any other Loan
Party makes a payment or payments to the Lenders or Lender (or to Lender for the
benefit of the Lenders), or Lender or the Lenders enforce any security interests
or Lender exercises its rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause of action, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.
8.13 Agreement to Contribute.
8.13.1 Right to Contribution. Except as otherwise expressly provided
herein, the Loan Parties are jointly and severally liable for the Obligations.
However, the benefits of this Agreement and the Loan will not necessarily
benefit each Loan Party to the same degree. In order to provide for just and
equitable contribution among the Loan Parties, if any payment is made by a Loan
Party (the "Funding Loan Party") in discharging more than its Proportionate
Share (hereinafter defined) of the Obligations, the Funding Loan Party shall be
entitled to a contribution from each other Loan Party (each a "Contributing Loan
Party") for all payments, damages and expenses incurred by the Funding Loan
Party in discharging the Obligations, as set forth in this Section 8.13.
8.13.2 Benefit Amount. For purposes of this Agreement, the "Benefit Amount"
of a Loan Party as of any date of determination shall be the net value of the
benefits to such Loan Party from the Loan. The "Proportionate Share" of a
Borrower shall be the ratio of (x) the Benefit Amount of such Borrower to (y)
the total amount of all Benefit Amounts of all Borrowers. The "Proportionate
Share" of FCOLP and FCO shall be the ratio of (x) the Benefit Amount of FCOLP or
FCO, as the case may be, to (y) the total amount of all Benefit Amounts of FCOLP
and FCO.
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8.13.3 Term Loan Contributions. Each Contributing Loan Party shall be
liable to a Funding Loan Party in an aggregate amount equal to its Proportionate
Share multiplied by the amount of Obligations paid by such Funding Loan Party.
The liability of the Non-Recourse Parties to a Funding Party under this Section
shall be limited as set forth in Section 7.3.
8.13.4 Subordination. The rights and claims of any Funding Loan Party
against any Contributing Loan Party under this Agreement shall be subject and
subordinate to the prior payment in cash in full of the Obligations, and no Loan
Party shall make or receive any contribution payment from any other Loan party
until such payment in cash in full of the Obligations.
8.13.5 Preservation of Rights. This Agreement shall not limit any right
which any Borrower may have against any other Person which is not a party
hereto.
8.13.6 Subsidiary Payment. The amount of contribution payable under this
Agreement by any Loan Party shall be reduced by the amount of any contribution
paid hereunder by a Subsidiary of such Loan Party.
8.13.7 Asset of Funding Loan Party. The parties hereto acknowledge that the
right to contribution hereunder shall constitute an asset of the party to which
such contribution is owing.
8.13.8 Date of Determination. Any amount payable as contribution under this
Contribution Agreement shall be determined as of the date on which the related
payment is made by a Funding Loan Party.
8.14 Suretyship Waivers.
8.14.1 Each Loan Party agrees that its obligations hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected
by any circumstance which constitutes a legal or equitable discharge of a
guarantor or surety other than payment and performance in full of the
Obligations. In furtherance of the foregoing and without limiting the generality
thereof, each Loan Party agrees as follows: (i) Lender may from time to time,
without notice or demand and without affecting the validity or enforceability of
this Agreement or giving rise to any limitation, impairment or discharge of such
Loan Party's liability hereunder, (A) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Obligations, (B)
settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Obligations or any
agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations, (C) request and accept guaranties of the
Obligations and take and hold other security for the payment of the Obligations,
(D) release, exchange, compromise, subordinate or modify, with or without
consideration, any other security for payment of the Obligations, any guaranties
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of the Obligations, or any other obligation of any Person with respect to the
Obligations, (E) enforce and apply any other security now or hereafter held by
or for the benefit of Lender in respect of the Obligations and direct the order
or manner of sale thereof, or exercise any other right or remedy that Lender may
have against any such security, as Lenders in their discretion may determine
consistent with this Agreement and any other Loan Document including foreclosure
on any such security pursuant to one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable, and (F)
exercise any other rights available to Lender under the Loan Documents, at law
or in equity; and (ii) this Agreement and the obligations of each Loan Party
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Obligations), including without limitation the occurrence of any of the
following, whether or not any Loan Party shall have had notice or knowledge of
any of them: (A) any failure to assert or enforce or agreement not to assert or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy with respect to the Obligations or any agreement relating
thereto, or with respect to any guaranty of or other security for the payment of
the Obligations, (B) any waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including without limitation
provisions relating to events of default) of the Credit Agreement, any of the
other Loan Documents or any agreement or instrument executed pursuant thereto,
or of any guaranty or other security for the Obligations, (C) the Obligations,
or any agreement relating thereto, at any time being found to be illegal,
invalid or unenforceable in any respect, (D) the application of payments
received from any source to the payment of indebtedness other than the
Obligations, even though Lender might have elected to apply such payment to any
part or all of the Obligations, (E) any failure to perfect or continue
perfection of a security interest in any other collateral which secures any of
the Obligations, (F) any defenses, set-offs or counterclaims which any other
Loan Party may allege or assert against any Lender in respect of the
Obligations, including but not limited to failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury, and (G) any other act or thing or omission, or delay to
do any other act or thing, which may or might in any manner or to any extent
vary the risk of any Loan Party as an obligor in respect of the Obligations.
8.14.2 Each Loan Party waives, for the benefit of Lender: (i) any right to
require Lender, as a condition of payment or performance by such Loan Party, to
(A) proceed against any other Loan Party, any guarantor of the Obligations or
any other Person, (B) proceed against or exhaust any other security held from
any other Loan Party, any guarantor of the Obligations or any other Person, (C)
proceed against or have resort to any balance of any deposit account or credit
on the books of Lender in favor of any Loan Party or any other Person, or (D)
pursue any other remedy in the power of Lender whatsoever; (ii) any defense
arising by reason of the incapacity, lack of authority or any disability or
other defense of any Loan Party including, without limitation, any defense based
on or arising out of the lack of validity or the unenforceability of the
Obligations or any agreement or instrument relating thereto or by reason of the
cessation of the liability of any Loan Party from any cause other than payment
in full of the Obligations; (iii) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (iv)
any defense based upon Lender's errors or omissions in the administration of the
Obligations, except behavior which amounts to bad faith; (v) (A) any principles
or provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Agreement and any legal or equitable discharge of such
Loan Party's obligations hereunder, (B) the benefit of any statute of
limitations affecting such Loan Party's liability hereunder or the enforcement
80
hereof, (C) any rights to set-offs, recoupments and counterclaims, and (D)
promptness, diligence and any requirement that Lender protect, secure, perfect
or insure any other security interest or lien or any property subject thereto;
(vi) notices, demands, presentments, protests, notices of protest, notices of
dishonor and notices of any action or inaction, notices of default under the
Credit Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Obligations or any agreement related
thereto, notices of any extension of credit to Loan Parties and notices of any
of the matters referred to in the preceding paragraph and any right to consent
to any thereof; and (vii) to the fullest extent permitted by law, any defenses
or benefits that may be derived from or afforded by law which limit the
liability of or exonerate guarantors or sureties, or which may conflict with the
terms of this Agreement.
8.14.3 Until the Obligations shall have been paid in full, each Loan Party
shall withhold exercise of (i) any claim, right or remedy, direct or indirect,
that such Loan Party now has or may hereafter have against any other Loan Party
or any of its assets in connection with this Agreement or the performance by any
other Loan Party of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (A) any right of subrogation,
reimbursement or indemnification that any Loan Party now has or may hereafter
have against any other Loan Party, (B) any right to enforce, or to participate
in, any claim, right or remedy that Lender now has or may hereafter have against
any Loan Party, and (C) any benefit of, and any right to participate in, any
other collateral or security now or hereafter held by Lender, and (ii) any right
of contribution any Loan Party may have against any guarantor of the
Obligations. Each Loan Party further agrees that, to the extent the waiver of
its rights of subrogation, reimbursement, indemnification and contribution as
set forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement or
indemnification such Loan Party may have against any other Loan Party or against
any other collateral or security, and any rights of contribution such Loan Party
may have against any such guarantor, shall be junior and subordinate to any
rights Lender may have against any Loan Party, to all right, title and interest
Lender may have in any such other collateral or security, and to any right
Lender may have against any such guarantor.
8.15 Severability.
In case any provision in or obligation under this Agreement or any Note or
any other Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction or under any set of circumstances, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction or under any other set of circumstances,
shall not in any way be affected or impaired thereby.
81
8.16 Headings.
Section and Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
8.17 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
UNDER THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT
AS SET FORTH BELOW. THE PARTIES ACKNOWLEDGE THAT NEW YORK HAS A SUBSTANTIAL
RELATIONSHIP TO THE UNDERLYING TRANSACTIONS RELATED TO THIS AGREEMENT AND TO THE
PARTIES INVOLVED.
NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE THAT:
(A) THE LAW OF THE STATE IN WHICH EACH PROPERTY IS SITUATED (THE "SITUS STATE")
GOVERNS PROCEDURES FOR ENFORCING, IN THE SITUS STATE, PROVISIONAL REMEDIES
DIRECTLY RELATED TO SUCH REAL PROPERTY, INCLUDING, WITHOUT LIMITATION,
APPOINTMENT OF A RECEIVER.
(B) THE LAW OF THE SITUS STATE ALSO APPLIES TO THE EXTENT, BUT ONLY TO THE
EXTENT, NECESSARY TO CREATE, TO PERFECT, AND TO FORECLOSE THE SECURITY
INTERESTS AND LIENS CREATED BY THE LOAN DOCUMENTS, BUT DOES NOT APPLY TO
ANY OBLIGATION SECURED THEREBY. THOSE OBLIGATIONS ARE GOVERNED BY NEW YORK
LAW. IN FURTHERANCE OF THE FOREGOING, THE PARTIES STIPULATE AND AGREE THAT
LENDER MAY ENFORCE IN ACCORDANCE WITH NEW YORK LAW ANY OR ALL OF ITS RIGHTS
TO XXX ANY LOAN PARTY OTHER THAN THE NON-RECOURSE PARTIES TO COLLECT ANY
INDEBTEDNESS, AND TO OBTAIN A DEFICIENCY JUDGMENT AGAINST BORROWER IN THE
SITUS STATE, NEW YORK, OR ELSEWHERE, BEFORE OR AFTER FORECLOSURE, AND IF
LENDER OBTAINS A DEFICIENCY JUDGMENT OUTSIDE THE SITUS STATE, IT MAY
ENFORCE THAT JUDGMENT IN THE SITUS STATE, AS WELL AS IN OTHER STATES.
8.18 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lender. Neither the Loan Parties'
rights or obligations hereunder nor any interest therein may be assigned or
delegated by the Loan Parties.
82
8.19 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE LOAN PARTIES ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH LOAN PARTY, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO BORROWER AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION
8.7;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDER RETAINS THE RIGHT TO SERVE PROCESS AND PURSUE
ITS REMEDIES IN ANY OTHER MANNER PERMITTED BY LAW AND TO BRING PROCEEDINGS
AGAINST THE LOAN PARTIES IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
8.20 Waiver of Jury Trial
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER
83
RELATIONSHIP THAT IS BEING ESTABLISHED HEREBY AND THEREBY. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this waiver
is a material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement and the other Loan
Documents, and that each will continue to rely on this waiver in their related
future dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN MADE HEREUNDER. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
8.21 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Borrower and
Lender of written or telephonic notification of such execution and authorization
of delivery thereof.
8.22 Material Inducement
Each Loan Party acknowledges that its representations, warranties,
covenants and agreements contained in this Agreement and the other Loan
Documents, including its covenants and agreements to pay Release Prices, are
material inducements to the Lenders to enter into this Agreement and to make the
Loan, that the Lenders have already relied on such representations, warranties,
covenants and agreements in entering into this Agreement and agreeing to make
the Loan (notwithstanding any investigation heretofore or hereafter made by or
on behalf of the Lenders), and that the Lenders will continue to rely on such
representations, warranties, covenants and agreements in their future dealings
with the Loan Parties. The Loan Parties understand that the Release Prices are
84
designed to afford to the Lenders a predictable return on their investment in
the Loan, that the Release Prices will be required to be paid by Borrower in
connection with voluntary and involuntary prepayments of the principal amount of
the Loan to the extent provided in this Agreement and that the payment of the
Release Prices in connection with involuntary prepayments beyond Borrower's
control (such as upon the occurrence of a casualty or a Taking) may be required.
Borrower agrees that its representations, warranties, covenants and agreements
contained in this Agreement and the other Loan Documents, including its
covenants and agreements to pay Release Prices, are reasonable in purpose and
scope. Borrower represents and warrants that it has reviewed this Agreement and
the other Loan Documents with its legal counsel and that it knowingly and
voluntarily is entering into this Agreement and the other Loan Documents
following consultation with legal counsel.
8.23 Entire Agreement
This Agreement is evidence of the indebtedness incurred pursuant hereto
and, taken together with all of the other Loan Documents and all certificates
and other documents delivered to Lender hereunder and thereunder, embodies the
entire agreement and supersedes all prior agreements, written and oral, relating
to the subject matter hereof. This Agreement and the other Loan Documents
constitute the final expression of the agreement between the parties hereto and
this Agreement and such other Loan Document may not be contradicted by evidence
of any alleged oral agreement.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
LOAN PARTIES:
ROYALE INVESTMENTS, INC., a Minnesota
corporation
By:
-----------------------------------
Xxxx Xxxxxxxx
Vice President and Secretary
Notice Address: The Xxxxxxx Group
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
FCO, L.P., a Delaware limited partnership
By: Royale Investments, Inc., a Minnesota
corporation, its sole general partner
By:
-----------------------------------
Xxxx Xxxxxxxx
Vice President and Secretary
Notice Address: The Xxxxxxx Group
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
FCO HOLDINGS, INC., a Delaware corporation
By:
-----------------------------------
Xxxx Xxxxxxxx
Vice President and Secretary
S-1
Notice Address: The Xxxxxxx Group
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
BLUE XXXX INVESTMENT COMPANY, L.P.,
a Delaware limited partnership
By: Strategic Facility Investors, Inc., a Delaware
corporation, its sole general partner
By:
--------------------------------
Xxxx X. Xxxxxx, III,
President
Notice Address: The Xxxxxxx Group
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
SOUTH BRUNSWICK INVESTORS, L.P.,
a Delaware limited partnership
By: South Brunswick Investment Company, L.L.C.,
a New Jersey limited liability company,
its authorized general partner
By:
--------------------------------
Xxxx X. Xxxxxx, III,
Manager
Notice Address: The Xxxxxxx Group
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
S-2
COMCOURT INVESTORS, L.P.,
a Delaware limited partnership
By: ComCourt Investment Corporation,
a Pennsylvania corporation,
its sole general partner
By:
--------------------------------
Xxxx X. Xxxxxx, III,
President
Notice Address: The Xxxxxxx Group
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
0000 XXXXX XXXXX, L.P.,
a Pennsylvania limited partnership
By: Gateway Xxxxxxx Development Corporation,
a Pennsylvania corporation,
its sole general partner
By:
--------------------------------
Xxxx X. Xxxxxx, III,
President
Notice Address: The Xxxxxxx Group
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
LENDER:
BANKERS TRUST COMPANY,
as Lender
S-3
By:
------------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
S-4
APPENDIX I
DEFINED TERMS
"Adjusted Consolidated Net Worth" means, as at any date of determination,
the Consolidated Total Assets plus accumulated depreciation, less Consolidated
Total Liabilities and intangible assets, on a consolidated basis determined in
conformity with GAAP.
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination Date
the rate per annum obtained by dividing (i) the Eurodollar offered rate for
deposits with maturities comparable to the Interest Period for which such
Adjusted Eurodollar Rate will apply as of approximately 10:00 A.M. (New York
time) on such Interest Rate Determination Date as reasonably determined by
Lender, by (ii) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements (including any marginal, emergency, supplemental, special
or other reserves) applicable on such Interest Rate Determination Date to any
member bank of the Federal Reserve System in respect of "Eurocurrency
liabilities" as defined in Regulation D (or any successor category of
liabilities under Regulation D).
"Affiliate" means with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" means this Senior Secured Credit Agreement dated as of the date
first written above, as it may be amended, restated, supplemented or otherwise
modified from time to time.
"Anniversary" means each anniversary of the Closing Date.
"ALTA" means the American Land Title Association or any successor thereto.
"Applicable Laws" means, collectively, all statutes, laws, rules,
regulations, ordinances, orders, decisions, writs, judgments, decrees and
injunctions of Governmental Authorities (including Environmental Laws) affecting
Borrower, any Loan Party or the Collateral or any part thereof (including the
acquisition, development, construction, Renovation, occupancy, use, improvement,
alteration, management, operation, maintenance, repair or restoration thereof),
whether now or hereafter enacted and in force, and all Authorizations relating
thereto, and all covenants, conditions and restrictions contained in any
instruments, either of record or known to Borrower or any other Loan Party, at
any time in force affecting any Property or any part thereof, including any such
covenants, conditions and restrictions which may (i) require improvements,
repairs or alterations in or to such Property
or any part thereof or (ii) in any way limit the use and enjoyment thereof; for
purposes of usury, Applicable Laws means the law of the State of New York
applicable to maximum rates of interest.
"Appraisal" means, with respect to any Property, a written appraisal of
such Property prepared by an Appraiser in form, content and methodology
satisfactory to Lender and in compliance with all applicable legal and
regulatory requirements (including the requirements of Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. " 3331, et
seq., as amended (or any successor statute thereto), and the regulations
promulgated thereunder).
"Appraiser" means Xxxxxxx, Xxxxx & Xxxx, Inc., or any other independent
appraiser selected by Lender and reasonably acceptable to Borrower who meets all
regulatory requirements applicable to Lender, who is a member of the Appraisal
Institute with a national practice and who has at least 10 years experience with
real estate of the same type as the Property to be appraised.
"Appraised Value" means, as of any date of determination and with respect
to any Property, the lesser of (i) the appraised value of such Property, in each
case as most recently determined by an Appraisal approved by Lender on or before
such date of determination and (ii) the principal amount secured by the Mortgage
encumbering such Property, as expressly set forth in such Mortgage.
"Approved Environmental Consultant" means any of the environmental
consultants who prepared the environmental audits delivered to Lender pursuant
to Section 3.1.12 or any other qualified, independent environmental consultant
reasonably acceptable to Lender.
"Assignment of Rents and Leases" means each Assignment of Rents and Leases
executed and acknowledged by the Loan Party party thereto in favor of Lender for
the benefit of Lender substantially in the form delivered on or before the
Closing Date pursuant to this Agreement, as any such Assignment of Rents and
Leases may be amended, restated, supplemented, consolidated, extended or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"Authorization" means any authorization, approval, franchise, license,
variance, land use entitlement, sewer and waste water discharge permit, storm
water discharge permit, air pollution authorization to operate, certificate of
occupancy, municipal water and sewer connection permit, and any like or similar
permit now or hereafter required for the construction or renovation of any
Improvements located on any Property or for the use, occupancy or operation of
any Property and all amendments, modifications, supplements and addenda thereto.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the rate per annum that is the higher of
(i) the Prime Rate or (ii) the sum of (a) the Federal Funds Effective Rate plus
(b) 1/2 of 1%. "Blue Xxxx" has the meaning set forth for it in the first
paragraph of this Agreement.
"Blue Xxxx Properties" means the Properties owned by Blue Xxxx as of
the Closing Date.
"Borrower" means, collectively, Blue Xxxx, South Brunswick, Comcourt and
Flank Drive, or, with respect to any Property, the Loan Party owning such
Property.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.
"Capital Expenditures" means, with respect to any Property, for any period
and as of any date of determination, all expenditures for capital improvements,
determined in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any capital stock,
partnership, limited liability company or joint venture interests of such Person
and shares, interests, participations or other ownership interests (however
designated) of any Person and any rights (other than debt securities convertible
into any of the foregoing), warrants or options to purchase any of the
foregoing.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Available for Debt Service" means, for any period and with respect to
any Property, the excess, if any, of the Property Income of such Property for
such period over the Property Expenses of such Property for such period.
"Cash Equivalents" means, as of any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States of America or (b) issued by any agency of the
United States of America the obligations of which are backed by the full faith
and credit of the United States of America, in each case maturing within one
year after such date; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof, in each case maturing within one year after
such date and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Xxxxx'x; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Xxxxx'x; (iv) Eurodollar deposits due within one year of any commercial banks
whose outstanding senior long-term debt securities are rated either A- or higher
by S&P or A-3 or higher by Xxxxx'x; (v) repurchase obligations with a term of
not more than 7 days for underlying securities of the types described in clause
(i) of this paragraph with any bank
meeting the qualifications specified in clause (vi) of this paragraph; (vi)
certificates of deposit or bankers' acceptances maturing within one year after
such date and issued or accepted by Lender or by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia that (a) is at least "adequately capitalized" (as defined
in the regulations of its primary Federal banking regulator) and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and
(vii) shares of any money market mutual fund that (a) has at least 95% of its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c)
has the highest rating obtainable from either S&P or Xxxxx'x.
"Cash Proceeds" means, with respect to any sale or other disposition or
refinancing of any Property, Cash payments received from such sale or
disposition or refinancing.
"Closing Date" means the first date on which all of the conditions set
forth in Article 3 are satisfied.
"Collateral" means, collectively, all property (including, without
limitation, Capital Stock, Partnership Interests and promissory notes and other
evidences of Indebtedness), whether real, personal or mixed, tangible or
intangible, owned or to be owned or leased or to be leased or otherwise held or
to be held by Borrower or in which Borrower has or shall acquire an interest, to
the extent of Borrower's interest therein, now or hereafter granted, assigned,
transferred, mortgaged or pledged to Lender or in which a Lien is granted to
Lender to secure all or any part of the Obligations, whether pursuant to the
Security Documents or otherwise, including, without limitation, the Properties,
the Leases and Rents and any and all proceeds of the foregoing, and the
Partnership Interests pledged pursuant to the Pledges.
"Comcourt" has the meaning set forth for it in the first paragraph of this
Agreement.
"Compliance Certificate" means a certificate delivered to Lender by
Borrower pursuant to Section 5.1.5 substantially in the form attached as Exhibit
D hereto.
"Condemnation Proceeds" means all compensation, awards, damages, rights of
action and proceeds awarded to any Loan Party by reason of any Taking.
"Consolidated Adjusted Net Income" means, for any period, for Royale and
its Subsidiaries, the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) provisions for taxes based on
income, (iv) total depreciation expense, (v) general and administrative expense,
(vi) total amortization expense, (vii) gains or losses on the sales of
Properties and other properties, debt restructurings or other extraordinary
items, and (viii) minority interest; less (a) a management fee equal to 3% of
total revenue, (b) a recurring capital expense reserve equal to $0.58 per net
rentable square foot for all Properties other than the Blue Xxxx Properties, (x)
unconsolidated partnerships, joint ventures and similar entities, and (y)
straight line rents, all of the foregoing as determined on a consolidated basis
for Royale and its Subsidiaries in conformity with GAAP.
"Consolidated Current Assets" means, at any date of determination, total
assets of Royale and its Subsidiaries on a consolidated basis which may properly
be classified as current assets in conformity with GAAP.
"Consolidated Current Liabilities" means, as at any date of determination,
the total liabilities of Royale and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP.
"Consolidated Funds from Operations" means net income (loss) (computed in
accordance with GAAP), excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization (specifically including
the amortization of deferred financial costs), and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect funds from
operations on the same basis. Consolidated Funds from Operations does not
represent cash generated from operating activities in accordance with GAAP and,
therefore, should not be considered as a substitute for net income as a measure
of results of operations or cash flow from operations calculated in accordance
with GAAP as a measure of liquidity.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to capital leases in accordance
with GAAP and capitalized interest) of Royale and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Royale and
its Subsidiaries, such interest to be calculated for purposes of this Agreement
against the outstanding principal amounts such Indebtedness as follows:
(a) for the Loan, during the Initial Term, using a constant based on the
then-current 10-year Treasury Rate as of the Closing Date, plus 2.50%,
instead of the interest rates actually applicable thereto;
(b) for the Loan, during any Extension Term, using a constant based on the
then-current 10-year Treasury Rate as of the commencement of such Extension
Term, plus 2.50%, instead of the interest rates actually applicable
thereto;
(c) for all other fixed rate Indebtedness, at the interest rates actually
applicable thereto; and
(d) for all other variable rate Indebtedness, using a constant based on the
then-current 10-year Treasury Rate as of the commencement of the
then-current Extension Term, plus 2.50%, instead of the interest rates
actually applicable thereto.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Royale and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Royale) in which any other Person (other than Royale or any of its
Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to Royale or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Royale or is merged
into or consolidated with Royale or any of its Subsidiaries or that Person's
assets are acquired by Royale or any of its Subsidiaries, (iii) the income of
any Subsidiary of Royale to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to any disposition of any assets of Company or its Subsidiaries or returned
surplus assets of any Pension Plan, and (v) (to the extent not included in
clauses (i) through (iv) above) any net extraordinary gains or net non-cash
extraordinary losses.
"Consolidated Total Assets" means, at any date of determination, total
assets of Royale and its Subsidiaries on a consolidated basis which may properly
be classified as assets in conformity with GAAP. The value of Consolidated Total
Assets shall be determined (i) prior to the first Anniversary by reference to
Appraisals received by Lender prior to the Closing, with respect to the assets
appraised therein; (ii) otherwise by capitalizing the Adjusted Net Income using
a 9.5% capitalization rate; and (iii) for any asset owned less than one year, by
using the aggregate purchase price for such asset.
"Consolidated Total Indebtedness" means, as of any date of determination,
the sum of the following, without duplication: (i) all Indebtedness of Royale
and its Subsidiaries, determined on a consolidated basis; plus (ii) all
Contingent Obligations of Royale and its Subsidiaries; plus (iii) all Guaranties
of Royale or any of its Subsidiaries; plus (iv) all letter of credit
reimbursement agreement obligations.
"Consolidated Total Liabilities" means, as at any date of determination,
the sum of each of the following, without duplication, for Royale and its
Subsidiaries, on a consolidated basis, (i) all indebtedness for borrowed money,
(ii) any obligation owed for all or any part of the deferred purchase price of
assets or services which would be shown to be a liability (or on the liability
side of the balance sheet) in accordance with GAAP, (iii) all guaranteed
obligations including any guaranteed indebtedness of consolidated or
non-consolidated joint ventures, (iv) the maximum amount of all letters of
credit issued or acceptance facilities established for the account of Royale or
any of its Subsidiaries, and, without duplication, all drafts drawn thereunder
(other than letters of credit offset by a like amount of Cash or Government
Securities held in escrow to secure such letter of credit and draws thereunder),
(v) all capitalized lease obligations, (vi) all indebtedness (A) of another
Person secured by any Lien on any property or asset owned or held by Royale or
any of its Subsidiaries regardless of whether the indebtedness secured thereby
shall have been assumed by that Royale or such Subsidiary or is nonrecourse to
the credit of Royale or such Subsidiary, and (B) of any consolidated Affiliate
of Royale whether or not such indebtedness has been assumed by Royale, and (vii)
indebtedness created or arising under any conditional sale or title retention
agreement, and (viii) withdrawal liability or insufficiency under ERISA or under
any qualified plan or related trust; but including within the foregoing, trade
payables and accrued expenses arising or incurred in the ordinary course of
business.
"Contingent Obligation" means, with respect to any Person, as of any date
of determination and without duplication, any direct or indirect liability,
contingent or otherwise, of that Person which has not been (or to the extent
that it has not been) paid or otherwise discharged with respect to the
following: (i) any Guaranty; (ii) any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings; or (iii) performance, surety and similar bonds in respect of any
Restoration, Renovation or other design, construction, restoration, renovation,
expansion or repair of any Improvements, in each case with respect to any
Property. The amount of any Contingent Obligation, as of any date of
determination, shall be equal to the least of (x) the amount of the obligation
so Guaranteed or that otherwise may be required to be paid, (y) the amount to
which such Contingent Obligation is expressly limited and (z) except with
respect to a Guaranty of Indebtedness, the maximum exposure under such
Contingent Obligation as reasonably calculated by Borrower and approved by
Lender in its sole discretion.
"Contractual Obligation" means, with respect to any Person, any provision
of any Security issued by that Person or of any material indenture, mortgage,
deed of trust, deed to secure debt, contract, lease, purchase order,
undertaking, agreement or other instrument to which that Person is a party or by
which it or any of its properties is bound or to which it or any of its
properties is subject.
"Controlling Principal" means Xxx Xxxxxxx and/or Xxxx X. Xxxxxx III, or any
trusts established by such Persons for the benefit of their immediate family
members if such Person is the trustee of such trusts and able to effectively
control the property and business of the trusts.
"Credit Bid" means a bid in a foreclosure sale pursuant to a Mortgage made
by Lender consisting of all or a portion of the outstanding amount of the
Obligations.
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced, by a negotiable certificate of deposit.
"Distribution" means any payment, distribution, dividend or other transfer
of money or other assets to a Loan Party's constituent partners, shareholders or
beneficiaries, other than (i) a payment on account of bona fide intercompany
indebtedness permitted under this Agreement, (ii) an Investment, or (iii) any
other payment expressly permitted under this Agreement.
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
"Eligible Assignee" means (i) (a) a commercial bank organized under the
laws of the United States of America or any state thereof; (b) a savings and
loan association or savings bank organized under the laws of the United States
of America or any state thereof; (c) a commercial bank organized under the laws
of any other country or a political subdivision
thereof; provided, however, that (x) such bank is acting through a branch or
agency located in the United States of America or (y) such bank is organized
under the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country; and (d)
any other entity which is an "accredited investor" (as defined in Regulation D
under the Securities Act) which extends credit or buys loans as one of its
principal businesses including, but not limited to, insurance companies,
investment banks, mutual funds and lease financing companies, in each case
(under clauses (a) through (d) above) that is reasonably acceptable to Lender;
and (ii) Lender and any Affiliate of Lender; and provided further, however, that
(A) each Eligible Assignee under clauses (i)(a) through (i)(c) above shall have
Tier 1 capital (as defined in the regulations of its primary Federal banking
regulator) of not less than $100,000,000, and (B) an entity shall not be an
Eligible Assignee if on the date of assignment of an interest in the Loan to
such entity Borrower would become liable for additional costs or withholdings by
virtue of such assignment under Sections 2.10.8 and 2.10.9.
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which (i) is currently maintained or contributed to by
Royale or any of its Subsidiaries, or (ii) was at any time within the preceding
five years maintained or contributed to by Royale or any of its Subsidiaries, to
the extent any of them could reasonably be expected to incur liability with
respect to such employee benefit plan.
"Engineer" means each reputable engineer approved by Lender licensed as
such in the state in which the applicable Property in question is located.
"Engineering Report" means, with respect to any Property, a written report
prepared by an Engineer, describing and analyzing the physical condition of the
Improvements of such Property, describing any necessary or recommended repairs,
estimating the cost of such repairs and otherwise in form and substance
reasonably satisfactory to Lender.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any Governmental Authority or any other Person for
any damage, including personal injury (including sickness, disease or death),
tangible or intangible property damage, contribution, indemnity, indirect or
consequential damages, damage to the environment, damage to natural resources,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Royale, any of
its Subsidiaries (including any Person who was a Subsidiary prior to the Closing
Date) or any Property.
"Environmental Indemnity" means the Environmental Indemnity executed and
delivered by Borrower on or before the Closing Date, in favor of Lender,
substantially in the form delivered on or before the Closing Date pursuant to
this Agreement, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"Environmental Laws" means all statutes, laws, ordinances, orders, rules,
regulations, written guidelines, writs, judgments, decrees or injunctions and
the like relating to (i) environmental matters, including those relating to
fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Hazardous Release or
threatened Hazardous Release of Hazardous Materials, (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, or the protection of human,
plant or animal health or welfare, in any manner applicable to any Loan Party or
any of its Subsidiaries or any of their properties, including the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. " 9601, et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. " 1801, et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. " 6901, et seq.), the
Federal Water Pollution Control Act (33 U.S.C. " 1251, et seq.), the Clean Air
Act (42 U.S.C. " 7401, et seq.), the Toxic Substances Control Act (15 U.S.C. "
2601, et seq.), the Solid Waste Disposal Act (42 U.S.C. " 6901, et seq.), as
amended by the Resource Conservation and Recovery Act (42 U.S.C. " 6901, et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. " 136,
et seq.), the Occupational Safety and Health Act (29 U.S.C. " 651, et seq.) and
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. " 11001, et
seq.), each as amended or supplemented, and rules and regulations, policies and
guidelines promulgated pursuant thereto and any analogous future or present
local, state and federal statutes and rules and regulations, policies and
guidelines promulgated pursuant thereto, each as in effect as of the date of
determination.
"Equity Proceeds" means the cash proceeds (net of underwriting discounts
and commissions and other reasonable costs associated therewith) from the
issuance of any equity Securities of Royale or any of its Subsidiaries,
including additional issuances of Common Stock or preferred stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"Eurodollar Rate" means the sum of the Adjusted Eurodollar Rate plus the
Eurodollar Rate Margin.
"Eurodollar Rate Margin" means, as of any date of determination, a per
annum rate equal to 2.50%.
"Event of Default" means each of the events set forth in Article 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Excusable Delay" means a delay due to acts of God, governmental
restrictions, enemy actions, war, civil commotion, fire, casualty, strikes,
shortages of supplies or labor, work stoppages or other causes beyond the
reasonable control of Royale or any of its
Affiliates, but lack of funds shall not be deemed a cause beyond the reasonable
control of Royale or any of its Affiliates.
"Extension Term" means the term of the Loan during the period from the
third Anniversary to (i) the fourth Anniversary if the extension option
contained in Section 2.4.1 is exercised, or (ii) the fifth Anniversary if the
extension option contained in Section 2.4.2 is exercised.
"Extraordinary Receipts" means the proceeds to Royale or any of its
Subsidiaries from such items as (i) sales, exchanges or other dispositions of
the assets of Royale or any of its Subsidiaries other than in the ordinary
course of business thereof, (ii) damage recoveries and casualty insurance
proceeds (including Condemnation Proceeds or Insurance Proceeds but other than
the proceeds of business interruption insurance or rental loss insurance), (iii)
income derived from Securities and other property acquired for investment except
to the extent such Securities represent Cash Equivalents, (iv) condemnation
awards or sales in lieu of and under the threat of condemnation (other than
awards or other payments for any Taking for temporary use), (v) debt or equity
financing or refinancing, and (vi) all other amounts of any nature paid to
Royale or any of its Subsidiaries not arising out of the ordinary course of
business thereof.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Lender from three Federal funds brokers of recognized
standing selected by Lender.
"Fee Letter" means, collectively, all letter agreements between all or some
of the Loan Parties and Lender or Lender's Affiliates regarding fees payable in
connection with the Loan.
"FCOLP" has the meaning set forth for it in the first paragraph of this
Agreement.
"Fixed Rate" means a fixed interest rate of seven and one-half percent per
annum.
"Flank Drive" has the meaning set forth for it in the first paragraph of
this Agreement.
"Formation" means, collectively, the transactions contemplated in the
Formation Agreement pursuant to which FCOLP and FCO are being formed and all or
substantially all Partnership Interests in each Borrower are being acquired by
FCOLP and FCO, as described in Recital C hereto, other than the contribution of
the "Retained Interests" (as defined in the Formation Agreement).
"Formation Agreement" means the Formation/Contribution Agreement dated as
of September 7, 1997, among Royale, Borrower and certain other parties
identified on the signature pages thereof, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"Formation Documents" means, collectively, the Formation Agreement and each
limited partnership agreement, articles of incorporation, bylaws, shareholders'
agreement and other agreement or document giving effect to the formation of a
Loan Party pursuant to the Formation Agreement.
"Funding Date" means the date of the funding of the Loan.
"Funds from Operations" means net income (loss) (computed in accordance
with GAAP) available for distribution to shareholders or partners, excluding
gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization (specifically including the amortization of
deferred financial costs) and minority interests, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect funds from
operations on the same basis.
"GAAP" means, subject to the limitations on the application thereof set
forth in Section 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, in each case as the same are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any state, county,
municipality or other political subdivision or branch thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any agency, board, central
bank, commission, court, department or officer thereof.
"Guaranty" means, with respect to any Person, any obligation, contingent or
otherwise, of that Person which has not been (or to the extent that it has not
been) paid or otherwise discharged with respect to any Indebtedness, lease,
dividend or other obligation of any other Person if the primary purpose or
intent thereof by the Person incurring the Guaranty is to provide assurance to
the obligee of such obligation that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof. Guaranties shall include, without limitation,
(i) the direct or indirect guaranty, endorsement (otherwise than for collection
or deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another, (ii)
the obligation to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (iii) any
liability of such
Person for the obligation of another Person through any agreement (contingent or
otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (b) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person if, in the case
of any agreement described under subclauses (a) or (b) of this sentence, the
primary purpose or intent thereof is as described in the preceding sentence. The
amount of any Guaranty shall be equal to the least of (x) the amount of the
obligation so guaranteed or otherwise supported, (y) the amount to which such
Guaranty is specifically limited and (z) except with respect to a Guaranty of
Indebtedness, the maximum exposure under such Guaranty as reasonably calculated
by Borrower and approved by Lender in its sole discretion. Guaranties shall not
include (i) any of the foregoing obligations to the extent that the same
constitutes Indebtedness under the definition thereof or is a Guaranty with
respect thereto and (2) Guaranties of any liability or obligation of Borrower in
respect of which Borrower are permitted to become liable pursuant to this
Agreement. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances",
"pollutant", "contaminant" or any other formulations intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Laws, (ii) any oil, petroleum, petroleum fraction or petroleum
derived substance, (iii) any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil, natural
gas or geothermal resources, (iv) any flammable substances or explosives, (v)
any radioactive materials, (vi) asbestos in any form, (vii) radon, (viii) urea
formaldehyde foam insulation, (ix) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million, (x) pesticides, and (xi) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any Persons in the vicinity of the
Properties; provided, however, that Hazardous Materials shall not include any
materials in a non-hazardous form such as asphalt contained in road-surfacing
materials or hazardous materials customarily used in the operation of office
properties and properly stored and maintained.
"Hazardous Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other receptacles containing any Hazardous Materials), or into or out of any
Property, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
"Impositions" means all real property taxes and assessments, of any kind or
nature whatsoever, including, without limitation, vault, water and sewer rents,
rates, charges and assessments, levies, permits, inspection and license fees and
other governmental, quasi-governmental or nongovernmental levies or assessments
such as maintenance charges, owner association dues or charges or fees resulting
from covenants, conditions and restrictions affecting the Properties,
assessments resulting from inclusion of any Property in any taxing district or
municipal or other special district, any of which are assessed or imposed upon
the Property, or become due and payable, and which create or may create a Lien
upon the Property, or any part thereof. In the event that any penalty, interest
or cost for nonpayment of any Imposition becomes due and payable, such penalty,
interest or cost shall be included within the term "Impositions".
"Improvements" means all buildings, structures, fixtures, tenant
improvements and other improvements of every kind and description now or
hereafter located in or on or attached to any Land, including all building
materials, water, sanitary and storm sewers, drainage, electricity, steam, gas,
telephone and other utility facilities, parking areas, roads, driveways, walks
and other site improvements; and all additions and betterments thereto and all
renewals, substitutions and replacements thereof.
"Indebtedness" means, with respect to any Person and without duplication,
to the extent required to be shown on a balance sheet prepared in conformity
with GAAP, (i) all indebtedness for money borrowed by that Person, (ii) that
portion of obligations with respect to Capital Leases that is classified as a
liability on a balance sheet in conformity with GAAP, (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) all obligations owed for all or any part of
the deferred purchase price of assets or services purchased by that Person (a)
due more than six months from the date of incurrence of the obligation in
respect thereof, (b) evidenced by a note or similar written instrument or (c)
owed in respect of real property purchased by such Person or any of its
Subsidiaries, (v) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person, (vi) obligations under Interest Rate Agreements, (vii) that
portion of any other obligation of that Person (other than reservation and
similar deposits from customers and working capital deposits from owners
received and held in the ordinary course of business) that is classified as a
liability on a balance sheet in conformity with GAAP, which obligation is (a)
due more than six months from the date of incurrence thereof or (b) evidenced by
a note or similar written instrument, (viii) trade payables of such Person and
its Subsidiaries that by their terms are more than 90 days delinquent (unless
being contested diligently and in good faith) and (ix) all Guaranties by that
Person.
"Indemnified Person" has the meaning assigned to that term in Section
8.3.1.
"Initial Term" means the term of the Loan commencing on the Closing Date
and ending on the third Anniversary.
"Insurance Proceeds" means all insurance proceeds, damages, claims and
rights of action and the right thereto under any insurance policies relating to
any portion of any Property.
"Insurance Requirements" means all terms of any insurance policy required
hereunder covering or applicable to any Property or any part thereof, all
requirements of the issuer of any such policy, and all orders, rules,
regulations and other requirements of the National Board of Fire Underwriters
(or any other body exercising similar functions) applicable to or affecting any
Property or any part thereof or any use of any Property or any portion thereof.
"Interest Period" has the meaning assigned to that term in Section
2.10.1.2.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect Royale or any of its Subsidiaries against
fluctuations in interest rates.
"Interest Rate Determination Date" means each date for calculating the
Adjusted Eurodollar Rate for purposes of determining the interest rate in
respect of an Interest Period. The Interest Rate Determination Date shall be the
second Business Day prior to the first day of the related Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person or any of its Subsidiaries,
as of any date of determination and without duplication:
(i) any direct or indirect purchase or other acquisition (whether or
not for consideration) by such investing Person or Subsidiary of, or of a
beneficial interest in, any Securities of any other Person;
(ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value by such investing Person or Subsidiary from any other
Person (other than (a) a Person with respect to which such investing Person
or Subsidiary is a Wholly Owned Subsidiary or (b) any other Wholly Owned
Subsidiary of the Person referred to in the preceding clause (a); provided
that, in the case of Royale and its Subsidiaries, such other Wholly Owned
Subsidiary is a Loan Party and has Guaranteed the Obligations), of any
equity Securities of such investing Person or Subsidiary;
(iii) any direct or indirect loan, advance (other than (a) advances to
officers, employees, consultants, accountants, attorneys and other advisors
and members of the Board of Directors of any Person for moving,
entertainment and travel expenses, drawing accounts and similar
expenditures in each case incurred in the ordinary course of business and
(b) advances to officers of any Person for other purposes in an amount
not greater than $100,000 individually or $330,000 in the aggregate, in
each case at any time outstanding) or capital contribution to any other
Person, including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that
other Person in the ordinary course of business; (iv) any payment to any
other Person for the purpose of or otherwise in connection with securing,
extending, renewing or modifying any Management Agreement;
(v) any commitment or obligation to make any investment described in
clauses (i) through (iv) above; and
(vi) any liability that is recourse to such investing Person or
Subsidiary or secured by any asset of such investing Person or Subsidiary
and that arises, by law, contract, ownership of Securities or otherwise,
directly or indirectly, as the result of or otherwise in connection with
the origination, continuation or termination of any investment described in
clauses (i) through (iv) above.
The amount of any Investment, as of any date of determination, shall be equal to
(y) with respect to an Investment referred to in clause (i) or (ii) of the
preceding sentence, the remainder of (1) the sum of original cost of such
Investment plus the cost of all additions thereto as of such date of
determination, minus (2) the aggregate amount paid to such Person or Subsidiary
as a return of such Investment; provided, that (A) the calculation of the amount
referred to in this clause (2) shall exclude all fees and other amounts (or the
portion thereof) that shall constitute interest, dividends or other amounts in
respect of the return on such Investment, as determined in accordance with GAAP,
and (B) the calculation of the amount referred to in this clause (i) shall
exclude, all adjustments for increases or decreases in value, and write-ups,
write-downs or write-offs with respect to such Investment, and (z) with respect
to an Investment referred to in clause (iv) or (v) of the preceding sentence,
the maximum aggregate liability for which such investing Person or Subsidiary
may become liable, by law, contract, ownership of Securities or otherwise, with
respect to such Investment as of such date of determination.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership, limited liability company or
other legal form, which joint venture, partnership or other similar arrangement
may be a Subsidiary of any Person, including of Borrower.
"Land" means, with respect to each Property, the land described on Exhibit
A to the Mortgage encumbering such Property, together with all strips and gores
within or adjoining such property, all estate, right, title, interest, claim or
demand whatsoever of any Loan Party or any of its Subsidiaries in the streets,
roads, sidewalks, alleys, and ways adjacent thereto (whether or not vacated and
whether public or private and whether open or proposed), all vaults or chutes
adjoining such land, all of the tenements, hereditaments, easements, reciprocal
easement agreements, rights pursuant to any trackage agreement, rights to the
use of common drive entries, rights-of-way and other rights, privileges and
appurtenances thereunto belonging
or in any way pertaining thereto, all reversions, remainders, dower and right of
dower, curtesy and right of curtesy, all of the air space and right to use said
air space above such property, all transferable development rights arising
therefrom or transferred thereto, all water and water rights (whether riparian,
appropriative or otherwise, and whether or not appurtenant) and shares of stock
evidencing the same, all mineral, mining, gravel, geothermal, oil, gas,
hydrocarbon substances and other rights to produce or share in the production of
anything related to such property, all drainage, crop, timber, agricultural, and
horticultural rights with respect to such property, and all other appurtenances
appurtenant to such property, including without limitation, any now or hereafter
belonging or in any way appertaining thereto, and all claims or demands of
Borrower either at law or in equity, in possession or expectancy, now or
hereafter acquired, of, in or to the same.
"Lease" means each of the leases, licenses, concession agreements,
franchise agreements and other occupancy agreements and other agreements
demising, leasing or granting rights of possession or use or, to the extent of
the interest therein of any Loan Party or any of its Subsidiaries, any sublease,
subsublease, underletting or sublicense, which now or hereafter may affect any
Property or any part thereof or interest therein, including any agreement
relating to a loan or other advance of funds made in connection with any such
lease, license, concession agreement, franchise or other occupancy agreement and
such sublease, subsublease, underletting or sublicense, and every amendment,
restatement, supplement, consolidation or other modification of or other
agreement relating to or entered into in connection with such lease, license,
concession agreement, franchise or other occupancy agreement and such sublease,
subsublease, underletting or sublicense, and every security deposit, letter of
credit, trust agreement, guaranty or similar security for the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto, and any guaranties of leasing commissions.
"Lender" has the meaning set forth in the first paragraph of this
Agreement, together with its successors and permitted assigns.
"Lien" means any lien (including any lien or security title granted
pursuant to any mortgage, deed of trust or deed to secure debt), pledge,
hypothecation, assignment, security interest, charge, levy, attachment,
restraint or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement to
give any security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
"Loan" means the loan made by Lender to Borrower pursuant to this
Agreement.
"Loan Amount" means One Hundred Million Dollars ($100,000,000).
"Loan Documents" means, collectively, this Agreement, the Note, the
Security Documents, the Environmental Indemnity and the Fee Letter.
"Loan Parties" has the meaning set forth for it in the first paragraph of
this
Agreement.
"Loan Parties' Accountants" means Coopers & Xxxxxxx, LLP, or another "big
six" accounting firm.
"Major Lease" means each Lease demising 15% or more of the net rentable
square feet of any Property.
"Management Agreements" means, collectively, all management agreements with
respect to the Properties.
"Management Fees" means, collectively, all management fees and all other
fees or charges payable to a manager for the management and operation of a
Property, the related land and the improvements thereof.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means a material adverse effect upon the
business, operations or condition (financial or otherwise) of the Loan Parties
or Controlling Principals, taken as a whole, which causes or is reasonably
likely to cause the material impairment of the ability of the Loan Parties to
perform, or of Lender to enforce, any Obligations of the Loan Parties.
"Material Lease" means each Lease demising fifteen percent or more of the
net rentable area of the Improvements with respect to any Property.
"Maturity Date" means the earlier of (i) the third Anniversary of the
Closing Date, as such date may be extended pursuant to Section 2.4 to a date not
later than the fifth Anniversary of the Closing Date, and (ii) the date as of
which the Obligations shall have become immediately due and payable pursuant to
Section 7.1.
"Maximum Amount" has the meaning set forth in Section 8.11.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor to the
business thereof.
"Mortgage" means each Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing executed and acknowledged by the Loan Party thereto in favor of
Lender for the benefit of the Lender, substantially in the form delivered on or
before the Closing Date pursuant to this Agreement, as each such agreement may
be amended, restated, supplemented, consolidated, extended or otherwise modified
from time to time in accordance with the terms thereof and hereof.
"Mortgaged Property" has the meaning assigned to that term in the
Mortgages.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, any gain (but not
loss), together with any related provision for Taxes on such gain (but not
loss), realized in connection with any Asset Sale, and excluding any
extraordinary gain (but not loss), together with any related provision for taxes
on such extraordinary gain (but not loss).
"Net Insurance/Condemnation Proceeds" means all Insurance Proceeds on
account of damage or destruction to any Property or all Condemnation Proceeds in
respect of any Property, minus the reasonable cost, if any, of such recovery and
of paying out such proceeds, including reasonable attorneys' fees and costs
allocable to inspecting the Work and the plans and specifications therefor.
"Net Sales Price" means, with respect to any sale or other permanent
disposition by a Loan Party or any of its Subsidiaries of a Property, or other
asset, the gross purchase price therefor less the sum of (i) the amounts applied
to the payment of Indebtedness or other obligations secured by a Lien on such
Property or other asset (other than the Obligations), (ii) the reasonable
out-of-pocket costs and expenses incurred by such Loan Party or Subsidiary
directly in connection with such sale or other permanent disposition, including
income taxes paid or estimated to be actually payable as a result thereof, after
taking into account any available tax credits or deductions and any tax sharing
arrangements (provided that the amount of income taxes so estimated to be
actually payable shall be approved by Lender, which approval shall not be
unreasonably withheld, conditioned or delayed), and (iii) closing adjustments
contemplated and reserved.
"Non-Recourse Parties" means Royale; FCO; South Brunswick Investment
Company, L.L.C., a New Jersey limited liability company, and Tiger South
Brunswick L.L.C., the current general partners of South Brunswick; Strategic
Facility Investors, Inc., a Delaware corporation, the current sole general
partner of Blue Xxxx; ComCourt Investment Corporation, a Pennsylvania
corporation, the current sole general partner of Comcourt; and Gateway Xxxxxxx
Development Corporation, a Pennsylvania corporation, the current sole general
partner of Flank Drive.
"Note" means the promissory note of FCOLP, FCO and Borrower issued on the
Closing Date, in the Loan Amount, substantially in the form of Exhibit B annexed
hereto, as it may be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.
"Notice of Interest Period Selection" means a notice pursuant to which
Borrower shall elect an Interest Period, which shall be in a form reasonably
acceptable to Lender.
"NYSE" means the New York Stock Exchange.
"Obligations" means, collectively, all obligations of every nature of the
Loan Parties from time to time owed to Lender under or in respect of the Loan
and the Loan Documents, whether for principal, interest, fees, commissions,
expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by a person specified in this Agreement
for such purpose or, in the absence of such specification, by its chairman of
the board (if an officer) or its president or one of its vice presidents and by
its chief financial officer or its treasurer; provided, however, that every
Officers' Certificate with respect to the compliance with a condition precedent
to the making of the Loan hereunder shall include (i) a statement that each
officer making or giving such Officers' Certificate has read such condition and
any definitions or other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of each signer, he has made or
has caused to be made such examination or investigation as is reasonably
necessary to enable him to express an informed opinion as to whether or not such
condition has been complied with, and (iii) a statement as to whether, in the
opinion of each signer, such condition has been complied with.
"Operating Lease" means, with respect to any Person, a lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is not accounted for as a capital lease on the balance
sheet of that Person.
"Outstanding Loan Amount" means at any time the portion of the Loan Amount
which is then outstanding.
"Participant" means Lender and any Person to whom Lender assigns any
interest in the Loan.
"Partnership Interests" means the general and/or limited partnership
interests (including all partnership units, all rights under partnership
agreements and all rights to distributions) in a Partnership Loan Party.
"Partnership Loan Party" means any Loan Party that is a general or limited
partnership.
"Payment Date" means the last day of each calendar month, beginning
November 30, 1997, or, if such day is not a Business Day, the next succeeding
Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor
thereto).
"Permitted Encumbrances" means the Liens shown in the Title Policy for each
Property and, with respect to any Property, the following types of Liens:
(ii) Liens for real property Taxes, assessments, vault charges, water
and sewer rents, and other Impositions the payment of which is not, at the
time, required pursuant to this Agreement;
(iii) the Leases in existence on the Closing Date and any Leases
entered into thereafter in accordance with the requirements of the Loan
Documents;
(iv) covenants, easements, rights-of-way, restrictions, minor
encroachments or other similar encumbrances incurred in the ordinary course
of business of Borrower that do not make such Property unmarketable or
interfere in any material respect, and which could not reasonably be
expected to interfere in any material respect, with the use of the Property
for office building purposes or with the ordinary conduct of the business
of Borrower;
(v) Liens securing the Obligations;
(vi) Liens that are bonded and thereby released of record in a manner
reasonably satisfactory to Lender; and
(vii) until the sixtieth day following the Closing Date, and solely
with respect to the Blue Xxxx Properties, the existing mortgage liens in
favor of Blue Xxxx Funding, Inc., which was assigned to United States Trust
Company of New York.
"Person" means, collectively, natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and Governmental Authorities.
"Pledges" means, collectively, the pledge by Royale of all of its interest
in FCOLP and FCO, the pledge by FCOLP of all of its interest in each Borrower,
and the pledge by FCO of all of its interest in each Borrower.
"Potential Event of Default" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within the applicable grace period.
"Prime Rate" means the rate that Lender announces from time to time as its
prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Lender may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
"Principal Reduction Amount" means the difference between (i) the
Outstanding Loan Amount on the third Anniversary, and (ii) sixty percent of the
then-current Appraised Value of all of the Properties then securing the Loan.
"Property" or "Properties" means each of the properties described on
Exhibit A hereto.
"Property Adjusted Net Income" means, for any period, for each Property,
the sum of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on income, (iv)
total depreciation expense, (v) general and administrative expense, (vi) total
amortization expense, (vii) gains or losses on the sales of portions of the
Property, debt restructurings or other extraordinary items, and (vii) minority
interest; less (a) a management fee equal to 3% of total revenue, (b) a
recurring capital expense reserve equal to $0.58 per net rentable square foot
for all Properties other than the Blue Xxxx Properties, adjusted for (x)
unconsolidated partnerships, joint ventures and similar entities, and (y)
straight line rents, all in conformity with GAAP.
"Property Amount" means the amount set forth for a Property on Exhibit C
hereto.
"Property Expenses" means, for any period and as calculated on the accrual
basis of accounting, all expenses incurred by Borrower during such period in
connection with the ownership, management, operation, cleaning, maintenance,
repair, restoration or leasing of any Property, including:
(ii) costs and expenses in connection with the cleaning, ordinary
repair, maintenance, decoration and painting of such Property;
(iii) wages, benefits, payroll taxes, uniforms, insurance costs and
all other related expenses for employees of Borrower engaged in the
management, operation, cleaning, maintenance, repair, restoration and
leasing of such Property and service to Tenants of such Property;
(iv) a management fee equal to 5% of Minimum Rents with respect to
such Property and during such period (which amount shall be treated as a
Property Expense whether or not any such management fee was in fact paid);
(v) the cost of all services and utilities with respect to such
Property, including all electricity, oil, gas, water, steam, heating,
ventilation, air conditioning, elevator, escalator, landscaping, model
furniture, answering services, telephone maintenance, credit check, snow
removal, trash removal and pest extermination costs and expenses and any
other energy, utility or similar item and overtime services with respect to
such Property;
(vi) the cost of building and cleaning supplies with respect to such
Property;
(vii) insurance premiums required in order to maintain the insurance
policies required under this Agreement or any other Loan Documents with
respect to such Property (which, in the case of any policies covering
multiple Properties, shall be allocated among the Properties pro rata in
proportion to the insured value of the Properties covered by such
policies);
(viii) legal, accounting, engineering, brokerage and other fees,
commissions, costs and expenses incurred by or on behalf of Borrower in
connection with the ownership, management, operation, maintenance, repair,
restoration, and leasing of such Property, including collection costs and
expenses;
(ix) costs and expenses of security and security systems provided to
and/or installed and maintained with respect to such Property;
(x) real property taxes and assessments with respect to such Property
and the costs incurred in seeking to reduce such taxes or the assessed
value of such Property;
(xi) advertising, marketing and promotional costs and expenses with
respect to such Property;
(xii) costs and expenses incurred in connection with lock changes,
storage, moving, appraisals, surveys, valuations, title insurance,
inspections, market surveys, permits (and the application or registration
therefor), and licenses (and the application or registration therefor) with
respect to such Property;
(xiii) maintenance and cleaning costs related to tenant amenities with
respect to such Property;
(xiv) Capital Expenditures with respect to such Property accrued
during such period or, if higher, a reserve for Capital Expenditures equal
to $0.15 per square foot of floor area contained in the Improvements
located at such Property during such period;
(xv) tenant improvements and leasing commissions with respect to such
Property accrued during such period;
(xvi) contributions by Borrower to any merchants' association, whether
as dues or advertising costs or otherwise with respect to such Property;
(xvii) costs incurred pursuant to any reciprocal easement agreement
affecting such Property;
(xviii) refunds Borrower must pay to Tenants and other occupants of
such Property;
(xix) reserves for such expenses and in such amounts as Borrower and
Lender may reasonably agree upon; and
(xx) all other ongoing expenses which in accordance with the accrual
basis of accounting should be included in Borrower's annual financial
statements as operating expenses of such Property.
Notwithstanding the foregoing, Property Expenses shall not include
depreciation and amortization or interest, principal or Release Prices, if any,
due under the Loan or the Note or otherwise in connection with the Obligations.
"Property Gross Revenue" means, for any period, all Receipts resulting from
the operation of such Property, including, without limitation, Rents or other
payments from Tenants, licensees and concessionaires and business interruption
and rental loss insurance payments; provided that Property Gross Revenue shall
exclude (i) excise, sales, use, occupancy and similar taxes and charges
collected from Tenants and remitted to Governmental Authorities, (ii) gratuities
collected for employees of such Property, (iii) security deposits and other
advance deposits, until and unless same are forfeited to Borrower or applied for
the purpose for which collected, (iv) federal, state or municipal excise, sales,
use or similar taxes collected directly from Tenants or included as part of the
sales price of any goods or services, and (v) Extraordinary Receipts.
"Property Income" means, for any period and as calculated on the accrual
basis of accounting, all regular income received during such period from the
operation of and with respect to any Property, as follows:
(i) all Rents, other income, forfeited security deposits and other
benefits which Borrower now or hereafter receives from or in connection
with such Property, including all income received from Tenants, licensees,
concessionaires and other Persons for the occupancy of space at such
Property and/or for the rendering of services to such Property's Tenants
and other occupants, but excluding, however, any moneys refunded to
Borrower as a result of tax certiorari or similar proceedings if and only
to the extent such refund relates to Impositions assessed for a fiscal
period ending prior to the Closing Date;
(ii) rent and business interruption insurance proceeds with respect to
such Property; and
(iii) all other amounts with respect to such Property which are
included in Borrower's annual accrual basis financial statements as
operating income.
Notwithstanding the foregoing, Property Income with respect to such
Property shall not include (a) any Condemnation Proceeds or Insurance
Proceeds (other than
Insurance Proceeds with respect to rental loss or business interruption
insurance or Condemnation Proceeds with respect to a temporary Taking with
respect to such Property and, in either such case, only to the extent
allocable to the applicable period), (b) any proceeds resulting from the
sale, exchange, transfer, financing or refinancing of all or any portion of
such Property, (c) any Rent attributable to a Lease affecting such Property
prior to the date on which the actual payment of Rent is required to
commence thereunder (provided that such prepaid Rent shall be included in
Property Income at such time as the obligation to pay such rent accrues),
(d) any item of income otherwise includable in Property Income with respect
to such Property but paid directly by any Tenant to a Person other than
Borrower, or (e) security deposits received from Tenants with respect to
such Property until forfeited.
"Property Hedged Interest Expense" means, for any period, total interest
expense (including that portion attributable to capital leases in accordance
with GAAP and capitalized interest) of Borrower on a consolidated basis with
respect to all outstanding Indebtedness of Borrower and its Subsidiaries that is
subject to Interest Rate Agreements, such interest to be calculated for purposes
of this Agreement against the outstanding principal amounts of such Indebtedness
using the highest possible interest rate (including credit spread) payable by
Borrower pursuant to such Interest Rate Agreements.
"Property Interest Expense" means, for any period, total interest expense
(including that portion attributable to capital leases in accordance with GAAP
and capitalized interest) of Borrower on a consolidated basis with respect to
all outstanding Indebtedness of Borrower and its Subsidiaries, such interest to
be calculated for purposes of this Agreement against the outstanding principal
amounts of such Indebtedness using a constant based on the then-current 10-year
Treasury Rate, plus 2.50%, instead of the actual interest rates applied thereto.
"Receipts" means, collectively, all cash, Cash Equivalents, checks, notes,
drafts and any items of payment or collection received, by or on behalf of
Royale or any of its Subsidiaries, or by any officers, employees or agents of
Royale or any of its Subsidiaries or other Persons acting for or in concert with
Royale or such Subsidiary to make collections on Royale's or such Subsidiary's
behalf in connection with or in any way relating to Royale or such Subsidiary or
the operation of Royale's or such Subsidiary's business, including, without
limitation, any proceeds received from or pursuant to (i) any sales of, or loans
against, accounts of Royale or any of its Subsidiaries (other than the Loan
pursuant to this Agreement), (ii) any disposition of assets (including, without
limitation, any disposition of assets permitted hereunder or consented to by
Lender, but excluding amounts applied to the repayment of indebtedness or other
obligations secured by a Lien on the assets subject to such disposition) or
issuance or sale of equity Securities by Royale or any of its Subsidiaries,
(iii) the incurrence of Indebtedness by Royale or any of its Subsidiaries and
the issuance and sale by Royale or any of its Subsidiaries of equity or debt
Securities, in each case other than the Obligations and other Indebtedness
permitted by this Agreement, (iv) insurance policies (other than liability
insurance payable directly or indirectly to a third party) maintained by Royale
or any of its Subsidiaries, whether or not Lender is an additional insured or
named as loss payee thereunder, (v) the successful prosecution (including any
settlement) of any claims, actions or
other litigation or proceeding by or on behalf of or against Royale or any of
its Subsidiaries, (vi) Investments in, or equity and debt Securities issued by,
Joint Ventures or other Persons and (vii) the Management Agreements (other than
amounts received by Royale or any of its Subsidiaries in respect of the Managed
Properties on behalf of, or as agent for, the parties to the Management
Agreements other than Royale and its Subsidiaries); it being understood and
agreed that nothing contained in this definition shall in any respect be deemed
to permit any transactions by Royale or any of its Subsidiaries otherwise
restricted or prohibited by this Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"REIT" means a "real estate investment trust," as such term is defined in
Section 856 of the Internal Revenue Code.
"Release" means any satisfaction, release, assignment instrument, deed of
reconveyance or similar instrument or instruments (each in recordable form but
without any representation or warranty of Lender) necessary and sufficient to
release any Collateral from the Lien of all applicable Security Documents.
"Release Date" means the date of a release of the Lien of the Security
Documents from any Property pursuant to Section 2.8.
"Release Price" means the amount that is the greatest of the following,
calculated as of the Release Date:
(b) 125% of the Property Amount with respect to such Property;
(c) in the event of a sale or other permanent disposition of such
Property, 85% of the Net Sales Price for such Property;
(d) the amount necessary to ensure that the sale or other disposition
does not cause a violation of the covenants set forth in Section 6.7 of
this Agreement; and
(e) in the event of a casualty or Taking with respect to such
Property, the Insurance Proceeds or Condemnation Proceeds, as the case may
be, resulting therefrom.
"Renovation" means the expansion, rebuilding, repair, restoration,
refurbishment, fixturing and equipping of the Improvements at a Property or a
Managed Property. The term "Renovate" used as a verb has a corresponding
meaning.
"Rent Reserve Account" means, collectively, one or more interest-bearing
accounts
to be established and maintained by Borrower at the offices of Lender located at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, each in the name of "Bankers Trust Company
-- FCOLP Rent Reserve Account," with such additional identifying references in
such name as Borrower and Lender shall agree.
"Rents" means all rents, issues, profits, royalties, receipts, revenues,
accounts receivable, security deposits and other deposits (subject to the prior
right of Tenants making such deposits) and income, including fixed, additional
and percentage rents, occupancy charges, operating expense reimbursements,
reimbursements for increases in taxes, sums paid by Tenants to Borrower to
reimburse Borrower for amounts originally paid or to be paid by Borrower or
Borrower's agents or affiliates for which such Tenants were liable, as, for
example, tenant improvements costs in excess of any work letter, lease takeover
costs, moving expenses and tax and operating expense pass-throughs for which a
Tenant is solely liable, parking, maintenance, common area, tax, insurance,
utility and service charges and contributions, proceeds of sale of electricity,
gas, heating, air-conditioning and other utilities and services, deficiency
rents and liquidated damages, and other benefits.
"Rent Roll" means, for any Property, a rent roll in the form approved by
Lender indicating (i) the names of all Tenants of such Property and the space
occupied by such Tenants, (ii) the term of each Lease affecting such Property,
(iii) the monthly Rent, additional Rent, if any, and other fees and charges paid
by each such Tenant and whether such Tenant is in default, (iv) for any Rent
Roll delivered after the Closing Date, any extension, renewal, expansion, or
purchase options contained in any such Lease, (v) each vacant space in such
Property and Borrower's estimate of the fair rental value of each such space,
(vi) the occupancy rate of such Property, (vii) the security deposit and
escrows, if any, held by Borrower under any such Lease and (viii) the arrearages
for any such Tenant.
"Restoration" means the repair, restoration (including demolition),
replacement and rebuilding of all or any portion of a Property (or the
Improvements thereof) following the destruction, damage, loss or Taking thereof.
The term "Restore" used as a verb has the corresponding meaning.
"Royale" has the meaning set forth for it in the first paragraph of this
Agreement.
"Scheduled Principal Payment Date" means, if the Maturity Date is extended
beyond the third Anniversary pursuant to Section 2.4, the third Anniversary and
the next succeeding eleven Payment Dates.
"Securities" means any stock, shares, partnership interests, interests in
limited liability companies, voting trust certificates, certificates of interest
or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Security Agreement" means the Security and Pledge Agreement executed and
delivered by each Loan Party and Lender on or before the Closing Date pursuant
to this Agreement, substantially in the form delivered on or before the Closing
Date pursuant to this Agreement, pursuant to which such Loan Party will pledge
and grant a security interest in the Collateral described therein to Lender, as
such Security Agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"Security Documents" means, collectively, the Mortgages, the Assignments of
Rents and Leases, the Security Agreement, the Tenant Subordination Agreements,
all mortgages, security agreements, pledge agreements, assignments and all other
instruments or documents (including UCC-1 financing statements, fixture filings,
amendments of financing statements or similar documents required or advisable in
order to perfect or maintain the Liens created by the Security Documents)
delivered by any Person pursuant to this Agreement or any of the other Loan
Documents, whether such delivery is prior to, contemporaneous with or after
delivery of this Agreement, in order to grant to Lender Liens in real, personal
or mixed property of that Person, and to maintain such Liens as each of the
foregoing may be amended, restated, consolidated, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
Security Documents do not include this Agreement or the Note.
"South Brunswick" has the meaning set forth for it in the first paragraph
of this Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, trust, joint venture or
other business entity of which either (i) the Person is a general partner or
member of a limited liability company or other entity having the right to direct
or manage the business and affairs of such entity or (ii) more than 50% of the
total voting power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
the Person or Persons (whether directors, managers, trustees or other Persons
performing similar functions) having the power to direct or cause the direction
of the management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof. The term "Subsidiary" shall include
Subsidiaries of a Subsidiary. Without limiting the generality of such term, all
of the Loan Parties other than Royale shall be deemed Subsidiaries of Royale for
purposes of this Agreement.
"Survey" means, with respect to any Property, a current survey map prepared
by a surveyor licensed in the state in which such Property is located,
reasonably acceptable to Lender, which shall (i) contain the legal description
of such Property, (ii) conform, and be certified by such surveyor to Lender and
the Title Company as conforming, to the Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys for urban survey
class as adopted by ALTA and American Congress on Surveying & Mapping (1992
version), and (iii) show, to the extent practicable, all matters described in
"Table A/Optional Survey Responsibilities and Specifications" in such Minimum
Standard Detail Requirements; provided, however, that the survey need not
satisfy the requirements of the preceding clauses (ii) and (iii) if the Title
Company has eliminated the survey exception from the Title Policies and all
other exceptions to the Title Policies based upon such survey are acceptable to
Lender in its sole discretion. Any such survey shall contain a certification by
such surveyor to Lender stating whether the Property is located in an area
having special flood hazards as identified by the Federal Emergency Management
Agency.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., or any successor to the business thereof.
"Taking" means the taking or appropriation (including by deed in lieu of
condemnation or by voluntary sale or transfer under threat of condemnation or
while legal proceedings for condemnation are pending) of any Property, or any
part thereof or interest therein, for public or quasi-public use under the power
of eminent domain, by reason of any public improvement or condemnation
proceeding, or in any other manner or any damage or injury or diminution in
value through condemnation, inverse condemnation or other exercise of the power
of eminent domain. The term "Taken" used as a verb has a correlative meaning.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, on
whomsoever and wherever imposed, levied, collected, withheld or assessed by a
Governmental Authority; provided, however, that "Tax on the overall net income"
of a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or, in the case of any
Lender, its lending office) is located or in which that Person is deemed to be
doing business on (or measured with reference to) all or part of the net income,
profits or gains of that Person (whether worldwide, or only insofar as such
income, profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise).
"Tenant" means any Person liable by contract or otherwise to pay rent or a
percentage of income, revenue or profits pursuant to a Lease, and includes a
tenant, subtenant, lessee and sublessee.
"Tenant Subordination Agreement" means any Subordination, Non-Disturbance
and Attornment Agreement executed and acknowledged by a Tenant, Borrower or any
other Loan Party and Lender, and reasonably satisfactory in form and substance
to Lender, as each such agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"Tenanting Costs" means costs incurred by Borrower in connection with the
leasing of a Property, including brokerage commissions, free rent, tenant
improvements and related
costs and expenses.
"Tenanting Costs Reserve Account" means, collectively, one or more
interest-bearing accounts to be established and maintained by Borrower at the
offices of Lender located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, each in the
name of "Bankers Trust Company -- FCOLP Tenanting Costs Reserve Account," with
such additional identifying references in such name as Borrower and Lender shall
agree.
"Title Company" means (i) as of any date on or prior to the Closing Date,
Commonwealth Land Title Insurance Company and (ii) as of any date after the
Closing Date, such other title company as may be selected by Borrower and
approved by Lender in its reasonable discretion. "Title Policies" means, with
respect to the Properties, the paid mortgagee policies of title insurance in the
form of a 1970 ALTA loan policy (or other form of loan policy available in the
applicable state and acceptable to Lender) and issued by the Title Company.
"Total Property Adjusted Net Income" means, for any period and as of any
date of determination, the aggregate Property Adjusted Net Income for such
period with respect to all Properties.
"Transfer" means any conveyance, assignment, sale, sale and leaseback,
mortgaging, encumbrance, pledging, hypothecation, granting of a security
interest in, granting of options with respect to or other disposition of
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) all or any portion
of any legal or beneficial interest (i) in all or any portion of any Property or
(ii) in any other assets of any Loan Party or any of its Subsidiaries, or (iii)
following the Formation, of any Partnership Interest (A) held by Royale in
FCOLP, (B) held by FCO in any Borrower, or (C) held by FCOLP in any Borrower.
"United States of America" means the 50 states of the United States of
America and Washington, D.C., but excluding any territories or possessions
thereof other than the Commonwealth of Puerto Rico.
"Wholly Owned" means, with respect to any Subsidiary of any Person, a
Subsidiary all of the outstanding equity Securities of which are owned directly
or indirectly by such Person.
"Work" has the meaning assigned to that term in Section 5.13.6.
