Exhibit 10.6
LOAN AND SECURITY AGREEMENT
Dated as of June 30, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ INVESTORS 5000A, LLC
as Borrower
and
GERMAN AMERICAN CAPITAL CORPORATION,
as Lender
TABLE OF CONTENTS
Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION............................................1
Section 1.1 Definitions........................................................1
Section 1.2 Principles of Construction........................................20
II. GENERAL TERMS.....................................................................21
Section 2.1 Loan; Disbursement to Borrower....................................21
Section 2.2 Interest; Loan Payments; Late Payment Charge......................21
Section 2.3 Prepayments.......................................................22
Section 2.4 Regulatory Change; Taxes..........................................23
Section 2.5 Conditions Precedent to Closing...................................24
III. CASH MANAGEMENT...................................................................28
Section 3.1 Cash Management...................................................28
IV. REPRESENTATIONS AND WARRANTIES....................................................37
Section 4.1 Borrower Representations..........................................37
Section 4.2 Survival of Representations.......................................45
V. BORROWER COVENANTS................................................................45
Section 5.1 Affirmative Covenants.............................................45
Section 5.2 Negative Covenants................................................52
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION....................................54
Section 6.1 Insurance Coverage Requirements...................................54
Section 6.2 Condemnation and Insurance Proceeds...............................58
VII. IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS.................................62
Section 7.1 Borrower to Pay Impositions and Other Charges.....................62
Section 7.2 No Liens..........................................................63
Section 7.3 Contest...........................................................63
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS.....................................64
Section 8.1 Restrictions on Transfers.........................................64
Section 8.2 Sale of Building Equipment........................................64
Section 8.3 Immaterial Transfers and Easements, etc...........................64
Section 8.4 Indebtedness......................................................65
Section 8.5 Permitted Interest Transfers......................................65
Section 8.6 Deliveries to Lender..............................................66
Section 8.7 Release of Properties.............................................66
Section 8.8 Leases............................................................67
IX. INTEREST RATE CAP AGREEMENT.......................................................70
Section 9.1 Interest Rate Cap Agreement.......................................70
Section 9.2 Pledge and Collateral Assignment..................................71
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Section 9.3 Covenants.........................................................71
Section 9.4 Powers of Borrower Prior to an Event of Default...................72
Section 9.5 Representations and Warranties....................................72
Section 9.6 Payments..........................................................73
Section 9.7 Remedies..........................................................73
Section 9.8 Sales of Rate Cap Collateral......................................75
Section 9.9 Public Sales Not Possible.........................................76
Section 9.10 Receipt of Sale Proceeds..........................................76
Section 9.11 Replacement Interest Rate Cap Agreement...........................76
X. MAINTENANCE OF PROPERTY; ALTERATIONS..............................................76
Section 10.1 Maintenance of Property...........................................76
Section 10.2 Conditions to Alteration..........................................76
Section 10.3 Costs of Alteration...............................................77
XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION............78
Section 11.1 Books and Records.................................................78
Section 11.2 Financial Statements..............................................79
XII. ENVIRONMENTAL MATTERS.............................................................81
Section 12.1 Representations...................................................81
Section 12.2 Covenants.........................................................81
Section 12.3 Environmental Reports.............................................82
Section 12.4 Environmental Indemnification.....................................82
Section 12.5 Recourse Nature of Certain Indemnifications.......................83
XIII. THE GROUND LEASES.................................................................83
Section 13.1 Leasehold Representations, Warranties.............................83
Section 13.2 Cure by Lender....................................................84
Section 13.3 Option to Renew or Extend the Ground Leases.......................84
Section 13.4 Ground Lease Covenants............................................84
Section 13.5 Lender Right to Participate.......................................87
Section 13.6 No Liability......................................................87
XIV. SECURITIZATION AND PARTICIPATION..................................................87
Section 14.1 Sale of Note and Securitization...................................87
Section 14.2 Cooperation.......................................................88
Section 14.3 Securitization Financial Statements...............................88
Section 14.4 Securitization Indemnification....................................88
Section 14.5 Retention of Servicer.............................................90
XV. ASSIGNMENTS AND PARTICIPATIONS....................................................90
Section 15.1 Assignment and Acceptance.........................................90
Section 15.2 Effect of Assignment and Acceptance...............................91
Section 15.3 Content...........................................................91
Section 15.4 Register..........................................................92
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Section 15.5 Substitute Notes..................................................92
Section 15.6 Participations....................................................92
Section 15.7 Disclosure of Information.........................................93
Section 15.8 Security Interest in Favor of Federal Reserve Bank................93
XVI. RESERVE ACCOUNTS..................................................................93
Section 16.1 Tax Reserve Account...............................................93
Section 16.2 Insurance Reserve Account.........................................94
Section 16.3 Structural Reserve Account........................................95
Section 16.4 TI and Leasing Reserve Account....................................95
Section 16.5 Deferred Maintenance and Environmental Remediation................97
Section 16.6 BofA Reserve Account..............................................98
XVII. DEFAULTS..........................................................................99
Section 17.1 Event of Default..................................................99
Section 17.2 Remedies.........................................................102
Section 17.3 Remedies Cumulative; Waivers.....................................103
Section 17.4 Costs of Collection..............................................103
XVIII. SPECIAL PROVISIONS...............................................................104
Section 18.1 Exculpation......................................................104
XIX. MISCELLANEOUS....................................................................104
Section 19.1 Survival.........................................................104
Section 19.2 Lender's Discretion..............................................104
Section 19.3 Governing Law....................................................104
Section 19.4 Modification, Waiver in Writing..................................105
Section 19.5 Delay Not a Waiver...............................................106
Section 19.6 Notices..........................................................106
Section 19.7 TRIAL BY JURY....................................................108
Section 19.8 Headings.........................................................108
Section 19.9 Severability.....................................................108
Section 19.10 Preferences......................................................108
Section 19.11 Waiver of Notice.................................................108
Section 19.12 Expenses; Indemnity..............................................109
Section 19.13 Exhibits and Schedules Incorporated..............................111
Section 19.14 Offsets, Counterclaims and Defenses..............................111
Section 19.15 Liability of Assignees of Lender.................................111
Section 19.16 No Joint Venture or Partnership; No Third Party Beneficiaries....111
Section 19.17 Publicity........................................................112
Section 19.18 Waiver of Marshalling of Assets..................................112
Section 19.19 Waiver of Counterclaim and other Actions.........................112
Section 19.20 Conflict; Construction of Documents; Reliance....................112
Section 19.21 Prior Agreements.................................................113
Section 19.22 Counterparts.....................................................113
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EXHIBITS AND SCHEDULES
EXHIBIT A TITLE INSURANCE REQUIREMENTS, ENDORSEMENTS AND AFFIRMATIVE
COVERAGES
EXHIBIT B SURVEY REQUIREMENTS
EXHIBIT C SINGLE PURPOSE ENTITY PROVISIONS
EXHIBIT D ENFORCEABILITY OPINION REQUIREMENTS
EXHIBIT E NON-CONSOLIDATION OPINION REQUIREMENTS
EXHIBIT F COUNTERPARTY OPINION REQUIREMENTS
EXHIBIT G FORM OF TENANT ESTOPPEL LETTER
EXHIBIT H FORM OF GROUND LEASE ESTOPPEL
EXHIBIT I FORM OF REA ESTOPPEL
EXHIBIT J [INTENTIONALLY DELETED]
EXHIBIT K BORROWER ORGANIZATIONAL STRUCTURE
EXHIBIT L INTEREST RATE CAP AGREEMENT
EXHIBIT M FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT N FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
EXHIBIT O O&M PROGRAM
EXHIBIT P FORM OF TENANT NOTIFICATION LETTER
EXHIBIT Q COUNTERPARTY ACKNOWLEDGMENT
EXHIBIT R [INTENTIONALLY DELETED]
EXHIBIT S [INTENTIONALLY OMITTED]
EXHIBIT T FORM OF INDEPENDENT MANAGER CERTIFICATE
EXHIBIT U [INTENTIONALLY DELETED]
SCHEDULE I REQUIRED TENANT ESTOPPEL CERTIFICATES
SCHEDULE II [INTENTIONALLY DELETED]
SCHEDULE III LITIGATION SCHEDULE
SCHEDULE IV REA SCHEDULE
SCHEDULE V REQUIRED DEFERRED MAINTENANCE AND ENVIRONMENTAL REMEDIATION
SCHEDULE VI GROUND LEASES
SCHEDULE VII ALLOCATED LOAN AMOUNTS
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT, dated as of June 30, 2003 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this Agreement), between FIRST STATES INVESTORS 5000A, LLC, a Delaware
limited liability company (Borrower), having an office at c/o First States
Group, L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and GERMAN
AMERICAN CAPITAL CORPORATION, a Maryland corporation, having an address at ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (together with its successors
and assigns, Lender).
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined)
from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents
(as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
Account Agreement shall mean the Account and Control Agreement, dated
the date hereof, among Lender, Borrower and Cash Management Bank.
Account Collateral shall have the meaning set forth in Section 3.1.2.
Acknowledgment shall mean the Acknowledgment, dated on or about the
date hereof made by Counterparty, or as applicable, Approved Counterparty in the
form of Exhibit Q.
Additional Non-Consolidation Opinion shall have the meaning set forth
in Section 4.1.29(b).
Affiliate shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with, or any general partner or managing member in, such
specified Person. An Affiliate of a Person includes, without limitation, (i) any
officer or director of such Person, (ii) any record or beneficial owner of more
than 10% of any class of ownership interests of such Person and (iii) any
Affiliate of the foregoing. For the purposes of this definition, "control" when
used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities or other beneficial interest, by contract or otherwise; and
the terms "controlling" and "controlled" have the meanings correlative to the
foregoing.
Agreement shall mean this Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
Allocated Loan Amount shall mean with respect to each Individual
Property, the designated allocated portion of the Loan applicable to such
Individual Property that is set forth on Schedule VII attached hereto.
ALTA shall mean American Land Title Association, or any successor
thereto.
Alteration shall have the meaning set forth in Article X.
Annual Budget shall mean the operating budget for the Property
prepared by or for Borrower setting forth, in reasonable detail, anticipated
results of operations of the Property for the applicable Fiscal Year, including
revenues from all sources, all anticipated Operating Expenses, Management Fees
and Capital Expenditures, which operating budget may be the same as the
operating budget that is prepared by Borrower pursuant to the Bank of America
Lease.
Approved Bank shall have the meaning set forth in the Account
Agreement.
Approved Base Building Work: Shall mean items of a capital or
structural repair nature required to repair and maintain the Property.
Approved Counterparty shall mean a bank or other financial institution
which has a minimum long-term unsecured debt rating of at least AA or its
equivalent by each of the Rating Agencies (as hereinafter defined), or if any
such bank or other financial institution is not rated by all the Rating
Agencies, then a minimum long-term rating of at least AA or its equivalent by
two of the Rating Agencies (one of which must be S&P), it being understood that
the AA benchmark rating and other benchmark ratings in this Agreement are
intended to be the ratings, or the equivalent of ratings, issued by S&P.
Assignment and Acceptance shall mean an assignment and acceptance
entered into by Lender and an assignee, and accepted by Lender in accordance
with Article XV and in substantially the form of Exhibit M or such other form
customarily used by Lender in connection with the participation or syndication
of mortgage loans at the time of such assignment.
Assignment of Leases shall mean those certain first priority
Assignment of Leases, Rents and Security Deposits, dated as of the date hereof,
from Borrower, as assignor, to Lender, as assignee, assigning to Lender all of
Borrower's interest in and to the Leases, Rents and Security Deposits as
security for the Loan, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
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Assignment of Management Agreement shall mean that certain Manager's
Consent and Subordination of Management Agreement, dated the date hereof, among
Lender, Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
Bankruptcy Code shall mean Title 11, U.S.C.A., as amended from time to
time and any successor statute thereto.
BofA Lease shall mean that certain Master Lease Agreement, dated as of
the Closing Date, between Borrower and Bank of America, N.A.
BofA Reserve Account shall have the meaning set forth in Section
3.1.1.
BofA Reserve Amount shall have the meaning set forth in Section 16.6.
Borrower has the meaning set forth in the first paragraph of this
Agreement.
Borrower's Account shall mean Borrower's account number
200-0011-522-216 at First Union National Bank (ABA #: ▇▇▇▇▇▇▇▇▇).
Building Equipment shall have the meaning set forth in the Security
Instrument.
Business Day shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York or in the state in which Servicer
is located are not open for business. When used with respect to an Interest
Determination Date, Business Day shall mean any day on which dealings in
deposits in U.S. Dollars are transacted in the London interbank market.
Capital Expenditures shall mean any amount incurred in respect of
capital items which in accordance with GAAP would not be included in Borrower's
annual financial statements for an applicable period as an operating expense of
the Property and is not reasonably expected by Borrower to be a regularly
recurring operating expense of the Property.
Cash shall mean the legal tender of the United States of America.
Cash and Cash Equivalents shall mean any one or a combination of the
following: (i) Cash, and (ii) U.S. Government Obligations.
Cash Management Bank shall mean Wachovia Bank, National Association or
any successor Approved Bank acting as Cash Management Bank under the Account
Agreement or other financial institution approved by the Lender and, if a
Securitization has occurred, the Rating Agencies.
Casualty Amount shall mean the greater of (i) five percent (5%) of the
Allocated Loan Amount of the affected Individual Property, but in no event more
than $3,000,000 and (ii) $500,000.
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Closing Date shall mean the date of this Agreement set forth in the
first paragraph hereof.
Code shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
Collateral Accounts shall have the meaning set forth in Section 3.1.1.
Collection Account shall mean the account specified herein for deposit
of Rents and other receipts from the Property as provided herein.
Completion shall have the meaning set forth in Section 16.5.
Completion Date shall have the meaning set forth in Section 16.5.
Control shall mean (i) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or otherwise
and (ii) the ownership, direct or indirect, of no less than 51% of the voting
securities of such Person, and the terms Controlled, Controlling and Common
Control shall have correlative meanings.
Counterparty shall mean, with respect to the Interest Rate Cap
Agreement, any Approved Counterparty.
Counterparty Opinion shall have the meaning set forth in Section
9.3(g).
Cut-Off Date shall have the meaning set forth in Section 6.2.3.
DBS shall have the meaning set forth in Section 14.4.2(b).
DBS Group shall have the meaning set forth in Section 14.4.2(b).
Debt shall mean, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services; (b) obligations of such Person as lessee
under leases which should have been or should be, in accordance with GAAP,
recorded as capital leases; (c) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for, or liabilities incurred on the account of, such Person;
(e) obligations or liabilities of such Person arising under letters of credit,
credit facilities or other acceptance facilities; (f) obligations of such Person
under any guarantees or other agreement to become secondarily liable for any
obligation of any other Person, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any Lien on any property of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
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Debt Service shall mean, with respect to any particular period of
time, scheduled interest payments under the Note.
Debt Service Reserve Account shall have the meaning set forth in
Section 3.1.1.
Default shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
Default Rate shall have the meaning set forth in the Note.
Deferred Maintenance Holdback Amount shall have the meaning set forth
in Section 16.5.
Deficiency shall have the meaning set forth in Section 6.2.4(b).
Disclosure Documents shall have the meaning set forth in Section
14.4.1.
Eligible Account has the meaning set forth in the Account Agreement.
Environmental Certificate shall have the meaning set forth in Section
12.2.1.
Environmental Claim shall mean any claim, action, cause of action,
investigation or written notice by any Person alleging potential liability
(including potential liability for investigatory costs, cleanup costs, natural
resource damages, property damages, personal injuries or penalties) arising out
of, based upon or resulting from (a) the presence, threatened presence, release
or threatened release into the environment of any Hazardous Materials from or at
the Property, or (b) the violation, or alleged violation, of any Environmental
Law relating to the Property.
Environmental Event shall have the meaning set forth in Section
12.2.1.
Environmental Indemnity shall mean the Environmental Indemnity, dated
the date hereof, made by First States Group, L.P. in favor of Lender.
Environmental Law shall have the meaning provided in the Environmental
Indemnity.
Environmental Reports shall have the meaning set forth in Section
12.1.
ERISA shall mean the United States Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
the rulings issued thereunder.
Event of Default shall have the meaning set forth in Section 17.1(a).
Excess Cash Flow shall have the meaning set forth in Section 3.1.5.
Exchange Act shall have the meaning set forth in Section 14.4.1.
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Exculpated Parties shall have the meaning set forth in Section 18.1.1.
Excusable Delay shall mean a delay solely due to acts of god,
governmental restrictions, stays, judgments, orders, decrees, enemy actions,
civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or
materials or other causes beyond the reasonable control of Borrower, but
Borrower's lack of funds in and of itself shall not be deemed a cause beyond the
control of Borrower.
Exit Fee shall have the meaning set forth in the Note.
Fee Owners shall mean the lessors under the Ground Leases.
Fiscal Year shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan or
the portion of any such 12-month period falling within the term of the Loan in
the event that such a 12-month period occurs partially before or after, or
partially during, the term of the Loan.
Fitch shall mean Fitch Ratings Inc.
TI and Leasing Costs shall have the meaning set forth in Section 16.4.
TI and Leasing Reserve Account shall have the meaning set forth in
Section 3.1.1.
GAAP shall mean the generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, to the extent such
principles are applicable to the facts and circumstances on the date of
determination.
Governmental Authority shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
Ground Leases shall mean the ground leases identified on Schedule VI
attached hereto.
Guarantors shall mean American Financial Realty Trust, a Maryland real
estate investment trust, and First States Group, L.P., a Delaware limited
partnership.
Hazardous Materials shall have the meaning provided in the
Environmental Indemnity.
Holding Account shall have the meaning set forth in Section 3.1.1.
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Impositions shall mean all taxes (including all ad valorem, sales
(including those imposed on lease rentals), use, single business, gross
receipts, value added, intangible transaction, privilege or license or similar
taxes), governmental assessments (including all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of this
Agreement), water, sewer or other rents and charges, excises, levies, fees
(including license, permit, inspection, authorization and similar fees), and all
other governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Property and/or any Rents (including all interest and penalties thereon), which
at any time prior to, during or in respect of the term hereof may be assessed or
imposed on or in respect of or be a Lien upon (a) Borrower (including all
income, franchise, single business or other taxes imposed on Borrower for the
privilege of doing business in the jurisdiction in which the Property is
located), (b) the Property, or any other collateral delivered or pledged to
Lender in connection with the Loan, or any part thereof, or any Rents therefrom
or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Property or the leasing or use of all or any part thereof.
Nothing contained in this Agreement shall be construed to require Borrower to
pay any tax, assessment, levy or charge imposed on (i) any tenant occupying any
portion of the Property, (ii) any third party manager of the Property, including
any Manager, or (iii) Lender in the nature of a capital levy, estate,
inheritance, succession, income or net revenue tax.
Improvements shall have the meaning set forth in the Security
Instrument.
Increased Costs shall have the meaning set forth in Section 2.4.1.
Indebtedness shall mean, at any given time, the Principal Amount,
together with all accrued and unpaid interest thereon and all other obligations
and liabilities due or to become due to Lender pursuant hereto, under the Note
or in accordance with the other Loan Documents and all other amounts, sums and
expenses paid by or payable to Lender hereunder or pursuant to the Note or the
other Loan Documents.
Indemnified Parties shall have the meaning set forth in Section
19.12(b).
Independent shall mean, when used with respect to any Person, a Person
who: (i) does not have any direct financial interest or any material indirect
financial interest in any Borrower or in any Affiliate of any Borrower, (ii) is
not connected with any Borrower or any Affiliate of any Borrower as an officer,
employee, promoter, underwriter, trustee, partner, member, manager, creditor,
director, supplier, customer or person performing similar functions and (iii) is
not a member of the immediate family of a Person defined in (i) or (ii) above.
Independent Accountant shall mean a firm of nationally recognized,
certified public accountants which is Independent and which is selected by
Borrower and reasonably acceptable to Lender.
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Independent Architect shall mean an architect, engineer or
construction consultant selected by Borrower which is Independent, licensed to
practice in the State and has at least five (5) years of architectural
experience and which is reasonably acceptable to Lender.
Independent Director, Independent Manager, or Independent Member shall
mean a Person who is not and will not be while serving and has never been (i) a
member (other than an Independent Member), manager (other than an Independent
Manager), director (other than an Independent Director), employee, attorney, or
counsel of Borrower or its Affiliates, (ii) a customer, supplier or other Person
who derives more than 1% of its purchases or revenues from its activities with
Borrower or its Affiliates, (iii) a direct or indirect legal or beneficial owner
in such entity or any of its Affiliates, (iv) a member of the immediate family
of any member, manager, employee, attorney, customer, supplier or other Person
referred to above, or (v) a person Controlling or under the common Control of
anyone listed in (i) through (iv) above. A Person that otherwise satisfies the
foregoing shall not be disqualified from serving as an Independent Director or
Independent Manager or Independent Member if such individual is at the time of
initial appointment, or at any time while serving as such, is an Independent
Director or Independent Manager or Independent Member, as applicable, of a
Single Purpose Entity affiliated with Borrower.
Individual Parcel shall have the meaning set forth in the Security
Instrument.
Individual Property shall have the meaning set forth in the Security
Instrument.
Insurance Requirements shall mean, collectively, (i) all material
terms of any insurance policy required pursuant to this Agreement and (ii) all
material regulations and then-current standards applicable to or affecting the
Property or any part thereof or any use or condition thereof, which may, at any
time, be recommended by the Board of Fire Underwriters, if any, having
jurisdiction over the Property, or such other body exercising similar functions.
Insurance Reserve Account shall have the meaning set forth in Section
3.1.1(b).
Insurance Reserve Amount shall have the meaning set forth in Section
16.2.
Intangible shall have the meaning set forth in the Security
Instrument.
Interest Determination Date shall have the meaning set forth in the
Note.
Interest Period shall have the meaning set forth in the Note.
Interest Rate Cap Agreement shall mean the Confirmation and Agreement
(together with the confirmation and schedules relating thereto), between the
Counterparty and Borrower, obtained by Borrower and collaterally assigned to
Lender pursuant to this Agreement. After delivery of a Replacement Interest Rate
Cap Agreement to Lender, the term Interest Rate Cap Agreement shall be deemed to
mean such Replacement Interest Rate Cap Agreement. The Interest Rate Cap
Agreement shall be governed by the laws of the State of New York and shall
contain each of the following:
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(a) Notional Amount. The notional amount of the Interest Rate Cap
Agreement shall be equal to the Principal Amount;
(b) Remaining Term. The remaining term of the Interest Rate Cap
Agreement shall at all times extend through the end of the Interest Period in
which the Maturity Date occurs as extended from time to time pursuant to this
Agreement and the Loan Documents;
(c) Parties. The Interest Rate Cap Agreement shall be issued by the
Counterparty to Borrower and shall be pledged to Lender by Borrower in
accordance with this Agreement;
(d) Payment Stream. The Counterparty under the Interest Rate Cap
Agreement shall be obligated to make a stream of payments, directly to the
Collection Account (whether or not an Event of Default has occurred) from time
to time equal to the product of (i) the notional amount of such Interest Rate
Cap Agreement multiplied by (ii) the excess, if any, of LIBOR (including any
upward rounding under the definition of LIBOR) over the Strike Price;
(e) Acknowledgment. The Counterparty under the Interest Rate Cap
Agreement shall execute and deliver the Acknowledgment; and
(f) Other. The Interest Rate Cap Agreement shall impose no material
obligation on the beneficiary thereof (after payment of the acquisition cost)
and shall be in all material respects satisfactory in form and substance to
Lender.
Land shall have the meaning set forth in the Security Instrument.
Late Payment Charge shall have the meaning set forth in Section 2.2.3.
Lease shall mean any lease (other than the Ground Lease), sublease or
subsublease, letting, license, concession or other agreement (whether written or
oral and whether now or hereafter in effect) pursuant to which any Person is
granted by the Borrower a possessory interest in, or right to use or occupy all
or any portion of any space in the Property, and every modification, amendment
or other agreement relating to such lease, sublease, subsublease, or other
agreement entered into in connection with such lease, sublease, subsublease, or
other agreement and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto.
Leasehold Estates shall have the meaning set forth in the Security
Instrument.
Lease Modification shall have the meaning set forth in Section 8.8.1.
Leases shall have the meaning set forth in the Security Instrument.
Legal Requirements shall mean all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees, injunctions, rules, regulations
and requirements, and irrespective of the nature of the work to be done, of
every Governmental Authority including, without limitation, Environmental Laws
and all covenants, restrictions and conditions now or hereafter of record which
may be applicable to Borrower or to the Property and the Improvements and the
Building Equipment thereon, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction of the Property and
the
9
Improvements and the Building Equipment thereon including, without limitation,
building and zoning codes and ordinances and laws relating to handicapped
accessibility.
Lender shall have the meaning set forth in the first paragraph of this
Agreement.
Lender's Consultant shall mean KTR Newmark Consultants, LLC, Entrix,
Inc. or such other environmental and engineering consulting firm selected by
Lender having experience (i) conducting environmental and engineering
assessments for properties similar to the Property and (ii) preparing and
supervising remediation plans for properties similar to the Property.
Letter of Credit shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit (either an evergreen letter of
credit or one which does not expire until at least sixty (60) days after the
Maturity Date (the LC Expiration Date), in favor of Lender and entitling Lender
to draw thereon in New York, New York, based solely on a statement executed by
an officer or authorized signatory of Lender and issued by an Approved Bank. If
at any time (a) the institution issuing any such Letter of Credit shall cease to
be an Approved Bank or (b) the Letter of Credit is due to expire prior to the LC
Expiration Date, Lender shall have the right immediately to draw down the same
in full and hold the proceeds thereof in accordance with the provisions of this
Agreement, unless Borrower shall deliver a replacement Letter of Credit from an
Approved Bank within (i) as to (a) above, twenty (20) days after Lender delivers
written notice to Borrower that the institution issuing the Letter of Credit has
ceased to be an Approved Bank or (ii) as to (b) above, at least twenty (20) days
prior to the expiration date of said Letter of Credit.
Liability shall have the meaning set forth in Section 14.4.2(b).
LIBOR shall have the meaning set forth in the Note.
LIBOR Margin shall have the meaning set forth in the Note.
LIBOR Rate shall have the meaning set forth in the Note.
License shall have the meaning set forth in Section 4.1.23.
Lien shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, collateral assignment, security interest, or any other
encumbrance or charge on or affecting Borrower, the Property, any portion
thereof or any interest therein, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and the filing of mechanic's, materialmen's and other
similar liens and encumbrances.
Loan shall mean the loan in the amount of $400,000,000.00 made by
Lender to Borrower pursuant to this Agreement.
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Loan Documents shall mean, collectively, this Agreement, the Note, the
Security Instrument, the Assignment of Leases, the Environmental Indemnity, the
Assignment of Management Agreement, the Account Agreement, the Recourse Guaranty
and all other documents executed and/or delivered by Borrower in connection with
the Loan including any certifications or representations delivered by or on
behalf of Borrower, any Affiliate of Borrower, the Manager, or any Affiliate of
the Manager.
Management Agreement shall mean the management agreement, dated as of
the Closing Date, pursuant to which the Manager is to provide management and
other services with respect to the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
Management Fee shall mean an amount equal to the property management
fee payable to the Manager pursuant to the terms of the Management Agreement for
base management services.
Manager shall mean First States Management Corp, LLC, a Delaware
limited liability company.
Material Adverse Effect shall mean any event or condition that has a
material adverse effect on (i) the Property taken as a whole, (ii) the use,
operation, or value of the Property taken as a whole, (iii) the business,
profits, operations or financial condition of Borrower, or (iv) the ability of
Borrower to repay the principal and interest of the Loan as it becomes due or to
satisfy any of Borrower's obligations under the Loan Documents.
Material Alteration shall mean any Alteration which, when aggregated
with all related Alterations (other than decorative work such as painting, wall
papering and carpeting and the replacement of fixtures, furnishings and
equipment to the extent being of a routine and recurring nature and performed in
the ordinary course of business) constituting a single project, involves an
estimated cost exceeding one percent (1%) of the Allocated Loan Amount for each
Individual Property with respect to such Alteration or related Alterations
(including the Alteration in question) then being undertaken at such Individual
Property.
Maturity Date shall have the meaning set forth in the Note.
Maturity Date Payment shall have the meaning set forth in the Note.
Maximum Legal Rate shall mean the maximum non-usurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
Monthly Insurance Reserve Amount shall have the meaning set forth in
Section 16.2.
Monthly Tax Reserve Amount shall have the meaning set forth in Section
16.1.
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Monthly TI and Leasing Reserve Amount shall have the meaning set forth
in Section 16.4.
Moody's shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
Net Operating Income shall mean the amount obtained by subtracting
Operating Expenses from Operating Income.
New Lease shall have the meaning set forth in Section 8.8.1.
Non-Consolidation Opinion shall have the meaning provided in Section
2.5.5.
Non-Disturbance Agreement shall have the meaning set forth in Section
8.8.9.
Note shall mean that certain Note in the principal amount of Four
Hundred Million Dollars ($400,000,000.00), made by Borrower in favor of Lender
as of the date hereof, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
O&M Program shall have the meaning set forth in Section 12.2.2.
Obligations shall have meaning set forth in the recitals of the
Security Instrument.
Officer's Certificate shall mean a certificate executed by an
authorized signatory of Borrower that is familiar with the financial condition
of Borrower and the operation of the Property.
Operating Expenses shall mean, for any period, without duplication,
all expenses actually paid or payable by Borrower during such period in
connection with the operation, management, maintenance, repair and use of the
Property, determined on an accrual basis, and, except to the extent otherwise
provided in this definition, in accordance with GAAP. Operating Expenses
specifically shall include (i) all expenses incurred in the immediately
preceding twelve (12) month period based on quarterly financial statements
delivered to Lender in accordance with Article XI, (ii) all payments required to
be made pursuant to any REAs, (iii) property management fees in an amount equal
to the greater of three percent (3%) of Operating Income and the management fees
actually paid under the Management Agreement, (iv) administrative, payroll,
security and general expenses for the Property, (v) the cost of utilities,
inventories and fixed asset supplies consumed in the operation of the Property,
(vi) a reasonable reserve for uncollectible accounts, (vii) costs and fees of
independent professionals (including, without limitation, legal, accounting,
consultants and other professional expenses), technical consultants, operational
experts (including quality assurance inspectors) or other third parties retained
to perform services required or permitted hereunder, (viii) cost of attendance
by employees at training and manpower development programs, (ix) association
dues, (x) computer processing charges, (xi) operational equipment and other
lease payments as reasonably approved by Lender, (xii) taxes and other
Impositions, other than income taxes or other Impositions in the nature of
income taxes and insurance premiums and (xiii) all underwritten reserves
required by Lender hereunder (without duplication). Notwithstanding the
foregoing, Operating Expenses shall not
12
include (1) depreciation or amortization, (2) income taxes or other Impositions
in the nature of income taxes, (3) any expenses (including legal, accounting and
other professional fees, expenses and disbursements) incurred in connection with
the making of the Loan or the sale, exchange, transfer, financing or refinancing
of all or any portion of the Property or in connection with the recovery of
Proceeds which are applied to prepay the Note, (4) any expenses which in
accordance with GAAP should be capitalized, (5) Debt Service, and (6) any item
of expense which would otherwise be considered within Operating Expenses
pursuant to the provisions above but is paid directly by any Tenant.
Operating Income shall mean, for any period, all income of Borrower
during such period from the use, ownership or operation of the Property as
follows:
(a) all amounts payable to Borrower by any Person as Rent and other
amounts under Leases, license agreements, occupancy agreements, concession
agreements or other agreements relating to the Property;
(b) business interruption insurance proceeds allocable to the
applicable reporting period; and
(c) all other amounts which in accordance with GAAP are included in
Borrower's annual financial statements as operating income attributable to the
Property.
Notwithstanding the foregoing, Operating Income shall not include (a)
any Proceeds (other than business interruption insurance proceeds and only to
the extent allocable to the applicable reporting period), (b) any proceeds
resulting from the Transfer of all or any portion of the Property, (c) any Rent
attributable to a Lease prior to the date in which the Tenant thereunder has
taken occupancy or in which the actual payment of rent is required to commence
thereunder, (d) any item of income otherwise included in Operating Income but
paid directly by any Tenant to a Person other than Borrower as an offset or
deduction against Rent payable by such Tenant, provided such item of income is
for payment of an item of expense (such as payments for utilities paid directly
to a utility company) and such expense is otherwise excluded from the definition
of Operating Expenses pursuant to clause "(6)" of the definition thereof, (e)
security deposits received from Tenants until forfeited or applied, and (f)
payments made to the Borrower under the Interest Rate Cap Agreement or any
Replacement Interest Rate Cap Agreement. Operating Income shall be calculated on
the accrual basis of accounting and, except to the extent otherwise provided in
this definition, in accordance with GAAP.
Opinion of Counsel shall mean an opinion of counsel of a law firm
selected by Borrower and reasonably acceptable to Lender.
Other Charges shall mean maintenance charges, impositions other than
Impositions, and any other charges, including, without limitation, vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Property, now or hereafter levied or assessed or imposed against the Property or
any part thereof by any Governmental Authority, other than those required to be
paid by a tenant pursuant to its respective Lease.
Other Taxes shall have the meaning set forth in Section 2.4.3.
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Payment Date shall have the meaning set forth in the Note.
Permitted Debt shall mean collectively, (a) the Note and the other
obligations, indebtedness and liabilities specifically provided for in any Loan
Document and secured by this Agreement, the Security Instrument and the other
Loan Documents, (b) trade payables incurred in the ordinary course of Borrower's
business, not secured by Liens on the Property (other than liens being properly
contested in accordance with the provisions of this Agreement or the Security
Instrument), not to exceed three percent (3%) of the Principal Amount at any one
time outstanding, payable by or on behalf of Borrower for or in respect of the
operation of the Property in the ordinary course of operating Borrower's
business, provided that (but subject to the remaining terms of this definition)
each such amount shall be paid within sixty (60) days following the date on
which each such amount becomes past due and (c) amounts due under (i) REAs and
similar operating agreements, (ii) the Management Agreement, and (iii) Leases
(including reimbursements for tenant improvement work). Nothing contained herein
shall be deemed to require Borrower to pay any amount, so long as Borrower is in
good faith, and by proper legal proceedings, diligently contesting the validity,
amount or application thereof, provided that in each case, at the time of the
commencement of any such action or proceeding, and during the pendency of such
action or proceeding (i) no Event of Default shall exist and be continuing
hereunder, (ii) adequate reserves with respect thereto are maintained on the
books of Borrower in accordance with GAAP (as determined by the Independent
Accountant), and (iii) such contest operates to suspend collection or
enforcement, as the case may be, of the contested amount and such contest is
maintained and prosecuted continuously and with diligence. Notwithstanding
anything set forth herein, in no event shall Borrower be permitted under this
provision to enter into a note (other than the Note and the other Loan
Documents) or other instrument for borrowed money.
Permitted Encumbrances shall mean collectively, (a) the Liens and
security interests created or permitted by the Loan Documents, (b) all Liens,
encumbrances and other matters disclosed in the Title Policy and (c) Liens, if
any, for Impositions imposed by any Governmental Authority not yet due or
delinquent.
Permitted Investments shall have the meaning set forth in the Account
Agreement.
Person shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
Personal Property shall have the meaning set forth in the Security
Instrument.
Physical Conditions Report shall mean the structural engineering
report with respect to the Property (i) prepared by an Independent Architect,
(ii) addressed to Lender, (iii) prepared based on a scope of work determined by
Lender in Lender's reasonable discretion, and (iv) in form and content
acceptable to Lender in Lender's reasonable discretion, together with any
amendments or supplements thereto.
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Plan shall have the meaning set forth in Section 4.1.10.
Principal Amount shall have the meaning set forth in the Note.
Proceeds shall have the meaning set forth in Section 6.2.2.
Proceeds Reserve Account shall have the meaning set forth in Section
3.1.1.
Property shall have the meaning set forth in the Security Instrument.
Provided Information shall have the meaning set forth in Section
14.1.1.
Qualified Manager shall mean (i) a reputable and experienced
management organization which together with its Affiliates manages multiple
properties having an aggregate minimum of 10,000,000 net rentable square feet of
office space, provided that (a) prior to a Securitization, Borrower shall have
obtained the prior written consent of Lender for such Person, which consent
shall not be unreasonably withheld or delayed and (b) after a Securitization, in
addition to Lender's consent, which consent shall not be unreasonably withheld
or delayed, Borrower shall have obtained a Rating Agency Confirmation or (ii)
any other manager as Lender shall approve in its sole and absolute discretion.
Rate Cap Collateral shall have the meaning set forth in Section 9.2.
Rating Agencies shall mean (a) prior to a Securitization, each of S&P,
▇▇▇▇▇'▇ and Fitch and any other nationally-recognized statistical rating agency
which has been approved by Lender and (b) after a Securitization has occurred,
each such Rating Agency which has rated the Securities in the Securitization.
Rating Agency Confirmation shall mean, collectively, a written
affirmation from each of the Rating Agencies that the credit rating of the
Securities given by such Rating Agency immediately prior to the occurrence of
the event with respect to which such Rating Agency Confirmation is sought will
not be qualified, downgraded or withdrawn as a result of the occurrence of such
event, which affirmation may be granted or withheld in such Rating Agency's sole
and absolute discretion. In the event that, at any given time, no such
Securities shall have been issued and are then outstanding, then the term Rating
Agency Confirmation shall be deemed instead to require the written approval of
Lender based on its good faith determination of whether the Rating Agencies
would issue a Rating Agency Confirmation if any such Securities were
outstanding.
REAs shall mean, collectively, as the same may be amended, restated,
supplemented or otherwise modified from time to time, those certain agreements
more specifically described on Schedule IV.
Real Property shall mean, collectively, the "Land", the "Improvements"
and the "Appurtenances" that is defined in the Security Instrument.
15
Recourse Guaranty shall mean that certain Guaranty of Recourse
Obligations of Borrower, dated as of the date hereof, by Guarantors in favor of
Lender, as the same may be amended, supplemented, restated or otherwise modified
from time to time.
Register shall have the meaning set forth in Section 15.4.
Regulatory Change shall mean any change after the date of this
Agreement in federal, state or foreign laws or regulations or the adoption or
the making, after such date, of any interpretations, directives or requests
applying to Lender, or any Person Controlling Lender or to a class of banks or
companies Controlling banks of or under any federal, state or foreign laws or
regulations (whether or not having the force of law) by any court or
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.
Rents shall mean all rents, rent equivalents, moneys payable as
damages or in lieu of rent or rent equivalents, royalties (including, without
limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation,
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of Borrower from any and
all sources arising from or attributable to the Property and Proceeds, if any,
from business interruption or other loss of income insurance.
Replacement Interest Rate Cap Agreement shall mean an interest rate
cap agreement from an Approved Counterparty with terms that are the same in all
material respects as the terms of the Interest Rate Cap Agreement except that
the same shall be effective as of (i) in connection with a replacement following
a downgrade, withdrawal or qualification of the long-term unsecured debt rating
of the Counterparty below AA by S&P or Aaa by Moody's, the date required in
Section 9.3(c) or (ii) in connection with a replacement related to an extension
of the Maturity Date, the date required in Section 5(a)(ii) of the Note;
provided that to the extent any such interest rate cap agreement does not meet
the foregoing requirements, a Replacement Interest Rate Cap Agreement shall be
such interest rate cap agreement approved in writing by Lender, and if the Loan
or any portion thereof is included in a Securitization, each of the Rating
Agencies with respect thereto.
S&P shall mean Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
Securities shall have the meaning set forth in Section 14.1.
Securities Act shall have the meaning set forth in Section 14.4.1.
Securitization shall have the meaning set forth in Section 14.1.
Security Deposit Account shall have the meaning set forth in Section
3.1.1.
Security Instrument shall mean those certain first priority Combined
Fee and Leasehold Multistate Mortgage, Deed to Secure Debt, Deed of Trust,
Security Agreement, Financing Statement, Fixture Filing and Assignment of
Leases, Rents and Security Deposits, dated the date hereof, executed and
delivered by Borrower (i) with respect to the Mortgage
16
Properties (as defined therein) to Lender and (ii) with respect to the Deed of
Trust Properties (as defined therein) to the trustees specified therein for the
benefit of Lender, and encumbering the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
Servicer shall mean such Person designated in writing with an address
for such Person by Lender, in its sole discretion, to act as Lender's agent
hereunder with such powers as are specifically delegated to the Servicer by
Lender, whether pursuant to the terms of this Agreement, the Account Agreement
or otherwise, together with such other powers as are reasonably incidental
thereto.
Single Purpose Entity shall mean a Person, other than an individual,
which (i) is formed or organized solely for the purpose of owning, holding,
developing, using, operating and financing an ownership interest in the
Property, (ii) does not engage in any business unrelated to the Property and the
ownership, development, use, operation and financing thereof, (iii) has not and
will not have any assets other than those related to its interest in the
Property or the operation, management and financing thereof or any indebtedness
other than the Permitted Debt, (iv) maintains its own separate books and records
and its own accounts, in each case which are separate and apart from the books
and records and accounts of any other Person, (v) holds itself out as being a
Person, separate and apart from any other Person, (vi) does not and will not
commingle its funds or assets with those of any other Person, (vii) conducts its
own business in its own name; (viii) maintains separate financial statements,
(ix) pays its own liabilities out of its own funds, (x) observes all
partnership, corporate or limited liability company formalities, as applicable,
(xi) pays the salaries of its own employees, if any, and maintains a sufficient
number of employees, if any, in light of its contemplated business operations,
(xii) does not guarantee or otherwise obligate itself with respect to the debts
of any other Person or hold out its credit as being available to satisfy the
obligations of any other Person, (xiii) does not acquire obligations or
securities of its partners, members or shareholders, (xiv) allocates fairly and
reasonably shared expenses, including, without limitation, any overhead for
shared office space, if any, (xv) uses separate stationary, invoices, and
checks, (xvi) maintains an arms-length relationship with its Affiliates, (xvii)
does not and will not pledge its assets for the benefit of any other Person or
make any loans or advances to any other Person, (xviii) does and will continue
to use commercially reasonable efforts to correct any known misunderstanding
regarding its separate identity, (xix) maintains adequate capital in light of
its contemplated business operations, (xx) has and will continue to have a
partnership or operating agreement, certificate of incorporation, articles of
organization or other organizational document which has been approved by Lender,
and (xxi) has not and will not engage in, seek, or consent to the dissolution,
winding up, liquidation, consolidation or merger and except as otherwise
permitted in this Agreement, has not and will not engage in, seek or consent to
any asset sale, transfer or partnership, membership or shareholder interests, or
amendments of its partnership or operating agreement, certificate of
incorporation, articles of organization or other organizational document. In
addition, if such Person is a partnership, (1) all general partners of such
Person shall be Single Purpose Entities; and (2) if such Person has more than
one general partner, then the organizational documents shall provide that such
Person shall continue (and not dissolve) for so long as a solvent general
partner exists. In addition, if such Person is a corporation, then, at all
times: (a) such Person shall have at least two (2) Independent Directors and (b)
the board of directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of
17
directors unless all of the directors, including the Independent Directors,
shall have participated in such vote. In addition, if such Person is a limited
liability company, (a) such Person shall have at least two (2) Independent
Managers or Independent Members, (b) if such Person is managed by a board of
managers, the board of managers of such Person may not take any action requiring
the unanimous affirmative vote of 100% of the members of the board of managers
unless all of the managers, including the Independent Managers, shall have
participated in such vote, (c) if such Person is not managed by a board of
managers, the members of such Person may not take any action requiring the
affirmative vote of 100% of the members of such Person unless all of the
members, including the Independent Members, shall have participated in such
vote, (d) each managing member shall be a Single Purpose Entity and (e) its
articles of organization, certificate of formation and/or operating agreement,
as applicable, shall provide that until all of the Indebtedness and Obligations
are paid in full such entity will not dissolve. In addition, the organizational
documents of such Person shall provide that such Person (1) without the
unanimous consent of all of the partners, directors or members, as applicable,
shall not with respect to itself or to any other Person in which it has a direct
or indirect legal or beneficial interest (a) seek or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator, custodian or other
similar official for the benefit of the creditors of such Person or all or any
portion of such Person's properties, or (b) take any action that might cause
such Person to become insolvent, petition or otherwise institute insolvency
proceedings or otherwise seek any relief under any laws relating to the relief
from debts or the protection of debtors generally, (2) has and will maintain its
books, records, resolutions and agreements as official records, (3) has held and
will hold its assets in its own name, (4) has and will maintain its financial
statements, accounting records and other organizational documents, books and
records separate and apart from any other Person, (5) has not and will not
identify its partners, members or shareholders, or any affiliates of any of them
as a division or part of it, (6) has and will maintain an arms-length
relationship with its Affiliates, and (7) has not and will not enter into or be
a party to any transaction with its partners, members, shareholders, or its
Affiliates except in the ordinary course of business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arms-length transaction with a third party.
Special Taxes shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, or any liabilities with respect
thereto, applicable to payments of principal, interest or other amounts on the
Loan or pursuant to the Loan Documents, but excluding, in the case of Lender,
such taxes (including income taxes, franchise taxes and branch profit taxes) as
are imposed on or measured by Lender's net income by the United States of
America or any Governmental Authority of the jurisdiction under the laws under
which Lender is organized or maintains a lending office.
Standard Form of Lease shall have the meaning set forth in Section
8.8.2(a).
State shall mean, with respect to each Individual Parcel, the State in
which such Individual Parcel or any part thereof is located.
Strike Price shall mean 5.25% per annum.
Structural Reserve Account shall have the meaning set forth in Section
3.1.1.
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Structural Reserve Amount shall have the meaning set forth in Section
16.3(a).
Sub-Account(s) shall have the meaning set forth in Section 3.1.1.
Surveys shall mean a survey of each parcel included in the Property
prepared by a surveyor licensed in the State and satisfactory to Lender and the
company or companies issuing the Title Policy, and containing a certification of
such surveyor satisfactory to Lender.
Taking shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of the Property, or
any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.
Tax Reserve Account shall have the meaning set forth in Section 3.1.1.
Tax Reserve Amount shall have the meaning set forth in Section 16.1.
Tenant shall mean any Person leasing, subleasing or otherwise
occupying any portion of the Property, other than the Manager and its employees,
agents and assigns.
Threshold Amount shall mean an amount equal to one-half of one percent
(0.5%) of the Principal Amount.
Title Company shall mean Chicago Title Insurance Company.
Title Policy shall mean an ALTA mortgagee title insurance policy (or,
if an Individual Parcel is in a state which does not permit the issuance of such
ALTA policy, such form as shall be permitted in such state) meeting the
requirements of Exhibit A to this Agreement issued by the Title Company with
respect to the Property and insuring the lien of the Security Instrument.
Total Loss shall mean (i) a casualty, damage or destruction of the
Property which, in the reasonable judgment of Lender, (A) involves an actual or
constructive loss of more than thirty percent (30%) of the lesser of (x) the
fair market value of the Property or (y) the Principal Amount, or (B) results in
the cancellation of leases comprising more than thirty percent (30%) of the
rentable area of the Property, and in either case with respect to which Borrower
is not required under the Leases to apply Proceeds to the restoration of the
Property or (ii) a permanent Taking which, in the reasonable judgment of Lender,
(A) involves an actual or constructive loss of more than fifteen percent (15%)
of the lesser of (x) the fair market value of the Property or (y) the Principal
Amount, or (B) renders untenantable either more than fifteen percent (15%) of
the rentable area of the Property, or (iii) a casualty, damage, destruction or
Taking that affects so much of the Property such that it would be impracticable,
in Lender's reasonable discretion, even after restoration, to operate the
Property as an economically viable whole.
Transfer shall mean to, directly or indirectly, sell, assign, convey,
mortgage, transfer, merge, consolidate, reorganize, pledge, hypothecate,
encumber, grant a security interest
19
in, exchange or otherwise dispose of any beneficial interest or grant any option
or warrant with respect to, or where used as a noun, a direct or indirect sale,
assignment, conveyance, transfer, merger, consolidation, reorganization, pledge
or other disposition of any beneficial interest by any means whatsoever whether
voluntary, involuntary, by operation of law or otherwise.
UCC or Uniform Commercial Code shall mean the Uniform Commercial Code
as in effect in the State of New York.
Underwriter Group shall have the meaning set forth in Section
14.4.2(b).
U.S. Government Obligations shall mean any direct obligations of, or
obligations guaranteed as to principal and interest by, the United States
Government or any agency or instrumentality thereof, provided that such
obligations are backed by the full faith and credit of the United States. Any
such obligation must be limited to instruments that have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change. If any
such obligation is rated by S&P, it shall not have an "r" highlighter affixed to
its rating. Interest must be fixed or tied to a single interest rate index plus
a single fixed spread (if any), and move proportionately with said index. U.S.
Government Obligations include, but are not limited to: U.S. Treasury direct or
fully guaranteed obligations, Farmers Home Administration certificates of
beneficial ownership, General Services Administration participation
certificates, U.S. Maritime Administration guaranteed Title XI financing, Small
Business Administration guaranteed participation certificates or guaranteed pool
certificates, U.S. Department of Housing and Urban Development local authority
bonds, and Washington Metropolitan Area Transit Authority guaranteed transit
bonds. In no event shall any such obligation have a maturity in excess of 365
days.
Work shall have the meaning provided in Section 6.2.4(a).
Section 1.2. Principles of Construction.
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the definitions given them in this
Agreement when used in any other Loan Document or in any certificate or other
document made or delivered pursuant thereto. All uses of the word "including"
shall mean including, without limitation unless the context shall indicate
otherwise. Unless otherwise specified, the words hereof, herein and hereunder
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.
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II. GENERAL TERMS
Section 2.1. Loan; Disbursement to Borrower.
2.1.1 The Loan. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept
the Loan on the Closing Date.
2.1.2 Disbursement to Borrower. Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Borrower
acknowledges and agrees that the full proceeds of the Loan have been disbursed
by Lender to Borrower on the Closing Date.
2.1.3 The Note, Security Instrument and Loan Documents. The Loan
shall be evidenced by the Note and secured by the Security Instrument, the
Assignment of Leases, this Agreement and the other Loan Documents.
2.1.4 Use of Proceeds. Borrower shall use the proceeds of the
Loan to (a) acquire the Property, (b) pay costs and expenses incurred in
connection with the closing of the Loan and (c) make deposits into the
Sub-Accounts as required hereunder.
Section 2.2. Interest; Loan Payments; Late Payment Charge.
2.2.1 Payment of Principal and Interest.
(i) Except as set forth in Section 2.2.1(ii), interest shall
accrue on the Principal Amount as set forth in the Note.
(ii) Upon the occurrence and during the continuance of an Event
of Default and from and after the Maturity Date (if the entire Principal Amount
is not repaid on the Maturity Date) interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan shall accrue at the Default Rate
calculated from the date such payment was due without regard to any grace or
cure periods contained herein. Interest at the Default Rate shall be computed
from the occurrence of the Event of Default until the actual receipt and
collection of the Indebtedness (or that portion thereof that is then due). To
the extent permitted by applicable law, interest at the Default Rate shall be
added to the Indebtedness and shall be secured by the Security Instrument. This
paragraph shall not be construed as an agreement or privilege to extend the date
of the payment of the Indebtedness, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default, and
Lender retains its rights under the Note to accelerate and to continue to demand
payment of the Indebtedness upon the happening of any Event of Default.
2.2.2 Method and Place of Payment.
(a) On each Payment Date, Borrower shall pay to Lender interest
accruing pursuant to the Note for the entire Interest Period during which said
Payment Date shall occur.
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(b) All amounts advanced by Lender pursuant to the applicable
provisions of the Loan Documents, other than the Principal Amount, together with
any interest at the Default Rate or other charges as provided therein, shall be
due and payable hereunder as provided in the Loan Documents. In the event any
such advance or charge is not so repaid by Borrower, Lender may, at its option,
first apply any payments received under the Note to repay such advances,
together with any interest thereon, or other charges as provided in the Loan
Documents, and the balance, if any, shall be applied in payment of any
installment of interest or principal then due and payable.
(c) The Maturity Date Payment shall be due and payable in full on the
Maturity Date.
2.2.3 Late Payment Charge. If any principal, interest or any
other sums due under the Loan Documents (other than the outstanding Principal
Amount due and payable on the Maturity Date) is not paid by Borrower on or prior
to the date on which it is due, Borrower shall pay to Lender upon demand an
amount equal to the lesser of four percent (4%) of such unpaid sum or the
Maximum Legal Rate (the Late Payment Charge) in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by this Agreement, the Security Instrument and the other
Loan Documents to the extent permitted by applicable law.
2.2.4 Usury Savings. This Agreement and the Note are subject to
the express condition that at no time shall Borrower be obligated or required to
pay interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due under the Note at a rate in excess of the Maximum Legal
Rate, then the LIBOR Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due under
the Note. All sums paid or agreed to be paid to Lender for the use, forbearance,
or detention of the sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.
Section 2.3. Prepayments.
2.3.1 Prepayments. No prepayments of the Indebtedness shall be
permitted except as set forth in Section 4 of the Note and except as expressly
set forth elsewhere in the Loan Documents.
2.3.2 Prepayments After Event of Default. If, following an Event
of Default, Lender shall accelerate the Indebtedness and Borrower thereafter
tenders payment of all or any part of the Indebtedness, or if all or any portion
of the Indebtedness is recovered by
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Lender after such Event of Default, (a) such payment may be made only, or will
be applied by Lender, on the next occurring Payment Date together with all
unpaid interest thereon as calculated through the end of the Interest Period
during which such Payment Date occurs (even if such period extends beyond such
Payment Date and calculated as if such payment had not been made on such Payment
Date), (b) such payment shall be deemed a voluntary prepayment by Borrower, and
(c) Borrower shall pay, in addition to the Indebtedness, an amount equal to the
Exit Fee.
2.3.3 Release of Property. Lender shall, upon the written request
and at the expense of Borrower, upon payment in full of the Principal Amount and
interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of the Note and this
Agreement, (i) release the Lien of this Agreement upon the Account Collateral
and the Rate Cap Collateral and (ii) release the Lien of the Security Instrument
on the Property or assign it, in whole or in part, to a new lender. In such
event, Borrower shall submit to Lender, not less than three (3) Business Days
prior to the date of such release or assignment, a release of lien or assignment
of lien, as applicable, for such property for execution by Lender. Such release
or assignment, as applicable, shall be in a form appropriate in each
jurisdiction in which the Property is located and satisfactory to Lender in its
reasonable discretion. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release or assignment, as applicable.
Section 2.4. Regulatory Change; Taxes.
2.4.1 Increased Costs. If, as a result of any Regulatory Change
or compliance of Lender therewith, the basis of taxation of payments to Lender
of the principal of or interest on the Loan is changed or Lender or the company
Controlling Lender shall be subject to (i) any tax, duty, charge or withholding
of any kind with respect to this Agreement; (ii) any reserve, special deposit or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities, of Lender or any company Controlling
Lender is imposed, modified or deemed applicable; or (iii) any other condition
affecting loans to borrowers subject to LIBOR-based interest rates is imposed on
Lender or any company Controlling Lender and Lender determines that, by reason
thereof, the cost to Lender or any company Controlling Lender of making,
maintaining or extending the Loan to Borrower is increased, or any amount
receivable by Lender or any company Controlling Lender hereunder in respect of
any portion of the Loan to Borrower is reduced, in each case by an amount deemed
by Lender in good faith to be material (such increases in cost and reductions in
amounts receivable being herein called Increased Costs), then Lender shall
provide notice thereof to Borrower and Borrower agrees that it will pay to
Lender upon Lender's written request such additional amount or amounts as will
compensate Lender or any company Controlling Lender for such Increased Costs to
the extent Lender reasonably determines that such Increased Costs are allocable
to the Loan. If Lender requests compensation under this Section 2.4.1, Borrower
may, by notice to Lender, require that Lender furnish to Borrower a statement
setting forth in reasonable detail the basis for requesting such compensation
and the method for determining the amount thereof.
2.4.2 Special Taxes. Borrower shall make all payments hereunder
free and clear of and without deduction for Special Taxes. If Borrower shall be
required by law to
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deduct any Special Taxes from or in respect of any sum payable hereunder or
under any other Loan Document to Lender, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.4.2)
Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
2.4.3 Other Taxes. In addition, Borrower agrees to pay any
present or future stamp or documentary taxes or other excise or property taxes,
charges, or similar levies which arise from any payment made hereunder, or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement, the other Loan Documents, or the Loan (hereinafter referred to as
Other Taxes).
2.4.4 Indemnity. Borrower shall indemnify Lender for the full
amount of Special Taxes and Other Taxes (including any Special Taxes or Other
Taxes imposed by any Governmental Authority on amounts payable under this
Section 2.4.4) paid by Lender and any liability (including penalties, interest,
and expenses) arising therefrom or with respect thereto, whether or not such
Special Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days after the date Lender
makes written demand therefor.
2.4.5 Change of Office. To the extent that changing the
jurisdiction of Lender's applicable office would have the effect of minimizing
Special Taxes, Other Taxes or Increased Costs, Lender shall use reasonable
efforts to make such a change, provided that same would not otherwise be
disadvantageous to Lender.
2.4.6 Survival. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of Borrower
contained in this Section 2.4 shall survive the payment in full of principal and
interest hereunder, and the termination of this Agreement.
Section 2.5. Conditions Precedent to Closing.
The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by, or on behalf of, Borrower or waiver by Lender of the following
conditions precedent no later than the Closing Date; provided, however, that
unless a condition precedent shall expressly survive the Closing Date pursuant
to a separate agreement, by funding the Loan, Lender shall be deemed to have
waived any such conditions not theretofore fulfilled or satisfied:
2.5.1 Representations and Warranties; Compliance with Conditions.
The representations and warranties of Borrower contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if made on and as of such
date; and Borrower shall be in compliance in all material respects with all
terms and conditions set forth in this Agreement and in each other Loan Document
on its part to be observed or performed.
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2.5.2 Delivery of Loan Documents; Title Policy; Reports.
(a) Loan Documents. Lender shall have received an original copy of
this Agreement, the Note and all of the other Loan Documents, in each case, duly
executed (and to the extent required, acknowledged) and delivered on behalf of
Borrower and any other parties thereto.
(b) Security Instrument, Assignment of Leases. Lender shall have
received evidence that original counterparts of the Security Instrument and
Assignment of Leases, in proper form for recordation, have been delivered to the
Title Company for recording, so as effectively to create, in the reasonable
judgment of Lender, upon such recording valid and enforceable first priority
Liens upon the Property, in favor of Lender (or such other trustee as may be
required or desired under local law), subject only to the Permitted Encumbrances
and such other Liens as are permitted pursuant to the Loan Documents.
(c) UCC Financing Statements. Lender shall have received evidence that
the UCC financing statements relating to the Security Instrument and this
Agreement have been delivered to the Title Company for filing in the applicable
jurisdictions.
(d) Title Insurance. Lender shall have received a Title Policy issued
by the Title Company and dated as of the Closing Date, with reinsurance and
direct access agreements reasonably acceptable to Lender. Such Title Policy
shall (i) provide coverage in the amount of the Loan, (ii) insure Lender that
the Security Instrument creates valid, first priority Liens on the Property,
free and clear of all exceptions from coverage other than Permitted Encumbrances
and standard exceptions and exclusions from coverage (as modified by the terms
of any endorsements), (iii) contain the endorsements and affirmative coverages
set forth on Exhibit A), and (iv) name Lender as the insured. The Title Policy
shall be assignable. Lender also shall have received evidence that all premiums
in respect of such Title Policy have been paid.
(e) Surveys. Lender shall have received current Surveys for the
Property, containing the survey certification substantially in the form attached
hereto as Exhibit B. Such Surveys shall reflect the same legal description for
the applicable parcel of the Property that is contained in the Title Policy
referred to in clause (d) above and shall include, among other things, a metes
and bounds description of the real property comprising part of the Property
reasonably satisfactory to Lender. The surveyor's seal shall be affixed to the
Surveys and the surveyor shall provide a certification for such Surveys in form
and substance acceptable to Lender.
(f) Insurance. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all insurance
premiums currently due and payable for the existing policy period.
(g) Environmental Reports. Lender shall have received an Environmental
Report in respect of the Property satisfactory to Lender.
(h) Zoning. Lender shall have received a summary report of the zoning
compliance of each Individual Property to the extent such information is
available to Borrower.
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(i) Certificate of Occupancy. Lender shall have received a summary
report of the existence of a valid certificate of occupancy for each Individual
Property to the extent such information is available to Borrower.
2.5.3 Related Documents. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Lender shall have received and approved certified copies thereof.
2.5.4 Delivery of Organizational Documents. On or before the
Closing Date, Borrower shall deliver, or cause to be delivered, to Lender copies
certified by an Officer's Certificate, of all organizational documentation
related Borrower and Guarantors as have been requested by Lender and/or the
formation, structure, existence, good standing and/or qualification to do
business of Borrower and Guarantors, as Lender may request in its sole
discretion, including, without limitation, good standing certificates,
qualifications to do business in the appropriate jurisdictions, resolutions
authorizing the entering into of the Loan and incumbency certificates as may be
requested by Lender. The organizational documents of Borrower shall contain
provisions having a substantive effect materially similar to that of the
language set forth in Exhibit C.
2.5.5 Opinions of Borrower's Counsel.
(a) Lender shall have received a Non-Consolidation Opinion
substantially in compliance with the requirements set forth in Exhibit E or in
such other form approved by the Lender (the Non-Consolidation Opinion).
(b) Lender shall have received one or more Opinions of Counsel
substantially in compliance with the requirements set forth in Exhibit D or in
such other form approved by the Lender.
2.5.6 Budgets. Borrower shall have delivered the Annual Budget
for the current Fiscal Year which Annual Budget shall be approved by Lender
prior to the Closing Date.
2.5.7 Completion of Proceedings. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents and all documents
incidental thereto shall be satisfactory in form and substance to Lender, and
Lender shall have received certified copies of such documents as Lender may
reasonably request.
2.5.8 Payments. All payments, deposits or escrows, if any,
required to be made or established by Borrower under this Agreement, the Note
and the other Loan Documents on or before the Closing Date shall have been paid.
2.5.9 [Reserved]
2.5.10 Account Agreement. Lender shall have received the original
of the Account Agreement executed by each of Cash Management Bank and Borrower.
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2.5.11 Assignment of Management Agreement. Lender shall have
received the original of the Assignment of Management Agreement executed by each
of Borrower and Manager.
2.5.12 Tenant Estoppels. Lender shall have received copies of the
tenant estoppel certificates delivered to Borrower by Bank of America, N.A.
pursuant to Borrower's acquisition agreement for the Property.
2.5.13 Ground Lease Estoppels. Lender shall have received an
executed estoppel letters from each Fee Owner in the form attached as Exhibit H
that is the lessor with respect to any Individual Property with an Allocated
Loan Amount greater than $0.00.
2.5.14 Reciprocal Easement Agreement Estoppels. Lender shall have
received an executed reciprocal easement agreement estoppel letter from all
parties under the REAs, substantially in the form attached as Exhibit I, other
than estoppel letters that Borrower is required to obtain pursuant to the
post-closing letter delivered by Borrower to Lender on the Closing Date.
2.5.15 [Reserved]
2.5.16 Independent Manager Certificate. Lender shall have
received an executed Independent Manager certificate substantially in the form
attached as Exhibit T.
2.5.17 Transaction Costs. Borrower shall have paid or reimbursed
Lender for all title insurance premiums, recording and filing fees, costs of
Environmental Reports, Physical Conditions Reports, appraisals and other
reports, the reasonable fees and costs of Lender's counsel and all other third
party out-of-pocket expenses incurred in connection with the origination of the
Loan.
2.5.18 Material Adverse Effect. No event or condition shall have
occurred since the date of Borrower's most recent financial statements
previously delivered to Lender which has or could reasonably be expected to have
a Material Adverse Effect. The Operating Income and Operating Expenses of the
Property, the Leases, and all other features of the transaction shall be as
represented to Lender without material adverse change. Neither Borrower nor any
of its constituent Persons shall be the subject of any bankruptcy,
reorganization, or insolvency proceeding.
2.5.19 Leases and Rent Roll. Lender shall have received certified
copies of all Leases and Ground Leases to the full extent provided to Borrower
by Bank of America, N.A., the former owner of the Property. Lender shall have
received a certified rent roll of the Property dated within thirty (30) days
prior to the Closing Date.
2.5.20 Reserved.
2.5.21 Tax Lot. Lender shall have received evidence that each
Individual Property constitutes one (1) or more separate tax lots, which
evidence shall be reasonably satisfactory in form and substance to Lender.
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2.5.22 Physical Conditions Report. Lender shall have received a
Physical Conditions Report with respect to each Individual Property, which
report shall be satisfactory in form and substance to Lender.
2.5.23 Management Agreement. Lender shall have received a
certified copy of the Management Agreement which shall be satisfactory in form
and substance to Lender.
2.5.24 Appraisal. Lender shall have received an appraisal of the
Property, which shall be satisfactory in form and substance to Lender.
2.5.25 Financial Statements. Lender shall have received certified
copies of financial statements with respect to the Property to the extent
available to, or in the possession of, Borrower.
2.5.26 Further Documents. Lender or its counsel shall have
received such other and further approvals, opinions, documents and information
as Lender or its counsel may have reasonably requested including the Loan
Documents in form and substance satisfactory to Lender and its counsel.
III. CASH MANAGEMENT
Section 3.1 Cash Management.
3.1.1 Establishment of Accounts. Borrower hereby confirms that,
simultaneously with the execution of this Agreement, pursuant to the Account
Agreement, it has established with Cash Management Bank, in the name of Borrower
for the benefit of Lender, as secured party, the collection account (the
Collection Account), which has been established as an interest-bearing deposit
account, and the holding account (the Holding Account), which has been
established as a securities account. Both the Collection Account and the Holding
Account and each sub-account of either such account and the funds deposited
therein and securities and other assets credited thereto shall serve as
additional security for the Loan. Pursuant to the Account Agreement, Borrower
shall irrevocably instruct and authorize Cash Management Bank to disregard any
and all orders for withdrawal from the Collection Account or the Holding Account
made by, or at the direction of, Borrower other than to transfer all amounts on
deposit in the Collection Account on a daily basis to the Holding Account.
Pursuant to the Account Agreement, Cash Management Bank on a daily basis shall
transfer all collected and available funds as determined by Cash Management
Bank's then current funds availability schedule received in the Collection
Account to the Holding Account. Borrower agrees that, prior to the payment in
full of the Indebtedness, the terms and conditions of the Account Agreement
shall not be amended or modified without the prior written consent of Lender
(which consent Lender may grant or withhold in its sole discretion), and if a
Securitization has occurred, the delivery by Borrower of a Rating Agency
Confirmation. In recognition of Lender's security interest in the funds
deposited into the Collection Account and the Holding Account, Borrower shall
identify both the Collection Account and the Holding Account with the name of
Lender, as secured party. The Collection Account shall be named as follows:
"First States Investors 5000A,
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LLC f/b/o German American Capital Corporation, as secured party Collection
Account" (Account Number 1015527619). The Holding Account shall be named as
follows: "First States Investors 5000A, LLC f/b/o German American Capital
Corporation, as secured party Holding Account" (Account Number 1015527627).
Borrower confirms that it has established with Cash Management Bank the
following sub-accounts of the Holding Account (each, a Sub-Account and,
collectively, the Sub-Accounts and together with the Holding Account and the
Collection Account, the Collateral Accounts), which (i) may be ledger or book
entry sub-accounts and need not be actual sub-accounts, (ii) shall each be
linked to the Holding Account, (iii) shall each be a "Securities Account"
pursuant to Article 8 of the UCC and (iv) shall each be an Eligible Account to
which certain funds shall be allocated and from which disbursements shall be
made pursuant to the terms of this Agreement:
(a) a sub-account for the retention of Account Collateral in respect
of Impositions and Other Charges for the Property with the account number
1015527627AQ2 (the Tax Reserve Account);
(b) a sub-account for the retention of Account Collateral in respect
of insurance premiums for the Property with the account number 1015527627AQ3
(the Insurance Reserve Account);
(c) a sub-account for the retention of Account Collateral in respect
of Debt Service on the Loan with the account number 1015527627AQ4 (the Debt
Service Reserve Account);
(d) a sub-account for the retention of Account Collateral in respect
of reserves for Approved Base Building Work with the account number
1015527627AQ5 (the Structural Reserve Account);
(e) a sub-account for the retention of Account Collateral in respect
of reserves for tenant improvements and leasing commissions with the account
number 1015527627AQ6 (the TI and Leasing Reserve Account);
(f) a sub-account for the retention of Account Collateral in respect
of reserves for defaults under the BofA Lease with the account number
1015527627AQ7 (the BofA Reserve Account);
(g) a sub-account for the retention of Account Collateral in respect
of Tenant security deposits (the Security Deposit Account) with the account
number 1015527627AQ9; and
(h) a sub-account for the retention of Account Collateral in respect
of certain Proceeds as more fully set forth in Section 6.2 with the account
number 1015527627AQ8 (the Proceeds Reserve Account).
3.1.2 Pledge of Account Collateral. To secure the full and
punctual payment and performance of the Obligations, Borrower hereby
collaterally assigns, grants a security interest in and pledges to Lender, to
the extent not prohibited by applicable law, a first priority continuing
security interest in and to the following property of Borrower, whether now
owned or existing or hereafter acquired or arising and regardless of where
located (all of the same, collectively, the Account Collateral):
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(a) the Collateral Accounts and all cash, checks, drafts, securities
entitlements, certificates, instruments and other property, including, without
limitation, all deposits and/or wire transfers from time to time deposited or
held in, credited to or made to Collateral Accounts;
(b) any and all amounts invested in Permitted Investments;
(c) all interest, dividends, cash, instruments, securities
entitlements and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the foregoing
or purchased with funds from the Collateral Accounts; and
(d) to the extent not covered by clauses (a), (b) or (c) above, all
proceeds (as defined under the UCC) of any or all of the foregoing.
In addition to the rights and remedies herein set forth, Lender shall
have all of the rights and remedies with respect to the Account Collateral
available to a secured party at law or in equity, including, without limitation,
the rights of a secured party under the UCC, as if such rights and remedies were
fully set forth herein.
This Agreement shall constitute a security agreement for purposes of
the Uniform Commercial Code and other applicable law.
3.1.2 Maintenance of Collateral Accounts.
(a) Borrower agrees that the Collection Account is and shall be
maintained (i) as a "deposit account" (as such term is defined in Section
9-102(a)(29) of the UCC), (ii) in such a manner that Lender shall have control
(within the meaning of Section 9-104(a)(2) of the UCC) over the Collection
Account and (iii) such that neither the Borrower nor Manager shall have any
right of withdrawal from the Collection Account and, except as provided herein,
no Account Collateral shall be released to the Borrower or Manager from the
Collection Account. Without limiting the Borrower's obligations under the
immediately preceding sentence, Borrower shall only establish and maintain the
Collection Account with a financial institution that has executed an agreement
substantially in the form of the Account Agreement or in such other form
acceptable to Lender in its sole discretion.
(b) Borrower agrees that each of the Holding Account and the
Sub-Accounts is and shall be maintained (i) as a "securities account" (as such
term is defined in Section 8-501(a) of the UCC), (ii) in such a manner that
Lender shall have control (within the meaning of Section 8-106(d)(2) of the UCC)
over the Holding Account and any Sub-Account, (iii) such that neither Borrower
nor Manager shall have any right of withdrawal from the Holding Account or the
Sub-Accounts and, except as provided herein, no Account Collateral shall be
released to Borrower from the Holding Account or the Sub-Accounts, (iv) in such
a manner that the Cash Management Bank shall agree to treat all property
credited to the Holding Account or the Sub-Accounts as "financial assets" and
(v) such that all securities or other property underlying any financial assets
credited to the Accounts shall be registered in the name of Cash Management
Bank, indorsed to Cash Management Bank or in blank or credited to another
securities account maintained in the name of Cash Management Bank and in no case
will any financial asset
30
credited to any of the Collateral Accounts be registered in the name of
Borrower, payable to the order of Borrower or specially indorsed to Borrower
except to the extent the foregoing have been specially indorsed to Cash
Management Bank or in blank. Without limiting Borrower's obligations under the
immediately preceding sentence, Borrower shall only establish and maintain the
Holding Account with a financial institution that has executed an agreement
substantially in the form of the Account Agreement or in such other form
acceptable to Lender in its sole discretion.
3.1.3 Eligible Accounts. The Collateral Accounts shall be
Eligible Accounts. The Collateral Accounts shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other banking or governmental authority, as may now or
hereafter be in effect. Income and interest accruing on the Collateral Accounts
or any investments held in such accounts shall be periodically added to the
principal amount of such account and shall be held, disbursed and applied in
accordance with the provisions of this Agreement and the Account Agreement.
Borrower shall be the beneficial owner of the Collateral Accounts for federal
income tax purposes and shall report all income on the Collateral Accounts.
3.1.4 Deposits into Sub-Accounts. On the date hereof, Borrower
has deposited the following amounts into the Sub-Accounts:
(i) $2,499,565 into the Tax Reserve Account;
(ii) $212,240.58 into the Insurance Reserve Account;
(iii) $0 into the Debt Service Reserve Account;
(iv) $0 into the Structural Reserve Account;
(v) $0 into the TI and Leasing Reserve Account;
(vi) $10,970,618.77 into the BofA Reserve Account;
(vii) $203,755.63 into the Security Deposit Account; and
(viii) $0 into the Proceeds Reserve Account.
3.1.5 Monthly Funding of Sub-Accounts.
(a) Borrower hereby irrevocably authorizes Lender to transfer (and,
pursuant to the Account Agreement shall irrevocably authorize Cash Management
Bank to execute any corresponding instructions of Lender), and Lender shall
transfer, from the Holding Account by 11:00 a.m. New York time on first calendar
day of each calendar month (and, if such day is not a Business Day, then on the
immediately preceding Business Day), or as soon thereafter as sufficient funds
are in the Holding Account to make the applicable transfers, commencing on July
1, 2003, funds in the following amounts and in the following order of priority:
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(i) funds in an amount equal to the Monthly Tax Reserve Amount
and any other amounts required pursuant to Section 16.1 for the month in which
the transfer from the Holding Account is made and transfer the same to the Tax
Reserve Account;
(ii) funds in an amount equal to the Monthly Insurance Reserve
Amount and any other amounts required pursuant to Section 16.2 for the month in
which the transfer from the Holding Account is made and transfer the same to the
Insurance Reserve Account;
(iii) funds in an amount equal to the amount of Debt Service due
on the Payment Date for the month in which the transfer from the Holding Account
is made and transfer the same to the Debt Service Reserve Account;
(iv) funds in an amount equal to the Monthly Structural Reserve
Amount for the month in which the transfer from the Holding Account is made and
transfer the same to the Structural Reserve Account;
(v) funds in an amount equal to the Monthly TI and Leasing
Reserve Amount for the month in which the transfer from the Holding Account is
made and transfer the same to the TI and Leasing Reserve Account;
(vi) funds in an amount equal to the positive difference, if any,
between the BofA Reserve Amount and the amount held in the BofA Reserve Account
on the date of such transfer and transfer the same to the BofA Reserve Account;
(vii) funds in an amount equal to the balance (if any) remaining
or deposited in the Holding Account after the foregoing deposits (such remainder
being hereinafter referred to as Excess Cash Flow) and provided no Event of
Default shall have occurred and is then continuing, transfer any Excess Cash
Flow to the Borrower's Account.
(b) If Lender shall reasonably determine that there will be
insufficient amounts in the Holding Account to make any of the transfers
pursuant to this Section 3.1.5 inclusive on the date required hereunder, Lender
shall provide notice to Borrower of such insufficiency (except that in no event
shall Lender be required to notify Borrower of any deficiency in the Debt
Service Reserve Account, such deficiency on any Payment Date being an Event of
Default) and, within five (5) Business Days after receipt of said notice and
prior to the expiration of any grace period applicable to such payment, Borrower
shall deposit into the Holding Account an amount equal to the shortfall of
available funds in the Holding Account taking into account any funds which
accumulate in the Holding Account during such five (5) day Business Day period.
In addition, in the event insufficient funds are held in the Tax Reserve
Account, the Insurance Reserve Account, the Debts Service Reserve Account, the
Structural Reserve Account, or the TI and Leasing Reserve Account for any month
after making the transfers from the Holding Account pursuant to this Section
3.1.5 to make the payments required from such Sub-Accounts pursuant to Section
3.1.6 and such deficiency arises from a monetary default under the BofA Lease,
Lender shall transfer or direct the Cash Management Bank to transfer funds in
the amount of such deficiency from the BofA Reserve Account to such other
Sub-Account in the amount of such deficiency. Notwithstanding anything to the
contrary
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contained in this Agreement or in the other Loan Documents, Borrower shall not
be deemed to be in default hereunder or thereunder in the event funds sufficient
for a required transfer are held in an appropriate Sub-Account and Lender or
Cash Management Bank fails to timely make any transfer from such Sub-Account as
contemplated by this Agreement unless due to the negligence or willful
misconduct of Borrower.
(c) Notwithstanding anything to the contrary contained herein or in
the Security Instrument, to the extent that Borrower shall fail to pay any
mortgage recording tax, costs, expenses or other amounts pursuant to Section
19.12 of this Agreement within the time period set forth therein, Lender shall
have the right, at any time, without notice to Borrower, to withdraw from the
Holding Account, an amount equal to such unpaid taxes, costs, expenses and/or
other amounts and pay such amounts to the Person(s) entitled thereto.
3.1.6 Payments from Sub-Accounts. Borrower irrevocably authorizes
Lender to make and, provided no Event of Default shall have occurred and be
continuing, Lender hereby agrees to make, the following payments from the
Sub-Accounts to the extent of the monies on deposit therefor:
(i) funds from the Tax Reserve Account to Lender sufficient to
permit Lender to pay (A) Impositions and (B) Other Charges, on the respective
due dates therefor, and Lender shall so pay such funds to the Governmental
Authority having the right to receive such funds;
(ii) funds from the Insurance Reserve Account to Lender
sufficient to permit Lender to pay insurance premiums for the insurance required
to be maintained pursuant to the terms of this Agreement and the Security
Instrument, on the respective due dates therefor, and Lender shall so pay such
funds to the insurance company having the right to receive such funds;
(iii) funds from the Debt Service Reserve Account to Lender
sufficient to pay Debt Service on each Payment Date, and Lender, on each Payment
Date, shall apply such funds to the payment of the Debt Service payable on such
Payment Date;
(iv) no more frequently than once in any calendar month, funds
from the Structural Reserve Account to Borrower funds to reimburse Borrower or
to pay for the cost of Approved Base Building Work;
(v) no more frequently than once in any calendar month, funds
from the TI and Leasing Reserve Account to the Borrower's Account to pay for TI
and Leasing Costs; and
(vi) funds from the Security Deposit Account in amounts and at
times as may be required to refund security deposits to Tenants at the
expiration or termination of Leases.
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3.1.7 Cash Management Bank.
(a) Lender shall have the right at Borrower's sole cost and expense to
replace the Cash Management Bank with a financial institution reasonably
satisfactory to Borrower in the event that (i) the Cash Management Bank fails,
in any material respect, to comply with the Account Agreement, (ii) the Cash
Management Bank named herein is no longer the Cash Management Bank or (iii) the
Cash Management Bank is no longer an Approved Bank. Upon the occurrence and
during the continuance of an Event of Default, Lender shall have the right at
Borrower's sole cost and expense to replace Cash Management Bank at any time,
without notice to Borrower. Borrower shall cooperate with Lender in connection
with the appointment of any replacement Cash Management Bank and the execution
by the Cash Management Bank and the Borrower of an Account Agreement and
delivery of same to Lender.
(b) So long as no Event of Default shall have occurred and be
continuing, Borrower shall have the right at its sole cost and expense to
replace the Cash Management Bank with a financial institution that is an
Approved Bank provided that such financial institution and Borrower shall
execute and deliver to Lender an Account Agreement substantially similar to the
Account Agreement executed as of the Closing Date.
3.1.8 Borrower's Account Representations, Warranties and
Covenants.
(a) Borrower represents, warrants and covenants that (i) within five (5)
Business Days after the date hereof, Borrower shall deliver a letter directing
all Tenants under the Leases to mail all checks and wire all funds with respect
to any payments due under such Leases directly to the Collection Account
pursuant to a letter substantially in the form of Exhibit P and (ii) Borrower
shall deliver a letter substantially in the form attached hereto as Exhibit P to
Tenants under all Leases entered into after the date hereof.
(b) Borrower further represents, warrants and covenants that (i) Borrower
shall cause Manager to deposit all amounts payable to Borrower pursuant to the
Management Agreement directly into the Collection Account, (ii) Borrower shall
pay or cause to be paid all Rents, Cash and Cash Equivalents or other items of
Operating Income not covered by the preceding subsection (a) within one Business
Day after receipt thereof by Borrower or its Affiliates directly into the
Collection Account and, until so deposited, any such amounts held by Borrower or
Manager shall be deemed to be Account Collateral and shall be held in trust by
it for the benefit, and as the property, of Lender and shall not be commingled
with any other funds or property of Borrower or Manager, (iii) there are no
accounts other than the Collateral Accounts maintained by Borrower or any other
Person with respect to Property or the collection of Rents, and (iv) so long as
the Loan shall be outstanding, neither Borrower nor any other Person shall open
any other operating accounts with respect to the Property or the collection of
Rents, except for the Collateral Accounts; provided that, Borrower and Manager
shall not be prohibited from utilizing one or more separate accounts for the
disbursement or retention of funds that have been transferred to the Borrower's
Account pursuant to Section 3.1.5(i).
34
3.1.9 Account Collateral and Remedies.
(a) Upon the occurrence and during the continuance of an Event of
Default, without additional notice from Lender to Borrower, (i) Lender may, in
addition to and not in limitation of Lender's other rights, make any and all
withdrawals from, and transfers between and among, the Collateral Accounts as
Lender shall determine in its sole and absolute discretion to pay any
Obligations, Operating Expenses and/or Capital Expenditures for the Property;
(ii) all Excess Cash Flow shall be retained in the Holding Account or applicable
Sub-Accounts, and (iii) Lender may liquidate and transfer any amounts then
invested in Permitted Investments to the Collateral Accounts to which they
relate or reinvest such amounts in other Permitted Investments as Lender may
reasonably determine is necessary to perfect or protect any security interest
granted or purported to be granted hereby or to enable Lender to exercise and
enforce Lender's rights and remedies hereunder with respect to any Account
Collateral or to preserve the value of the Account Collateral.
(b) Upon the occurrence and during the continuance of an Event of
Default, Borrower hereby irrevocably constitutes and appoints Lender as
Borrower's true and lawful attorney-in-fact, with full power of substitution, to
execute, acknowledge and deliver any instruments and to exercise and enforce
every right, power, remedy, option and privilege of Borrower with respect to the
Account Collateral, and do in the name, place and stead of Borrower, all such
acts, things and deeds for and on behalf of and in the name of Borrower, which
Borrower could or might do or which Lender may deem necessary or desirable to
more fully vest in Lender the rights and remedies provided for herein and to
accomplish the purposes of this Agreement. The foregoing powers of attorney are
irrevocable and coupled with an interest. Upon the occurrence and during the
continuance of an Event of Default, Lender may perform or cause performance of
any such agreement, and any reasonable expenses of Lender incurred in connection
therewith shall be paid by Borrower as provided in Section 5.1.16.
(c) Borrower hereby expressly waives, to the fullest extent permitted
by law, presentment, demand, protest or any notice of any kind in connection
with this Agreement or the Account Collateral. Borrower acknowledges and agrees
that ten (10) days' prior written notice of the time and place of any public
sale of the Account Collateral or any other intended disposition thereof shall
be reasonable and sufficient notice to Borrower within the meaning of the UCC.
3.1.10 Transfers and Other Liens. Borrower agrees that it will
not (i) sell or otherwise dispose of any of the Account Collateral or (ii)
create or permit to exist any Lien upon or with respect to all or any of the
Account Collateral, except for the Lien granted to Lender under this Agreement.
3.1.11 Reasonable Care. Beyond the exercise of reasonable care in
the custody thereof, Lender shall have no duty as to any Account Collateral in
its possession or control as agent therefor or bailee thereof or any income
thereon or the preservation of rights against any person or otherwise with
respect thereto. Lender shall be deemed to have exercised reasonable care in the
custody and preservation of the Account Collateral in its possession if the
Account Collateral is accorded treatment substantially equal to that which
Lender accords its own property, it being understood that Lender shall not be
liable or responsible for any loss or
35
damage to any of the Account Collateral, or for any diminution in value thereof,
by reason of the act or omission of Lender, its Affiliates, agents, employees or
bailees, except to the extent that such loss or damage results from Lender's
gross negligence or willful misconduct. In no event shall Lender be liable
either directly or indirectly for losses or delays resulting from any event
which may be the basis of an Excusable Delay, computer malfunctions,
interruption of communication facilities, labor difficulties or other causes
beyond Lender's reasonable control or for indirect, special or consequential
damages except to the extent of Lender's gross negligence or willful misconduct.
Notwithstanding the foregoing, Borrower acknowledges and agrees that (i) Lender
does not have custody of the Account Collateral, (ii) Cash Management Bank has
custody of the Account Collateral, (iii) the initial Cash Management Bank was
chosen by Borrower and (iv) Lender has no obligation or duty to supervise Cash
Management Bank or to see to the safe custody of the Account Collateral.
3.1.12 Lender's Liability.
(a) Lender shall be responsible for the performance only of such
duties with respect to the Account Collateral as are specifically set forth in
this Section 3.1 or elsewhere in the Loan Documents, and no other duty shall be
implied from any provision hereof. Lender shall not be under any obligation or
duty to perform any act with respect to the Account Collateral which would cause
it to incur any expense or liability or to institute or defend any suit in
respect hereof, or to advance any of its own monies. Borrower shall indemnify
and hold Lender, its employees and officers harmless from and against any loss,
cost or damage (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by Lender in connection with the transactions
contemplated hereby with respect to the Account Collateral except as such may be
caused by the gross negligence or willful misconduct of Lender, its employees,
officers or agents.
(b) Lender shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bond or other paper,
document or signature believed by it in good faith to be genuine, and, in so
acting, it may be assumed that any person purporting to give any of the
foregoing in connection with the provisions hereof has been duly authorized to
do so. Lender may consult with counsel, and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action taken or
suffered by it hereunder and in good faith in accordance therewith.
3.1.13 Continuing Security Interest. This Agreement shall create
a continuing security interest in the Account Collateral and shall remain in
full force and effect until payment in full of the Indebtedness. Upon payment in
full of the Indebtedness, this security interest shall automatically terminate
without further notice from any party and Borrower shall be entitled to the
return, upon its request, of such of the Account Collateral as shall not have
been sold or otherwise applied pursuant to the terms hereof and Lender shall
execute such instruments and documents as may be reasonably requested by
Borrower to evidence such termination and the release of the Account Collateral.
36
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower Representations.
Borrower represents and warrants as of the Closing Date that:
4.1.1 Organization. Borrower is a Delaware limited liability
company and has been duly organized and is validly existing and in good standing
pursuant to the laws of the State of Delaware with requisite power and authority
to own its properties and to transact the businesses in which it is now engaged.
American Financial Realty Trust is a Maryland real estate investment trust and
has been duly organized and is validly existing and in good standing pursuant to
the laws of the State of Maryland with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged. Each of
Borrower and the Guarantors has duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations, except where the
failure to be so qualified does not have a material adverse effect upon such
property, businesses and operations. Each of Borrower and the Guarantors possess
all rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged, and the sole business of Borrower is the management and
operation of the Property. The organizational structure of Borrower is
accurately depicted by the schematic diagram attached hereto as Exhibit K.
Borrower shall not itself change its name, identity, corporate structure or
jurisdiction of organization unless it shall have given Lender ten (10) Business
Days prior written notice of any such change and shall have taken all steps
reasonably requested by Lender to grant, perfect, protect and/or preserve the
security interest granted hereunder to Lender.
4.1.2 Proceedings. Each of Borrower and the Guarantors has full
power to and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement and the other Loan Documents. This Agreement
and the other Loan Documents have been duly executed and delivered by, or on
behalf of, each of Borrower and the Guarantors, as applicable, and constitute
legal, valid and binding obligations of each of Borrower and the Guarantors, as
applicable, enforceable against each of Borrower and the Guarantors, as
applicable, in accordance with their respective terms, subject only to
applicable bankruptcy, insolvency and similar laws affecting rights of creditors
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
4.1.3 No Conflicts. The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower and Guarantors, as
applicable, will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance (other than pursuant to the Loan
Documents) upon any of the property or assets of Borrower or Guarantors pursuant
to the terms of any indenture, mortgage, deed of trust, loan agreement,
partnership agreement or other agreement or instrument to which Borrower or
either Guarantor is a party or by which any of Borrower's or either Guarantor's
property or assets is subject (unless consents from all applicable parties
thereto have been obtained), nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
37
Authority, and any consent, approval, authorization, order, registration or
qualification of or with any Governmental Authority required for the execution,
delivery and performance by Borrower or either Guarantors of this Agreement or
any other Loan Documents has been obtained and is in full force and effect.
4.1.4 Litigation. Except as set forth on Schedule III attached
hereto, there are no material arbitration proceedings, governmental
investigations, actions, suits or proceedings at law or in equity by or before
any Governmental Authority now pending or, to the best of Borrower's knowledge,
threatened against or affecting Borrower, Guarantors or the Property. The
actions, suits or proceedings identified on Schedule III, if determined against
Borrower, either Guarantor or the Property, would not materially and adversely
affect the condition (financial or otherwise) or business of Borrower, either
Guarantors or the condition or operation of the Property.
4.1.5 Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which is reasonably likely to
materially and adversely affect Borrower or Borrower's business, properties or
assets, operations or condition, financial or otherwise. Borrower is not in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or the Property is bound.
Borrower has no material financial obligation (contingent or otherwise) under
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Borrower is a party or by which Borrower or the Property is
otherwise bound, other than (a) obligations incurred in the ordinary course of
the operation of the Property and (b) obligations under the Loan Documents.
4.1.6 Title. Borrower has good, marketable and insurable fee
simple title to, or leasehold estate in, the Land and the Improvements, free and
clear of all Liens whatsoever except the Permitted Encumbrances. Borrower has
good and marketable title to the remainder of the Property, free and clear of
all Liens whatsoever except the Permitted Encumbrances. The Security Instrument,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (a) a valid, perfected first mortgage lien on the Land
and the Improvements or the leasehold estate therein, as applicable, subject
only to Permitted Encumbrances, and (b) perfected security interests in and to,
and perfected collateral assignments of, all personalty (including the Leases),
all in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances. There are no claims for payment for work,
labor or materials affecting the Property which are or may become a lien prior
to, or of equal priority with, the Liens created by the Loan Documents. Borrower
represents and warrants that none of the Permitted Encumbrances will materially
and adversely affect (i) the ability of Borrower to pay any of its obligations
to any Person as and when due, (ii) the fair market value of the Property, (iii)
the marketability of title to the Property, or (iv) the use or operation of the
Property as presently used and operated as of the Closing Date and thereafter.
Borrower shall preserve its right, title and interest in and to the Property for
so long as the Note remains outstanding and will warrant and defend same and the
validity and priority of the Lien hereof from and against any and all claims
whatsoever other than the Permitted Encumbrances.
38
4.1.7 No Bankruptcy Filing. None of Borrower, Manager or
Guarantors is contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
major portion of such entity's assets or property, and Borrower has no knowledge
of any Person contemplating the filing of any such petition against it or
against any Borrower, Manager or Guarantors.
4.1.8 [Reserved]
4.1.9 All Property. The Property constitutes all of the real
property, personal property, equipment and fixtures currently (i) owned or
leased by Borrower or (ii) used in the operation of the business located on the
Property, other than items owned by Manager or any Tenants.
4.1.10 No Plan Assets.
(a) Borrower does not maintain an employee benefit plan as defined by
Section 3(3) of ERISA, which is subject to Title IV of ERISA, and Borrower (i)
has no knowledge of any material liability which has been incurred or is
expected to be incurred by Borrower which is or remains unsatisfied for any
taxes or penalties with respect to any "employee benefit plan," within the
meaning of Section 3(3) of ERISA, or any "plan," within the meaning of Section
4975(e)(1) of the Internal Revenue Code or any other benefit plan (other than a
multiemployer plan) maintained, contributed to, or required to be contributed to
by Borrower or by any entity that is under common control with Borrower within
the meaning of ERISA Section 4001(a)(14) (a Plan) or any plan that would be a
Plan but for the fact that it is a multiemployer plan within the meaning of
ERISA Section 3(37); and (ii) has made and shall continue to make when due all
required contributions to all such Plans, if any. Each such Plan has been and
will be administered in compliance with its terms and the applicable provisions
of ERISA, the Internal Revenue Code, and any other applicable federal or state
law; and no action shall be taken or fail to be taken that would result in the
disqualification or loss of tax-exempt status of any such Plan intended to be
qualified and/or tax exempt; and
(b) Borrower is not an employee benefit plan, as defined in Section
3(3) of ERISA, subject to Title I of ERISA, none of the assets of Borrower
constitutes or will constitute plan assets of one or more such plans within the
meaning of 29 C.F.R. Section 2510.3-101 and Borrower is not a governmental plan
within the meaning of Section 3(32) of ERISA and transactions by or with
Borrower are not subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code currently in
effect, which prohibit or otherwise restrict the transactions contemplated by
this Agreement.
4.1.11 Compliance. Borrower and the Property and the use thereof
comply in all material respects with all applicable Legal Requirements,
including, without limitation, building and zoning ordinances and codes. To the
best of Borrower's knowledge, Borrower is not in default or in violation of any
order, writ, injunction, decree or demand of any Governmental Authority. To the
best of Borrower's knowledge, there has not been committed by Borrower any act
or omission affording the federal government or any other Governmental
39
Authority the right of forfeiture as against the Property or any part thereof or
any monies paid in performance of Borrower's obligations under any of the Loan
Documents.
4.1.12 Financial Information. To the best of Borrower's
knowledge, all financial data including, without limitation, the statements of
cash flow and income and operating expense, that have been delivered by or on
behalf of Borrower to Lender in respect of the Property (i) are true, complete
and correct in all material respects, (ii) fairly represent the financial
condition of the Property as of the date of such reports, and (iii) to the
extent prepared or audited by an independent certified public accounting firm,
have been prepared in accordance with GAAP throughout the periods covered,
except as disclosed therein. Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and could reasonably be expected to have a Material Adverse Effect.
4.1.13 Condemnation. To the best of Borrower's knowledge, except
as set forth on Schedule III hereto, no material condemnation has been commenced
or, to Borrower's knowledge, is contemplated with respect to all or any portion
of the Property or for the relocation of roadways providing access to the
Property.
4.1.14 Federal Reserve Regulations. None of the proceeds of the
Loan will be used for the purpose of purchasing or carrying any "margin stock"
as defined in Regulation U, Regulation X or Regulation T or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry "margin stock" or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of Regulation U or Regulation
X. As of the Closing Date, Borrower does not own any "margin stock."
4.1.15 Utilities and Public Access. To the best of Borrower's
knowledge, the Property has rights of access to public ways and is served by
water, sewer, sanitary sewer and storm drain facilities adequate to service the
Property for its intended uses. To the best of Borrower's knowledge, all
utilities necessary to the existing use of the Property are located either in
the public right-of-way abutting the Property (which are connected so as to
serve the Property without passing over other property) or in recorded easements
serving the Property and such easements are set forth in and insured by the
Title Policy. To the best of Borrower's knowledge, all roads necessary for the
use of the Property for its current purposes have been completed and, if
necessary, dedicated to public use.
4.1.16 Not a Foreign Person. Borrower is not a foreign person
within the meaning of (S) 1445(f)(3) of the Code.
4.1.17 Separate Lots. To the best of Borrower's knowledge, each
Individual Parcel is comprised of one (1) or more contiguous parcels which
constitute a separate tax lot or lots and does not constitute or include a
portion of any other tax lot not a part of such Individual Parcel.
4.1.18 Assessments. To the best of Borrower's knowledge, there
are no pending or proposed special or other assessments for public improvements
or otherwise affecting
40
the Property, nor are there any contemplated improvements to the Property that
may result in such special or other assessments.
4.1.19 Enforceability. The Loan Documents are not subject to any
existing right of rescission, set-off, counterclaim or defense by Borrower,
including the defense of usury, nor would the operation of any of the terms of
the Loan Documents, or the exercise of any right thereunder, render the Loan
Documents unenforceable (subject to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law)), and Borrower has
not asserted any right of rescission, set-off, counterclaim or defense with
respect thereto.
4.1.20 No Prior Assignment. There are no prior sales, transfers
or assignments of the Leases or any portion of the Rents due and payable or to
become due and payable which are presently outstanding following the funding of
the Loan, other than those being terminated or assigned to Lender concurrently
herewith.
4.1.21 Insurance. Borrower has obtained and has delivered to
Lender certificates evidencing all insurance policies required under this
Agreement, reflecting the insurance coverages, amounts and other requirements
set forth in this Agreement. Borrower has not, and to the best of Borrower's
knowledge no Person has, done by act or omission anything which would impair the
coverage of any such policy.
4.1.22 Use of Property. The Property is used exclusively for
office, bank branch, bank operation center and retail purposes and other
appurtenant and related uses.
4.1.23 Certificate of Occupancy; Licenses. To the best of
Borrower's knowledge except as described on the summary report prepared by The
Planning and Zoning Resource Corporation and delivered to Lender prior to the
Closing Date, all certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy permits required of
Borrower for the legal use, occupancy and operation of the Property as office
buildings, bank branches and bank operations centers (collectively, the
Licenses), have been obtained and are in full force and effect. Borrower shall
keep and maintain all Licenses necessary for the operation of the Property as
office buildings, bank branches and bank operations centers. The use being made
of the Property is in conformity with the certificate of occupancy issued for
the Property.
4.1.24 [Reserved]
4.1.25 Physical Condition. To the best of Borrower's knowledge,
and except as expressly disclosed in the Physical Conditions Report, the
Property, including, without limitation, all buildings, Improvements, parking
facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects; to
the best of Borrower's knowledge, and except as disclosed in the Physical
Conditions Report, there exists no structural or other material defects or
damages in or to the Property, whether latent or otherwise,
41
and Borrower has not received any written notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
4.1.26 Boundaries. To the best of Borrower's knowledge and in
reliance on the Surveys, (a) all of the Improvements lie wholly within the
boundaries and building restriction lines of the Real Property, (b) no
improvements on adjoining properties encroach upon the Real Property, and (c) no
easements or other encumbrances upon the Individual Property encroach upon any
of the Improvements, except in each case where such encroachment would not have
a material adverse effect on the value or marketability of the Real Property or,
if it could have such an effect, where such encroachment is insured against by
the Title Policy.
4.1.27 Leases. The Property is not subject to any Leases other
than the Leases described in the certified rent roll delivered in connection
with the origination of the Loan. Such certified rent roll is true, complete and
correct in all material respects as of the date set forth therein. No Person has
any possessory interest in the Property or right to occupy the same except under
and pursuant to the provisions of the Leases. The current Leases are in full
force and effect and to Borrower's knowledge, there are no material defaults
thereunder by either party (other than as expressly disclosed on the certified
rent roll delivered to Lender or the Tenant estoppel certificates delivered to
Lender in connection with the closing of the Loan) and there are no conditions
that, with the passage of time or the giving of notice, or both, would
constitute material defaults thereunder. No Rent has been paid more than one (1)
month in advance of its due date, except as disclosed in the Tenant estoppel
certificates delivered to Lender in connection with the closing of the Loan.
There has been no prior sale, transfer or assignment, hypothecation or pledge by
Borrower of any Lease or of the Rents received therein, which will be
outstanding following the funding of the Loan, other than those being assigned
to Lender concurrently herewith. No Tenant under any Lease has a right or option
pursuant to such Lease or otherwise to purchase all or any part of the property
of which the leased premises are a part except as disclosed in the Tenant
estoppel certificates delivered to Lender.
4.1.28 Filing and Recording Taxes. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the transfer of the Property to Borrower have been
or will be promptly paid, and the granting and recording of the Security
Instrument and the UCC financing statements required to be filed in connection
with the Loan have been or will be promptly made. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable Legal Requirements currently in effect in connection
with the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Security Instrument, have been or will be promptly paid.
42
4.1.29 Single Purpose Entity/Separateness.
(a) Until the Indebtedness has been paid in full, Borrower hereby
represents, warrants and covenants that Borrower is, shall be, and shall
continue to be, a Single Purpose Entity.
(b) All of the assumptions made in the Non-Consolidation Opinion,
including, but not limited to, any exhibits attached thereto, are true and
correct in all respects and any assumptions made in any subsequent
non-consolidation opinion delivered in connection with the Loan Documents (an
Additional Non-Consolidation Opinion), including, but not limited to, any
exhibits attached thereto, will have been and shall be true and correct in all
respects. Borrower has complied and will comply with all of the assumptions made
with respect to it in the Non-Consolidation Opinion. Borrower will have complied
and will comply with all of the assumptions made with respect to it in any
Additional Non-Consolidation Opinion. Each entity other than Borrower with
respect to which an assumption shall be made in any Additional Non-Consolidation
Opinion will have complied and will comply with all of the assumptions made with
respect to it in any Additional Non-Consolidation Opinion.
4.1.30 Management Agreement. The Management Agreement is in full
force and effect and there is no default thereunder by any party thereto and no
event has occurred that, with the passage of time and/or the giving of notice
would constitute a default thereunder. The Manager is an affiliate of Borrower.
4.1.31 Illegal Activity. No portion of the Property has been or
will be purchased with proceeds of any illegal activity.
4.1.32 No Change in Facts or Circumstances; Disclosure. All
financial statements and rent rolls submitted by Borrower in connection with the
Loan are accurate, complete and correct in all material respects. All other
written information, reports, certificates and other documents submitted by
Borrower to Lender in connection with the Loan are, to the best of Borrower's
knowledge, accurate, complete and correct in all material respects. Except with
respect to such representations and warranties contained in this Agreement or in
any other Loan Document which are qualified as being made to the best of
Borrower's knowledge, all representations and warranties made by Borrower in
this Agreement or in any other Loan Document, are accurate, complete and correct
in all material respects. There has been no material adverse change known to
Borrower in any condition, fact, circumstance or event that would make any such
information inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects the Property or the
business operations or the financial condition of Borrower. Borrower has
disclosed to Lender all material facts known to Borrower and has not failed to
disclose any material fact known to Borrower that is likely to cause any
representation or warranty made herein to be materially misleading.
4.1.33 Tax Filings. Borrower has filed (or has obtained effective
extensions for filing) all federal, state and local tax returns required to be
filed and has paid or made adequate provision for the payment of all federal,
state and local taxes, charges and assessments payable by Borrower.
43
4.1.34 Solvency/Fraudulent Conveyance. Borrower (a) has not
entered into the transaction contemplated by this Agreement or any Loan Document
with the actual intent to hinder, delay, or defraud any creditor and (b) has
received reasonably equivalent value in exchange for its obligations under the
Loan Documents. After giving effect to the Loan, the fair saleable value of
Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its Debts as such Debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Debt and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations of Borrower).
4.1.35 Investment Company Act. Borrower is not (a) an investment
company or a company Controlled by an investment company, within the meaning of
the Investment Company Act of 1940, as amended, (b) a holding company or a
subsidiary company of a holding company or an affiliate of either a holding
company or a subsidiary company within the mean of the Public Utility Holding
Company Act of 1935, as amended or (c) subject to any other federal or state law
or regulation which purports to restrict or regulate its ability to borrow
money.
4.1.36 [Reserved]
4.1.37 Labor. To the best of Borrower's knowledge, no organized
work stoppage or labor strike is pending or threatened by employees and other
laborers at the Property. Neither Borrower nor Manager (i) is involved in or
threatened with any labor dispute, grievance or litigation relating to labor
matters involving any employees and other laborers at the Property, including,
without limitation, violation of any federal, state or local labor, safety or
employment laws (domestic or foreign) and/or charges of unfair labor practices
or discrimination complaints, (ii) has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or the Railway Labor Act
or (iii) is a party to, or bound by, any collective bargaining agreement or
union contract with respect to employees and other laborers at the Property and
no such agreement or contract is currently being negotiated by the Borrower,
Manager or any of its Affiliates.
4.1.38 Brokers. Neither Borrower nor Lender has dealt with any
broker or finder with respect to the transactions contemplated by the Loan
Documents and neither party has done any acts, had any negotiations or
conversations, or made any agreements or promises which will in any way create
or give rise to any obligation or liability for the payment by either party of
any brokerage fee, charge, commission or other compensation to any Person with
respect to the transactions contemplated by the Loan Documents. Borrower and
Lender shall each indemnify and hold harmless the other from and against any
loss, liability, cost or expense, including any judgments, attorneys' fees, or
costs of appeal, incurred by the other party and
44
arising out of or relating to any breach or default by the indemnifying party of
its representations, warranties and/or agreements set forth in this Section
4.1.38. The provisions of this Section 4.1.38 shall survive the expiration and
termination of this Agreement and the payment of the Indebtedness.
4.1.39 No Other Debt. Borrower has not borrowed or received debt
financing that has not been heretofore repaid in full, other than the Permitted
Debt.
4.1.40 Taxpayer Identification Number. Borrower's Federal
taxpayer identification number is ▇▇-▇▇▇▇▇▇▇.
4.1.41 Leases and REAs. Borrower represents that it has
heretofore delivered to Lender true and complete copies of all Leases, Ground
Leases and REAs and any and all amendments or modifications thereof provided by
Bank of America, N.A., the former owner of the Property or otherwise in
Borrower's possession. To the best of Borrower's knowledge, no events or
circumstances exist which with or without the giving of notice, the passage of
time or both, may constitute a default on the part of Borrower under any Leases,
Ground Leases or REAs. To the best of Borrower's knowledge, Bank of America,
N.A., the former owner of the Property, has complied with and performed all of
its material construction, improvement and alteration obligations with respect
to the Property required as of the date hereof and any other obligations under
the other REAs, Ground Leases or the Leases that are required as of the date
hereof have either been complied with or the failure to comply with the same
does not and could not reasonably be expected to have a Material Adverse Effect.
The REAs are in full force and effect and neither Borrower nor, to Borrower's
knowledge, any other party to the REAs, is in default thereunder, and to the
best of Borrower's knowledge, there are no conditions which, with the passage of
time or the giving of notice, or both, would constitute a default thereunder.
The REAs have not been modified, amended or supplemented except as set forth on
Schedule IV.
Section 4.2 Survival of Representations. Borrower agrees that all of
the representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall be deemed
given and made as of the date of the funding of the Loan and survive for so long
as any amount remains owing to Lender under this Agreement or any of the other
Loan Documents by Borrower or Guarantors unless a longer survival period is
expressly stated in a Loan Document with respect to a specific representation or
warranty, in which case, for such longer period. All representations,
warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.
V. BORROWER COVENANTS
Section 5.1 Affirmative Covenants.
From the Closing Date and until payment and performance in full of all
obligations of Borrower under the Loan Documents, Borrower hereby covenants and
agrees with Lender that:
45
5.1.1 Performance by Borrower. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document executed and delivered by, or applicable to, Borrower, and shall
not enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower, as applicable, without the prior written consent
of Lender.
5.1.2 Existence; Compliance with Legal Requirements; Insurance.
Subject to Borrower's right of contest pursuant to Section 7.3, Borrower shall
at all times comply and cause the Property to be in compliance with all Legal
Requirements applicable to the Borrower and the Property and the uses permitted
upon the Property. Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises necessary to comply with all Legal Requirements
applicable to it and the Property. There shall never be committed by Borrower,
and Borrower shall not knowingly permit any other Person in occupancy of or
involved with the operation or use of the Property to commit, any act or
omission affording the federal government or any state or local government the
right of forfeiture as against the Property or any part thereof or any monies
paid in performance of Borrower's obligations under any of the Loan Documents.
Borrower hereby covenants and agrees not to commit, knowingly permit or suffer
to exist any act or omission affording such right of forfeiture. Borrower shall
at all times maintain, preserve and protect all franchises and trade names and
preserve all the remainder of its property used in the conduct of its business
and shall keep the Property in good working order and repair, and from time to
time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto, all as more fully set forth
in the Security Instrument. Borrower shall keep the Property insured at all
times to such extent and against such risks, and maintain liability and such
other insurance, as is more fully set forth in this Agreement.
5.1.3 Litigation. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened in
writing against Borrower which, if determined adversely to Borrower would have a
Material Adverse Effect.
5.1.4 Single Purpose Entity.
(a) Each of Borrower has been since the date of its formation and
shall remain a Single Purpose Entity.
(b) Each of Borrower shall continue to maintain its own deposit
account or accounts, separate from those of any Affiliate, with commercial
banking institutions. None of the funds of Borrower will be diverted to any
other Person or for other than business uses of Borrower, nor will such funds be
commingled with the funds of any other Affiliate.
(c) To the extent that Borrower shares the same officers or other
employees as any of Borrower or its Affiliates, the salaries of and the expenses
related to providing benefits to such officers and other employees shall be
fairly allocated among such entities, and each such entity shall bear its fair
share of the salary and benefit costs associated with all such common officers
and employees.
46
(d) To the extent that Borrower jointly contracts with any of Borrower
or its Affiliates, as applicable, to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities, and each such entity shall bear its fair
share of such costs. To the extent that either Borrower contracts or does
business with vendors or service providers where the goods and services provided
are partially for the benefit of any other Person, the costs incurred in so
doing shall be fairly allocated to or among such entities for whose benefit the
goods and services are provided, and each such entity shall bear its fair share
of such costs. All material transactions between (or among) Borrower and any of
its respective Affiliates shall be conducted on substantially the same terms (or
on more favorable terms for Borrower) as would be conducted with third parties.
(e) To the extent that Borrower or any of its Affiliates have offices
in the same location, there shall be a fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its fair share of
such expenses.
(f) Borrower shall conduct its affairs strictly in accordance with its
organizational documents, and observe all necessary, appropriate and customary
corporate, limited liability company or partnership formalities, as applicable,
including, but not limited to, obtaining any and all members' consents necessary
to authorize actions taken or to be taken, and maintaining accurate and separate
books, records and accounts, including, without limitation, payroll and
intercompany transaction accounts.
(g) In addition, Borrower shall each: (i) maintain books and records
separate from those of any other Person; (ii) maintain its assets in such a
manner that it is not more costly or difficult to segregate, identify or
ascertain such assets; (iii) hold regular meetings of its board of directors,
shareholders, partners or members, as the case may be, and observe all other
corporate, partnership or limited liability company, as the case may be,
formalities; (iv) hold itself out to creditors and the public as a legal entity
separate and distinct from any other entity; (v) prepare separate tax returns
and financial statements, or if part of a consolidated group, then it will be
shown as a separate member of such group; (vi) transact all business with its
Affiliates on an arm's-length basis and pursuant to enforceable agreements;
(vii) conduct business in its name and use separate stationery, invoices and
checks; (viii) not commingle its assets or funds with those of any other Person;
and (ix) not assume, guarantee or pay the debts or obligations of any other
Person.
5.1.5 Consents. If Borrower is a corporation, the board of
directors of such Person may not take any action requiring the unanimous
affirmative vote of 100% of the members of the board of directors unless all of
the directors, including the Independent Directors, shall have participated in
such vote. If Borrower is a limited liability company, (a) if such Person is
managed by a board of managers, the board of managers of such Person may not
take any action requiring the unanimous affirmative vote of 100% of the members
of the board of managers unless all of the managers, including the Independent
Managers, shall have participated in such vote, (b) if such Person is not
managed by a board of managers, the members of such Person may not take any
action requiring the affirmative vote of 100% of the members of such Person
unless all of the members, including the Independent Members, shall have
participated in such vote. An affirmative vote of 100% of the directors, board
of managers or members, as applicable, of Borrower shall be required to (i) file
a bankruptcy or insolvency
47
petition or otherwise institute insolvency proceedings or to authorize Borrower
to do so or (ii) file an involuntary bankruptcy petition against any Affiliate,
Manager, or any Affiliate of Manager. Furthermore, Borrower's formation
documents shall expressly state that for so long as the Loan is outstanding,
neither Borrower shall not be permitted to (i) dissolve, liquidate, consolidate,
merge or sell all or substantially all of Borrower's assets other than in
connection with the repayment of the Loan or (ii) engage in any other business
activity and such restrictions shall not be modified or violated for so long as
the Loan is outstanding.
5.1.6 Access to Property. Borrower shall permit agents,
representatives and employees of Lender and the Rating Agencies to inspect the
Property or any part thereof during normal business hours on Business Days upon
reasonable advance notice, subject to such limitations on such access provided
by the Leases.
5.1.7 Notice of Default. Borrower shall promptly advise Lender
(a) of any event or condition that has or is likely to have a Material Adverse
Effect and (b) of the occurrence of any Default or Event of Default of which
Borrower has knowledge.
5.1.8 Cooperate in Legal Proceedings. Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which would reasonably be expected to affect in any
material adverse way the rights of Lender hereunder or under any of the other
Loan Documents and, in connection therewith, permit Lender, at its election, to
participate in any such proceedings which may have a Material Adverse Effect.
5.1.9 Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required, under the Loan
Documents executed and delivered by, or applicable to, Borrower.
5.1.10 Insurance.
(a) Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any Proceeds lawfully or equitably payable in connection with the
Property, and Lender shall be reimbursed for any expenses incurred in connection
therewith (including reasonable attorneys' fees and disbursements) out of such
Proceeds.
(b) Borrower shall comply with all Insurance Requirements and shall
not bring or keep or permit to be brought or kept any article upon any of the
Property or cause or permit any condition to exist thereon which would be
prohibited by any Insurance Requirement, or would invalidate insurance coverage
required hereunder to be maintained by Borrower on or with respect to any part
of the Property pursuant to Section 6.1.
5.1.11 Further Assurances; Separate Notes; Bifurcation.
(a) Borrower shall execute and acknowledge (or cause to be executed
and acknowledged) and deliver to Lender all documents, and take all actions,
reasonably required by Lender from time to time to confirm the rights created or
now or hereafter intended to be created under this Agreement and the other Loan
Documents and any security interest created or
48
purported to be created thereunder, to protect and further the validity,
priority and enforceability of this Agreement and the other Loan Documents, to
subject to the Loan Documents any property of Borrower intended by the terms of
any one or more of the Loan Documents to be encumbered by the Loan Documents, or
otherwise carry out the purposes of the Loan Documents and the transactions
contemplated thereunder. Borrower agrees that it shall, following the occurrence
and during the continuance of a Default or Event of Default and upon request,
reasonably cooperate with Lender in connection with any request by Lender to
sever the Note into two (2) or more separate substitute notes in an aggregate
principal amount equal to the Principal Amount and to reapportion the Loan among
such separate substitute notes, including, without limitation, by executing and
delivering to Lender new substitute notes to replace the Note, amendments to or
replacements of existing Loan Documents to reflect such severance and/or
Opinions of Counsel with respect to such substitute notes, amendments and/or
replacements, provided that Borrower shall bear no costs or expenses in
connection therewith (other than administrative costs and expenses of Borrower).
Any such substitute notes may have varying principal amounts and economic terms,
provided, however, that (i) the maturity date of any such substitute note shall
be the same as the scheduled Maturity Date of the Note immediately prior to the
issuance of such substitute notes, (ii) the substitute notes shall provide for
amortization of the Principal Amount on a weighted average basis over a period
not less than the amortization period provided under the Note, if any,
immediately prior to the issuance of the substitute notes, (iii) the weighted
average LIBOR Margin for the term of the substitute notes shall not exceed the
LIBOR Margin under the Note immediately prior to the issuance of such substitute
notes; and (iv) the economics of the Loan, taken as a whole, shall not change in
a manner which is adverse to Borrower. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply payment of all sums due
under such substitute notes in such order and priority as Lender shall elect in
its sole and absolute discretion.
(b) In addition, Borrower shall, at Borrower's sole cost and expense:
(i) furnish to Lender, to the extent not otherwise already
furnished to Lender and reasonably acceptable to Lender, 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 by Borrower pursuant to the terms of the
Loan Documents;
(ii) execute and deliver, from time to time, such further
instruments (including, without limitation, delivery of any financing statements
under the UCC) as may be reasonably requested by Lender to confirm the Lien of
the Security Instrument on any Building Equipment, Operating Asset or any
Intangible;
(iii) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
to evidence, preserve and/or protect the collateral at any time securing or
intended to secure the obligations of Borrower under the Loan Documents, as
Lender may reasonably require; and
(iv) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the carrying out of the terms and
conditions of this Agreement and the other Loan Documents, as Lender shall
reasonably require from time to time.
49
(c) Borrower further agrees that if, in connection with the
Securitization, it is determined by the Rating Agencies that a portion of the
Securitization would not receive an "investment grade" rating unless the
principal amount of the Loan were to be decreased and, as a result, the
principal amount of the Loan is decreased, then the Borrower shall take all
actions as are necessary to effect as "bifurcation" of the Loan by severing a
portion of the Loan into a mezzanine loan and Borrower shall execute and deliver
any and all necessary amendments or modifications to the Loan Documents and any
mezzanine loan documents as shall be required by Lender. Notwithstanding the
foregoing, Lender agrees that any "resizing" of the Loan shall not change the
economics of the Loan taken as a whole in a manner which is adverse to Borrower.
Any bifurcation of a portion of the Loan into a mezzanine loan shall be without
cost to Borrower.
5.1.12 Mortgage Taxes. Borrower shall pay all taxes, charges,
filing, registration and recording fees, excises and levies payable with respect
to the Note or the Liens created or secured by the Loan Documents, other than
income, franchise and doing business taxes imposed on Lender.
5.1.13 Operation.
(a) Borrower shall, and shall cause Manager to, (i) promptly perform
and/or observe all of the covenants and agreements required to be performed and
observed by it under the Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder; (ii) promptly
notify Lender of any "event of default" under the Management Agreement of which
it is aware; (iii) promptly deliver to Lender a copy of each financial
statement, capital expenditures plan, property improvement plan and any other
notice, report and estimate received by it under the Management Agreement; and
(iv) enforce in a commercially reasonable manner the performance and observance
of all of the covenants and agreements required to be performed and/or observed
by the Manager under the Management Agreement.
5.1.14 Business and Operations. Borrower shall continue to engage
in the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Property. Borrower shall qualify to do business and shall remain in good
standing under the laws of the State in which each parcel of the Property is
located and as and to the extent required for the ownership, maintenance,
management and operation of the Property.
5.1.15 Title to the Property. Borrower shall warrant and defend
(a) its title to the Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Liens of the Security Instrument, the Assignment of Leases and
this Agreement on the Property, subject only to Liens permitted hereunder
(including Permitted Encumbrances), in each case against the claims of all
Persons whomsoever. To the extent not paid to Lender under Lender's Title
Policy, Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in the Property, other than as permitted hereunder, is
claimed by another Person.
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5.1.16 Costs of Enforcement. In the event (a) that this Agreement
or any Security Instrument is foreclosed upon in whole or in part or that this
Agreement or any Security Instrument is put into the hands of an attorney for
collection, suit, action or foreclosure, (b) of the foreclosure of any security
agreement prior to or subsequent to this Agreement in which proceeding Lender is
made a party, or a mortgage prior to or subsequent to any Security Instrument in
which proceeding Lender is made a party, or (c) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of Borrower or any of its
constituent Persons or an assignment by Borrower or any of its constituent
Persons for the benefit of its creditors, Borrower, its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys' fees and costs, incurred by Lender or Borrower
in connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, together with all required service or use
taxes.
5.1.17 Estoppel Statement.
(a) Borrower shall, from time to time, upon thirty (30) days' prior
written request from Lender, execute, acknowledge and deliver to the Lender, an
Officer's Certificate, stating that this Agreement and the other Loan Documents
are unmodified and in full force and effect (or, if there have been
modifications, that this Agreement and the other Loan Documents are in full
force and effect as modified and setting forth such modifications), stating the
amount of accrued and unpaid interest and the outstanding principal amount of
the Note and containing such other information with respect to the Borrower, the
Property and the Loan as Lender shall reasonably request. The estoppel
certificate shall also state either that no Event of Default exists hereunder
or, if any Event of Default shall exist hereunder, specify such Event of Default
and the steps being taken to cure such Event of Default.
(b) In connection with a Securitization, Borrower shall use
commercially reasonable efforts to deliver to Lender, within fifteen (15)
Business Days of Lender's request, tenant estoppel certificates from each Tenant
in substantially the form and substance of the estoppel certificate set forth in
Exhibit G provided that Borrower shall not be required to deliver such
certificates more frequently than three times in any calendar year.
5.1.18 Loan Proceeds. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section
2.1.4.
5.1.19 No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (a) with any other real property
constituting a tax lot separate from the Property and (b) which constitutes real
property with any portion of the Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such real property portion of the Property.
5.1.20 No Further Encumbrances. Borrower shall do, or cause to be
done, all things necessary to keep and protect the Property and all portions
thereof unencumbered from any Liens, easements or agreements granting rights in
or restricting the use or development of the Property, except for (a) Permitted
Encumbrances, (b) Liens permitted
51
pursuant to the Loan Documents, (c) Liens for Impositions prior to the
imposition of any interest, charges or expenses for the non-payment thereof and
(d) any Liens permitted pursuant to Leases.
5.1.21 Leases and REAs. Borrower shall promptly after receipt
thereof deliver to Lender a copy of any notice received with respect to the REAs
and the Leases claiming that Borrower is in default in the performance or
observance of any of the material terms, covenants or conditions of any of the
REAs or the Leases.
Section 5.2 Negative Covenants.
From the Closing Date until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Lien of this Agreement or the Security Instrument in accordance with the terms
of this Agreement and the other Loan Documents, Borrower covenants and agrees
with Lender that it will not do, directly or indirectly, any of the following:
5.2.1 Incur Debt. Incur, create or assume any Debt other than
Permitted Debt or Transfer or lease all or any part of the Property or any
interest therein, except as permitted in the Loan Documents;
5.2.2 Encumbrances. Incur, create or assume or permit the
incurrence, creation or assumption of any Debt secured by an interest in
Borrower and shall not Transfer or permit the Transfer of any interest in
Borrower except as permitted pursuant to Article VIII;
5.2.3 Engage in Different Business. Engage, directly or
indirectly, in any business other than that of entering into this Agreement and
the other Loan Documents to which Borrower is a party and the use, ownership,
management, leasing, renovation, financing, development, operation and
maintenance of the Property and activities related thereto;
5.2.4 Make Advances. Make advances or make loans to any Person,
or hold any investments, except as expressly permitted pursuant to the terms of
this Agreement or any other Loan Document;
5.2.5 Partition. Partition any Individual Property;
5.2.6 Commingle. Commingle its assets with the assets of any of
its Affiliates;
5.2.7 Guarantee Obligations. Guarantee any obligations of any
Person;
5.2.8 Transfer Assets. Transfer any asset other than in the
ordinary course of business or Transfer any interest in the Property except as
may be permitted hereby or in the other Loan Documents;
5.2.9 Amend Organizational Documents. Amend or modify any of its
organizational documents without Lender's consent, other than in connection with
any Transfer permitted pursuant to Article VIII or to reflect any change in
capital accounts, contributions,
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distributions, allocations or other provisions that do not and could not
reasonably be expected to have a Material Adverse Effect and provided that
Borrower each remain a Single Purpose Entity;
5.2.10 Dissolve. Dissolve, wind-up, terminate, liquidate, merge
with or consolidate into another Person, except as expressly permitted pursuant
to this Agreement;
5.2.11 Bankruptcy. (i) File a bankruptcy or insolvency petition
or otherwise institute insolvency proceedings or (ii) file or solicit the filing
of an involuntary bankruptcy petition against Borrower, Manager or any Affiliate
of Borrower or Manager, without obtaining the prior consent of all of the
directors of Single Purpose Member, including, without limitation, the
Independent Managers;
5.2.12 ERISA. Engage in any activity that would subject it to
regulation under ERISA or qualify it as an "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) to which ERISA applies and Borrower's assets
do not and will not constitute plan assets within the meaning of 29 C.F.R.
Section 2510.3-101;
5.2.13 Distributions. From and after the occurrence and during
the continuance of an Event of Default, make any distributions to or for the
benefit of any of its partners or members or its or their Affiliates;
5.2.14 Manager.
(a) Borrower shall not, without the prior written consent of Lender,
which consent shall not be unreasonably withheld or delayed (provided, if a
Securitization shall have occurred, Borrower obtains a Rating Agency
Confirmation with respect to such action): (i) materially modify, change,
supplement, alter or amend the Management Agreement or waive or release any of
its right and remedies under the Management Agreement that would have a Material
Adverse Effect or (ii) replace the Manager with a Person other than a Qualified
Manager;
(b) Borrower shall notify Lender in writing (and shall deliver a copy
of the proposed management agreement) of any entity proposed to be designated as
a Qualified Manager of the Property not less than thirty (30) days before such
Qualified Manager begins to manage the Property, and, if a Securitization shall
have occurred, shall obtain prior to any appointment of a Qualified Manager a
Rating Agency Confirmation, with respect to any proposed Qualified Manager;
(c) If (a) an Event of Default has occurred and is continuing or (b)
the Manager shall become insolvent, Borrower shall, at the request of Lender,
terminate the Management Agreement and replace the Manager with a Qualified
Manager in accordance with this Section 5.2.14 and shall deliver an acceptable
Non-Consolidation Opinion covering such replacement Manager if such Person (i)
is not covered by the Non-Consolidation Opinion or an Additional
Non-Consolidation Opinion, and (ii) is an Affiliate of Borrower; and
(d) Upon the retention of a Qualified Manager, Lender, and if a
Securitization shall have occurred, the Rating Agencies, shall have the right to
approve any new management
53
agreement with such Qualified Manager (which approval by Lender shall not be
unreasonably withheld or delayed).
5.2.15 Modify REAs. Without the prior consent of Lender, which
shall not be unreasonably withheld, delayed or conditioned, Borrower shall not
execute modifications to the REAs;
5.2.16 Modify Account Agreement. Without the prior consent of
Lender, which shall not be unreasonably withheld, delayed or conditioned (and if
a Securitization shall have occurred, a Rating Agency Confirmation obtained by
Borrower), Borrower shall not execute any modification to the Account Agreement;
5.2.17 Zoning Reclassification. Without the prior written consent
of Lender, (a) initiate or consent to any zoning reclassification of any portion
of the Property, (b) seek any variance under any existing zoning ordinance that
could result in the use of the Property becoming a non-conforming use under any
zoning ordinance or any other applicable land use law, rule or regulation, or
(c) allow any portion of the Property to be used in any manner that could result
in the use of the Property becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation;
5.2.18 Debt Cancellation. Cancel or otherwise forgive or release
any material claim or debt owed to it by any Person, except for adequate
consideration or in the ordinary course of its business and except for
termination of a Lease as permitted by Section 8.8;
5.2.19 Misapplication of Funds. Distribute any revenue from the
Property or any Proceeds in violation of the provisions of this Agreement, fail
to remit amounts to the Collection Account or Holding Account, as applicable, as
required by Section 3.1, misappropriate any security deposit or portion thereof
or apply the proceeds of the Loan in violation of Section 2.1.4; or
5.2.20 Single-Purpose Entity. Fail to be a Single-Purpose Entity
or take or suffer any action or inaction the result of which would be to cause
Borrower to cease to be a Single-Purpose Entity.
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
Section 6.1 Insurance Coverage Requirements. Borrower shall, at its
sole cost and expense (whether directly or by the inclusion of such obligations
as tenant obligations in the applicable Leases), keep in full force and effect
insurance coverage of the types and minimum limits as follows during the term of
this Agreement:
6.1.1 Property Insurance. Insurance against loss customarily
included under so called "All Risk" policies including flood, earthquake,
vandalism, and malicious mischief, boiler and machinery, and such other
insurable hazards as, under good insurance practices, from time to time are
insured against for other property and buildings similar to the Improvements and
Building Equipment in nature, use, location, height, and type of construction.
Such insurance policy shall also insure the additional expense of demolition and
if any of the Improvements or the use of the Property shall at any time
constitute legal non-conforming
54
structures or uses, provide coverage for contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction Endorsements
and containing an "Ordinance or Law Coverage" or "Enforcement" endorsement. The
amount of such "All Risk" insurance shall be not less than one hundred percent
(100%) of the replacement cost value of the Improvements and the Building
Equipment. Each such insurance policy shall contain an agreed amount
(coinsurance waiver) and replacement cost value endorsement and shall cover,
without limitation, all tenant improvements and betterments which Borrower is
required to insure in accordance with any Lease. Lender shall be named "Loss
Payee" on a "Standard Mortgagee Endorsement" and be provided not less than
thirty (30) days advance notice of change in coverage, cancellation or
non-renewal.
6.1.2 Liability Insurance. "General Public Liability" insurance,
including, without limitation, "Commercial General Liability" insurance; "Owned"
(if any), "Hired" and "Non Owned Auto Liability"; and "Umbrella Liability"
coverage for "Personal Injury", "Bodily Injury", "Death, Accident and Property
Damage", providing in combination no less than $100,000,000 per occurrence and
in the annual aggregate. The policies described in this paragraph shall cover,
without limitation: elevators, escalators, independent contractors, "Contractual
Liability" (covering, to the maximum extent permitted by law, Borrower's
obligation to indemnify Lender as required under this Agreement and "Products
and Completed Operations Liability" coverage). All public liability insurance
shall name Lender as "Additional Insured" either on a specific endorsement or
under a blanket endorsement satisfactory to Lender.
6.1.3 Workers' Compensation Insurance. Workers compensation and
disability insurance as required by law.
6.1.4 Commercial Rents Insurance. "Commercial rents" insurance in
an amount equal to twelve (12) months actual rental loss plus a twelve (12)
month extended period of indemnity endorsement and with a limit of liability
sufficient to avoid any co-insurance penalty and to provide Proceeds which will
cover the actual loss of profits and rents sustained during the period of at
least eighteen (18) months following the date of casualty. Such policies of
insurance shall be subject only to exclusions that are acceptable to Lender and,
if the Loan is the subject of a Securitization, the Rating Agencies; provided,
however, that such exclusions are reasonably consistent with those required for
loans similar to the Loan provided herein. Such insurance shall be deemed to
include "loss of rental value" insurance where applicable. The term "rental
value" means the sum of (A) the total then ascertainable Rents payable under the
Leases and (B) the total ascertainable amount of all other amounts to be
received by Borrower from third parties which are the legal obligation of
Tenants, reduced to the extent such amounts would not be received because of
operating expenses not incurred during a period of non-occupancy of that portion
of such Property then not being occupied.
6.1.5 Builder's All-Risk Insurance. During any period of repair
or restoration, builder's "All-Risk" insurance in an amount equal to not less
than the full insurable value of the relevant Individual Property against such
risks (including so called "All Risk" perils coverage and collapse of the
Improvements to agreed limits as Lender may request, in form and substance
acceptable to Lender).
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6.1.6 Boiler and Machinery Insurance. Comprehensive boiler and
machinery insurance (without exclusion for explosion) covering all mechanical
and electrical equipment against physical damage, rent loss and improvements
loss and covering, without limitation, all tenant improvements and betterments
that Borrower is required to insure pursuant to any Lease on a replacement cost
basis. The minimum amount of limits to be provided shall be $10,000,000 per
accident.
6.1.7 Flood Insurance. If any portion of the Improvements is
located within an area designated as "flood prone" or a "special flood hazard
area" (as defined under the regulations adopted under the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973), flood
insurance shall be provided, in an amount not less than the maximum limit of
coverage available under the Federal Flood Insurance plan with respect to the
Property. Lender reserves the right to require flood insurance in excess of that
available under the Federal Flood Insurance plan.
6.1.8 Terrorism Insurance. Terrorism insurance, including
insurance coverage relating to the acts of terrorist groups or individuals, in
the amount equal to the Principal Amount in form and substance acceptable to
Lender. Borrower agrees that if any property insurance policy covering the
Property provides for any exclusions of coverage for acts of terrorism, then a
separate terrorism insurance policy in the coverage amount required under this
Section and in form and substance acceptable to Lender will be obtained by
Borrower for the Property.
6.1.9 Environmental Insurance. Environmental liability insurance
policies, which shall be non-cancelable at any time prior to the Maturity Date,
against any and all claims, including, without limitation, unknown environmental
hazards requiring remediation as of the date of this Agreement and known
environmental conditions not requiring remediation as of the date of this
Agreement, in an amount of not less than $5,000,000 per loss or $30,000,000 in
the aggregate arising out of or connected with the presence of any Hazardous
Materials at the Property. Lender shall be named in such environmental insurance
as an additional named insured and the environmental insurance policy shall
provide that it shall be assignable to Lender upon a foreclosure or assignment
in lieu of foreclosure of the Mortgage.
6.1.10 Other Insurance. At Lender's reasonable request, such
other insurance with respect to the Property against loss or damage of the kinds
from time to time customarily insured against and in such amounts as are
generally required by institutional lenders on loans of similar amounts and
secured by properties comparable to, and in the general vicinity of, the
Property.
6.1.11 Ratings of Insurers. Borrower shall maintain the insurance
coverage described in Section 6.1.1 through Section 6.1.10, in all cases, with
one or more domestic primary insurers reasonably acceptable to Lender, having
both (x) claims-paying-ability and financial strength ratings by S&P of not less
than "A" and its equivalent by the other Rating Agencies, provided that, with
respect to any layered or quota share insurance policy for the insurance that is
issued by more than five (5) insurers, the requirements of this clause (x) will
be satisfied if at least sixty percent (60%) of the limits provided shall be
with insurers that meet such claims-paying-ability and financial strength
ratings, and (y) an ▇▇▇▇▇▇ ▇. Best Company,
56
Inc. (Best) rating of "A" or better and a financial size category of not less
than "X", provided that, with respect to any layered or quota share insurance
policy for the insurance that is issued by more than five (5) insurers, the
requirements of this clause (y) will be satisfied if at least sixty percent
(60%) of the limits provided shall be with insurers that meet such rating and
financial size category standards. All insurers providing insurance required by
this Agreement shall be authorized to issue insurance in the State.
6.1.12 Form of Insurance Policies; Endorsements. All insurance
policies shall be in such form and with such endorsements as are satisfactory to
Lender (and Lender shall have the right to approve amounts, form, risk coverage,
deductibles, loss payees and insureds). A certificate of insurance with respect
to all of the above-mentioned insurance policies has been delivered to Lender
and originals or certified copies of all such policies shall be delivered to
Lender when the same are available (but no later than ninety (90) days after the
date hereof) and shall be held by Lender. All policies shall name Lender as an
additional insured, shall provide that all Proceeds (except with respect to
Proceeds of general liability and workers' compensation insurance) be payable to
Lender as and to the extent set forth in Section 6.2, and shall contain: (i) a
standard "non-contributory mortgagee" endorsement or its equivalent relating,
inter alia, to recovery by Lender notwithstanding the negligent or willful acts
or omissions of Borrower; (ii) a waiver of subrogation endorsement in favor of
Lender; (iii) an endorsement providing that no policy shall be impaired or
invalidated by virtue of 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; (iv) an endorsement providing for a deductible per loss of an
amount not more than that which is customarily maintained by prudent owners of
properties with a standard of operation and maintenance comparable to and in the
general vicinity of the Property, but in no event in excess of an amount
reasonably acceptable to Lender; and (v) a provision that such policies shall
not be canceled, terminated or expire without at least thirty (30) days' prior
written notice to Lender, in each instance. No insurance policy required
hereunder shall include any so called "terrorist exclusion" or similar exclusion
or exception to insurance coverage relating to the acts of terrorist groups or
individuals. Each insurance policy shall contain a provision whereby the
insurer: (i) agrees that such policy shall not be canceled or terminated, the
coverage, deductible, and limits of such policy shall not be modified, other
provisions of such policy shall not be modified if such policy, after giving
effect to such modification, would not satisfy the requirements of this
Agreement, and such policy shall not be canceled or fail to be renewed, without
in each case, at least thirty (30) days prior written notice to Lender, (ii)
waives any right to claim any premiums and commissions against Lender, provided
that the policy need not waive the requirement that the premium be paid in order
for a claim to be paid to the insured, and (iii) provides that Lender at its
option, shall be permitted to make payments to effect the continuation of such
policy upon notice of cancellation due to non-payment of premiums. In the event
any insurance policy (except for general public and other liability and workers
compensation insurance) shall contain breach of warranty provisions, such policy
shall provide that with respect to the interest of Lender, such insurance policy
shall not be invalidated by and shall insure Lender regardless of (A) any act,
failure to act or negligence of or violation of warranties, declarations or
conditions contained in such policy by any named insured, (B) the occupancy or
use of the Property for purposes more hazardous than permitted by the terms
thereof, or (C) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of this Agreement.
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6.1.13 Certificates. Borrower shall deliver to Lender annually,
concurrently with the renewal of the insurance policies required hereunder, a
certificate from Borrower's insurance agent stating that the insurance policies
required to be delivered to Lender pursuant to this Section 6.1 are maintained
with insurers who comply with the terms of Section 6.1.11, setting forth a
schedule describing all premiums required to be paid by Borrower to maintain the
policies of insurance required under this Section 6.1, and stating that Borrower
has paid such premiums. Certificates of insurance with respect to all
replacement policies shall be delivered to Lender not less than fifteen (15)
Business Days prior to the expiration date of any of the insurance policies
required to be maintained hereunder which certificates shall bear notations
evidencing payment of applicable premiums. Borrower shall deliver to Lender
originals (or certified copies) of such replacement insurance policies on or
before the earlier to occur of (i) ninety (90) days after the effective date
thereof and (ii) five (5) Business Days after Borrower's receipt thereof. If
Borrower fails to maintain and deliver to Lender the certificates of insurance
and certified copies or originals required by this Agreement, upon five (5)
Business Days' prior notice to Borrower, Lender may procure such insurance, and
all costs thereof (and interest thereon at the Default Rate) shall be added to
the Indebtedness. Lender shall not, by the fact of approving, disapproving,
accepting, preventing, obtaining or failing to obtain any insurance, incur any
liability for or with respect to the amount of insurance carried, the form or
legal sufficiency of insurance contracts, solvency of insurance companies, or
payment or defense of lawsuits, and Borrower hereby expressly assumes full
responsibility therefor and all liability, if any, with respect to such matters.
Borrower agrees that any replacement insurance policy required hereunder shall
not include any so called "terrorist exclusion" or similar exclusion or
exception to insurance coverage relating to the acts of terrorist groups or
individuals.
6.1.14 Separate Insurance. Borrower shall not take out separate
insurance contributing in the event of loss with that required to be maintained
pursuant to this Section 6.1 unless such insurance complies with this Section
6.1.
6.1.15 Blanket Policies. The insurance coverage required under
this Section 6.1 may be effected under a blanket policy or policies covering the
Property and other properties and assets not constituting a part of the
Property; provided that any such blanket policy shall specify, except in the
case of public liability insurance, the portion of the total coverage of such
policy that is allocated to the Property, and any sublimits in such blanket
policy applicable to the Property, which amounts shall not be less than the
amounts required pursuant to this Section 6.1 and which shall in any case comply
in all other respects with the requirements of this Section 6.1. Upon Lender's
request, Borrower shall deliver to Lender an Officer's Certificate setting forth
(i) the number of properties covered by such policy, (ii) the location by city
(if available, otherwise, county) and state of the properties, (iii) the average
square footage of the properties (or the aggregate square footage), (iv) a brief
description of the typical construction type included in the blanket policy and
(v) such other information as Lender may reasonably request.
Section 6.2 Condemnation and Insurance Proceeds.
6.2.1 Notification. Borrower shall promptly notify Lender in
writing upon obtaining knowledge of (i) the institution of any proceedings
relating to any Taking (whether material or immaterial) of, or (ii) the
occurrence of any casualty, damage or injury to,
58
the Property or any portion thereof, the restoration of which is estimated by
Borrower in good faith to cost more than the Casualty Amount. In addition, each
such notice shall set forth such good faith estimate of the cost of repairing or
restoring such casualty, damage, injury or Taking in reasonable detail if the
same is then available and, if not, as soon thereafter as it can reasonably be
provided.
6.2.2 Proceeds. In the event of any Taking of or any casualty or
other damage or injury to the Property, Borrower's right, title and interest in
and to all compensation, awards, proceeds, damages, claims, insurance
recoveries, causes and rights of action (whether accrued prior to or after the
date hereof) and payments which Borrower may receive or to which Borrower may
become entitled with respect to the Property or any part thereof other than
payments received in connection with any liability or loss of rental value or
business interruption insurance (collectively, Proceeds), in connection with any
such Taking of, or casualty or other damage or injury to, the Property or any
part thereof are hereby assigned by Borrower to Lender and, except as otherwise
herein provided, shall be paid to the Lender. Borrower shall, in good faith and
in a commercially reasonable manner, file and prosecute the adjustment,
compromise or settlement of any claim for Proceeds and, subject to Borrower's
right to receive the direct payment of any Proceeds as herein provided, will
cause the same to be paid directly to Lender to be held and applied in
accordance with the provisions of this Agreement. Except upon the occurrence and
during the continuance of an Event of Default, Borrower may settle any insurance
claim with respect to Proceeds which does not exceed the Casualty Amount.
Whether or not an Event of Default shall have occurred and be continuing, Lender
shall have the right to approve, such approval not to be unreasonably withheld,
any settlement which might result in any Proceeds in excess of the Casualty
Amount and Borrower shall deliver or cause to be delivered to Lender all
instruments reasonably requested by Lender to permit such approval. Borrower
shall pay all reasonable out-of-pocket costs, fees and expenses reasonably
incurred by Lender (including all reasonable attorneys' fees and expenses, the
reasonable fees of insurance experts and adjusters and reasonable costs incurred
in any litigation or arbitration), and interest thereon at the Default Rate to
the extent not paid within ten (10) Business Days after delivery of a request
for reimbursement by Lender accompanied by an invoice and other evidence of such
costs, fees and expenses in connection with the settlement of any claim for
Proceeds and seeking and obtaining of any payment on account thereof in
accordance with the foregoing provisions. If any Proceeds are received by
Borrower and may be retained by Borrower pursuant to this Section 6.2, such
Proceeds shall, until the completion of the related Work, be held in trust for
Lender and shall be segregated from other funds of Borrower to be used to pay
for the cost of the Work in accordance with the terms hereof, and in the event
such Proceeds exceed the Casualty Amount, such Proceeds shall be forthwith paid
directly to and held by Lender in the Proceeds Reserve Account in trust for
Borrower, in each case to be applied or disbursed in accordance with this
Section 6.2. If an Event of Default shall have occurred and be continuing, or if
Borrower fails to file and/or prosecute any insurance claim for a period of
fifteen (15) Business Days following Borrower's receipt of written notice from
Lender, Borrower hereby irrevocably empowers Lender, in the name of Borrower as
its true and lawful attorney-in-fact, to file and prosecute such claim
(including settlement thereof) with counsel satisfactory to Lender and to
collect and to make receipt for any such payment, all at Borrower's expense
(including payment of interest at the Default Rate for any amounts advanced by
Lender pursuant to this Section 6.2). Notwithstanding anything to the contrary
set forth in this Agreement or any other Loan Document, however, unless an Event
of Default has occurred and is continuing hereunder, to the
59
extent any Proceeds do not exceed the Casualty Amount, such Proceeds are to be
paid directly to Borrower to be applied to restoration of the Property in
accordance with the terms hereof (except that Proceeds paid in respect of the
insurance described in Section 6.1.4 shall be deposited directly to the
Collection Account as revenue of the Property).
6.2.3 Lender to Take Proceeds. If (i) the Proceeds shall equal or
exceed the Principal Amount, (ii) an Event of Default shall have occurred and be
continuing, (iii) a Total Loss with respect to the Property shall have occurred,
(iv) the Property is not capable of being restored substantially to its
condition prior to such Taking or casualty and such incapacity shall have a
Material Adverse Effect, (v) Leases demising in the aggregate less than 50% of
the total rentable space in the Property which has been demised under executed
and delivered Leases in effect as of the date of the occurrence of such fire or
other casualty remain in full force and effect during and after the completion
of the restoration and (vi) Lender determines that upon the completion of the
restoration, the gross cash flow and the net cash flow of the Property will not
be restored to a level sufficient to cover all carrying costs and operating
expenses of the Property, including, without limitation, debt service on the
Note at a coverage ratio (after deducting all required reserves as required by
Lender from net operating income) of at least 2.0 to 1.0, which coverage ratio
shall be determined by Lender in its sole and absolute discretion; then in any
such case, all Proceeds shall be paid over to Lender (if not paid directly to
Lender) and any Proceeds remaining after reimbursement of Lender's or its
agent's reasonable out-of-pocket costs and expenses actually incurred in
connection with recovery of any such Proceeds (including, without limitation,
reasonable out-of-pocket administrative costs and inspection fees) shall be
applied by Lender to prepay the Note, except to the extent Borrower is required
to apply such Proceeds to restore the Property pursuant to the BofA Lease and
does not have the right to elect not to restore the Property in accordance with
the provisions thereof and the balance, if any shall be paid to Borrower.
6.2.4 Borrower to Restore.
(a) Promptly after the occurrence of any damage or destruction to all
or any portion of the Property or a Taking of a portion of the Property,
Borrower shall commence and diligently prosecute, or cause to be commenced and
diligently prosecuted, to completion, subject to Excusable Delays, the repair,
restoration and rebuilding of the Property (in the case of a partial Taking, to
the extent it is capable of being restored) so damaged, destroyed or remaining
after such Taking in full compliance with all material Legal Requirements and
free and clear of any and all Liens except Permitted Encumbrances (such repair,
restoration and rebuilding are sometimes hereinafter collectively referred to as
the Work). The plans and specifications shall require that the Work be done in a
first-class workmanlike manner at least equivalent to the quality and character
prior to the damage or destruction (provided, however, that in the case of a
partial Taking, the Property restoration shall be done to the extent reasonably
practicable after taking into account the consequences of such partial Taking),
so that upon completion thereof, the Property shall be at least equal in value
and general utility to the Property prior to the damage or destruction; it being
understood, however, that Borrower shall not be obligated to restore the
Property to the precise condition of the Property prior to any partial Taking
of, or casualty or other damage or injury to, the Property, if the Work actually
performed, if any, or failed to be performed, shall have no Material Adverse
Effect on the value of the Property from the value that the Property would have
had if the same had been restored to its condition immediately prior
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to such Taking or casualty. Subject to Borrower's rights pursuant to Section
2.3.3 to cause the Property to be released from the Liens of the Security
Instrument, Borrower shall be obligated to restore the Property suffering a
casualty or which has been subject to a partial Taking in accordance with the
provisions of this Section 6.2 at Borrower's sole cost and expense whether or
not the Proceeds shall be sufficient, provided that, if applicable, the Proceeds
shall be made available to Borrower by Lender in accordance with this Agreement.
(b) If Proceeds are not required to be applied toward payment of the
Indebtedness pursuant to Section 6.2.3, then Lender shall make the Proceeds
which it is holding pursuant to the terms hereof (after payment of any
reasonable out-of-pocket expenses actually incurred by Lender in connection with
the collection thereof plus interest thereon at the Default Rate (from the date
advanced through the date of reimbursement) to the extent the same are not paid
within ten (10) Business Days after request for reimbursement by Lender)
available to Borrower for payment of or reimbursement of Borrower's or the
applicable Tenant's expenses incurred with respect to the Work, upon the terms
and subject to the conditions set forth in paragraphs (i), (ii), (iii) and (iv)
below and in Section 6.2.5:
(i) at the time of loss or damage or at any time thereafter while
Borrower is holding any portion of the Proceeds, there shall be no continuing
Event of Default;
(ii) if, at any time, the estimated cost of the Work (as
estimated by the Independent Architect referred to in clause (iii) below) shall
exceed the Proceeds (a Deficiency) and for so long as a Deficiency shall exist,
Lender shall not be required to make any Proceeds disbursement to Borrower
unless Borrower delivers to Lender evidence of Borrower's ability to meet such
excess costs and which is reasonably satisfactory to Lender and satisfactory to
the Rating Agencies;
(iii) Each of Lender and the Independent Architect shall have
reasonably approved the plans and specifications for the Work and any change
orders in connection with such plans and specifications; and
(iv) Lender shall, within a reasonable period of time prior to
request for initial disbursement, be furnished with an estimate of the cost of
the Work accompanied by an Independent Architect's certification as to such
costs and appropriate plans and specifications for the Work. Borrower shall
restore all Improvements such that when they are fully restored and/or repaired,
such Improvements and their contemplated use fully comply with all applicable
Legal Requirements including zoning, environmental and building laws, codes,
ordinances and regulations.
6.2.5 Disbursement of Proceeds.
(a) Disbursements of the Proceeds in Cash or Cash Equivalents to
Borrower hereunder shall be made from time to time (but not more frequently than
once in any month) by Lender but only for so long as no Event of Default shall
have occurred and be continuing, as the Work progresses upon receipt by Lender
of (i) an Officer's Certificate dated not more than ten (10) Business Days prior
to the application for such payment, requesting such payment or reimbursement
and describing the Work performed that is the subject of such request, the
parties
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that performed such Work and the actual cost thereof, and also certifying that
such Work and materials are or, upon disbursement of the payment requested to
the parties entitled thereto, will be free and clear of Liens other than
Permitted Encumbrances, (ii) evidence reasonably satisfactory to Lender that (A)
all materials installed and work and labor performed in connection with such
Work have been paid for in full and (B) there exists no notices of pendancy,
stop orders, mechanic's liens or notices of intention to file same (unless the
same is required by the applicable state law as a condition to the payment of a
contractor) or any liens or encumbrances of any nature whatsoever on the
Property arising out of the work which have not been either fully bonded to the
satisfaction of Lender or discharged of record or in the alternative, fully
insured to the satisfaction of Lender by the Title Company that issued the Title
Policy and (iii) an Independent Architect's certificate certifying performance
of the Work together with an estimate of the cost to complete the Work. No
payment made prior to the final completion of the Work, as certified by the
Independent Architect, except for payment made to contractors whose Work shall
have been fully completed and from which final lien waivers have been received,
shall exceed ninety percent (90%) of the value of the Work performed and
materials furnished and incorporated into the Improvements from time to time,
and at all times the undisbursed balance of said Proceeds together with all
amounts deposited, bonded, guaranteed or otherwise provided for pursuant to
Section 6.2.4(b) above, shall be at least sufficient to pay for the estimated
cost of completion of the Work; final payment of all Proceeds remaining with
Lender shall be made upon receipt by Lender of a certification by an Independent
Architect, as to the completion of the Work substantially in accordance with the
submitted plans and specifications, final lien releases, and the filing of a
notice of completion and the expiration of the period provided under the law of
the applicable State for the filing of mechanics' and materialmens' liens which
are entitled to priority as to other creditors, encumbrances and purchasers, as
certified pursuant to an Officer's Certificate, and delivery of a certificate of
occupancy with respect to the Work, or, if not applicable, an Officer's
Certificate to the effect that a certificate of occupancy is not required.
(b) If, after the Work is completed in accordance with the provisions
hereof and Lender receives evidence that all costs of completion have been paid,
there are excess Proceeds, Lender shall apply such excess Proceeds with respect
to the Taking of or casualty to the Property to the payment or prepayment of all
or any portion of the Indebtedness secured hereby without penalty or premium,
and any balance thereof, shall be paid over to Borrower.
VII. IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS
Section 7.1 Borrower to Pay Impositions and Other Charges. Except for
any Impositions to be paid directly by Bank of America, N.A. pursuant to the
BofA Lease, Borrower shall pay all Impositions now or hereafter levied or
assessed or imposed against the Property or any part thereof prior to the
imposition of any interest, charges or expenses for the non-payment thereof and
shall pay all Other Charges on or before the date they are due. Borrower shall
deliver to Lender annually, no later than fifteen (15) Business Days after the
first day of each fiscal year of Borrower, and shall update as new information
is received, a schedule describing all Impositions, payable or estimated to be
payable during such fiscal year attributable to or affecting the Property or
Borrower. Subject to Borrower's right of contest set forth in Section 7.3,
Lender, on behalf of Borrower, shall pay or direct the Cash Management Bank to
pay, all Impositions and Other Charges which are attributable to or affect the
Property or Borrower, prior to the date such Impositions or Other Charges shall
become delinquent or late
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charges may be imposed thereon, directly to the applicable taxing authority with
respect thereto, to the extent funds in the Tax Reserve Account are sufficient
to pay such Impositions. Nothing contained in this Agreement or the Security
Instrument shall be construed to require Borrower to pay any tax, assessment,
levy or charge imposed on Lender in the nature of a franchise, capital levy,
estate, inheritance, succession, income or net revenue tax.
Section 7.2 No Liens. Subject to its right of contest set forth in
Section 7.3, Borrower shall at all times keep, or cause to be kept, the Property
free from all Liens (other than Permitted Encumbrances) and shall pay when due
and payable (or bond over) all claims and demands of mechanics, materialmen,
laborers and others which, if unpaid, might result in or permit the creation of
a Lien on the Property or any portion thereof and shall in any event cause the
prompt, full and unconditional discharge of all Liens imposed on or against the
Property or any portion thereof within forty-five (45) days after receiving
written notice of the filing (whether from Lender, the lienor or any other
Person) thereof. Borrower shall do or cause to be done, at the sole cost of
Borrower, everything reasonably necessary to fully preserve the first priority
of the Liens of the Security Instrument against the Property, subject to the
Permitted Encumbrances. Upon the occurrence and during the continuance of an
Event of Default with respect to its Obligations as set forth in this Article
VII, Lender may (but shall not be obligated to) make such payment or discharge
such Lien, and Borrower shall reimburse Lender on demand for all such advances
pursuant to Section 19.12 (together with interest thereon at the Default Rate).
Section 7.3 Contest. Nothing contained herein shall be deemed to
require Borrower to pay, or cause to be paid, any Imposition or to satisfy any
Lien, or to comply with any Legal Requirement or Insurance Requirement, so long
as Borrower is in good faith, and by proper legal proceedings, where
appropriate, diligently contesting the validity, amount or application thereof,
provided that in each case, at the time of the commencement of any such action
or proceeding, and during the pendency of such action or proceeding (i) no Event
of Default shall exist and be continuing hereunder, (ii) Borrower shall keep
Lender informed of the status of such contest at reasonable intervals, (iii) if
Borrower is not providing security as provided in clause (vi) below, adequate
reserves with respect thereto are maintained on Borrower's books in accordance
with GAAP or in the Tax Reserve Account or Insurance Reserve Account, as
applicable, (iv) either such contest operates to suspend collection or
enforcement as the case may be, of the contested Imposition, Lien or Legal
Requirement and such contest is maintained and prosecuted continuously and with
diligence or the Imposition or Lien is bonded, (v) in the case of any Insurance
Requirement, the failure of Borrower to comply therewith shall not impair the
validity of any insurance required to be maintained by Borrower under Section
6.1 or the right to full payment of any claims thereunder, and (vi) in the case
of Impositions and Liens which are not bonded in excess of $500,000
individually, or in the aggregate, during such contest, Borrower, shall deposit
with or deliver to Lender either Cash and Cash Equivalents or a Letter or
Letters of Credit in an amount equal to 125% of (A) the amount of Borrower's
obligations being contested plus (B) any additional interest, charge, or penalty
arising from such contest. Notwithstanding the foregoing, the creation of any
such reserves or the furnishing of any bond or other security, Borrower promptly
shall comply with any contested Legal Requirement or Insurance Requirement or
shall pay any contested Imposition or Lien, and compliance therewith or payment
thereof shall not be deferred, if, at any time the Property or any portion
thereof shall be, in Lender's reasonable judgment, in imminent danger of being
forfeited
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or lost or Lender is likely to be subject to civil or criminal damages as a
result thereof. If such action or proceeding is terminated or discontinued
adversely to Borrower, Borrower shall deliver to Lender reasonable evidence of
Borrower's compliance with such contested Imposition, Lien, Legal Requirements
or Insurance Requirements, as the case may be.
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS
Section 8.1 Restrictions on Transfers. Unless such action is permitted
by the provisions of this Article VIII, Borrower shall not, and shall not permit
any other Person holding any direct or indirect ownership interest in Borrower
or the Property to, except with the prior written consent of Lender, (i)
Transfer all or any part of the Property, (ii) incur any Debt, other than
Permitted Debt or Permitted Encumbrances, (iii) permit any Transfer (directly or
indirectly) of any interest in Borrower, or (iv) permit any merger,
consolidation or reorganization of Borrower, First States Investors 5000, LLC,
First States Group, L.P. or American Financial Realty Trust.
Section 8.2 Sale of Building Equipment. Borrower may Transfer or
dispose of Building Equipment which is being replaced or which is no longer
necessary in connection with the operation of the Property free from the Liens
of the Security Instrument provided that such Transfer or disposal will not have
a Material Adverse Effect on the value of the Property taken as a whole, will
not materially impair the utility of the Property, and will not result in a
reduction or abatement of, or right of offset against, the Rents payable under
any Lease, in either case as a result thereof, and provided further that any new
Building Equipment acquired by Borrower (and not so disposed of) shall be
subject to the Liens of the Security Instrument. Lender shall, from time to
time, upon receipt of an Officer's Certificate requesting the same and
confirming satisfaction of the conditions set forth above, execute a written
instrument in form reasonably satisfactory to Lender to confirm that such
Building Equipment which is to be, or has been, sold or disposed of is free from
the Liens of the Security Instrument.
Section 8.3 Immaterial Transfers and Easements, etc. Borrower may,
without the consent of Lender, (i) make immaterial Transfers of portions of the
Property to Governmental Authorities for dedication or public use (subject to
the provisions of Section 6.2) or, portions of the Property to third parties for
the purpose of erecting and operating additional structures whose use is
integrated with the use of the Property, and (ii) grant easements, restrictions,
covenants, reservations and rights of way in the ordinary course of business for
access, water and sewer lines, telephone and telegraph lines, electric lines or
other utilities or for other similar purposes, provided that no such Transfer,
conveyance or encumbrance set forth in the foregoing clauses (i) and (ii) shall
materially impair the utility and operation of the Property or have a Material
Adverse Effect on the value of the Property taken as a whole. In connection with
any Transfer permitted pursuant to this Section 8.3, Lender shall execute and
deliver any instrument reasonably necessary or appropriate, in the case of the
Transfers referred to in clause (i) above, to release the portion of the
Property affected by such Taking or such Transfer from the Liens of the Security
Instrument or, in the case of clause (ii) above, to subordinate the Lien of a
Security Instrument to such easements, restrictions, covenants, reservations and
rights of way or other similar grants upon receipt by Lender of:
(a) a copy of the instrument or instruments of Transfer;
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(b) an Officer's Certificate stating (x) with respect to any Transfer,
the consideration, if any, being paid for the Transfer and (y) that such
Transfer does not materially impair the utility and operation of the Property,
materially reduce the value of the Property or have a Material Adverse Effect;
and
(c) reimbursement of all of Lender's reasonable costs and expenses
incurred in connection with such Transfer.
Section 8.4 Indebtedness. Borrower shall not incur, create or assume
any Debt or incur any liabilities, other than the Permitted Debt, without the
consent of Lender.
Section 8.5 Permitted Interest Transfers.
(a) A Transfer (but not a pledge or encumbrance) of a direct or
indirect beneficial interest in Borrower shall be permitted without Lender's
consent if (i) following such Transfer one hundred percent (100%) of the direct
and indirect beneficial interests in Borrower are owned by First States Group,
L.P.; (ii) Lender receives at least thirty (30) days prior written notice
thereof; (iii) immediately prior to such Transfer, no Event of Default shall
have occurred and be continuing; and (iv) in the event such Transfer, when taken
together with all other Transfers, involves more than forty-nine percent (49%)
of the direct beneficial interests in Borrower, prior to such Transfer, Borrower
delivers a Non-Consolidation Opinion in a form satisfactory to Lender.
(b) A Transfer (but not a pledge or encumbrance) of limited
partnership interests in First States Group, L.P., shall be permitted without
Lender's consent if (i) immediately prior to such Transfer, no Event of Default
shall have occurred and be continuing; (ii) following such Transfer American
Financial Realty Trust directly or indirectly owns one hundred percent (100%) of
the beneficial interests in all of the general partners of First States Group,
L.P.; and (iii) following such Transfer no Person or group of Persons acting in
concert, other than American Financial Realty Trust and Persons directly or
indirectly wholly owned by American Financial Realty Trust, (1) acquires in the
aggregate with prior holdings in First States Group, L.P. more than forty-nine
percent (49%) of the beneficial interests in First States Group, L.P. or (2)
acquires direct or indirect management control of First States Group, L.P.
(c) A Transfer (but not a pledge or encumbrance) of a direct or
indirect beneficial interest in American Financial Realty Trust shall be
permitted without Lender's consent and without the delivery of the documents
required by Section 8.6 if (i) such Transfer is made though an open market trade
on a national stock exchange and (ii) following such Transfer no Person or group
of Persons acting in concert (1) acquires in the aggregate with prior holdings
in American Financial Realty Trust more than forty-nine percent (49%) of the
beneficial interests in American Financial Realty Trust or (2) acquires direct
or indirect management control of American Financial Realty Trust.
(d) Any Transfer of any direct or indirect beneficial interest in
Borrower, First States Group, L.P. or American Financial Realty Trust, other
than as permitted in Section 8.5(a), (b) or (c), shall require the prior written
consent of Lender, which may be granted or withheld in Lender's sole and
absolute discretion, provided that in the event the Loan is subject to a
65
Securitization, Lender's consent shall not be required if Lender receives at
least thirty (30) days prior written notice of such Transfer and Borrower
delivers a Rating Agency Confirmation an a Non-Consolidation Opinion to Lender
with respect to such Transfer.
Section 8.6 Deliveries to Lender. Not less than thirty (30) days prior
to the closing of any transaction subject to the provisions of this Article VIII
(other than as expressly provided in Section 8.5), Borrower shall deliver to
Lender an Officer's Certificate describing the proposed transaction and stating
that such transaction is permitted by this Article VIII, together with any
appraisal or other documents upon which such Officer's Certificate is based. In
addition, Borrower shall provide Lender with copies of executed deeds or other
similar closing documents within ten (10) Business Days after such closing.
Section 8.7 Release of Properties. Borrower shall have the right to
obtain a release of one or more of the Individual Properties (each, a Property
Release and such Individual Property being a Release Property) in whole, but not
in part, from the lien of the Security Instruments provided that all of the
following conditions are satisfied:
(i) Borrower delivers irrevocable notice of such Property Release
(a Property Release Notice) no less than ten (10) Business Days prior to the
proposed date of such Property Release (the Release Date);
(ii) The aggregate Releases Prices of the Release Properties
shall not exceed $12,000,000;
(iii) On such Release Date, concurrently with Lender's release of
such Individual Property, Borrower shall pay to Lender (A) an amount equal to
one hundred twenty-five percent (125%) of the Allocated Loan Amount of any
Individual Property with an Allocated Loan Amount that is greater than $0.00 and
(B) with respect to any Individual Property that has an Allocated Loan Amount
that is equal to $0.00, an amount equal to the lesser of (1) the actual
consideration received by Borrower from Bank of American, N.A. in the event such
Individual Property is transferred by Borrower to Bank of America, N.A. and (2)
fifty percent (50%) of the "As Is" value that is identified for such Individual
Property on Schedule VII (each such amount, a Release Price), in either case
together with any interest payable with respect to the amount of such payment
through the end of the Interest Period in which such Release Date occurs (such
amount being the Release Payment). Notwithstanding the foregoing, in no event
shall such Release Payment exceed the then outstanding Obligations. In no event
shall a Property Release occur (and Lender shall have no obligation to release
any Individual Property) on a date that is not a Release Date;
(iv) No Event of Default shall have occurred and is then
continuing on the date on which Borrower delivers the Property Release Notice
and on the Release Date;
(v) Borrower shall execute and deliver such other instruments,
certificates, opinions of counsel and documentation as Lender and the Rating
Agencies shall reasonably request in order to preserve, confirm or secure the
Liens and security granted to Lender by the Loan Documents, including any
amendments, modification or supplements to any of the Loan Documents and partial
release endorsements to the Title Policy;
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(vi) Borrower shall pay for any and all reasonable out of pocket
costs and expenses incurred in connection with any proposed release, including
Lender's reasonable attorneys' fees and disbursements and all title insurance
premiums for any endorsements to the Title Policy reasonably required by Lender
in connection with such proposed Property Release; and
(vii) Prior to the Release Date, Borrower shall deliver to Lender
evidence reasonably satisfactory to Lender that all amounts owing by Borrower to
any parties in connection with the transaction relating to the proposed Property
Release have been paid in full, or are simultaneously paid in full at the
Release Date or adequate reserves therefor are established by Borrower in cash
with respect to contingent or other liabilities that may arise out of such
transaction.
Section 8.8 Leases.
8.8.1 New Leases and Lease Modifications. Except as otherwise
provided in this Section 8.8, Borrower shall not (x) enter into any Lease (a New
Lease) or (y) consent to the assignment of any Lease (unless required to do so
by the terms of such Lease) that releases the original Tenant from its
obligations under the Lease, or (z) modify any Lease, accept a surrender of any
portion of the Property subject to a Lease (unless such surrender is required by
law or the applicable Lease), allow a reduction in the term of any Lease or a
reduction in the Rent payable under any Lease, change any renewal provisions of
any Lease, materially increase the obligations of the landlord or materially
decrease the obligations of any Tenant, or terminate any Lease (any such action
referred to in clauses (y) and (z) being referred to herein as a Lease
Modification) without the prior written consent of Lender, which consent shall
not be unreasonably withheld or delayed. Any New Lease or Lease Modification
that requires Lender's consent shall be delivered to Lender for approval not
less than ten (10) Business Days prior to the effective date of such New Lease
or Lease Modification. Any such request for consent or approval shall state in
prominent bold-faced type that "YOUR RESPONSE TO THIS REQUEST FOR CONSENT OR
APPROVAL IS REQUIRED WITHIN SEVEN (7) BUSINESS DAYS AFTER YOUR RECEIPT OF THIS
REQUEST." In the event Lender fails to respond to such first request for consent
or approval with respect to any New Lease or Lease Modification, Borrower shall
send Lender a second request for such consent or approval, which second request
shall state in prominent bold-faced type that "THIS IS A SECOND REQUEST FOR YOUR
CONSENT OR APPROVAL. YOUR RESPONSE TO THIS SECOND REQUEST FOR CONSENT OR
APPROVAL IS REQUIRED WITHIN THREE (3) BUSINESS DAYS AFTER YOUR RECEIPT OF THIS
REQUEST. FAILURE TO RESPOND TO THIS REQUEST WITHIN (3) BUSINESS DAYS WILL BE
DEEMED TO BE YOUR APPROVAL OF THE CONSENT TO THE NEW LEASE OR LEASE MODIFICATION
REQUESTED IN THIS NOTICE." In the event Lender fails to respond to a second
request for any consent or approval that includes the notice required herein
within three (3) Business Days after Lender's receipt of such second request,
such failure shall be deemed an approval of the matter for which the second
request is delivered.
8.8.2 Leasing Conditions. Subject to terms of this Section 8.8,
provided no Event of Default shall have occurred and be continuing, Borrower may
enter into a New Lease or Lease Modification, without Lender's prior written
consent, that satisfies each of the
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following conditions (as evidenced by an Officer's Certificate delivered to
Lender at least ten (10) Business Days prior to Borrower's entry into such New
Lease or Lease Modification):
(a) such New Lease is written on the standard form of lease to be
approved by Lender within thirty (30) days of the date hereof (the Standard Form
of Lease), with only such changes as are commercially reasonable given the
then-current market conditions, none of which changes shall violate the
subordination, attornment and non-disturbance provisions contained in the
Standard Form of Lease;
(b) with respect to a New Lease or Lease Modification, the premises
demised thereunder is not more than 25,000 net rentable square feet of the
Property;
(c) the term of such New Lease or Lease Modification, as applicable,
does not exceed 120 months, plus up to two (2) 60-month option terms (or
equivalent combination of renewals) or 240 months for bank branches, provided
that the rental rate during each such option term is at least equal to the
greater of (x) 95% of the prevailing market rate as of the commencement of such
option term and (y) during the first such option term, the rental rate in effect
under such New Lease or Lease Modification, as applicable, during the initial
term, and during the second such option term, the rental rate in effect under
such New Lease or Lease Modification, as applicable, during the first option
term;
(d) the rental rate under such New Lease or Lease Modification, as
applicable, is at least equal to the then prevailing market rate (including rent
abatements and tenant inducements) for the entire term of such lease (except for
the option periods as set forth in the preceding clause (c));
(e) such New Lease or Lease Modification, as applicable, provides that
the premises demised thereby cannot be used for any of the following uses; any
pornographic or obscene purposes, any commercial sex establishment, any
pornographic, obscene, nude or semi-nude performances, modeling, materials,
activities or sexual conduct or any other use that has or could reasonably be
expected to have a Material Adverse Effect;
(f) the Tenant under such New Lease or Lease Modification, as
applicable, is not an Affiliate of Borrower (other than any property management
offices);
(g) the New Lease or Lease Modification, as applicable, does not
impose any burden, duty or liability on Borrower that is materially greater than
is provided in the Standard Form of Lease subject to clause (a) above other than
rent concessions and tenant improvement allowances which are consistent with the
then current market conditions;
(h) the New Lease or Lease Modification, as applicable, does not
contain any provision whereby the Rent payable thereunder would be based, in
whole or in part, upon the net income or profits derived by any Person from the
Property (which, for the avoidance of doubt, does not include percentage rent);
(i) the New Lease or Lease Modification, as applicable, does not
prevent Proceeds from being held and disbursed by Lender in accordance with the
terms hereof;
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(j) the New Lease or Lease Modification, as applicable, shall not
entitle any Tenant to receive and retain Proceeds except those that may be
specifically awarded to it in condemnation proceedings because of the Taking of
its trade fixtures and its leasehold improvements which have not become part of
the Property and such business loss as Tenant may specifically and separately
establish; and
(k) the New Lease or Lease Modification, as applicable satisfies the
requirements of Section 8.8.7 and Section 8.8.8.
8.8.3 Delivery of New Lease or Lease Modification. Upon the
execution of any New Lease or Lease Modification, as applicable, Borrower shall
deliver to Lender an executed copy of the Lease and an additional copy marked to
show all changes from the Standard Form of Lease.
8.8.4 Lease Amendments. Borrower agrees that it shall not have
the right or power, as against Lender without its consent, to cancel, abridge,
amend or otherwise modify any Lease unless such modification complies with this
Section 8.8.
8.8.5 Security Deposits. All security or other deposits of
Tenants of the Property shall be treated as trust funds and shall not be
commingled with any other funds of Borrower, and such deposits, to the extent
made in cash shall be deposited, upon receipt of the same by Borrower into the
Security Deposit Account and to the extent made with a letter of credit shall be
delivered to Lender. Within ten (10) Business Days after written request by
Lender, Borrower shall furnish to Lender reasonably satisfactory evidence of
compliance with this Section 8.8.5, together with a statement of all lease
securities deposited with Borrower by the Tenants and the location and account
number of the account in which such security deposits are held. The rent roll
delivered to Lender identifies all security deposits and the amounts thereof,
currently in Borrower's possession. In the event any Tenant has the right to
receive a refund of its security deposit pursuant to the terms of such Tenant's
Lease, Lender shall either direct the Cash Management Bank to transfer funds
from the Security Deposit Account to Borrower in the amount of such security
deposit that is required to be funded or Lender shall return the applicable
letter of credit that was posted by such Tenant. Upon receipt of such security
deposit, Borrower shall promptly return the same to the applicable Tenant.
8.8.6 No Default Under Leases. Borrower shall (i) promptly
perform and observe all of the material terms, covenants and conditions required
to be performed and observed by Borrower under the Leases and the REAs, if the
failure to perform or observe the same would have a Material Adverse Effect;
(ii) exercise, within ten (10) Business Days after a written request by Lender,
any right to request from the Tenant under any Lease, or the party to any REAs,
a certificate with respect to the status thereof and (iii) not collect any of
the Rents, more than one (1) month in advance (except that Borrower may collect
such security deposits and last month's Rents as are permitted by Legal
Requirements and are commercially reasonable in the prevailing market and
collect other charges in accordance with the terms of each Lease).
8.8.7 Subordination. All New Leases entered into by Borrower
after the date hereof shall by their express terms be subject and subordinate to
this Agreement and the Security Instrument (through a subordination provision
contained in such Lease or otherwise)
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and shall provide that the Person holding any rights thereunder shall attorn to
Lender or any other Person succeeding to the interests of Lender upon the
exercise of its remedies hereunder or any transfer in lieu thereof on the terms
set forth in this Section 8.8.
8.8.8 Attornment. Each New Lease entered into from and after the
date hereof shall provide that in the event of the enforcement by Lender of any
remedy under this Agreement or the Security Instrument, the Tenant under such
Lease shall, at the option of Lender or of any other Person succeeding to the
interest of Lender as a result of such enforcement, attorn to Lender or to such
Person and shall recognize Lender or such successor in the interest as lessor
under such Lease without change in the provisions thereof; provided, however,
Lender or such successor in interest shall not be liable for or bound by (i) any
payment of an installment of rent or additional rent made more than thirty (30)
days before the due date of such installment, (ii) any act or omission of or
default by Borrower under any such Lease (but the Lender, or such successor,
shall be subject to the continuing obligations of the landlord to the extent
arising from and after such succession to the extent of Lender's, or such
successor's, interest in the Property), (iii) any credits, claims, setoffs or
defenses which any Tenant may have against Borrower, (iv) any obligation under
such Lease to maintain a fitness facility at the Property, (v) any obligation on
Borrower's part, pursuant to such Lease, to perform any tenant improvement work
or (vi) any obligation on Borrower's part, pursuant to such Lease, to pay any
sum of money to any Tenant. Each such New Lease shall also provide that, upon
the reasonable request by Lender or such successor in interest, the Tenant shall
execute and deliver an instrument or instruments confirming such attornment.
8.8.9 Non-Disturbance Agreements. Lender shall enter into, and,
if required by applicable law to provide constructive notice or requested by a
Tenant, record in the county where the subject Property is located, a
subordination, attornment and non-disturbance agreement, substantially in form
and substance substantially similar to the form attached hereto as Exhibit N (a
Non-Disturbance Agreement), with any Tenant (other than an Affiliate of
Borrower) entering into a New Lease for which Lender's prior written consent is
required by this Section 8.8 and has been obtained, within ten (10) Business
Days after written request therefor by Borrower, provided that, such request is
accompanied by an Officer's Certificate stating that such Lease complies in all
material respects with this Section 8.8. All reasonable third party costs and
expenses incurred by Lender in connection with the negotiation, preparation,
execution and delivery of any Non-Disturbance Agreement, including, without
limitation, reasonable attorneys' fees and disbursements, shall be paid by
Borrower (in advance, if requested by Lender).
IX. INTEREST RATE CAP AGREEMENT.
Section 9.1 Interest Rate Cap Agreement. If at any time LIBOR equals
or exceeds 3.25%, within five (5) Business Days, Borrower shall obtain, and
thereafter maintain in effect, the Interest Rate Cap Agreement, which shall be
coterminous with the Loan and have a notional amount which shall not at any time
be less than the outstanding principal balance of the Loan. The Interest Rate
Cap Agreement shall have a strike rate equal to the Strike Price. The notional
amount of the Interest Rate Cap Agreement may be reduced from time to time in
amounts equal to any mandatory prepayment of the principal of the Loan made in
accordance with Section 5(b) of the Note.
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Section 9.2 Pledge and Collateral Assignment. As security for the full
and punctual payment and performance of the Obligations when due (whether upon
stated maturity, by acceleration, early termination or otherwise), Borrower, as
pledgor, hereby pledges, assigns, hypothecates, transfers and delivers to Lender
as collateral and hereby grants to Lender a continuing first priority lien on
and security interest in, to and under all of the following whether now owned or
hereafter acquired and whether now existing or hereafter arising (the Rate Cap
Collateral): all of the right, title and interest of Borrower in and to (i) the
Interest Rate Cap Agreement; (ii) all payments, distributions, disbursements or
proceeds due, owing, payable or required to be delivered to Borrower in respect
of the Interest Rate Cap Agreement or arising out of the Interest Rate Cap
Agreement, whether as contractual obligations, damages or otherwise; and (iii)
all of Borrower's claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under or arising out of the
Interest Rate Cap Agreement, in each case including all accessions and additions
to, substitutions for and replacements, products and proceeds of any or all of
the foregoing.
Section 9.3 Covenants.
(a) Borrower shall comply with all of its obligations under the terms
and provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement to Borrower or Lender shall
be deposited immediately into the Collection Account pursuant to Section 3.1.
Subject to terms hereof, provided no Event of Default has occurred and is
continuing, Borrower shall be entitled to exercise all rights, powers and
privileges of Borrower under, and to control the prosecution of all claims with
respect to, the Interest Rate Cap Agreement and the other Rate Cap Collateral.
Borrower shall take all actions reasonably requested by Lender to enforce
Borrower's rights under the Interest Rate Cap Agreement in the event of a
default by the Counterparty thereunder and shall not waive, amend or otherwise
modify any of its rights thereunder.
(b) Borrower shall defend Lender's right, title and interest in and to
the Rate Cap Collateral pledged by Borrower pursuant hereto or in which it has
granted a security interest pursuant hereto against the claims and demands of
all other Persons.
(c) In the event of any downgrade, withdrawal or qualification of the
rating of the Counterparty such that it ceases to qualify as an "Approved
Counterparty", unless the Counterparty shall have posted collateral on terms
acceptable to each Rating Agency, Borrower shall replace the Interest Rate Cap
Agreement with a Replacement Interest Rate Cap Agreement not later than ten (10)
Business Days following receipt of notice from Lender, Servicer or any other
Person of such downgrade, withdrawal or qualification. In the event that the
Counterparty is downgraded to A2 or lower by ▇▇▇▇▇'▇, a Replacement Interest
Rate Cap Agreement shall be required regardless of the posting of collateral.
(d) In the event that Borrower fails to purchase and deliver to Lender
the Interest Rate Cap Agreement as and when required hereunder, Lender may
purchase the Interest Rate Cap Agreement and the cost incurred by Lender in
purchasing the Interest Rate Cap Agreement shall be paid by Borrower to Lender
with interest thereon at the Default Rate from the date such cost was incurred
by Lender until such cost is paid by Borrower to Lender.
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(e) Borrower shall not sell, assign, or otherwise dispose of, or
mortgage, pledge or grant a security interest in, any of the Rate Cap Collateral
or any interest therein, and any sale, assignment, mortgage, pledge or security
interest whatsoever made in violation of this covenant shall be a nullity and of
no force and effect, and upon demand of Lender, shall forthwith be cancelled or
satisfied by an appropriate instrument in writing.
(f) Borrower shall not (i) without the prior written consent of
Lender, modify, amend or supplement the terms of the Interest Rate Cap
Agreement, (ii) without the prior written consent of Lender, except in
accordance with the terms of the Interest Rate Cap Agreement, cause the
termination of the Interest Rate Cap Agreement prior to its stated maturity
date, (iii) without the prior written consent of Lender, except as aforesaid,
waive or release any obligation of the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement) under the Interest Rate Cap
Agreement, (iv) without the prior written consent of Lender, consent or agree to
any act or omission to act on the part of the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement) which, without such consent
or agreement, would constitute a default under the Interest Rate Cap Agreement,
(v) fail to exercise promptly and diligently each and every material right which
it may have under the Interest Rate Cap Agreement, (vi) take or intentionally
omit to take any action or intentionally suffer or permit any action to be
omitted or taken, the taking or omission of which would result in any right of
offset against sums payable under the Interest Rate Cap Agreement or any defense
by the Counterparty (or any successor or substitute party to the Interest Rate
Cap Agreement) to payment or (vii) fail to give prompt notice to Lender of any
notice of default given by or to Borrower under or with respect to the Interest
Rate Cap Agreement, together with a complete copy of such notice. If Borrower
shall have received written notice that the Securitization shall have occurred,
no consent by Lender provided for in this Section 9.3 (f) shall be given by
Lender unless Lender shall have received a Rating Agency Confirmation.
(g) To the extent required by Lender, in connection with an Interest
Rate Cap Agreement, Borrower shall obtain and deliver to Lender an Opinion of
Counsel from counsel (which counsel may be in-house counsel for the
Counterparty) for the Counterparty upon which Lender and its successors and
assigns may rely (the Counterparty Opinion), under New York law and, if the
Counterparty is a non-U.S. entity, the applicable foreign law, substantially in
compliance with the requirements set forth in Exhibit F or in such other form
approved by the Lender.
Section 9.4 Powers of Borrower Prior to an Event of Default. Subject
to the provisions of Section 9.3(a), provided no Event of Default has occurred
and is continuing, Borrower shall be entitled to exercise all rights, powers and
privileges of Borrower under, and to control the prosecution of all claims with
respect to, the Interest Rate Cap Agreement and the other Rate Cap Collateral.
Section 9.5 Representations and Warranties. Borrower hereby covenants
with, and represents and warrants to, Lender as follows:
(a) The Interest Rate Cap Agreement constitutes the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, subject only to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally, and
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subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(b) The Rate Cap Collateral is free and clear of all claims or
security interests of every nature whatsoever, except such as are created
pursuant to this Agreement and the other Loan Documents, and Borrower has the
right to pledge and grant a security interest in the same as herein provided
without the consent of any other Person other than any such consent that has
been obtained and is in full force and effect.
(c) The Rate Cap Collateral has been duly and validly pledged
hereunder. All consents and approvals required to be obtained by Borrower for
the consummation of the transactions contemplated by this Agreement have been
obtained.
(d) Giving effect to the aforesaid grant and assignment to Lender,
Lender has, as of the date of this Agreement, and as to Rate Cap Collateral
acquired from time to time after such date, shall have, a valid, and upon proper
filing, perfected and continuing first priority lien upon and security interest
in the Rate Cap Collateral; provided that no representation or warranty is made
with respect to the perfected status of the security interest of Lender in the
proceeds of Rate Cap Collateral consisting of "cash proceeds" or "non-cash
proceeds" as defined in the UCC except if, and to the extent, the provisions of
Section 9-306 of the UCC shall be complied with.
(e) Except for financing statements filed or to be filed in favor of
Lender as secured party, there are no financing statements under the UCC
covering any or all of the Rate Cap Collateral and Borrower shall not, without
the prior written consent of Lender, until payment in full of all of the
Obligations, execute and file in any public office, any enforceable financing
statement or statements covering any or all of the Rate Cap Collateral, except
financing statements filed or to be filed in favor of Lender as secured party.
Section 9.6 Payments. If Borrower at any time shall be entitled to
receive any payments with respect to the Interest Rate Cap Agreement, such
amounts shall, immediately upon becoming payable to Borrower, be deposited by
Counterparty into the Collection Account.
Section 9.7 Remedies. Subject to the provisions of the Interest Rate
Cap Agreement, if an Event of Default shall occur and then be continuing:
(a) Lender, without obligation to resort to any other security, right
or remedy granted under any other agreement or instrument, shall have the right
to, in addition to all rights, powers and remedies of a secured party pursuant
to the UCC, at any time and from time to time, sell, resell, assign and deliver,
in its sole discretion, any or all of the Rate Cap Collateral (in one or more
parcels and at the same or different times) and all right, title and interest,
claim and demand therein and right of redemption thereof, at public or private
sale, for cash, upon credit or for future delivery, and in connection therewith
Lender may grant options and may impose reasonable conditions such as requiring
any purchaser to represent that any "securities" constituting any part of the
Rate Cap Collateral are being purchased for investment only, Borrower hereby
waiving and releasing any and all equity or right of redemption to the fullest
extent permitted by the UCC or applicable law. If all or any of the Rate Cap
Collateral is sold by Lender upon credit or for future delivery, Lender shall
not be liable for the failure of the
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purchaser to purchase or pay for the same and, in the event of any such failure,
Lender may resell such Rate Cap Collateral. It is expressly agreed that Lender
may exercise its rights with respect to less than all of the Rate Cap
Collateral, leaving unexercised its rights with respect to the remainder of the
Rate Cap Collateral, provided, however, that such partial exercise shall in no
way restrict or jeopardize Lender's right to exercise its rights with respect to
all or any other portion of the Rate Cap Collateral at a later time or times.
(b) Lender may exercise, either by itself or by its nominee or
designee, in the name of Borrower, all of Lender's rights, powers and remedies
in respect of the Rate Cap Collateral, hereunder and under law.
(c) Borrower hereby irrevocably, in the name of Borrower or otherwise,
authorizes and empowers Lender and assigns and transfers unto Lender, and
constitutes and appoints Lender its true and lawful attorney-in-fact, and as its
agent, irrevocably, with full power of substitution for Borrower and in the name
of Borrower, (i) to exercise and enforce every right, power, remedy, authority,
option and privilege of Borrower under the Interest Rate Cap Agreement,
including any power to subordinate or modify the Interest Rate Cap Agreement
(but not, unless an Event of Default exists and is continuing, the right to
terminate or cancel the Interest Rate Cap Agreement), or to give any notices, or
to take any action resulting in such subordination, termination, cancellation or
modification and (ii) in order to more fully vest in Lender the rights and
remedies provided for herein, to exercise all of the rights, remedies and powers
granted to Lender in this Agreement, and Borrower further authorizes and
empowers Lender, as Borrower's attorney-in-fact, and as its agent, irrevocably,
with full power of substitution for Borrower and in the name of Borrower, to
give any authorization, to furnish any information, to make any demands, to
execute any instruments and to take any and all other action on behalf of and in
the name of Borrower which in the opinion of Lender may be necessary or
appropriate to be given, furnished, made, exercised or taken under the Interest
Rate Cap Agreement, in order to comply therewith, to perform the conditions
thereof or to prevent or remedy any default by Borrower thereunder or to enforce
any of the rights of Borrower thereunder. These powers-of-attorney are
irrevocable and coupled with an interest, and any similar or dissimilar powers
heretofore given by Borrower in respect of the Rate Cap Collateral to any other
Person are hereby revoked.
(d) Lender may, without notice to, or assent by, Borrower or any other
Person (to the extent permitted by law), but without affecting any of the
Obligations, in the name of Borrower or in the name of Lender, notify the
Counterparty, or if applicable, any other counterparty to the Interest Rate Cap
Agreement, to make payment and performance directly to Lender; extend the time
of payment and performance of, compromise or settle for cash, credit or
otherwise, and upon any terms and conditions, any obligations owing to Borrower,
or claims of Borrower, under the Interest Rate Cap Agreement; file any claims,
commence, maintain or discontinue any actions, suits or other proceedings deemed
by Lender necessary or advisable for the purpose of collecting upon or enforcing
the Interest Rate Cap Agreement; and execute any instrument and do all other
things deemed necessary and proper by Lender to protect and preserve and realize
upon the Rate Cap Collateral and the other rights contemplated hereby.
(e) Pursuant to the powers-of-attorney provided for above, Lender may
take any action and exercise and execute any instrument which it may deem
necessary or advisable to
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accomplish the purposes hereof; provided, however, that Lender shall not be
permitted to take any action pursuant to said power-of-attorney that would
conflict with any limitation on Lender's rights with respect to the Rate Cap
Collateral. Without limiting the generality of the foregoing, Lender, after the
occurrence of an Event of Default, shall have the right and power to receive,
endorse and collect all checks and other orders for the payment of money made
payable to Borrower representing: (i) any payment of obligations owed pursuant
to the Interest Rate Cap Agreement, (ii) interest accruing on any of the Rate
Cap Collateral or (iii) any other payment or distribution payable in respect of
the Rate Cap Collateral or any part thereof, and for and in the name, place and
stead of Borrower, to execute endorsements, assignments or other instruments of
conveyance or transfer in respect of any property which is or may become a part
of the Rate Cap Collateral hereunder.
(f) Lender may exercise all of the rights and remedies of a secured
party under the UCC.
(g) Without limiting any other provision of this Agreement or any of
Borrower's rights hereunder, and without waiving or releasing Borrower from any
obligation or default hereunder, Lender shall have the right, but not the
obligation, to perform any act or take any appropriate action, as it, in its
reasonable judgment, may deem necessary to protect the security of this
Agreement, to cure such Event of Default or to cause any term, covenant,
condition or obligation required under this Agreement or the Interest Rate Cap
Agreement to be performed or observed by Borrower to be promptly performed or
observed on behalf of Borrower. All amounts advanced by, or on behalf of, Lender
in exercising its rights under this Section 9.7(g) (including, but not limited
to, reasonable legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Default Rate from the date of
each such advance, shall be payable by Borrower to Lender upon demand and shall
be secured by this Agreement.
Section 9.8 Sales of Rate Cap Collateral. No demand, advertisement or
notice, all of which are, to the fullest extent permitted by law, hereby
expressly waived by Borrower, shall be required in connection with any sale or
other disposition of all or any part of the Rate Cap Collateral, except that
Lender shall give Borrower at least thirty (30) Business Days' prior written
notice of the time and place of any public sale or of the time when and the
place where any private sale or other disposition is to be made, which notice
Borrower hereby agrees is reasonable, all other demands, advertisements and
notices being hereby waived. To the extent permitted by law, Lender shall not be
obligated to make any sale of the Rate Cap Collateral if it shall determine not
to do so, regardless of the fact that notice of sale may have been given, and
Lender may without notice or publication adjourn any public or private sale, and
such sale may, without further notice, be made at the time and place to which
the same was so adjourned. Upon each private sale of the Rate Cap Collateral of
a type customarily sold in a recognized market and upon each public sale, unless
prohibited by any applicable statute which cannot be waived, Lender (or its
nominee or designee) may purchase any or all of the Rate Cap Collateral being
sold, free and discharged from any trusts, claims, equity or right of redemption
of Borrower, all of which are hereby waived and released to the extent permitted
by law, and may make payment therefor by credit against any of the Obligations
in lieu of cash or any other obligations. In the case of all sales of the Rate
Cap Collateral, public or private, Borrower shall pay all reasonable costs and
expenses of every kind for sale or delivery, including brokers' and
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attorneys' fees and disbursements and any tax imposed thereon. However, the
proceeds of sale of Rate Cap Collateral shall be available to cover such costs
and expenses, and, after deducting such costs and expenses from the proceeds of
sale, Lender shall apply any residue to the payment of the Obligations in the
order of priority as set forth in Section 11 of the Security Instrument.
Section 9.9 Public Sales Not Possible. Borrower acknowledges that the
terms of the Interest Rate Cap Agreement may prohibit public sales, that the
Rate Cap Collateral may not be of the type appropriately sold at public sales,
and that such sales may be prohibited by law. In light of these considerations,
Borrower agrees that private sales of the Rate Cap Collateral shall not be
deemed to have been made in a commercially unreasonably manner by mere virtue of
having been made privately.
Section 9.10 Receipt of Sale Proceeds. Upon any sale of the Rate Cap
Collateral by Lender hereunder (whether by virtue of the power of sale herein
granted, pursuant to judicial process or otherwise), the receipt by Lender or
the officer making the sale or the proceeds of such sale shall be a sufficient
discharge to the purchaser or purchasers of the Rate Cap Collateral so sold, and
such purchaser or purchasers shall not be obligated to see to the application of
any part of the purchase money paid over to Lender or such officer or be
answerable in any way for the misapplication or non-application thereof.
Section 9.11 Replacement Interest Rate Cap Agreement. If, in
connection with Borrower's exercise of any extension option pursuant to Section
5 of the Note, Borrower delivers a Replacement Interest Rate Cap Agreement, all
the provisions of this Article IX applicable to the Interest Rate Cap Agreement
delivered on the Closing Date shall be applicable to the Replacement Interest
Rate Cap Agreement.
X. MAINTENANCE OF PROPERTY; ALTERATIONS
Section 10.1 Maintenance of Property. Borrower shall keep and
maintain, or cause to be kept and maintained, including by enforcement of the
provisions of the BofA Lease, the Property and every part thereof in good
condition and repair, subject to ordinary wear and tear, and, subject to
Excusable Delays and the provisions of this Agreement with respect to damage or
destruction caused by casualty events or Takings, shall not permit or commit any
waste, impairment, or deterioration of any portion of the Property in any
material respect. Borrower further covenants to do all other acts which from the
character or use of the Property may be reasonably necessary to protect the
security hereof, the specific enumerations herein not excluding the general.
Borrower shall not remove or demolish any Improvement on the Property except as
the same may be necessary in connection with an Alteration or a restoration in
connection with a Taking or casualty, or as otherwise permitted herein, in each
case in accordance with the terms and conditions hereof.
Section 10.2 Conditions to Alteration. Provided that no Event of
Default shall have occurred and be continuing hereunder, Borrower shall have the
right, without Lender's consent, to undertake any alteration, improvement,
demolition or removal of the Property or any portion thereof (any such
alteration, improvement, demolition or removal, an Alteration) so long as either
(a) Bank of America, N.A. is permitted to undertake such Alteration without the
consent of Borrower pursuant to the BofA Lease or (b) (i) Borrower provides
Lender with prior written
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notice of any Material Alteration, and (ii) such Alteration is undertaken in
accordance with the applicable provisions of this Agreement and the other Loan
Documents, is not prohibited by any relevant REAs and the Leases and shall not,
upon completion (giving credit to rent and other charges attributable to Leases
executed upon such completion), have a Material Adverse Effect on the value, use
or operation of the Property taken as a whole or otherwise. Any Material
Alteration shall be conducted under the supervision of an Independent Architect
and, in connection with any Material Alteration, Borrower shall deliver to
Lender, for information purposes only and not for approval by Lender, detailed
plans and specifications and cost estimates therefor, prepared by such
Independent Architect, as well as an Officer's Certificate stating that such
Alteration will involve an estimated cost of not more than the Threshold Amount
for Alterations at the Property. Such plans and specifications may be revised at
any time and from time to time by such Independent Architect provided that
material revisions of such plans and specifications are filed with Lender, for
information purposes only. All work done in connection with any Alteration shall
be performed with due diligence in a good and workmanlike manner, all materials
used in connection with any Alteration shall not be less than the standard of
quality of the materials currently used at the Property and all materials used
shall be in accordance with all applicable material Legal Requirements and
Insurance Requirements.
Section 10.3 Costs of Alteration. Notwithstanding anything to the
contrary contained in this Article X, no Material Alteration or Alteration which
when aggregated with all other Alterations (other than Material Alterations)
then being undertaken by Borrower (exclusive of Alterations being directly paid
for by Tenants at the Property) exceeds the Threshold Amount, shall be performed
by or on behalf of Borrower unless Borrower shall have delivered to Lender Cash
and Cash Equivalents and/or a Letter of Credit as security in an amount not less
than the estimated cost of the Material Alteration or the Alterations minus the
Threshold Amount (as set forth in the Independent Architect's written estimate
referred to above). In addition to payment or reimbursement from time to time of
Borrower's expenses incurred in connection with any Material Alteration or any
such Alteration, the amount of such security shall be reduced on any given date
to the Independent Architect's written estimate of the cost to complete the
Material Alteration or the Alterations (including any retainages), free and
clear of Liens, other than Permitted Encumbrances. Costs which are subject to
retainage (which in no event shall be less than 5% in the aggregate) shall be
treated as due and payable and unpaid from the date they would be due and
payable but for their characterization as subject to retainage. In the event
that any Material Alteration or Alteration shall be made in conjunction with any
restoration with respect to which Borrower shall be entitled to withdraw
Proceeds pursuant to Section 6.2, the amount of the Cash and Cash Equivalents
and/or Letter of Credit to be furnished pursuant hereto need not exceed the
aggregate cost of such restoration and such Material Alteration or Alteration
(as estimated by the Independent Architect), less the sum of the amount of any
Proceeds which Borrower may be entitled to withdraw pursuant to Section 6.2 and
which are held by Lender in accordance with Section 6.2. Payment or
reimbursement of Borrower's expenses incurred with respect to any Material
Alteration or any such Alteration shall be accomplished upon the terms and
conditions specified in Section 6.2.
At any time after substantial completion of any Material Alteration or any
such Alteration in respect of which Cash and Cash Equivalents and/or a Letter of
Credit is deposited pursuant hereto, the whole balance of any Cash and Cash
Equivalents so deposited by Borrower with Lender and then remaining on deposit
(together with earnings thereon), as well as all retainages,
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may be withdrawn by Borrower and shall be paid by Lender to Borrower, and any
other Cash and Cash Equivalents and/or a Letter of Credit so deposited or
delivered shall, to the extent it has not been called upon, reduced or
theretofore released, be released to Borrower, within ten (10) days after
receipt by Lender of an application for such withdrawal and/or release together
with an Officer's Certificate, and signed also (as to the following clause (a))
by the Independent Architect, setting forth in substance as follows:
(a) that the Material Alteration or Alteration in respect of which
such Cash and Cash Equivalents and/or a Letter of Credit was deposited has been
substantially completed in all material respects substantially in accordance
with any plans and specifications therefor previously filed with Lender under
Section 10.2 and that, if applicable, a certificate of occupancy has been issued
with respect to such Material Alteration or Alteration by the relevant
Governmental Authority(ies) or, if not applicable, that a certificate of
occupancy is not required; and
(b) that to the knowledge of the certifying Person all amounts which
Borrower is or may become liable to pay in respect of such Material Alteration
or Alteration through the date of the certification have been paid in full or
adequately provided for or are being contested in accordance with Section 7.3
and that lien waivers have been obtained from the general contractor and major
subcontractors performing such Material Alterations or Alterations (or such
waivers are not customary and reasonably obtainable by prudent managers in the
area where the Property is located).
(c) For the purposes of this Section 10.3 only, Alterations and
Material Alterations shall not include tenant improvement alterations,
improvements, demolitions or removals undertaken pursuant to a Lease in which
the costs thereof are being fully paid out of funds held by Lender in the TI and
Leasing Reserve Account or Alterations by Bank of America, N.A. pursuant to the
BofA Lease that are permitted to be undertaken by Bank of America, N.A. without
the consent of Borrower.
XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER
INFORMATION
Section 11.1 Books and Records. Borrower shall keep and maintain on a
fiscal year basis proper books and records separate from any other Person, in
which accurate and complete entries shall be made of all dealings or
transactions of or in relation to the Note, the Property and the business and
affairs of Borrower relating to the Property which shall reflect all items of
income and expense in connection with the operation on an individual basis of
the Property and in connection with any services, equipment or furnishings
provided in connection with the operation of the Property, in accordance with
GAAP. Lender and its authorized representatives shall have the right at
reasonable times and upon reasonable notice to examine the books and records of
Borrower relating to the operation of the Property and to make such copies or
extracts thereof as Lender may reasonably require.
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Section 11.2 Financial Statements.
11.2.1 Monthly Reports. Not later than thirty (30) days following
the end of each calendar month, Borrower will deliver, or will cause Manager to
deliver, to Lender (with a copy to the Rating Agencies) unaudited financial
statements, internally prepared, in accordance with GAAP, consistently applied,
including a statement of revenues and expenses and a statement of Net Operating
Income for the twelve (12) month period then ended (but only including periods
during which Borrower or an Affiliate of Borrower owned the Property). Such
financial statements shall be accompanied by one or more Officer's Certificates
or a certificate executed by an officer of Manager certifying to the signer's
actual knowledge, (A) that such statements fairly represent, in all material
respects, the financial condition and results of operations of Borrower in
accordance with GAAP consistently applied, (B) that as of the date of such
certificate, no Default exists under this Agreement or any other Loan Document
or, if so, specifying the nature and status of each such Default and the action
then being taken by Borrower or proposed to be taken to remedy such Default, (C)
that as of the date of such certificate, no litigation exists involving
Borrower, the Property or either Guarantor in which the amount involved is
$500,000 (in the aggregate) or more or in which all or substantially all of the
potential liability is not covered by insurance, or, if so, specifying such
litigation and the actions being taking in relation thereto and (D) the amount
by which actual Operating Expenses were greater than or less than the Operating
Expenses anticipated in the applicable Annual Budget. Such financial statements
shall contain such other information as shall be reasonably requested by Lender
for purposes of the calculations to be made by Mortgagee pursuant to the terms
hereof.
11.2.2 Quarterly Reports. Not later than sixty (60) days
following the end of each fiscal quarter, Borrower shall deliver to Lender
unaudited financial statements for Borrower and each Guarantor, internally
prepared on a cash basis including a balance sheet and profit and loss statement
as of the end of such quarter and for the corresponding quarter of the previous
year, and a statement of revenues and expenses for the year to date, a statement
of Net Operating Income for such quarter, and a comparison of the year to date
results with (i) the results for the same period of the previous year, (ii) the
results that had been projected by Borrower and each Guarantor for such period
and (iii) the Annual Budget for such period and the Fiscal Year. Borrower shall
also delivery a projection of the real estate tax contribution of Bank of
America, N.A. as additional rent under the BofA Lease during the immediately
following fiscal quarter and a description of the Individual Properties to which
such tax contribution relates. Such statements for each quarter shall be
accompanied by an Officer's Certificate certifying to the best of the signer's
knowledge, (A) that such statements fairly represent the financial condition and
results of operations of Borrower and each Guarantor, (B) that as of the date of
such Officer's Certificate, no Default exists under this Agreement, the Note or
any other Loan Document or, if so, specifying the nature and status of each such
Default and the action then being taken by Borrower or proposed to be taken to
remedy such Default, (C) that as of the date of each Officer's Certificate, no
litigation exists involving Borrower, the Property or either Guarantor in which
the amount involved is $500,000 (in the aggregate) or more and which potential
liability is not covered by insurance, or, if so, specifying such litigation and
the actions being taking in relation thereto and (D) the amount by which actual
Operating Expenses were greater than or less than the Operating Expenses
anticipated in the applicable Annual Budget.
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Such financial statements shall contain such other information as shall be
reasonably requested by Lender for purposes of calculations to be made by Lender
pursuant to the terms hereof.
11.2.3 Annual Reports. Not later than one hundred twenty (120)
days after the end of each Fiscal Year of Borrower's and each Guarantor's
operations, Borrower shall deliver to Lender audited financial statements for
Borrower and each Guarantor certified by an Independent Accountant in accordance
with GAAP, covering the Property, Borrower and each Guarantor, including a
balance sheet as of the end of such year, a statement of Net Operating Income
for the year and for the fourth quarter thereof and a statement of revenues and
expenses for such year, and stating in comparative form the figures for the
previous fiscal year and the Annual Budget for such fiscal year, as well as the
supplemental schedule of net income or loss presenting the net income or loss
for the Property and occupancy statistics for the Property, and copies of all
federal income tax returns to be filed. Such annual financial statements shall
also be accompanied by an Officer's Certificate in the form required pursuant to
Section 11.2.1.
11.2.4 Leasing Reports. Not later than sixty (60) days after the
end of each fiscal quarter of Borrower's operations, Borrower shall deliver to
Lender a true and complete rent roll for the Property, dated as of the last
month of such fiscal quarter, showing the percentage of gross leasable area of
the Property, if any, leased as of the last day of the preceding calendar
quarter, the current annual rent for the Property, the expiration date of each
lease, whether to Borrower's knowledge any portion of the Property has been
sublet, and if it has, the name of the subtenant, and such rent roll shall be
accompanied by an Officer's Certificate certifying that such rent roll is true,
correct and complete in all material respects as of its date and stating whether
Borrower, within the past three (3) months, has issued a notice of default with
respect to any Lease which has not been cured and the nature of such default.
11.2.5 Capital Expenditures Summaries. Borrower shall, within
ninety (90) days after the end of each calendar year during the term of the
Note, deliver to Lender an annual summary of any and all capital expenditures
made at the Property during the prior twelve (12) month period.
11.2.6 Management Agreement. Borrower shall deliver to Lender,
within ten (10) Business Days of the receipt thereof by Borrower, a copy of all
reports prepared by Manager pursuant to the Management Agreement.
11.2.7 Annual Budget. Borrower shall deliver to Lender the Annual
Budget for Lender's approval, at least sixty (60) days prior the end of each
Fiscal Year. Neither Borrower nor Manager shall change or modify the Annual
Budget that has been approved by Lender without the prior written consent of
Lender.
11.2.8 Notice of Certain Occurrences. In addition to all other
notices required to be given by Borrower hereunder, Borrower shall give notice
to Lender promptly upon the occurrence of: (a) any litigation or proceeding
affecting Borrower or the Property or any part thereof in which the amount
involved is $500,000 (in the aggregate) or more and not covered by insurance or
in which injunctive or similar relief is sought and likely to be obtained; and
(b) a material adverse change in the business, operations, property or financial
condition of Borrower or the Property.
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11.2.9 Other Information. Borrower shall, promptly after written
request by Lender or, if a Securitization shall have occurred, the Rating
Agencies, furnish or cause to be furnished to Lender, in such manner and in such
detail as may be reasonably requested by Lender, such reasonable additional
information as may be reasonably requested with respect to the Property.
XII. ENVIRONMENTAL MATTERS.
Section 12.1 Representations. Borrower hereby represents and warrants
that except as set forth in the environmental reports and studies delivered to
Lender (the Environmental Reports), (i) Borrower has not engaged in or knowingly
permitted any operations or activities upon, or any use or occupancy of the
Property, or any portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials on, under, in or about
the Property, or transported any Hazardous Materials to, from or across the
Property, except in all cases in material compliance with Environmental Laws and
only in the course of legitimate business operations at the Property; (ii) to
the best of Borrower's knowledge, no tenant, occupant or user of the Property,
or any other Person, has engaged in or permitted any operations or activities
upon, or any use or occupancy of the Property, or any portion thereof, for the
purpose of or in any material way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials on, in or about the Property, or transported
any Hazardous Materials to, from or across the Property, except in all cases in
material compliance with Environmental Laws and only in the course of legitimate
business operations at the Property; (iii) no Hazardous Materials are presently
constructed, deposited, stored, or otherwise located on, under, in or about the
Property except in material compliance with Environmental Laws; (iv) no
Hazardous Materials have migrated from the Property upon or beneath other
properties which would reasonably be expected to result in material liability
for Borrower; and (v) no Hazardous Materials have migrated or threaten to
migrate from other properties upon, about or beneath the Property which would
reasonably be expected to result in material liability for Borrower.
Section 12.2 Covenants.
12.2.1 Compliance with Environmental Laws. Subject to Borrower's
right to contest under Section 7.3, Borrower covenants and agrees with Lender
that it shall comply in all material respects with all Environmental Laws. If at
any time during the continuance of the Liens of the Security Instrument, a
Governmental Authority having jurisdiction over the Property requires remedial
action to correct the presence of Hazardous Materials in, around, or under the
Property (an Environmental Event), Borrower shall deliver prompt notice of the
occurrence of such Environmental Event to Lender. Within thirty (30) days after
Borrower has knowledge of the occurrence of an Environmental Event, Borrower
shall deliver to Lender an Officer's Certificate (an Environmental Certificate)
explaining the Environmental Event in reasonable detail and setting forth the
proposed remedial action, if any. Borrower shall promptly provide Lender with
copies of all notices which allege or identify any actual or potential violation
or noncompliance received by or prepared by or for Borrower in connection with
any Environmental Law. For purposes of this paragraph, the term "notice" shall
mean any summons, citation, directive, order, claim, pleading, letter,
application, filing, report,
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findings, declarations or other materials pertinent to compliance of the
Property and Borrower with such Environmental Laws. If any Security Instrument
is foreclosed, Borrower shall deliver the Property in material compliance with
all applicable Environmental Laws.
12.2.2 Compliance with O&M Plan. Attached hereto as Exhibit O are
asbestos operations and maintenance programs for one or more of the Individual
Properties (the O&M Program). Borrower has reviewed the O&M Program and agrees
to implement each and every recommendation contained in the O&M Program within
thirty (30) days after the Closing Date. Compliance with the O&M Program shall
be considered a material covenant of this Agreement. On the first day of each
calendar month during the Term, Borrower shall deliver to Lender copies of all
materials, reports, and data prepared or generated in connection with the O&M
Program. In the event that any Alterations or tenant improvement work would
involve the O&M Program, Borrower shall deliver Lender evidence of Borrower's
compliance with the O&M Program.
Section 12.3 Environmental Reports. Upon the occurrence and during the
continuance of an Environmental Event with respect to the Property or an Event
of Default, Lender shall have the right to have its consultants perform a
comprehensive environmental audit of the Property. Such audit shall be conducted
by an environmental consultant chosen by Lender and may include a visual survey,
a record review, an area reconnaissance assessing the presence of hazardous or
toxic waste or substances, PCBs or storage tanks at the Property, an asbestos
survey of the Property, which may include random sampling of the Improvements
and air quality testing, and such further site assessments as Lender may
reasonably require due to the results obtained from the foregoing. Borrower
grants Lender, its agents, consultants and contractors the right to enter the
Property as reasonable or appropriate for the circumstances for the purposes of
performing such studies and the reasonable cost of such studies shall be due and
payable by Borrower to Lender upon demand and shall be secured by the Liens of
the Security Instrument. Lender shall not unreasonably interfere with, and
Lender shall direct the environmental consultant to use its commercially
reasonable efforts not to interfere with , Borrower's or any Tenant's, other
occupant's or Manager's operations upon the Property when conducting such audit,
sampling or inspections. By undertaking any of the measures identified in and
pursuant to this Section 12.3, Lender shall not be deemed to be exercising any
control over the operations of Borrower or the handling of any environmental
matter or hazardous wastes or substances of Borrower for purposes of incurring
or being subject to liability therefor.
Section 12.4 Environmental Indemnification. Borrower shall protect,
indemnify, save, defend, and hold harmless the Indemnified Parties from and
against any and all liability, loss, damage, actions, causes of action, costs or
expenses whatsoever (including reasonable attorneys' fees and expenses) and any
and all claims, suits and judgments which any Indemnified Party may suffer, as a
result of or with respect to: (a) any Environmental Claim relating to or arising
from the Property; (b) the violation of any Environmental Law in connection with
the Property; (c) any release, spill, or the presence of any Hazardous Materials
affecting the Property; (d) the presence at, in, on or under, or the release,
escape, seepage, leakage, discharge or migration at or from, the Property of any
Hazardous Materials, whether or not such condition was known or unknown to
Borrower and (e) any toxic mold contamination at or affecting any Individual
Property; provided that, in each case, Borrower shall be relieved of its
obligation under this subsection if any of the matters referred to in clauses
(a) through (e) above
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did not occur (but need not have been discovered) prior to (1) the foreclosure
of any Security Instrument, (2) the delivery by Borrower to Lender or its
designee of a deed-in-lieu of foreclosure with respect to the Property, or (3)
Lender's or its designee's taking possession and control of the Property after
the occurrence of an Event of Default hereunder. If any such action or other
proceeding shall be brought against Lender, upon written notice from Borrower to
Lender (given reasonably promptly following Lender's notice to Borrower of such
action or proceeding), Borrower shall be entitled to assume the defense thereof,
at Borrower's expense, with counsel reasonably acceptable to Lender; provided,
however, Lender may, at its own expense, retain separate counsel to participate
in such defense, but such participation shall not be deemed to give Lender a
right to control such defense, which right Borrower expressly retains.
Notwithstanding the foregoing, each Indemnified Party shall have the right to
employ separate counsel at Borrower's expense if, in the reasonable opinion of
legal counsel, a conflict or potential conflict exists between the Indemnified
Party and Borrower that would make such separate representation advisable.
Borrower shall have no obligation to indemnify an Indemnified Party for damage
or loss resulting from such Indemnified Party's gross negligence or willful
misconduct.
Section 12.5 Recourse Nature of Certain Indemnifications.
Notwithstanding anything to the contrary provided in this Agreement or in any
other Loan Document, the indemnification provided in Section 12.4 shall be fully
recourse to Borrower and shall be independent of, and shall survive, the
discharge of the Indebtedness, the release of the Liens created by the Security
Instrument, and/or the conveyance of title to the Property to Lender or any
purchaser or designee in connection with a foreclosure of any Security
Instrument or conveyance in lieu of foreclosure.
XIII. THE GROUND LEASES
Section 13.1 Leasehold Representations, Warranties. Borrower hereby
represents and warrants as follows with respect to each Ground Lease relating to
an Individual Property that has an Allocated Loan Amount of greater than $0.00:
(a) Each Ground Lease is in full force and effect, unmodified by any
writing or otherwise, and Borrower has not waived, canceled or surrendered any
of its rights thereunder;
(b) all rent, additional rent and/or other charges reserved in or
payable under the Ground Leases have been paid to the extent that they are
payable to the date hereof;
(c) Borrower enjoys the quiet and peaceful possession of the Leasehold
Estates;
(d) Borrower has not delivered or received any notices of default
under any Ground Lease and to the best of Borrower's knowledge is not in default
under any of the terms of any Ground Lease, and there are no circumstances
which, with the passage of time or the giving of notice, or both, would
constitute a default under any Ground Lease;
(e) No Fee Owner is in default under any of the terms of any Ground
Lease on its part to be observed and performed;
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(f) Borrower has delivered to Lender a true, accurate and complete
copy of the Ground Leases furnished by Bank of America, N.A., the former owner
of the Property or otherwise in the possession of Borrower; and
(g) Borrower knows of no adverse claim to the title or possession of
Borrower or any Fee Owner.
In the event Lender notifies Borrower that an Event of Default has occurred as a
result of any of the foregoing representations and warranties being untrue with
respect to any Individual Property, Borrower shall have the right to cure such
representations and warranties by paying to Lender an amount equal to the
Allocated Loan Amount with respect to the affected Individual Property and
Lender shall apply such amount to the repayment of the Principal Amount pursuant
to the terms of the Note, provided that any such repayment shall not be subject
to payment of the Exit Fee with respect to the amount repaid.
Section 13.2 Cure by Lender. In the event of a default by Borrower in
the performance of any of its obligations under any Ground Lease, including,
without limitation, any default in the payment of any sums payable thereunder,
then, in each and every such case, Lender may, at its option, cause the default
or defaults to be remedied and otherwise exercise any and all rights of Borrower
thereunder in the name of and on behalf of Borrower. Borrower shall, on demand,
reimburse Lender for all advances made and expenses incurred by Lender in curing
any such default (including, without limitation, reasonable attorneys' fees and
disbursements), together with interest thereon computed at the Default Rate from
the date that such advance is made to and including the date the same is paid to
Lender.
Section 13.3 Option to Renew or Extend the Ground Leases. Borrower
shall give Lender written notice of its intention to exercise each and every
option, if any, to renew or extend the term of each Ground Lease, at least
thirty (30) days prior to the expiration of the time to exercise such option
under the terms thereof. If required by Lender, Borrower shall duly exercise any
renewal or extension option with respect to any Ground Lease if Lender
reasonably determines that the exercise of such option is necessary to protect
Lender's security for the Loan. If Borrower intends to renew or extend the term
of any Ground Lease, it shall deliver to Lender, with the notice of such
decision, a copy of the notice of renewal or extension delivered to the
applicable Fee Owner, together with the terms and conditions of such renewal or
extension. If Borrower does not renew or extend the term of any Ground Lease,
Lender may, at its option, exercise the option to renew or extend in the name of
and on behalf of Borrower. Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to execute and deliver, for and in
the name of Borrower, all instruments and agreements necessary under the Ground
Leases or otherwise to cause any renewal or extension of the Ground Leases.
Section 13.4 Ground Lease Covenants.
13.4.1 Waiver of Interest In New Ground Lease. In the event any
Ground Lease shall be terminated by reason of a default thereunder by Borrower
and Lender shall require from the applicable Fee Owner a new ground lease,
Borrower hereby waives any right, title and interest in and to such new ground
lease or the leasehold estate created thereby, waiving all rights of redemption
now or hereafter operable under any law.
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13.4.2 No Election to Terminate. Borrower shall not elect to
treat any Ground Lease as terminated, canceled or surrendered pursuant to the
applicable provisions of the Bankruptcy Code (including, without limitation,
Section 365(h)(1) thereof) without Lender's prior written consent in the event
of any Fee Owner's bankruptcy. In addition, Borrower shall, in the event of any
Fee Owner's bankruptcy, reaffirm and ratify the legality, validity, binding
effect and enforceability of the applicable Ground Lease and shall remain in
possession of the applicable Property and the applicable Leasehold Estate,
notwithstanding any rejection thereof by such Fee Owner or any trustee,
custodian or receiver.
13.4.3 Notice Prior to Rejection. Borrower shall give Lender not
less than thirty (30) days prior written notice of the date on which Borrower
shall apply to any court or other governmental authority for authority and
permission to reject any Ground Lease in the event that there shall be filed by
or against Borrower any petition, action or proceeding under the Bankruptcy Code
or under any other similar federal or state law now or hereafter in effect and
if Borrower determines to reject any Ground Lease. Lender shall have the right,
but not the obligation, to serve upon Borrower within such thirty (30) day
period a notice stating that (i) Lender demands that Borrower assume and assign
such Ground Lease to Lender subject to and in accordance with the Bankruptcy
Code, and (ii) Lender covenants to cure or provide reasonably adequate assurance
thereof with respect to all defaults reasonably susceptible of being cured by
Lender and of future performance under such Ground Lease. If Lender serves upon
Borrower the notice described above, Borrower shall not seek to reject such
Ground Lease and shall comply with the demand provided for clause (i) above
within fifteen (15) days after the notice shall have been given by Lender.
13.4.4 Lender Right to Perform. During the continuance of an
Event of Default, Lender shall have the right, but not the obligation, (i) to
perform and comply with all obligations of Borrower under the Ground Leases
without relying on any grace period provided therein, (ii) to do and take,
without any obligation to do so, such actions as Lender deems necessary or
desirable to prevent or cure any default by Borrower under any Ground Lease,
including, without limitation, any act, deed, matter or thing whatsoever that
Borrower may do in order to cure a default under the Ground Leases and (iii) to
enter in and upon the Property or any part thereof to such extent and as often
as Lender deems necessary or desirable in order to prevent or cure any default
of Borrower under the Ground Leases. Borrower shall, within five (5) Business
Days after written request is made therefor by Lender, execute and deliver to
Lender or to any party designated by Lender, such further instruments,
agreements, powers, assignments, conveyances or the like as may be reasonably
necessary to complete or perfect the interest, rights or powers of Lender
pursuant to this Section or as may otherwise be required by Lender.
13.4.5 Lender Attorney in Fact. In the event of any arbitration
under or pursuant to any Ground Lease in which Lender elects to participate,
Borrower hereby irrevocably appoints Lender as its true and lawful
attorney-in-fact (which appointment shall be deemed coupled with an interest) to
exercise, during the continuance of an Event of Default, all right, title and
interest of Borrower in connection with such arbitration, including, without
limitation, the right to appoint arbitrators and to conduct arbitration
proceedings on behalf of Borrower and Lender. All costs and expenses incurred by
Lender in connection with such arbitration and the settlement thereof shall be
borne solely by Borrower, including, without limitation, attorneys'
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fees and disbursements. Nothing contained in this Section shall obligate Lender
to participate in any such arbitration.
13.4.6 No Defaults. Borrower shall not do, permit or suffer any
event or omission as a result of which there could occur a default by the
Borrower under the Ground Leases or any event which, with the giving of notice
or the passage of time, or both, would constitute a default by the Borrower
under any Ground Lease which could permit any party to a Ground Lease validly to
terminate such Ground Lease (including, without limitation, a default in any
payment obligation), and Borrower shall obtain the consent or approval of the
applicable Fee Owner to the extent required pursuant to the terms of any Ground
Lease.
13.4.7 No Modification. Borrower shall not cancel, terminate,
surrender, modify or amend or in any way alter, surrender all or any portion of
the Property, permit the alteration of any of the provisions of any Ground Lease
or agree to any termination, amendment, modification or surrender of any Ground
Lease in a manner that materially increases Borrower's obligations or materially
decreases Borrower's rights without Lender's prior written consent in each
instance, which consent shall not be unreasonably withheld.
13.4.8 Notices of Default. Borrower shall deliver to Lender
copies of any notice of default by any party under any Ground Lease, or of any
notice from any Fee Owner of its intention to terminate any Ground Lease or to
re-enter and take possession of any portion of the Property, immediately upon
delivery or receipt of such notice, as the case may be.
13.4.9 Delivery of Information. Borrower shall promptly furnish
to Lender copies of such information and evidence as Lender may request
concerning Borrower's due observance, performance and compliance with the terms,
covenants and conditions of the Ground Leases.
13.4.10 No Subordination. Borrower shall not consent to the
subordination of any Ground Lease to any mortgage or other lease of the fee
interest in any portion of the Property.
13.4.11 Further Assurances. Borrower, at its sole cost and
expense, shall execute and deliver to Lender, within five (5) Business Days
after request, such documents, instruments or agreements as may be required to
permit Lender to cure any default under the Ground Leases.
13.4.12 Estoppel Certificates. Borrower shall use its
commercially reasonable efforts to obtain and deliver to Lender within twenty
(20) days after written demand by Lender, an estoppel certificate from each Fee
Owner designated by Lender setting forth (i) the name of the lessee and the
lessor thereunder, (ii) that the applicable Ground Lease is in full force and
effect and has not been modified or, if it has been modified, the date of each
modification (together with copies of each such modification), (iii) the date to
which all rental charges have been paid by the lessee under the applicable
Ground Lease, (iv) whether there are any alleged defaults of the lessee under
the applicable Ground Lease and, if there are, setting forth the nature thereof
in reasonable detail, (v) if the lessee under the applicable Ground Lease shall
be in default, the default and (vi) such other matters as Lender shall
reasonably request.
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Section 13.5 Lender Right to Participate. Lender shall have the right,
but not the obligation, to proceed in respect of any claim, suit, action or
proceeding relating to the rejection of any Ground Lease by any Fee Owner as a
result of a Fee Owner's bankruptcy, including, without limitation, the right to
file and prosecute any and all proofs of claims, complaints, notices and other
documents in any case in respect of such Fee Owner under and pursuant to the
Bankruptcy Code.
Section 13.6 No Liability. Lender shall have no liability or
obligation under any Ground Lease by reason of its acceptance of the Security
Instrument, this Agreement and the other Loan Documents. Lender shall be liable
for the obligations of the lessee arising under any Ground Lease for only that
period of time during which Lender is in possession of the portion of the
Property covered by such Ground Lease or has acquired, by foreclosure or
otherwise, and is holding all of Borrower's right, title and interest therein.
XIV. SECURITIZATION AND PARTICIPATION
Section 14.1 Sale of Note and Securitization. At the request of Lender
and, to the extent not already required to be provided by Borrower under this
Agreement, Borrower shall use reasonable efforts to satisfy the market standards
which may be reasonably required in the marketplace or by the Rating Agencies in
connection with the sale of the Note or participation therein as part of the
first successful securitization (such sale and/or securitization, the
Securitization) of rated single or multi-class securities (the Securities)
secured by or evidencing ownership interests in the Note and this Agreement,
including using reasonable efforts to do (or cause to be done) the following:
14.1.1 Provided Information. (i) Provide such non-confidential
financial and other information (but not projections) with respect to the
Property, Borrower, each Guarantor, Manager and Bank of America, N.A. to the
extent such information is reasonably available to Borrower, Guarantors, or
Manager, (ii) provide business plans (but not projections) and budgets relating
to the Property and (iii) cooperate with the holder of the Note (and its
representatives) in obtaining such site inspection, appraisals, market studies,
environmental reviews and reports, engineering reports and other due diligence
investigations of the Property, as may be reasonably requested by the holder of
the Note or reasonably requested by the Rating Agencies (all information
provided pursuant to this Section 14.1 together with all other information
heretofore provided to Lender in connection with the Loan, as such may be
updated, at Borrower's request, in connection with a Securitization, or
hereafter provided to Lender in connection with the Loan or a Securitization,
being herein collectively called the Provided Information);
14.1.2 Opinions of Counsel. Use reasonable efforts to cause to be
rendered such customary Opinions of Counsel as may be reasonably requested by
the holder of the Note or the Rating Agencies in connection with the
Securitization, including, without limitation, 10b-5 opinions and true sale
opinions. Borrower's failure to use reasonable efforts to deliver or cause to be
delivered the Opinions of Counsel required hereby within ten (10) Business Days
after written request therefor shall constitute an "Event of Default" hereunder.
Any such Opinions of Counsel that Borrower is reasonably required to cause to be
delivered in connection with a Securitization shall be delivered at Borrower's
expense; and
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14.1.3 Modifications to Loan Documents. Execute such amendments
to Loan Documents as may be reasonably requested by Lender or the Rating
Agencies in order to achieve the required rating or to effect the Securitization
(including, without limitation, modifying the Payment Date, as defined in the
Note, to a date other than as originally set forth in the Note), provided, that
nothing contained in this Section 14.1.3 shall result in any material economic
or other material adverse change in the transaction contemplated by the Loan
Documents.
Section 14.2 Cooperation. Borrower shall (i) at Lender's request, meet
with representatives of the Rating Agencies at reasonable times to discuss the
business and operations of the Property, (ii) cooperate with the reasonable
requests of the Rating Agencies in connection with the Property, and (iii)
cooperate in any manner that may reasonably be requested by Lender in connection
with a Securitization. Until the Obligations are paid in full, Borrower shall
provide the Rating Agencies with all financial reports required hereunder and
such other information as they shall reasonably request, including copies of any
default notices or other material notices delivered to and received from Lender
hereunder, to enable them to continuously monitor the creditworthiness of
Borrower and to permit an annual surveillance of the implied credit rating of
the Securities.
Section 14.3 Securitization Financial Statements. Borrower
acknowledges that all such financial information delivered by Borrower to Lender
pursuant to Article XI may, at Lender's option, be delivered to the Rating
Agencies.
Section 14.4 Securitization Indemnification.
14.4.1 Disclosure Documents. Borrower understands that certain of
the Provided Information may be included in disclosure documents in connection
with the Securitization, including a prospectus or private placement memorandum
or a public registration statement (each, a Disclosure Document) and may also be
included in filings with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the Securities Act) or the Securities and
Exchange Act of 1934, as amended (the Exchange Act), or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Securitization. In the event
that the Disclosure Document is required to be revised prior to the sale of all
Securities, upon request, Borrower shall reasonably cooperate with the holder of
the Note in updating the Provided Information for inclusion or summary in the
Disclosure Document by providing all current information pertaining to Borrower
and the Property reasonably requested by Lender.
14.4.2 Indemnification Certificate. In connection with each of
(x) a preliminary and a private placement memorandum, or (y) a preliminary and
final prospectus, as applicable, Borrower agrees to provide, at Lender's
reasonable request, an indemnification certificate:
(a) certifying that Borrower has carefully examined those portions of
such memorandum or prospectus, as applicable, reasonably designated in writing
by Lender for Borrower's review pertaining to Borrower, the Property, the Loan
and/or the Provided Information and insofar as such sections or portions thereof
specifically pertain to Borrower, the
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Property, the Provided Information or the Loan (such portions, the Relevant
Portions), the Relevant Portions do not (except to the extent specified by
Borrower if Borrower does not agree with the statements therein), as of the date
of such certificate, to Borrower's actual knowledge, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading.
(b) indemnifying Lender, Deutsche Bank Securities, Inc. and its
Affiliates (collectively, DBS) that have prepared the Disclosure Document
relating to the Securitization, each of its directors, each of its officers who
have signed the Disclosure Document and each person or entity who controls DBS
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the DBS Group), and DBS, together with the DBS
Group, each of their respective directors and each person who controls DBS or
the DBS Group, within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act (collectively, the Underwriter Group) for any
actual, out-of-pocket losses, third party claims, damages (excluding lost
profits, diminution in value and other consequential damages) or liabilities
arising out of third party claims (the Liabilities) to which any member of the
Underwriter Group may become subject to the extent such Liabilities arise out of
or are based upon any untrue statement of any material fact contained in the
Relevant Portions and in the Provided Information or arise out of or are based
upon the omission by Borrower to state therein a material fact required to be
stated in the Relevant Portions in order to make the statements in the Relevant
Portions in light of the circumstances under which they were made, not
misleading.
(c) Borrower's liability under clauses (a) and (b) above shall be
limited to Liabilities arising out of or based upon any such untrue statement or
omission made in a Disclosure Document in reliance upon and in conformity with
information furnished to Lender by, or furnished at the direction and on behalf
of, Borrower in connection with the preparation of those portions of the
registration statement, memorandum or prospectus pertaining to Borrower, the
Property or the Loan, including financial statements of Borrower and operating
statements with respect to the Property. This indemnity agreement will be in
addition to any liability which Borrower may otherwise have.
(d) Promptly after receipt by an indemnified party under this Article
XIV of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Article XIV, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party under this Article XIV of its assumption of such defense, the indemnifying
party shall not be liable for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense
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thereof; provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there are any legal defenses available to it
and/or other indemnified parties that are different from or in conflict with
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties at the expense of the indemnifying party. The
indemnifying party shall not be liable for the expenses of separate counsel
unless an indemnified party shall have reasonably concluded that there may be
legal defenses available to it that are different from or in conflict with those
available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity provided for in this Article XIV is for any
reason held to be unenforceable by an indemnified party in respect of any
actual, out-of-pocket losses, claims, damages or liabilities relating to third
party claims (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under this Article XIV, the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such actual, out of pocket losses, third party claims, damages or liabilities
(or action in respect thereof) (but excluding damages for lost profits,
diminution in value of the Property and consequential damages); provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution for Liabilities arising therefrom from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, the following factors
shall be considered: (i) the DBS Group's and Borrower's relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted; (ii) the opportunity to correct and prevent any statement or omission;
(iii) the limited responsibilities and obligations of Borrower as specified
herein; and (iv) any other equitable considerations appropriate in the
circumstances.
Section 14.5 Retention of Servicer. Lender reserves the right, at
Borrower's sole cost and expense, to retain the Servicer. Lender has advised
Borrower that the Servicer initially retained by Lender shall be Midland Loan
Services, Inc. Borrower shall pay any fees and expenses of the Servicer, special
servicer and trustee and any reasonable third party fees and expenses,
including, without limitation, reasonable attorneys fees and disbursement,
including, without limitation, the standard monthly servicing fee of the
Servicer and any special servicing fees, servicing advances and interest
thereon.
The foregoing provisions of this Article XIV shall not apply unless
and until a Default or Event of Default has occurred.
XV. ASSIGNMENTS AND PARTICIPATIONS.
Section 15.1 Assignment and Acceptance. During the existence of a
Default or Event of Default, Lender may assign to one or more Persons all or a
portion of its rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of the Note);
provided that the parties to each such assignment shall execute and deliver to
Lender, for its acceptance and recording in the Register (as hereinafter
defined), an
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Assignment and Acceptance. In the event of any such assignment, the holders of
the rights and obligations under this Agreement and the other Loan Documents
shall designate one person to act as agent or lead lender to exercise the rights
of Lender under this Agreement and the other Loan Documents. In addition, Lender
may participate to one or more Persons all or any portion of its rights and
obligations under this Agreement and the other Loan Documents (including without
limitation, all or a portion of the Note) utilizing such documentation to
evidence such participation and the parties' respective rights thereunder as
Lender, in its sole discretion, shall elect.
Section 15.2 Effect of Assignment and Acceptance. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (i) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of Lender, as the case may be, hereunder and such assignee shall be
deemed to have assumed such rights and obligations, and (ii) Lender shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of Lender's rights and obligations under this Agreement and the other
Loan Documents, Lender shall cease to be a party hereto) accruing from and after
the effective date of the Assignment and Acceptance, except with respect to (A)
any payments made by Borrower to Lender pursuant to the terms of the Loan
Documents after the effective date of the Assignment and Acceptance and (B) any
letter of credit, cash deposit or other deposits or security (other than the
Liens of the Security Instrument and the other Loan Documents) delivered to or
deposited with German American Capital Corporation, as Lender, for which German
American Capital Corporation shall remain responsible for the proper disposition
thereof until such items are delivered to a party who is qualified as an
Approved Bank and agrees to hold the same in accordance with the terms and
provisions of the agreement pursuant to which such items were deposited.
Section 15.3 Content. By executing and delivering an Assignment and
Acceptance, Lender and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this
Agreement or any other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (ii) Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower or the performance or observance by Borrower of any of its
obligations under any Loan Documents or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not
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taking action under this Agreement and the other Loan Documents; (v) such
assignee appoints and authorizes Lender to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Documents as
are delegated to Lender by the terms hereof together with such powers and
discretion as are reasonably incidental thereto; and (vi) such assignee agrees
that it will perform, in accordance with their terms, all of the obligations
which by the terms of this Agreement and the other Loan Documents are required
to be performed by Lender.
Section 15.4 Register. Lender shall maintain a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of Lender and each assignee pursuant to
this Article XV and the principal amount of the Loan owing to each such assignee
from time to time (the Register). The entries in the Register shall, with
respect to such assignees, be conclusive and binding for all purposes, absent
manifest error. The Register shall be available for inspection by Borrower or
any assignee pursuant to this Article XV at any reasonable time and from time to
time upon reasonable prior written notice.
Section 15.5 Substitute Notes. Upon its receipt of an Assignment and
Acceptance executed by an assignee, together with any Note or Notes subject to
such assignment, Lender shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit M hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register, and (iii) give prompt written notice thereof to Borrower. Within five
(5) Business Days after its receipt of such notice, Borrower, at Lender's own
expense, shall execute and deliver to Lender in exchange and substitution for
the surrendered Note or Notes a new Note to the order of such assignee in an
amount equal to the portion of the Loan assigned to it and a new Note to the
order of Lender in an amount equal to the portion of the Loan retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate then outstanding principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the Note
(modified, however, to the extent necessary so as not to impose duplicative or
increased obligations on Borrower and to delete obligations previously satisfied
by Borrower). Notwithstanding the provisions of this Article XV, Borrower shall
not be responsible or liable for any additional taxes, reserves, adjustments or
other costs and expenses that are related to, or arise as a result of, any
transfer of the Loan or any interest or participation therein that arise solely
and exclusively from the transfer of the Loan or any interest or participation
therein or from the execution of the new Note contemplated by this Section 15.5,
including, without limitation, any mortgage tax. Lender and/or the assignees, as
the case may be, shall from time to time designate one agent through which
Borrower shall request all approvals and consents required or contemplated by
this Agreement and on whose statements Borrower may rely.
Section 15.6 Participations. Lender or any assignee pursuant to this
Article XV may sell participations to one or more Persons (other than Borrower
or any of its Affiliates) in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of the Note held by it); provided, however,
that (i) such assignee's obligations under this Agreement and the other Loan
Documents shall remain unchanged, (ii) such assignee shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such assignee shall remain the
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holder of any such Note for all purposes of this Agreement and the other Loan
Documents, and (iv) Borrower, Lender and the assignees pursuant to this Article
XV shall continue to deal solely and directly with such assignee in connection
with such assignee's rights and obligations under this Agreement and the other
Loan Documents. In the event that more than one (1) party comprises Lender,
Lender shall designate one party to act on the behalf of all parties comprising
Lender in providing approvals and all other necessary consents under the Loan
Documents and on whose statements Borrower may rely.
Section 15.7 Disclosure of Information. Any assignee pursuant to this
Article XV may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Article XV, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to Borrower furnished to such assignee by or on behalf of Borrower;
provided, however, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree in writing for the
benefit of Borrower to preserve the confidentiality of any confidential
information received by it.
Section 15.8 Security Interest in Favor of Federal Reserve Bank.
Notwithstanding any other provision set forth in this Agreement or any other
Loan Document, any assignee pursuant to this Article XV may at any time create a
security interest in all or any portion of its rights under this Agreement or
the other Loan Documents (including, without limitation, the amounts owing to it
and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
XVI. RESERVE ACCOUNTS
Section 16.1 Tax Reserve Account. In accordance with the time periods
set forth in Section 3.1, Borrower shall deposit into the Tax Reserve Account an
amount equal to (a) (i) one-twelfth of the annual Impositions that Lender
reasonably estimates will be payable during the next ensuing twelve (12) months
that will not be paid by Bank of America, N.A. as additional rent under the BofA
Lease (the Monthly Non-BofA Tax Component) and (ii) the amount that will be paid
by Bank of America, N.A. as additional rent for the payment of taxes in any
calendar month (the Monthly BofA Tax Component), which amounts together shall
accumulate to provide with Lender sufficient funds to pay all Impositions at
least thirty (30) days prior to the imposition of any interest, charges or
expenses for the non-payment thereof, (b) one-twelfth of the annual Other
Charges that Lender reasonably estimates will be payable during the next ensuing
twelve (12) months and (c) the amount due and payable to the Servicer for the
month in which the deposit is made for the fees and expenses of the Servicer
(said monthly amounts in (a), (b) and (c) above hereinafter called the Monthly
Tax Reserve Amount, and the aggregate amount of funds held in the Tax Reserve
Account being the Tax Reserve Amount). As of the Closing Date, the Monthly
Non-BofA Tax Component is $318,078.00 and the Monthly BofA Tax Component with
respect to each month is estimated as follows: January - $819,179.00, February -
$2,109,342.00, March - $1,170,973.00, April - $587,725.00, May - $411,848.00,
June - $352,292.00, July - $319,055.00, August - $323,867.00, September -
$373,273.00, October - $2,271,569.00, November - $4,646,868.00, and December -
$1,089,693.00. The Monthly Non-BofA Tax Component and the Monthly BofA Tax
Component are subject to adjustment by Lender upon notice to Borrower. The
Monthly Tax Reserve Amount shall be paid by Borrower
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to Lender on each Payment Date. Lender will apply the Monthly Tax Reserve Amount
to payments of Impositions, Other Charges and Servicer fees and expenses
required to be made by Borrower pursuant this Agreement and the other Loan
Documents, subject to Borrower's right to contest Impositions in accordance with
Section 7.3. In making any payment relating to the Tax Reserve Account, Lender
may do so according to any ▇▇▇▇, statement or estimate procured from the
appropriate public office, without inquiry into the accuracy of such ▇▇▇▇,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of funds in the
Tax Reserve Account shall exceed the amounts due for Impositions, Other Charges
and Servicer fees and expenses, Lender shall credit such excess against future
payments to be made to the Tax Reserve Account. If at any time Lender reasonably
determines that the Tax Reserve Amount is not or will not be sufficient to pay
Impositions, Other Charges and Servicer fees and expenses by the dates set forth
above, Lender shall notify Borrower of such determination and Borrower shall
increase its monthly payments to Lender by the amount that Lender reasonably
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to the imposition of any interest, charges or expenses for the non-payment
of the Impositions, Other Charges and Servicer fees and expenses. Upon payment
of the Impositions, Other Charges and Servicer fees and expenses, Lender shall
reassess the amount necessary to be deposited in the Tax Reserve Account for the
succeeding period, which calculation shall take into account any excess amounts
remaining in the Tax Reserve Account.
Section 16.2 Insurance Reserve Account. In accordance with the time
periods set forth in Section 3.1, Borrower shall deposit into the Insurance
Reserve Account an amount equal to one-twelfth of the insurance premiums that
Lender reasonably estimates, based on the most recent ▇▇▇▇, will be payable for
the renewal of the coverage afforded by the insurance policies upon the
expiration thereof in order to accumulate with Lender sufficient funds to pay
all such insurance premiums at least thirty (30) days prior to the expiration of
the policies required to be maintained by Borrower pursuant to the terms hereof
(said monthly amounts hereinafter called the Monthly Insurance Reserve Amount,
and the aggregate amount of funds held in the Insurance Reserve Account being
the Insurance Reserve Amount), provided that if Bank of America, N.A. is not in
default of its obligations to pay insurance premiums pursuant to the BofA Lease,
the Monthly Insurance Reserve Amount shall not include the portion of the
insurance premiums that Bank of America, N.A. is required to pay pursuant to the
BofA Lease. As of the Closing Date, the Monthly Insurance Reserve Amount is
$212,240.58, but such amount is subject to adjustment by Lender upon notice to
Borrower. The Monthly Insurance Reserve Amount shall be paid by Borrower to
Lender on each Payment Date. Lender will apply the Monthly Insurance Reserve
Amount to payments of insurance premiums required to be made by Borrower
pursuant this Agreement and the Loan Documents. In making any payment relating
to the Insurance Reserve Account, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the insurer or agent, without inquiry into
the accuracy of such ▇▇▇▇, statement or estimate or into the validity thereof.
If the amount of funds in the Insurance Reserve Account shall exceed the amounts
due for insurance premiums pursuant to Article VI, Lender shall credit such
excess against future payments to be made to the Insurance Reserve Account. If
at any time Lender reasonably determines that the Insurance Reserve Amount is
not or will not be sufficient to pay insurance premiums by the dates set forth
above, Lender shall notify Borrower of such determination and Borrower shall
increase its monthly payments to Lender by the amount that Lender reasonably
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to expiration of the applicable insurance policies. Upon payment of such
insurance premiums,
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Lender shall reassess the amount necessary to be deposited in the Insurance
Reserve Account for the succeeding period, which calculation shall take into
account any excess amounts remaining in the Insurance Reserve Account.
Section 16.3 Structural Reserve Account.
(a) In accordance with the time periods set forth in Section 3.1,
Borrower shall deposit, or cause to be deposited into the Structural Reserve
Account, an amount equal to$52,825.31 (the Monthly Structural Reserve Amount and
together with all amounts deposited in the Structural Reserve Account, the
Structural Reserve Amount) and held by the Cash Management Bank for the benefit
of Lender as additional security for the Loan in accordance with Section 3.1 and
the Account Agreement.
(b) Lender shall make disbursements from the Structural Reserve
Account to reimburse Borrower for the cost of Approved Base Building Work in
accordance with and in the manner provided in this Section 16.3. In addition to
Borrower's satisfaction of the requirements of Section 10.1 and Section 10.2,
Lender's prior reasonable consent shall be required prior to commencing any
Approved Base Building Work that in the aggregate with all related Approved Base
Building Work (collectively, a Project) would reasonably be expected to cost in
excess of the Threshold Amount. Lender's consent shall not be required in
connection with a Project that would reasonably be expected to cost less than or
equal to the Threshold Amount. Lender shall, within fifteen (15) Business Days
of a written request from Borrower and satisfaction of the requirements set
forth in this Section 16.3 disburse to Borrower amounts from the Structural
Reserve Account necessary to pay for the actual costs of completed Approved Base
Building Work, which work shall be subject to the inspection of Lender for
compliance with the requirements of this Agreement. In no event shall Lender be
obligated to disburse funds from the Structural Reserve Account if an Event of
Default exists.
(c) Each request for disbursement from the Structural Reserve Account
shall be in a form reasonably specified or reasonably approved by Lender and be
submitted together with an Officer's Certificate specifying the specific items
for which the disbursement is requested, certifying that such item qualifies as
an Approved Base Building Work, the estimated cost for the applicable Project
through completion and the cost of each item purchased. Each request for
disbursement shall be delivered at least fifteen (15) Business Days prior to the
date of the requested disbursement and shall include copies of invoices for all
costs incurred and each request shall include evidence satisfactory to Lender of
payment of all such amounts or evidence that such amounts will be paid by such
disbursement. Borrower shall not make a request for disbursement from the
Structural Reserve Account more frequently than once in any calendar month and
the total amount of any request shall not be less than $25,000 (except in the
case of the final request for disbursement).
Section 16.4 TI and Leasing Reserve Account.
(a) On the Closing Date, a portion of the Loan in an amount equal to
$0 (the TI and Leasing Reserve Initial Amount and together with all other
amounts subsequently deposited into the TI and Leasing Reserve Account, the TI
and Lease Reserve Amount) has been advanced by Lender as part of the
Indebtedness but has been deposited into the TI and
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Leasing Reserve Account in accordance with Section 3.1 and held by Cash
Management Bank for the benefit of Lender as additional security for the Loan.
In addition, in accordance with the time periods set forth in Section 3.1,
Borrower shall deposit, or cause to be deposited into the TI and Leasing Reserve
Account, an amount equal to $102,982.67 (the Monthly TI and Leasing Reserve
Amount) to be held by Cash Management Bank on Lender's behalf as additional
security for the Loan in accordance with Section 3.1 and the Account Agreement.
(b) Provided that no Event of Default shall have occurred and be
continuing, Lender shall make disbursements from the TI and Leasing Reserve
Account to Borrower from time to time, but not more than once during each
calendar month, to pay for costs (collectively, TI and Leasing Costs) incurred
by Borrower for (A) tenant improvements or allowances required under any Lease,
any New Lease and any Lease Modification, provided that with respect to any New
Lease or Lease Modification, as applicable, each such New Lease or Lease
Modification complies with the terms and provisions of this Agreement and (B)
leasing commissions (including any so-called "override" leasing commissions
which may be due and then payable to any leasing or rental agent engaged by
Borrower for the Property in the event that an agent other than such agent shall
also be entitled to a leasing commission) incurred by Borrower in connection
with a Lease (and unpaid), a New Lease or a Lease Modification, provided that
such leasing commissions and "override" leasing commissions are reasonable and
customary for properties similar to the Property and the portion of the Property
leased for which such leasing commission and "override" leasing commission is
due, in each case in the manner provided herein.
(c) As between Lender and Borrower, Borrower shall be obligated to
fund directly to such Tenants or third parties, as the case may be, all TI and
Leasing Costs in excess of sums available for disbursement from the TI and
Leasing Reserve Account.
(d) The obligation of Lender to make a disbursement from the TI and
Leasing Reserve Account for TI and Leasing Costs shall be subject to the
satisfaction of the following further conditions precedent before or
concurrently with the date of such disbursement:
(i) Borrower (or Manager) shall have delivered to Lender, without
duplication (x) a certified copy of the fully executed Lease, New Lease or Lease
Modification, as applicable, to which the applicable TI and Leasing Costs relate
and (y) a certified copy of any related leasing, brokerage, fee or commission
agreement entered into with respect thereto;
(ii) Borrower shall have delivered to Lender, at least ten (10)
Business Days prior to the date of the proposed disbursement, an Officer's
Certificate attaching a true, correct and complete copy of the Lease, New Lease
or Lease Modification, as applicable, to which the TI and Leasing Costs relate,
and certifying (x) the amounts then due and payable for TI and Leasing Costs and
(y) that all previously disbursed amounts have been paid in accordance with any
prior certification, together with reasonable supporting documentation that the
TI and Leasing Costs to be funded with such disbursement are due and payable and
that payment was made of all TI and Leasing Costs funded by previous
disbursements;
(iii) Lender shall have received with respect to all previous
disbursements funded for TI and Leasing Costs, documents required to be
furnished by Tenants
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under their Leases, together with either (A) lien waivers from each of the
contractors which received the prior disbursement or (B) an Officer's
Certificate reasonably satisfactory to Lender showing that all parties who might
or could claim statutory or common law Liens and have furnished material, labor
or brokerage services to the Property have been paid all amounts then due for
labor, materials or brokerage services furnished to the Property;
(iv) With respect to the final disbursement for costs associated
with any capital improvement, Lender shall have received a new permanent or
temporary certificate of occupancy for the portion of the Improvements covered
by such capital improvement, if a certificate of occupancy is required by Legal
Requirements, or a certification by Borrower or a licensed architect that no
said certificate of occupancy is required;
(v) Lender shall have received a certificate executed by Borrower
stating that all conditions precedent to the Borrower's obligation, as landlord,
to fund the Borrower's share of the cost of the portion in question of such
tenant work have been satisfied by such Tenant;
(vi) Lender shall have received and approved an Officer's
Certificate setting forth (A) the scope of the tenant work to be performed
thereunder and (B) the aggregate cost of the TI and Leasing Costs payable
thereunder; and
(vii) no Event of Default shall have occurred and is then
continuing.
Section 16.5 Deferred Maintenance and Environmental Remediation.
(a) On the Closing Date, a portion of the Loan in the amount of
$2,593,515 (the Deferred Maintenance Holdback Amount) will be deposited by
Lender into the Structural Reserve Account and held by the Cash Management Bank
for the benefit of Lender as additional security for the Loan in accordance with
Section 3.1 and the Account Agreement. Subject to the pre-conditions to
disbursement set forth in this Section 16.5, Lender shall make disbursements of
the Deferred Maintenance Holdback Amount from the Structural Reserve Account
from time to time (but no more frequently than once a calendar month) to pay for
the costs of completing certain deferred maintenance items as such items are
more particularly described on Schedule V attached hereto. Lender shall, upon
written request from Borrower and satisfaction of the requirements to final
disbursement set forth in this Section 16.5 (the Completion) instruct the Cash
Management Bank to disburse to Borrower the remaining Deferred Maintenance
Holdback Amount.
(b) The Deferred Maintenance Holdback Amount may be disbursed from
time to time (provided that in no event shall the remaining balance of the
Deferred Maintenance Holdback Amount be reduced to less than $100,000 prior to
the final installment) upon Borrower's satisfaction of the conditions set forth
in this Section 16.5, except that the final disbursement of the Deferred
Maintenance Holdback Amount shall not be disbursed until the conditions set
forth in Section 16.5(c)(ii)(f) shall have also been satisfied. All
disbursements of the Deferred Maintenance Holdback Amount shall only be made on
a Payment Date.
(c) The obligation of Lender to disburse any portion of the Deferred
Maintenance Holdback Amount to the Borrower from the Structural Reserve Account
is subject
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to the condition precedent that all of the following requirements shall have
been completed to Lender's reasonable satisfaction:
(i) No Event of Default shall have occurred and be continuing;
and
(ii) Lender shall have received the following items:
(A) a request for advance duly executed by an authorized
officer of the Borrower delivered to Lender no earlier than twenty (20) days
prior to the date the disbursement is requested;
(B) a certificate from the Lender's Consultant certifying to
Lender that the work has been undertaken to date to the satisfaction of Lender's
Consultant;
(C) with respect to all but the final disbursement of the
Deferred Maintenance Holdback Amount, a certificate from Borrower certifying to
Lender that there are sufficient funds remaining in from the Deferred
Maintenance Holdback Amount to attain Completion;
(D) with respect to all but the final disbursement of the
Deferred Maintenance Holdback Amount, copies of receipted invoices for all of
the items, work or remediation equal to (or greater than) the amount of the
Deferred Maintenance Holdback Amount being disbursed;
(E) payment of all of Lender's costs and expenses incurred
in connection with disbursement of the Deferred Maintenance Holdback Amount,
including, without limitation, reasonable attorneys fees and disbursements
(which may, at the option of Lender, be paid from the Deferred Maintenance
Holdback Amount), including, without limitation, the retention by Lender of
Lender's Consultant; and
(F) in connection with the final disbursement (in addition
to satisfying each of the conditions, other than the condition in clauses (C)
and (D), set forth above), a certificate from Lender's Consultant certifying to
Lender that the work has been completed to the satisfaction of Lender's
Consultant.
Section 16.6 BofA Reserve Account.
(a) On the Closing Date, a portion of the Loan in an amount equal to
$10,970,618.77 has been advanced by Lender as part of the Indebtedness but has
been deposited into the BofA Reserve Account in accordance with Section 3.1 and
held by Cash Management Bank for the benefit of Lender as additional security
for the Loan. In addition, in accordance with the time periods set forth in
Section 3.1, Borrower shall deposit, or cause to be deposited into the BofA
Reserve Account Reserve Account, an amount necessary to hold on deposit in the
BofA Reserve Account an amount equal to three (3) months Basic Annual Rent (as
defined in the BofA Lease) payable, from time to time, by Bank of America, N.A.
under the BofA Lease (the BofA Reserve Amount) to be held by Cash Management
Bank on Lender's behalf as additional security for the Loan in accordance with
Section 3.1 and the Account Agreement.
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(b) Lender shall make disbursements from the BofA Reserve Account from
time to time to the Tax Reserve Account, the Insurance Reserve Account, the Debt
Service Reserve Account, the Structure Reserve Account or the TI and Leasing
Reserve Account pursuant to Section 3.1 to the extent there are insufficient
funds held in such Sub-Accounts as a result of a monetary default by Bank of
America, N.A. under the BofA Lease.
XVII. DEFAULTS
Section 17.1 Event of Default.
(a) Each of the following events shall constitute an event of default
hereunder (an Event of Default):
(i) if (A) the Indebtedness is not paid in full on the Maturity
Date, (B) any regularly scheduled monthly payment of interest due under the Note
is not paid in full on the applicable Payment Date, (C) the Exit Fee is not paid
when due, (D) any deposit to the Collection Account is not made on the required
deposit date therefor; or (E) except as to any amount included in (A), (B), (C)
and/or (D) of this clause (i), any other amount payable pursuant to this
Agreement, the Note or any other Loan Document is not paid in full when due and
payable in accordance with the provisions of the applicable Loan Document, with
such failure continuing for ten (10) Business Days after Lender delivers written
notice thereof to Borrower;
(ii) subject to Borrower's right to contest as set forth in
Section 7.3, if any of the Impositions are not paid prior to the imposition of
any interest, penalty, charge or expense for the non-payment thereof;
(iii) if the insurance policies required by Section 6.1 are not
kept in full force and effect, or if certificates evidencing such insurance
policies are not delivered to Lender within thirty (30) days of the effective
date of such insurance policies;
(iv) if, except as permitted pursuant to Article VIII, (a) any
Transfer of any direct or indirect legal, beneficial or equitable interest in
all or any portion of the Property, (b) any Transfer of any direct or indirect
interest in Borrower or Guarantors, (c) any Lien or encumbrance on all or any
portion of the Property, (d) any pledge, hypothecation, creation of a security
interest in or other encumbrance of any direct or indirect interests in Borrower
or Guarantors, (e) any merger, consolidation or reorganization of Borrower,
First States Investors 5000, LLC, First States Group, L.P. or American Financial
Realty Trust, or (f) the filing of a declaration of condominium with respect to
any Individual Property;
(v) if any representation or warranty made by Borrower herein or
by Borrower, Guarantors or any Affiliate of Borrower in any other Loan Document,
or in any report, certificate, financial statement or other instrument,
agreement or document furnished to Lender shall have been false or misleading in
any material respect as of the date the representation or warranty was made;
(vi) if Borrower or either Guarantor shall make an assignment for
the benefit of creditors;
99
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower or either Guarantor or if Borrower or either Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower or either Guarantor, or if any proceeding for the dissolution or
liquidation of Borrower or either Guarantor shall be instituted; provided,
however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower or either Guarantor upon the same
not being discharged, stayed or dismissed within ninety (90) days;
(viii) if Borrower or either Guarantor, as applicable, attempts
to assign its rights under this Agreement or any of the other Loan Documents or
any interest herein or therein in contravention of the Loan Documents;
(ix) with respect to any term, covenant or provision set forth
herein (other than the other subsections of this Section 17.1) which
specifically contains a notice requirement or grace period, if Borrower or
either Guarantor shall be in default under such term, covenant or condition
after the giving of such notice or the expiration of such grace period;
(x) if any of the assumptions contained in the Non-Consolidation
Opinion, in any Additional Non-Consolidation Opinion or in any other
non-consolidation opinion delivered to Lender in connection with the Loan, or in
any other non-consolidation delivered subsequent to the closing of the Loan, is
or shall become untrue in any material respect;
(xi) if Borrower shall fail to comply with any covenants set
forth in Section 5.1.4, Section 5.2.9 and 5.2.20;
(xii) except as provided clause (xi) above, if Borrower shall
fail to comply with any covenants set forth in Article V or Section XI with such
failure continuing for ten (10) Business Days after Lender delivers written
notice thereof to Borrower;
(xiii) if Borrower shall fail to comply with any covenants set
forth in Section 4 of the Security Instrument with such failure continuing for
ten (10) Business Days after Lender delivers written notice thereof to Borrower;
(xiv) Borrower shall fail to deposit any sums required to be
deposited in the Collateral Accounts thereof pursuant to Article XVI when due;
(xv) if this Agreement or any other Loan Document or any Lien
granted hereunder or thereunder, in whole or in part, shall terminate or shall
cease to be effective or shall cease to be a legally valid, binding and
enforceable obligation of Borrower or any Guarantor, or any Lien securing the
Indebtedness shall, in whole or in part, cease to be a perfected first priority
Lien, subject to the Permitted Encumbrances (except in any of the foregoing
cases in accordance with the terms hereof or under any other Loan Document or by
reason of any affirmative act of Lender);
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(xvi) if there shall occur any default by Borrower, as lessee
under any Ground Lease, in the observance or performance of any term, covenant
or condition of any Ground Lease on the part of Borrower to be observed or
performed, and said default is not cured prior to the expiration of any
applicable grace or cure period therein provided and would allow the Lessor
thereunder to terminate such Ground Lease, or if any one or more of the events
referred to in any Ground Lease shall occur which would cause such Ground Lease
to terminate without notice or action by the applicable Fee Owner under such
Ground Lease or if any Leasehold Estate shall be surrendered or any Ground Lease
shall be lawfully terminated or cancelled for any reason or under any
circumstances whatsoever, or if any of the terms, covenants or conditions of any
Ground Lease shall in any manner be modified, changed, supplemented, altered or
amended in contradiction of the provisions of Article XIII without the prior
written consent of Lender, which consent shall not be unreasonably withheld,
conditioned or delayed;
(xvii) if the Management Agreement is terminated and a Qualified
Manager is not appointed as a replacement manager pursuant to the provisions of
Section 5.2.14 within sixty (60) days after such termination;
(xviii) if Borrower shall default beyond the expiration of any
applicable cure period under any existing easement, covenant or restriction
which affects any Individual Property, the default of which shall have a
Material Adverse Effect;
(xix) if Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement or of any Loan
Document not specified in subsections (i) to (xiv) above, for thirty (30) days
after notice from Lender; provided, however, that if such Default is susceptible
of cure but cannot reasonably be cured within such thirty (30) day period and
provided further that Borrower shall have commenced to cure such Default within
such thirty (30) day period and thereafter diligently proceeds to cure the same,
such thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed ninety (90) days.
(b) Unless waived in writing by Lender, upon the occurrence and during
the continuance of an Event of Default (other than an Event of Default described
in clauses (a)(vi), (vii) or (viii) above) Lender may, without notice or demand,
in addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, take such action
that Lender deems advisable to protect and enforce its rights against Borrower
and in the Property, including, without limitation, (i) declaring immediately
due and payable the entire Principal Amount together with interest thereon and
all other sums due by Borrower under the Loan Documents, (ii) collecting
interest on the Principal Amount at the Default Rate whether or not Lender
elects to accelerate the Note and (iii) enforcing or availing itself of any or
all rights or remedies set forth in the Loan Documents against Borrower and the
Property, including, without limitation, all rights or remedies available at law
or in equity; and upon any Event of Default described in subsections (a)(vi) or
(a)(vii) above, the Indebtedness and all other obligations of Borrower hereunder
and under the other Loan Documents shall immediately and automatically become
due and payable, without notice or demand, and Borrower hereby expressly waives
any such notice or demand, anything contained herein or in
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any other Loan Document to the contrary notwithstanding. The foregoing
provisions shall not be construed as a waiver by Lender of its right to pursue
any other remedies available to it under this Agreement, the Security Instrument
or any other Loan Document. Any payment hereunder may be enforced and recovered
in whole or in part at such time by one or more of the remedies provided to
Lender in the Loan Documents.
Section 17.2 Remedies.
(a) Unless waived in writing by Lender, upon the occurrence and during
the continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Lender against Borrower under
this Agreement or any of the other Loan Documents executed and delivered by, or
applicable to, Borrower or at law or in equity may be exercised by Lender at any
time and from time to time, whether or not all or any of the Indebtedness shall
be declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and
remedies under any of the Loan Documents with respect to the 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 may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is continuing (i) Lender
shall not be subject to any one action or election of remedies law or rule and
(ii) all liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Property and the Security Instrument have been foreclosed, sold
and/or otherwise realized upon in satisfaction of the Indebtedness or the
Indebtedness has been paid in full.
(b) Upon the occurrence and during the continuance of an Event of
Default, with respect to the Account Collateral, the Lender may:
(i) without notice to Borrower, except as required by law, and at
any time or from time to time, charge, set-off and otherwise apply all or any
part of the Account Collateral against the Obligations, Operating Expenses
and/or Capital Expenditures for the Property or any part thereof;
(ii) in Lender's sole discretion, at any time and from time to
time, exercise any and all rights and remedies available to it under this
Agreement, and/or as a secured party under the UCC;
(iii) demand, collect, take possession of or receipt for, settle,
compromise, adjust, ▇▇▇ for, foreclose or realize upon the Account Collateral
(or any portion thereof) as Lender may determine in its sole discretion; and
(iv) take all other actions provided in, or contemplated by, this
Agreement.
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(c) With respect to Borrower, the Account Collateral, the Rate Cap
Collateral and the Property, nothing contained herein or in any other Loan
Document shall be construed as requiring Lender to resort to the Property for
the satisfaction of any of the Indebtedness, and Lender may seek satisfaction
out of the Property or any part thereof, in its absolute discretion in respect
of the Indebtedness. In addition, Lender shall have the right from time to time
to partially foreclose this Agreement and the Security Instrument in any manner
and for any amounts secured by this Agreement or the Security Instrument then
due and payable as determined by Lender in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal or interest, Lender may foreclose this Agreement
and the Security Instrument to recover such delinquent payments, or (ii) in the
event Lender elects to accelerate less than the entire outstanding principal
balance of the Loan, Lender may foreclose this Agreement and the Security
Instrument to recover so much of the principal balance of the Loan as Lender may
accelerate and such other sums secured by this Agreement or the Security
Instrument as Lender may elect. Notwithstanding one or more partial
foreclosures, the Property shall remain subject to this Agreement and the
Security Instrument to secure payment of sums secured by this Agreement and the
Security Instrument and not previously recovered.
Section 17.3 Remedies Cumulative; Waivers.
The rights, powers and remedies of Lender under this Agreement and the
Loan Documents shall be cumulative and not exclusive of any other right, power
or remedy which Lender may have against Borrower pursuant to this Agreement or
the other Loan Documents, or existing at law or in equity or otherwise. Lender's
rights, powers and remedies may be pursued singly, concurrently or otherwise, at
such time and in such order as Lender may determine in Lender's sole discretion.
No delay or omission to exercise any remedy, right or power accruing upon an
Event of Default shall impair any such remedy, right or power or shall be
construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one Default or Event of Default with respect to Borrower or any Guarantor shall
not be construed to be a waiver of any subsequent Default or Event of Default by
Borrower or any Guarantor or to impair any remedy, right or power consequent
thereon.
Section 17.4 Costs of Collection. In the event that after an Event of
Default: (i) the Note or any of the Loan Documents is placed in the hands of an
attorney for collection or enforcement or is collected or enforced through any
legal proceeding; (ii) an attorney is retained to represent Lender in any
bankruptcy, reorganization, receivership, or other proceedings affecting
creditors' rights and involving a claim under the Note or any of the Loan
Documents; or (iii) an attorney is retained to protect or enforce the lien or
any of the terms of this Agreement, the Security Instrument or any of the Loan
Documents; then Borrower shall pay to Lender all reasonable attorney's fees,
costs and expenses actually incurred in connection therewith, including costs of
appeal, together with interest on any judgment obtained by Lender at the Default
Rate.
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XVIII. SPECIAL PROVISIONS
Section 18.1 Exculpation.
18.1.1 Exculpated Parties. The Loan shall be fully recourse to
Borrower. Except as set forth in the Recourse Guaranty and the Environmental
Indemnity, no personal liability shall be asserted, sought or obtained by Lender
or enforceable against (i) any Affiliate of Borrower, (ii) any Person owning,
directly or indirectly, any legal or beneficial interest in Borrower or any
Affiliate of Borrower or (iii) any direct or indirect partner, member,
principal, officer, director, controlling person, beneficiary, trustee, advisor,
shareholder, employee, agent of any Persons described in clauses (i) or (ii)
above (collectively, the Exculpated Parties) and none of the Exculpated Parties
shall have any personal liability (whether by suit deficiency judgment or
otherwise) in respect of the Obligations, this Agreement, the Note or any other
Loan Document.
XIX. MISCELLANEOUS
Section 19.1 Survival. This Agreement and all covenants,
indemnifications, agreements, representations and warranties made herein and in
the certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lender of the Note, and shall
continue in full force and effect so long as all or any of the Indebtedness is
outstanding and unpaid unless a longer period is expressly set forth herein or
in the other Loan Documents. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party. All covenants, promises and agreements in this
Agreement, by or on behalf of Borrower, shall inure to the benefit of the
successors and assigns of Lender. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder and under the
other Loan Documents shall be joint and several.
Section 19.2 Lender's Discretion. Whenever pursuant to this Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 19.3 Governing Law.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN
WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, WHICH
STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED
104
IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED
BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO
ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
NOTE, AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CORPORATION SERVICE COMPANY
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 19.4 Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Note, or of any other Loan Document, or consent to any
departure therefrom, shall in any event be
105
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought (and, if a Securitization shall have occurred, a Rating
Agency Confirmation is obtained), and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to or demand on
Borrower shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
Section 19.5 Delay Not a Waiver. Neither any failure nor any delay on
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note or under any other Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, the Note or any other Loan
Document, Lender shall not be deemed to have waived any right either to require
prompt payment when due of all other amounts due under this Agreement, the Note
or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.
Section 19.6 Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested, (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery or (c) telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section):
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If to Lender: German American Capital Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Midland Loan Services Inc.
10851 ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: First States Investors 5000A, LLC
c/o First States Group, L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
All notices, elections, requests and demands under this Agreement shall be
effective and deemed received upon the earliest of (i) the actual receipt of the
same by personal delivery or otherwise, (ii) one (1) Business Day after being
deposited with a nationally recognized overnight courier service as required
above, (iii) three (3) Business Days after being deposited in the United States
mail as required above or (iv) on the day sent if sent by facsimile with
confirmation on or before 5:00 p.m. New York time on any Business Day or on the
next Business Day if so delivered after 5:00 p.m. New York time or on any day
other than a Business Day. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, election, request, or
demand sent.
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Section 19.7 TRIAL BY JURY. BORROWER AND ALL PERSONS CLAIMING BY,
THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (I) ARISING UNDER THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTE OR
ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS
AGREEMENT, THE SECURITY INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT (AS NOW
OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED
OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND BORROWER HEREBY AGREES AND CONSENTS THAT AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. BORROWER
ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF
THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE
MAKING OF THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.
Section 19.8 Headings. The Article and/or Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
Section 19.9 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 19.10 Preferences. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 19.11 Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement
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or the other Loan Documents do not specifically and expressly provide for the
giving of notice by Lender to Borrower.
Section 19.12 Expenses; Indemnity.
(a) Borrower covenants and agrees to pay or, if Borrower fails to pay,
to reimburse, Lender upon receipt of written notice from Lender for all
reasonable actual out-of-pocket costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with (i) the
preparation, negotiation, execution and delivery of this Agreement and the other
Loan Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender pursuant to this
Agreement); (ii) Lender's ongoing performance of and compliance with all
agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iii) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters as required herein
or under the other Loan Documents; (iv) securing Borrower's compliance with any
requests made pursuant to the provisions of this Agreement; (v) the filing and
recording fees and expenses, mortgage recording taxes, title insurance and
reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred in creating and perfecting
the Lien in favor of Lender pursuant to this Agreement and the other Loan
Documents; (vi) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, the Property, or any other security given for the
Loan; (vii) enforcing any obligations of or collecting any payments due from
Borrower under this Agreement, the other Loan Documents or with respect to the
Property or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a work-out or of any
insolvency or bankruptcy proceedings; (viii) procuring insurance policies
pursuant to Section 6.1.11; and (ix) the Securitization of the Loan if
applicable, including, without limitation, any fees of the Rating Agencies,
printing costs and legal costs and expenses. Any cost and expenses due and
payable to Lender may be paid from any amounts in the Collection Account or the
Holding Account.
(b) Subject to the non-recourse provisions of Section 18.1, Borrower
shall protect, indemnify and save harmless Lender, and all officers, directors,
stockholders, members, partners, employees, agents, successors and assigns
thereof (collectively, the Indemnified Parties) from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including all reasonable attorneys' fees and expenses actually
incurred) imposed upon or incurred by or asserted against the Indemnified
Parties or the Property or any part of its interest therein, by reason of the
occurrence or existence of any of the following (to the extent Proceeds payable
on account of the following shall be inadequate; it being understood that in no
event will the Indemnified Parties be required to actually pay or incur any
costs or expenses as a condition to the effectiveness of the foregoing
indemnity) prior to (i) the acceptance by Lender or its designee of a
deed-in-lieu of foreclosure with respect to the Property, or (ii) an Indemnified
Party or its designee taking possession or control of the Property or (iii) the
foreclosure of any Security Instrument, except to the extent caused by the
actual willful
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misconduct or gross negligence of the Indemnified Parties (other than such
willful misconduct or gross negligence imputed to the Indemnified Parties
because of their interest in the Property): (1) ownership of Borrower's interest
in the Property, or any interest therein, or receipt of any Rents or other sum
therefrom, (2) any accident, injury to or death of any persons or loss of or
damage to property occurring on or about the Property or any Appurtenances
thereto, (3) any design, construction, operation, repair, maintenance, use,
non-use or condition of the Property or Appurtenances thereto, including claims
or penalties arising from violation of any Legal Requirement or Insurance
Requirement, as well as any claim based on any patent or latent defect, whether
or not discoverable by Lender, any claim the insurance as to which is
inadequate, and any Environmental Claim, (4) any Default under this Agreement or
any of the other Loan Documents or any failure on the part of Borrower to
perform or comply with any of the terms of any Lease or REA within the
applicable notice or grace periods, (5) any performance of any labor or services
or the furnishing of any materials or other property in respect of the Property
or any part thereof, (6) any negligence or tortious act or omission on the part
of Borrower or any of its agents, contractors, servants, employees, sublessees,
licensees or invitees, (7) any contest referred to in Section 7.3 hereof, (8)
any obligation or undertaking relating to the performance or discharge of any of
the terms, covenants and conditions of the landlord contained in the Leases, or
(9) the presence at, in or under the Property or the Improvements of any
Hazardous Materials in violation of any Environmental Law. Any amounts the
Indemnified Parties are legally entitled to receive under this Section which are
not paid within fifteen (15) Business Days after written demand therefor by the
Indemnified Parties or Lender, setting forth in reasonable detail the amount of
such demand and the basis therefor, shall bear interest from the date of demand
at the Default Rate, and shall, together with such interest, be part of the
Indebtedness and secured by the Security Instrument. In case any action, suit or
proceeding is brought against the Indemnified Parties by reason of any such
occurrence, Borrower shall at Borrower's expense resist and defend such action,
suit or proceeding or will cause the same to be resisted and defended by counsel
at Borrower's reasonable expense for the insurer of the liability or by counsel
designated by Borrower (unless reasonably disapproved by Lender promptly after
Lender has been notified of such counsel); provided, however, that nothing
herein shall compromise the right of Lender (or any Indemnified Party) to
appoint its own counsel at Borrower's expense for its defense with respect to
any action which in its reasonable opinion presents a conflict or potential
conflict between Lender and Borrower that would make such separate
representation advisable; provided further that if Lender shall have appointed
separate counsel pursuant to the foregoing, Borrower shall not be responsible
for the expense of additional separate counsel of any Indemnified Party unless
in the reasonable opinion of Lender a conflict or potential conflict exists
between such Indemnified Party and Lender. So long as Borrower is resisting and
defending such action, suit or proceeding as provided above in a prudent and
commercially reasonable manner, Lender and the Indemnified Parties shall not be
entitled to settle such action, suit or proceeding without Borrower's consent
which shall not be unreasonably withheld or delayed, and claim the benefit of
this Section with respect to such action, suit or proceeding and Lender agrees
that it will not settle any such action, suit or proceeding without the consent
of Borrower; provided, however, that if Borrower is not diligently defending
such action, suit or proceeding in a prudent and commercially reasonable manner
as provided above, and Lender has provided Borrower with thirty (30) days' prior
written notice, or shorter period if mandated by the requirements of applicable
law, and opportunity to correct such determination, Lender may settle such
action, suit or proceeding and claim the
110
benefit of this Section 19.12 with respect to settlement of such action, suit or
proceeding. Any Indemnified Party will give Borrower prompt notice after such
Indemnified Party obtains actual knowledge of any potential claim by such
Indemnified Party for indemnification hereunder. The Indemnified Parties shall
not settle or compromise any action, proceeding or claim as to which it is
indemnified hereunder without notice to Borrower.
Section 19.13 Exhibits and Schedules Incorporated. The Exhibits and
Schedules annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.
Section 19.14 Offsets, Counterclaims and Defenses. Any assignee of
Lender's interest in and to this Agreement, the Note and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrower may otherwise have
against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
Section 19.15 Liability of Assignees of Lender. No assignee of Lender
shall have any personal liability, directly or indirectly, under or in
connection with this Agreement or any other Loan Document or any amendment or
amendments hereto made at any time or times, heretofore or hereafter, any
different than the liability of Lender hereunder. In addition, no assignee shall
have at any time or times hereafter any personal liability, directly or
indirectly, under or in connection with or secured by any agreement, lease,
instrument, encumbrance, claim or right affecting or relating to the Property or
to which the Property is now or hereafter subject any different than the
liability of Lender hereunder. The limitation of liability provided in this
Section 19.15 is (i) in addition to, and not in limitation of, any limitation of
liability applicable to the assignee provided by law or by any other contract,
agreement or instrument, and (ii) shall not apply to any assignee's gross
negligence or willful misconduct.
Section 19.16 No Joint Venture or Partnership; No Third Party
Beneficiaries.
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that
111
Lender will refuse to make the Loan in the absence of strict compliance with any
or all thereof and no other Person shall under any circumstances be deemed to be
a beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by Lender if, in Lender's sole discretion, Lender deems it
advisable or desirable to do so.
Section 19.17 Publicity. All news releases, publicity or advertising
by Borrower or its Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, or any of its Affiliates shall be subject to the prior
written approval of Lender, provided that Lender's approval shall not be
required in connection with any required Securities and Exchange Commission
filings by Borrower or Guarantors or in any prospectus or offering materials
filed therewith and provided to third parties.
Section 19.18 Waiver of Marshalling of Assets. To the fullest extent
permitted by law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets of Borrower, Borrower's members and
others with interests in Borrower and of the Property, and agrees not to assert
any right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Property for the
collection of the Indebtedness without any prior or different resort for
collection or of the right of Lender to the payment of the Indebtedness out of
the net proceeds of the Property in preference to every other claimant
whatsoever.
Section 19.19 Waiver of Counterclaim and other Actions. Borrower
hereby expressly and unconditionally waives, in connection with any suit, action
or proceeding brought by Lender on this Agreement or any Loan Document, any and
every right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Lender on this Agreement or any Loan Document and cannot be
maintained in a separate action) and (ii) have any such suit, action or
proceeding consolidated with any other or separate suit, action or proceeding.
Section 19.20 Conflict; Construction of Documents; Reliance. In the
event of any conflict between the provisions of this Agreement and any of the
other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the
112
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.
Section 19.21 Prior Agreements. This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, other than
that certain Conditional Commitment, dated as of May 30, 2003, between First
States Group, L.P. and Lender, are superseded by the terms of this Agreement and
the other Loan Documents and unless specifically set forth in a writing
contemporaneous herewith the terms, conditions and provisions of any and all
such prior agreements, the than such Conditional Commitment, do not survive
execution of this Agreement.
Section 19.22 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
FIRST STATES INVESTORS 5000A, LLC,
a Delaware limited liability company
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Loan and Security Agreement Signature Page
LENDER:
GERMAN AMERICAN CAPITAL CORPORATION,
a Maryland corporation
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
Loan and Security Agreement Signature Page
STATE OF PENNSYLVANIA )
) ss.
COUNTY OF PHILADELPHIA )
On the day of June in the year 2003 before me, the
----
undersigned, a notary public in and for said state, personally appeared ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual,
or the person upon behalf of which the individual acted, executed the
instrument.
-------------------------------------
Notary Public
[Notary Seal] My commission expires:
