EXHIBIT 10.18
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LOAN MODIFICATION AND EXTENSION AGREEMENT
by and among
SOUTHWEST MARKET LIMITED PARTNERSHIP
a District of Columbia limited partnership,
XXXXXXXX X. XXXXXXXXX
a Natural Person,
and
XXXXXX X. XXXXX
a Natural Person,
and
THE SUMITOMO BANK, LIMITED,
a Japanese banking institution acting
through its NEW YORK BRANCH
FOR
TWO INDEPENDENCE SQUARE
Dated as of September 26, 1994
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TABLE OF CONTENTS
Page
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ARTICLE I - CERTAIN DEFINITIONS.............................................3
ARTICLE II - EXTENSION AND RELATED MATTERS .................................5
Section 2.01 Extension of Maturity Date .................................5
Section 2.02 Reaffirmation of Liability .................................5
Section 2.03 Modification Fee ...........................................6
ARTICLE III - AMENDMENT OF ORIGINAL LOAN AGREEMENT .........................6
Section 3.01 Amendment of Original Loan Agreement .......................6
Section 3.02 Amendment of other Loan Documents ..........................9
Section 3.03 Reaffirmation of Certain Documents .........................9
Section 3.04 Ratification of Loan Documents .............................9
Section 3.06 Termination of Bid Protest Guaranty .......................10
ARTICLE IV - LENDER'S FIXED RATE OPTION ...................................10
Section 4.01 Lender's Fixed Rate Option ................................10
Section 4.02 Exercise of Lender's Conversion Option ....................11
Section 4.03 Implementation of Interest Rate Management Arrangement ....12
Section 4.04 Recalculation of Trigger Rate .............................16
ARTICLE V - REPRESENTATIONS, WARRANTIES AND COVENANTS .....................18
Section 5.01 Existence .................................................18
Section 5.02 Authorization, Enforceable Obligations ....................18
Section 5.03 Conflicting Agreements ....................................19
Section 5.04 Organizational Documents ..................................20
Section 5.05 No Material Litigation ....................................21
Section 5.06 Compliance with Applicable Laws ...........................22
Section 5.07 Information Delivered .....................................22
Section 5.08 True Statement ............................................23
Section 5.09 No Event of Default .......................................23
Section 5.10 Space Leases ..............................................23
Section 5.11 Financial Statements of Borrower ..........................24
Section 5.12 Financial Statements of Guarantors ........................24
Section 5.13 Taxes and Other Assessments ...............................24
Section 5.14 No Liens ..................................................25
(i)
Page
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Section 5.15 Trust Estate ..............................................25
Section 5.16 No Bankruptcy .............................................26
Section 5.17 Absence of Transfer .......................................26
Section 5.18 Certificates ..............................................26
Section 5.19 Representations and warranties Loan Documents .............26
Section 5.20 Event of Default ..........................................27
ARTICLE VI - EFFECTIVE DATE ...............................................27
Section 6.01 Effective Date ............................................27
Section 6.02 Termination ...............................................30
ARTICLE VII - MISCELLANEOUS ...............................................30
Section 7.01 Entire Agreement; Exhibits and Schedules ..................30
Section 7.02 Counterparts ..............................................31
Section 7.03 Governing Law .............................................31
Section 7.04 Severability ..............................................31
Section 7.05 Successors and Assigns ....................................31
Section 7.06 Time of the Essence .......................................32
Section 7.07 Headings ..................................................32
Section 7.08 Notices ...................................................32
Section 7.09 Survival ..................................................32
(ii)
EXHIBITS
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Exhibit "A" Form of Allonge
Exhibit "B" Form of Second Amendment to Construction Loan Deed of Trust and
Security Agreement
Exhibit "C" Form of First Amendment to Collateral Assignment of Leases,
Rents, Profits and Income and Pledge of Accounts
Exhibit "D" Form of First Modification to Collateral Assignment of Project
Documents
Exhibit "E-1" Form of Closing Certificate
Exhibit "E-2" Form of Closing Certificate
Exhibit "E-3" Form of Closing Certificate
Exhibit "E-4" Form of Closing Certificate
Exhibit "E-5" Form of Closing Certificate
Exhibit "F" Form of Extension of Side Letter regarding Development Fee
Exhibit "G" List of Space Leases
Exhibit "H" Certificate Confirming Effective Date
Exhibit "I" First Amendment to Interest Guaranty and Indemnity
SCHEDULES
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Schedule 1 Trigger Rates
Schedule 2 Methodology for Converting Pre-Tax Net Operating Income to
Trigger Rates
Schedule 3 Representatives of Borrower
Schedule 4 Leases in Default
(iii)
LOAN MODIFICATION AND EXTENSION AGREEMENT
THIS LOAN MODIFICATION AND EXTENSION AGREEMENT (this "Agreement") made and
entered into as of the _____ day of September, 1994, by and among SOUTHWEST
MARKET LIMITED PARTNERSHIP, a District of Columbia limited partnership
("Borrower"); XXXXXXXX X. XXXXXXXXX, who is a natural person ("Xxxxxxxxx"), and
XXXXXX X. XXXXX, who is a natural person ("Linde") (Xxxxxxxxx and Xxxxx being
collectively referred to as the "Guarantors"); and THE SUMITOMO BANK, LIMITED, a
Japanese banking institution acting through its NEW YORK BRANCH ("Lender");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower and Lender are the parties to a certain Construction Loan
Agreement dated as of February 22, 1991 (the "Original Loan Agreement"),
pursuant to which Lender, in periodic advances, advanced to Borrower on the
terms and conditions set forth in the Original Loan Agreement the aggregate
principal amount of One Hundred Twenty-Five Million and No/100 Dollars
($125,000,000.00) (the "Loan"); and
WHEREAS, all advances made by Lender to Borrower pursuant to the Original
Loan Agreement are evidenced by that certain Promissory Note dated February 27,
1991, in the principal amount of $125,000,000, made by Borrower to the order of
Lender (the "Original Note"); and
WHEREAS, the Original Note is secured by that certain Construction Loan
Deed of Trust and Security Agreement dated as of February 22, 1991 and effective
as of February 27, 1991, by and among Borrower, Lender and Trustee (as defined
therein), as recorded in the Land Records of the District of Columbia on
February 27, 1991 as Instrument No. 10516 (the "Initial Deed of Trust"); and
WHEREAS, the Initial Deed of Trust was amended by that certain First
Amendment to Construction Loan Deed of Trust and Security Agreement (the "First
Amendment to Deed of Trust"), by and among Borrower, Lender and Trustee, dated
as of September 9, 1994 and effective as of September 21, 1994, which was
recorded in the Land Records of the District of Columbia on September 9, 1994 as
Instrument No. 76268 (the Initial Deed of Trust as amended by the First
Amendment to Deed of Trust and shall hereinafter be referred to as the "Original
Deed of Trust"); and
WHEREAS, Borrower's obligations under the original Loan Agreement and
Original Note are further secured by the Assignment of Rents and the Assignment
of Project Documents, as such terms are defined in the Original Loan Agreement;
and
WHEREAS, pursuant to an Interest Guaranty and Indemnity dated as of
February 22, 1991 (the "Interest Guaranty"), Guarantors jointly and severally
guaranteed to Lender, on and subject to the terms and conditions of the Interest
Guaranty, the payment of the Obligations (as defined in the Interest Guaranty);
and
WHEREAS, pursuant to an Environmental Guaranty dated as of February 22,
1991, Guarantors jointly and severally guaranteed to Lender Borrower's
performance of certain obligations under the Initial Deed of Trust relating to
Hazardous Material, as such term is defined in the Initial Deed of Trust; and
WHEREAS, the Loan by its terms will mature on February 27, 1998 (the
"Original Maturity Date") and the principal balance and all other Indebtedness
owed by Borrower to Lender will become due and payable in full on such date; and
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WHEREAS, Borrower and Lender desire to extend the Original Maturity Date
and modify certain other terms of the Loan, on and subject to the terms and
conditions set forth herein; and
WHEREAS, the extension of the maturity and the modification of certain
other terms of the Loan will provide economic benefits to Borrower and
Guarantors;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to
legally bind themselves, Borrower, Guarantors and Lender hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
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As used in this Agreement, the capitalized terms set forth below shall have
the meanings given them in this Article I. Capitalized terms used in this
Agreement but not defined in this Article I shall have the meanings set forth
elsewhere in this Agreement or, if not defined elsewhere in this Agreement, the
meanings given such terms in the Original Loan Agreement (as amended by this
Agreement).
Effective Date. As used herein, "Effective Date" shall have the meaning
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given to such term in Section 6.01 hereinbelow.
Modification Documents. As used herein, the "Modification Documents" shall
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mean (a) an Allonge (the "Allonge") in the form attached hereto as Exhibit "A";
(b) a Second Amendment to Construction Loan Deed of Trust and Security Agreement
in the form attached hereto as Exhibit "B" (the "Modification to Deed of
Trust"); (c) a First Amendment to Collateral
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Assignment of Leases, Rents, Profits and Income and Pledge of Accounts in the
form attached hereto as Exhibit "C" (the "Modification to Assignment of Rents");
(d) a First Modification to Collateral Assignment of Project Documents in the
form attached hereto as Exhibit I'D" (the "Modification to Assignment of Project
Documents"); (e) Closing Certificates in the forms attached hereto as Exhibits
"E-1", "E-2", "E-3", "E-4", and "E-5"; (f) this Agreement; (g) an Extension of
Side Letter regarding Development Fee in the form attached hereto as Exhibit
"F"; (h) a First Amendment to Interest Guaranty and Indemnity in the form
attached hereto as Exhibit "I"; and (i) such other documents and instruments
amending, modifying, restating, or extending any of the Loan Documents as Lender
reasonably may require.
Original Note. As used herein, "Original Note" shall have the meaning
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given to such term in the recitals to this Agreement and is the "Note" as
defined in the original Loan Agreement prior to the amendments thereto effected
by this Agreement.
Trigger Rate. As used herein, "Trigger Rate" shall mean, for each calendar
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year falling in whole or in part within the Loan Term, the per annum rate of
interest set forth on Schedule 1 to this Agreement (which has been calculated in
accordance with Schedule 2 to this Agreement), as such rate may from time to
time be modified in accordance with Section 4.04 of this Agreement.
Trigger Rate Notice. As used herein, "Trigger Rate Notice" shall mean a
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telephonic notice (followed by prompt written confirmation thereof) by Lender to
Borrower, which informs Borrower that the Weighted Average Rate (as hereinafter
defined) has reached or surpassed the Trigger Rate.
Weighted Average Rate. As used herein, "Weighted Average Rate" shall mean
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the weighted average of the rates of interest that are in effect under the Note
on the first day of each
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calendar month (applicable for the previous month) falling within the Loan Term
with. respect to each of the Portions of Principal that comprise the entire
outstanding principal balance of the Loan.
ARTICLE II
EXTENSION AND RELATED MATTERS
-----------------------------
Section 2.01 Extension of Maturity Date. On the Effective Date, the
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Maturity Date of the Loan shall be extended from the Original Maturity Date to
February 27, 2003 as provided in the Allonge.
Section 2.02 Reaffirmation of Liability.
--------------------------
(a) Borrower acknowledges and agrees, and shall forever be estopped
from controverting the fact that, as of the date hereof, Borrower is indebted to
Lender for the following items in the following amounts:
(i) The principal amount of the Loan of One Hundred Twenty-Five
Million and No/100 Dollars ($125,000,000.00) together with any accrued
but unpaid interest at the rate or rates of interest in effect in
accordance with the terms of the original Note; and
(ii) Lender's unpaid Out-of-Pocket Costs, including, without
limitation, legal fees incurred in connection with the modification of
the terms of the Loan to be effected pursuant to this Agreement, in
the aggregate amount of Thirty-Nine Thousand Two Hundred Forty-Nine
and 55/100 Dollars ($39,249.55).
(b) On the Effective Date, Borrower shall pay to Lender in immediately
available funds all of Lender's unpaid out-of-pocket Costs incurred as of the
Effective Date.
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Section 2.03 Modification Fee. On the Effective Date and in
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consideration of Lender's extending the original Maturity Date of the Loan and
modifying the terms of the Loan in the other respects set forth herein, Borrower
shall pay to Lender in immediately available funds a modification fee in the
amount of Three Hundred Seventy Five Thousand and No/100 Dollars ($375,000.00).
ARTICLE III
AMENDMENT OF ORIGINAL LOAN AGREEMENT
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Section 3.01 Amendment of Original Loan Agreement. On the Effective
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Date, the Original Loan Agreement shall be deemed amended by Borrower and Lender
as follows:
(a) Throughout the Original Loan Agreement, the term "Agreement" shall
be deemed to refer to the Original Loan Agreement as amended by this Agreement,
as such Loan Agreement from time to time may be further amended, modified,
supplemented, restated, or extended.
(b) In Article I of the Original Loan Agreement, the following
definitions are amended as follows:
(i) The definition of "Assignment of Project Documents" is
amended by adding at the end thereof, immediately preceding the
period, the following language: ", as amended by that certain First
Modification to Collateral Assignment of Project Documents dated as of
September __, 1994, as such Assignment of Project Documents may from
time to time be further amended, modified, supplemented, restated, or
extended".
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(ii) The definition of "Assignment of Rents" is amended by adding
at the end thereof, immediately preceding the period, the following
language: ", as further amended by that certain First Amendment to
Collateral Assignment of Leases, Rents, Profits and Income and Pledge
of Accounts dated as of September __, 1994 and effective as of
September __, 1994, as such Assignment of Rents may from time to time
be further amended, modified, supplemented, restated or extended".
(iii) The definition of "Environmental Guaranty" is amended by
adding at the end thereof, immediately proceeding the period, the
following language: ", as reaffirmed by that certain Loan Modification
and Extension Agreement dated as of September __, 1994, as such
Environmental Guaranty may from time to time be further reaffirmed,
amended, modified, supplemented, restated or extended".
(iv) The definition of "Interest Guaranty" is amended by adding
at the end thereof, immediately preceding the period, the following
language: ", as reaffirmed by that certain Loan Modification and
Extension Agreement dated as of September __, 1994, as amended by that
certain First Amendment to Interest Guaranty and Indemnity dated as of
September __, 1994, and as such Interest Guaranty may from time to
time be further reaffirmed, amended, modified, supplemented, restated
or extended".
(v) The definition of "Loan Documents" is amended by adding at
the end thereof, immediately preceding the period, the following
language: ", as such Loan Documents may from time to time be amended,
modified, supplemented, restated, or extended".
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(vi) The definition of "Note" is amended to read in its entirety
as follows:
Note. As used herein, "Note" shall mean that certain Promissory
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Note dated February 27, 1991, made by Borrower to the order of Lender,
in the principal amount of One Hundred Twenty-Five Million and No/100
U.S. Dollars (U.S. $125,000,000.00), as amended by that certain
Allonge dated September __ , 1994, as such Note may from time to time
be further amended, modified, supplemented, restated, or extended.
(c) Sections 3.03(e)(i) and 3.03(e)(ii) of the Original Loan Agreement
are hereby amended to read in their entirety as follows:
(i) In exercising the Conversion Option, Borrower must designate a
single Interest Period that begins on the Conversion Date and
expires on the Maturity Date.
(ii) In exercising the Conversion Option, Borrower must
designate as the Portion of Principal to bear interest at the Fixed
Rate the entire principal balance of the Loan outstanding at such
time.
(d) Section 7.21 of the Original Loan Agreement is hereby amended by
adding the following new paragraph (h) at the end thereof:
(h) Notwithstanding anything in this Section 7.21 to the contrary,
if the Second Amendment to Deed of Trust is not recorded in the Land
Records of District of Columbia at Borrower's request, Borrower shall
not further mortgage, encumber for debt or pledge the Trust Estate,
Revenues or any part thereof or any
8
interest therein (including without limitation, air or development
rights) without Lender's express written consent.
Section 3.02 Amendment of other Loan Documents.
---------------------------------
(a) On the Effective Date, the original Note shall be amended by
Borrower's execution and delivery to Lender of the Allonge in the form of
Exhibit "A" hereto and Lender's affixation of the Allonge to the Original Note
and thereafter shall be effective and interpreted in accordance with its terms
and conditions as so amended.
(b) On the Effective Date, the Original Deed of Trust, the Assignment
of Rents, the Assignment of Project Documents and the Interest Guaranty shall be
modified by, respectively, the Modification to Deed of Trust, the Modification
to Assignment of Rents, the Modification to Assignment of Project Documents and
the First Amendment to Interest Guaranty, by Borrower's, Guarantors' and
Lender's execution and delivery of Exhibits "B", "C", "D" and "I" hereto,
respectively, and thereafter shall be effective and interpreted in accordance
with their respective terms as so modified.
Section 3.03 Reaffirmation of Certain Documents. Guarantors hereby
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absolutely, unconditionally and fully reaffirm all of their guarantees,
obligations and agreements under the Environmental Guaranty and the Interest
Guaranty and Indemnity according to the terms thereof.
Section 3.04 Ratification of Loan Documents. Except as expressly
------------------------------
amended, restated, modified, reaffirmed or extended by this Agreement and the
other Modification Documents, the Loan Documents shall remain in full force and
effect in accordance with their terms. Borrower and Guarantors, as to the Loan
Documents to which each is a party, acknowledge and agree that as of the date
hereof there exist no offsets, defenses, counterclaims, or abatements to the
9
obligations of Borrower or Guarantors thereunder and all obligations of Lender
thereunder have been fully performed.
Section 3.05 Termination of Completion Guaranty. Lender hereby confirms
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and acknowledges that the Completion Guaranty, dated as of February 22, 1991,
made by Guarantors to Lender has been terminated according to the terms
thereunder.
Section 3.06 Termination of Bid Protest Guaranty. Lender hereby confirms
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and acknowledges that the Bid Protest Guaranty, dated as of February 22, 1991,
made by Guarantors to Lender has been terminated according to the terms
thereunder.
ARTICLE IV
LENDER'S FIXED RATE OPTION
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Section 4.01 Lender's Fixed Rate Option. Lender shall calculate and
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notify Borrower on or after the first Business Day of each calendar month (but
not later than the tenth (10th) Business Day of such month) of the Weighted
Average Rate as of the first day of such calendar month. If the Weighted
Average Rate as of the first day of such month is equal to or greater than the
Trigger Rate for the calendar year in which such month occurs, Lender shall have
the right, on and subject to the terms and conditions set forth in this Article
IV ("Lender's conversion Option"), to cause the floating interest rate or rates
then in effect pursuant to the terms of the Note on the Portions of Principal
comprising the entire then-outstanding principal balance of the Loan to be
converted from such floating rate or rates to the Fixed Rate for an Interest
Period equal to the remainder of the Loan Term. Lender shall have no liability
to Borrower by reason of Lender's failure to calculate or give Borrower notice
of the Weighted Average Rate and such failure shall not constitute a default by
Lender under the terms of this Agreement or any other
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Loan Document. The sole consequence of Lender's failure to calculate or give
Borrower notice of the Weighted Average Rate shall be that Lender shall not have
the right to exercise Lender's Conversion option in a calendar month in which,
by the tenth (10th) Business Day of such month, Lender has not calculated and
given Borrower notice of the Weighted Average Rate in effect as of the first day
of such month.
Section 4.02 Exercise of Lender's Conversion Option.
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(a) If (i) Borrower has not theretofore exercised Borrower's
Conversion Option and converted the interest rate or rates on the Loan to the
Fixed Rate pursuant to Article III of the Original Loan Agreement as amended by
this Agreement, (ii) the Weighted Average Rate as of the first day of the
calendar month in which Lender elects to exercise Lender's Conversion Option is
equal to or greater than the Trigger Rate for the calendar year in which such
month occurs, and (iii) Lender has calculated and given Borrower notice of the
Weighted Average Rate not later than the tenth (10th) Business Day of such
month, Lender may thereafter exercise Lender's Conversion Option on any Business
Day during such month by giving Borrower a Trigger Rate Notice.
(b) The representatives of Borrower identified on Schedule 3 to this
Agreement (i) are each individually authorized to transmit to Lender Borrower's
acceptance or rejection of the Fixed Rate obtainable by Lender and offered to
Borrower, as hereinafter provided, and (ii) will be available to Lender by
telephone from 9:00 a.m. New York time until 3:00 p.m. New York time on each
Business Day during the applicable Decision Period (as defined in Section
4.02(c) below). Borrower may change the representatives identified on Schedule
3 to this Agreement by delivering a written notice to Lender identifying one or
more
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representatives of Borrower (and the telephone number of each such
representative) for purposes of this Article IV. Borrower may not change the
representatives identified on Schedule 3 to this Agreement during a Decision
Period.
(c) A "Decision Period" shall mean a period commencing at 9:00 a.m.
New York time on the Business Day next following the date on which the Trigger
Rate Notice is given to Borrower and continuing through and including 3:00 p.m.
New York time on the fourth (4th) Business Day following the date on which the
Trigger Rate Notice is given to Borrower.
(d) Borrower's right to exercise Borrower's Conversion Option under
Article III of the Loan Agreement shall be suspended from the time Lender gives
a Trigger Rate Notice until the expiration of the ensuing Decision Period.
Section 4.03 Implementation of Interest Rate Management Arrangement.
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(a) Lender shall, not later than 3:00 p.m. on the fourth (4th)
Business Day following the date on which the Trigger Rate Notice is given to
Borrower, obtain one or more offers for an Interest Rate Management Arrangement
having a term equal to the remaining Loan Term that, subject to Subsection
4.03(d) hereinbelow, will enable Lender to convert the interest rate or rates on
the entire principal balance of the Loan outstanding at that time to a fixed
rate of interest. Prior to accepting an offer for an Interest Rate Management
Arrangement, Lender shall telephonically quote to Borrower the fixed per annum
interest rate together with all Funding Costs that will result from effectuating
such an Interest Rate Management Arrangement, which rate Borrower shall either
accept or reject within three (3) hours following Lender's telephonic quote to
Borrower. The fixed rate offered by Lender (i) if made applicable to the Loan
prior to February 27, 1998 shall include Lender's spread of seventy one-
hundredths of one percent
12
(0.70%) and shall increase on February 27, 1998 by ten one-hundredths of one
percent (0.10%), thus increasing Lender's aggregate spread to eighty one-
hundredths of one percent (0.80%) and on February 27, 2001 by an additional
twenty one-hundredths of one percent (0.20%), thus increasing Lender's aggregate
spread to one percent (1.00%); (ii) if made applicable to the Loan on or after
February 27, 1998 but prior to February 27, 2001, shall include Lender's spread
of eighty one-hundredths of one percent (0.80%) and shall increase on February
27, 2001 by twenty one-hundredths of one percent (0.20%), thus increasing
Lender's aggregate spread to one percent (1.00%); and (iii) if made applicable
to the Loan on or after February 27, 2001, shall include Lender's spread of one
percent (1.00%).
(b) If Borrower accepts the fixed rate quoted by Lender, Lender shall
use all reasonable efforts to accept and enter into the offered Interest Rate
Management Arrangement. If Lender is able to enter into the offered Interest
Rate Management Arrangement then, commencing on the second (2nd) Business Day
after Lender enters into the offered Interest Rate Management Arrangement (the
"Lender Option Conversion Date") (subject to Section 4.03(d) below), the
interest rate on the entire principal balance of the Loan outstanding at that
time shall, without further notice to or action by Borrower or Lender, bear
interest at the fixed rate quoted by Lender for the remainder of the Loan term,
which shall include Lender's spread as set forth in Section 4.03(a) hereinabove
and shall increase as set forth in Section 4.03(a) hereinabove, which rate shall
constitute the Fixed Rate as defined in the Note. If Lender is unable to obtain
the fixed rate quote accepted by Borrower pursuant to this Section 4.03(b),
Lender shall, until 3:00 p.m. New York time on the final Business Day of the
Decision Period, continue to seek an Interest Rate Management Arrangement that
will result in a Fixed Rate acceptable to Borrower and
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obtainable by Lender. If Lender is unable to obtain a Fixed Rate offered by
Lender and acceptable to Borrower by 3:00 p.m. New York time on the final
Business Day of the Decision Period, Lender shall have the right, in its sole
and absolute discretion, either (i) to accept and enter into an Interest Rate
Management Arrangement satisfactory to Lender in its sole and absolute
discretion in order to convert the interest rate or rates on the entire
principal balance of the Loan outstanding at that time to a fixed rate of
interest or (ii) not to enter into an Interest Rate Management Arrangement and
thereafter, subject to the same terms and conditions hereof, to give another
Trigger Rate Notice and, during the ensuing Decision Period, enter into an
Interest Rate Management Arrangement in the manner provided herein. If, under
clause (i) of the preceding sentence, Lender is able and so elects to enter into
an Interest Rate Management Arrangement then, commencing on the Lender option
Conversion Date (subject to Section 4.03(d) hereinbelow), the interest rate on
the entire principal balance of the Loan outstanding at that time shall, without
further notice to or action by Borrower or Lender, bear interest for the
remainder of the Loan Term at a fixed per annum rate of interest equal to the
fixed rate provided for under the Interest Rate Management Arrangement accepted
by Lender plus Lender's spread as set forth in Section 4.03(a) hereinabove and
shall increase as set forth in Section 4.03(a) hereinabove, which rate shall
constitute the Fixed Rate as defined in the Note.
(c) If (i) Lender is able to contact Borrower and Borrower fails to
accept or reject the fixed rate quoted by Lender pursuant to Section 4.03(a)
hereinabove, or (ii) Borrower rejects the fixed rate quoted by Lender pursuant
to Section 4.03(a) hereinabove, or (iii) Borrower fails by 5:00 p.m. New York
time on the Business Day immediately preceding the last day of the Decision
Period to designate one or more individuals authorized to accept an offered
fixed rate,
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or (iv) Lender is unable to contact Borrower to obtain Borrower's election as to
a proposed fixed rate, Lender shall not accept an offered Interest Rate
Management Arrangement and shall, until 3:00 p.m. New York time on the final
Business Day of the Decision Period, continue to seek an Interest Rate
Management Arrangement that will result in a Fixed Rate acceptable to Borrower.
If Borrower fails to accept a Fixed Rate offered by Lender by 3:00 p.m. New York
time on the final Business Day of the Decision Period, Lender shall have the
right, in its sole and absolute discretion, either (A) to accept and enter into
an Interest Rate Management Arrangement satisfactory to Lender in its sole and
absolute discretion in order to convert the interest rate or rates on the entire
principal balance of the Loan outstanding at that time to a fixed rate of
interest or (B) not to enter into an Interest Rate Management Arrangement and
thereafter, subject to the same terms and conditions hereof, to give another
Trigger Rate Notice and, during the ensuing Decision Period, enter into an
Interest Rate Management Arrangement in the manner provided herein. If, under
clause (A) of the preceding sentence, Lender is able and so elects to enter into
an Interest Rate Management Arrangement then, commencing on the Lender Option
Conversion Date (subject to Section 4.03(d) hereinbelow), the interest rate on
the entire principal balance of the Loan outstanding at that time shall, without
further notice to or action by Borrower or Lender, bear interest for the
remainder of the Loan Term at a fixed per annum rate of interest equal to the
fixed rate provided for under the Interest Rate Management Arrangement accepted
by Lender plus Lender's spread as set forth in Section 4.03(a) hereinabove and
shall increase as set forth in Section 4.03(a), which rate shall constitute the
Fixed Rate as defined in the Note.
(d) Notwithstanding anything to the contrary in this Section 4.03, if,
on the Lender option Conversion Date, the applicable interest rate for one or
more Portions of Principal
15
will be the Eurodollar Rate pursuant to Section 3 of the Note, Lender shall
enter into an Interest Rate Management Arrangement that will become effective
(i) for each such Portion of Principal upon the expiration of the Interest
Period associated with the Eurodollar Rate applicable to such Portion of
Principal and (ii) for all other Portions of Principal on the Lender Option
Conversion Date. In such event, the Fixed Rate shall apply to each such Portion
of Principal bearing interest at a Eurodollar Rate upon the expiration of the
Interest Period associated with such Eurodollar Rate.
(e) Borrower shall reimburse Lender for all Funding Costs and other
Out-of-Pocket Costs incurred by Lender in connection with Lender's entering into
an Interest Rate Management Arrangement under this Article IV.
Section 4.04 Recalculation of Trigger Rate.
-----------------------------
(a) Borrower and Lender acknowledge that the Trigger Rates set forth
on Schedule 1 to this Agreement were calculated using (i) the methodology
illustrated on Schedule 2 to this Agreement and (ii) the "Pre-Tax Net Operating
Income" of the Trust Estate as calculated and set forth by Leggat XxXxxx &
Xxxxxx Appraisal and Consulting Co., Inc. ("Leggat XxXxxx") in that certain re-
examination dated July 11, 1994 (the "Reappraisal") of earlier appraisals
prepared by Leggat XxXxxx of the Trust Estate and Phase I.
(b) If Lender, in its reasonable discretion, determines at any time
during the Loan Term that the Pre-Tax Net Operating Income of the Trust Estate
has for any reason decreased since the date on which Trigger Rates were last
calculated by more than five percent (5t), Borrower shall, if Lender so requests
and at Borrower's sole cost and expense, but subject to Section 4.04(c)
hereinbelow, cause Leggat XxXxxx (or another appraisal firm acceptable to
16
Lender in its reasonable discretion if Leggat XxXxxx is not then in business or
is unable or unwilling to perform in a timely manner the work contemplated by
this Section 4.04(b)) within thirty (30) days of Lender's request to determine
the then-current Pre-Tax Net Operating Income of the Trust Estate using the same
methodology used by Leggat XxXxxx to determine Pre-Tax Net Operating Income for
purposes of the Reappraisal, provided that in determining the then-current Pre-
Tax Net Operating Income of the Trust Estate, Borrower shall cause Leggat XxXxxx
(or such other appraisal firm as provided for above) to use only Revenues
received under Qualifying Space Leases. Lender shall then recalculate each
annual Trigger Rate using (i) the then-current Pre-Tax Net Operating Income as
so redetermined and (ii) the methodology set forth on Schedule 2 to this
Agreement. Lender shall give Borrower notice of the Trigger Rates as so
recalculated by Lender and, from and after the date on which such notice is
given, the Trigger Rates shall for all purposes hereunder be deemed amended to
be the Trigger Rates as so recalculated.
(c) If the Pre-Tax Net Operating Income of the Trust Estate has
decreased by more than five percent (5%) by reason of Space Tenants that occupy
more than five percent (5%) of the rentable space in the Improvements
terminating their Space Leases, then Borrower shall not be required to cause the
Pre-Tax Net Operating Income of the Trust Estate to be redetermined in
accordance with Section 4.04(b) hereinabove until such time as Space Tenants
occupy at least ninety-five percent (95%) of the rentable space in the
Improvements under Qualifying Space Leases.
(d) Trigger Rates shall remain in effect until recalculated in
accordance with this Section 4.04.
17
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
Each of Zuckerman, Linde, and Borrower makes the representations,
warranties and covenants respectively pertaining to himself or itself set forth
in Section 5.01 through and including Section 5.19 hereinbelow as of the date
hereof and again on and as of the Effective Date, all of which shall survive the
execution and delivery of this Agreement.
Section 5.01 Existence. Borrower is and at all relevant times was a
---------
limited partnership duly organized, validly existing and in good standing under
the laws of the District of Columbia. Borrower has and at all relevant times had
the authority, rights and franchises to own its properties, to carry on its
business as now conducted, to perform its obligations under the Loan Documents,
this Agreement, and the other Modification Documents, to complete the Project in
accordance with the Plans, to own and operate the Project as a first-class
commercial office building, and has made all filings in each jurisdiction in
which the character of its business or nature of its properties makes such
filings necessary and where not filing could have a material adverse impact on
its business. Borrower conducts no business, directly or indirectly, except for
the ownership and operation of the Project and of Phase I, and the ownership of
Lot 872.
Section 5.02 Authorization, Enforceable Obligations. Each of
--------------------------------------
Guarantors and Borrower has the authority and legal right to execute, deliver
and perform this Agreement and the Modification Documents to which he or it is a
party and Borrower has taken all necessary partnership action to authorize the
execution, delivery and performance of this Agreement and the Modification
Documents to which it is a party. No consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with any
18
court, Governmental Authority, or third party which has not been obtained is
required for the execution, delivery, and performance by Borrower or Guarantors
of this Agreement or the Modification Documents to which he or it is a party.
This Agreement has been (and, on the Effective Date, each of the Modification
Documents will have been) executed and delivered by each of Borrower and
Guarantors if a party thereto and constitutes (and, on the Effective Date, each
of this Agreement and the Modification Documents will constitute) the legal,
valid and binding obligation of each of Borrower and Guarantors if a party
thereto, enforceable against such persons and entities in accordance with its
terms.
Section 5.03 Conflicting Agreements. Neither the execution nor
----------------------
delivery of any of this Agreement or the Modification Documents nor the
fulfillment of or compliance with the terms and provisions hereof or thereof or
of the Loan Documents, nor the consummation of the transactions contemplated
------------
hereby or by any of the other documents referred to herein, will conflict with
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien (other than the lien of the Loan Documents and the Modification Documents)
upon any of the properties or assets of either of Borrower or Guarantors
pursuant to its partnership agreement, any other contract, any award of any
arbitrator or any agreement, (including any agreement with Borrower's partners
and also including Project Documents), instrument, order, judgment, decree,
statute, law, ordinance, franchise, certificate, permit, rule, regulation or the
like to which any of Borrower or Guarantors is subject, or to or by which their
or its properties or their or its assets or the Trust Estate are bound or
affected.
19
Section 5.04 Organizational Documents. Borrower has furnished Lender
------------------------
with true, correct, and complete copies of the following documents:
(a) with respect to Independence Square, Inc., sole Managing General
Partner of the sole General Partner of Borrower:
(i) The certificate of incorporation of such corporation and
all amendments thereof, certified by the Secretary of State of the state of such
corporation's incorporation, together with a certificate of said Secretary of
State to the effect that the corporation is in good standing therein;
(ii) A certificate from the Secretary of State or comparable
official of the jurisdiction in which the Premises are located (if other than
such corporation's state of incorporation) to the effect that the corporation is
in good standing and qualified to do business therein;
(iii) Bylaws certified to Lender by the secretary of the
corporation; and
(iv) A certificate of the secretary of the corporation
certifying (A) resolutions of the shareholders and directors of the corporation
authorizing the consummation of the transactions contemplated by the
Modification Documents to which such corporation is a party or a signatory and
the execution, delivery, and performance of each of the Modification Documents
to which such corporation is a party or a signatory and (B) the incumbency and
signature of each of the officers of the corporation to execute any Modification
Documents; and
(b) With respect to Boston Southwest Associates Limited
Partnership, sole General Partner of Borrower:
20
(i) A true, correct and complete copy of its
partnership agreement, together with all amendments thereto, as
currently in effect, certified by a Person satisfactory to Lender in
its sole discretion.
(ii) All certificates filed or required to be filed by
the partnership in the jurisdiction of its formation and the
jurisdiction where the Premises are located in order for it to do
business in those jurisdictions; and
(iii) Such evidence as may be available from the
Secretary of State or comparable official of the jurisdiction of the
partnership's formation to the effect that the partnership continues
to exist and is in good standing.
Section 5.05 No Material Litigation. No litigation, investigation or
----------------------
administrative proceeding of or before any court, arbitrator, or Governmental
Authority is pending, or has been threatened in writing by potential claimants
or their counsel, against any of Borrower or Guarantors or any of their assets
or that would, if adversely determined, be likely to have a material adverse
effect on (a) Borrower's or either Guarantor's ability to perform its or his
obligations under this Agreement, the other Loan Documents, or the Modification
Documents; (b) the validity or enforceability of this Agreement, the other Loan
Documents, or the Modification Documents; or (c) Lender's security under this
Agreement, any other Loan Document, or the Modification Documents. No notice
has been received by Borrower of any proceeding to condemn, purchase, or
otherwise acquire the Trust Estate or any part thereof or interest therein, and,
to the best of Borrower's knowledge, no such proceeding has been threatened by a
duly authorized official of a Governmental Authority acting in his official
capacity.
21
Section 5.06 Compliance with Applicable Laws. Each of Borrower,
-------------------------------
Guarantors, the Project, and the Trust Estate is in compliance with the
requirements of all Laws, the failure to comply with which would materially and
adversely affect Borrower's or either Guarantor's ability to perform its or his
obligations under this Agreement, any of the other Loan Documents, or the
Modification Documents, and no written notice of non-compliance with any of the
foregoing has been received by Borrower or either Guarantor from any
Governmental Authority. No consent, approval or authorization, or registration,
declaration or filing with any Governmental Authority or any other Person is
required for the valid execution, delivery and performance by Borrower and
Guarantors of this Agreement, the other Loan Documents, or the Modification
Documents, or the carrying out of the transactions contemplated of hereby or
thereby.
Section 5.07 Information Delivered. All facts, studies, reports,
---------------------
loan applications, financial statements, operating cost histories, and all other
documents and data, financial or otherwise, respecting Borrower and Guarantors,
or contracts, permits, licenses, or other matters affecting any part of the
Trust Estate or the operation thereof which have been furnished to Lender or
Lender's counsel by Borrower or Borrower's counsel or Guarantors or Guarantors'
counsel were, to the best of Borrower's and Guarantors' knowledge, true,
correct, and complete in all material respects when made or delivered to Lender,
or, if copies thereof have been so furnished, such copies are, to the best of
Borrower's and each Guarantor's knowledge, true, correct and complete in all
material respects, and neither Borrower nor any and Guarantor has failed to
disclose any data or documents necessary to make the foregoing true, accurate,
complete in all material respects and not materially misleading.
22
Section 5.08 True Statement. Neither this Agreement, any other Loan
--------------
Document, the Modification Documents nor any other document delivered to Lender
in connection with the Loan contains, or will contain when made, any untrue
statement of a material fact by Borrower or Guarantors and by this reference all
representations and warranties made in any of the Loan Documents and the
Modification Documents are hereby made a part of this Agreement to the same
extent as if fully set forth herein.
Section 5.09 No Event of Default. There exists no Event of Default
-------------------
under any of the Loan Documents nor any fact or circumstance which, with the
passage of time, giving of notice or action by third parties could become an
Event of Default under any of the Loan Documents or the Modification Documents.
Section 5.10 Space Leases. Set forth on Exhibit "H" hereto is a
------------
true, correct, and complete list of all Space Leases now in effect with respect
to the Trust Estate. Except for such Space Leases and the Permitted Exceptions,
there are no leases, licenses, tenancy agreements, contracts, or understandings,
oral or written, pursuant to which any person or entity has or claims any right
to use or occupy any portion of the Trust Estate. Except as set forth on such
Exhibit "H", there are no amendments, modifications, supplements, or
understandings, oral or written, which affect any of the Space Leases. All
other information set forth on Exhibit "H" with respect to the Space Leases is
true and correct in all material respects. Other than as set forth on Schedule
4, no notice of default has been given by any party to any Space Lease which
default remains uncured, there are no material defaults under the provisions of
any of the Space Leases, and all conditions to the effectiveness and continuing
effectiveness of each Space Lease required to be satisfied as of the date hereof
have been satisfied.
23
Section 5.11 Financial Statements of Borrower. Borrower has
--------------------------------
furnished to Lender the financial statements of Borrower for its fiscal year
ended December 31, 1993, consisting of balance sheets and statements of income
and retained earnings and changes in financial position for the years then
ended, certified by the chief financial officer of Borrower's general partner as
being true, complete, and correct; the foregoing financial statements are true
and correct and contain no material misstatement or omission, and fairly present
financial position, assets, and liabilities of Borrower as of the respective
dates thereof and the results of its operations for the respective periods then
ended; since the respective dates of the foregoing financial statements, there
has been no material adverse change in the assets, liabilities, financial
position, or results of operations of Borrower; and Borrower has not incurred
any obligation or liability which would materially and adversely affect its
business operations or its interest in the Trust Estate.
Section 5.12 Financial Statements of Guarantors. Borrower has
----------------------------------
furnished or caused to be furnished to Lender the financial statements of each
Guarantor for the fiscal year ending December 31, 1993, certified by the
respective Guarantor (a) as being true, complete, and correct; (b) containing no
material misstatement or omission, and fairly presenting the financial position,
assets, and liabilities of Guarantor as of the date thereof; (c) since the date
of the foregoing financial statements, there has been no material adverse change
in the assets, liabilities, or financial position of Guarantor; and (d)
Guarantor not having incurred any obligation or liability which would materially
and adversely affect his financial position.
Section 5.13 Taxes and Other Assessments. Each of Borrower and
---------------------------
Guarantors has filed all federal, state, and local tax returns and other reports
required by all laws to have been filed prior to the date hereof; has paid or
caused to be paid all taxes, assessments, and other
24
governmental charges that are due and payable prior to the date hereof; and has
made adequate provision for the payment of such taxes, assessments, or other
charges accruing but not yet payable. Neither Borrower nor any of Guarantors
has knowledge of any deficiency or additional assessment in a materially
important amount in connection with any taxes, assessments, or charges not
provided for on its respective books.
Section 5.14 No Liens. To the best of Borrower's knowledge, there
--------
are no liens or other impositions against the Trust Estate or any part thereof
except as may be included among the Permitted Exceptions. To the best of
Borrower's knowledge, there do not exist any unpaid conditional sales contracts,
chattel mortgages, security agreements, or financing statements in respect of
the Trust Estate, or any part thereof, except such as may be included among the
Permitted Exceptions. Without limiting the foregoing, the Trust Estate is, to
the best of Borrower's knowledge, free from due and unpaid water charges, sewer
rents, taxes, assessments, and other similar liens and/or impositions,
mechanics' and materialmen's liens (xxxxxx, or inchoate), and any other Liens
(other than liens arising with respect to non-delinquent property taxes) whether
or not disclosed in the Title Policies.
Section 5.15 Trust Estate. There has occurred no material damage to
------------
any part of the Trust Estate. No part of the Trust Estate has been taken in
condemnation or other like proceedings. Borrower has received no notice of any
(i) proceedings in eminent domain or any similar proceeding or transaction with
respect to any part of the Trust Estate; or (ii) material change in the zoning
of the Land or the use thereof as permitted by law and, to the best of
Borrower's knowledge, no such proceeding or change has been threatened by a duly
authorized official of a Governmental Authority acting in his official capacity.
25
Section 5.16 No Bankruptcy. As of the date hereof, there is no (a)
-------------
filing by or against Borrower or any of Guarantors of a voluntary or involuntary
case or petition in bankruptcy, insolvency, or reorganization under the Federal
Bankruptcy Code as now or hereafter constituted or under any other laws of
similar nature, which bankruptcy, insolvency, or reorganization in the case of
an involuntary filing has not been dismissed; (b) appointment of a receiver or
trustee for Borrower, any of the foregoing persons or entities, or the Trust
Estate, or any part thereof; (c) making by Borrower or any of the foregoing
persons or entities of an assignment for the benefit of creditors; or (d) any
similar act or occurrence.
Section 5.17 Absence of Transfer. Since the date of the original
-------------------
funding of the Loan, there has not been any Transfer and there is not now in
existence any contract providing for or contemplating a Transfer.
Section 5.18 Certificates. Borrower has delivered to Lender all such
------------
permits, licenses, variances, approvals, consents, and other certificates or
documents with respect to the Trust Estate (collectively, the "Certificates") as
have been issued as of the date hereof by all relevant governmental authorities
of competent jurisdiction which to the best of Borrower's knowledge are
necessary to evidence the legal right and ability of Borrower to operate the
Trust Estate as it currently is operated. Borrower will deliver to Lender
copies of all other necessary Certificates as they are subsequently obtained.
Section 5.19 Representations and warranties Loan Documents. On the
---------------------------------------------
Effective Date, Borrower shall be deemed to represent and warrant to Lender that
all representations and warranties made by Borrower which are set forth in the
Original Loan Agreement, the Original
26
Deed of Trust and in the other Loan Documents are true, correct, and complete in
all material respects as of and as if made on the Effective Date, subject only
to the following qualifications:
(a) The representations and warranties that are remade pursuant
to this Section 5.19 shall take into account the amendments to the Loan
Documents effected on the Effective Date by this Agreement and the Modification
Documents.
(b) The representations and warranties made in Sections 6.01,
6.05, 6.13, and 6.18 of the Original Loan Agreement shall not be deemed to be
remade as of the Effective Date; instead the representations and warranties set
forth in Sections 5.01 and 5.05 of this Agreement are substituted -therefor and
are represented and warranted by Borrower as true and correct on the Effective
Date.
Section 5.20 Event of Default. It shall constitute an Event of
----------------
Default under the Loan Agreement (as in effect after giving application to the
changes set forth in this Agreement) and other Loan Documents if any
representation or warranty set forth in, made, or remade pursuant to this
Article V shall prove to have been untrue, incorrect, incomplete, or misleading
in any material respect when made or remade.
ARTICLE VI
EFFECTIVE DATE
--------------
Section 6.01 Effective Date. The "Effective Date", as used in this
--------------
Agreement, shall be that date on which all of the conditions precedent set forth
in this Section 6.01 have been satisfied or, in Lender's absolute discretion,
waived by Lender. Upon the satisfaction of all of the conditions precedent set
forth in this Section 6.01 or the waiver thereof by Lender, in
27
Lender's absolute discretion, Borrower and Lender shall execute the certificate
attached hereto as Exhibit "I" confirming the Effective Date.
(a) Lender shall have received a payment from Borrower of (i)
the modification fee due upon the Effective Date in the amount of Three Hundred
and Seventy-Five Thousand and No/100 Dollars ($375,000.00) and (ii) Lender's
Out-of-Pocket Costs.
(b) There shall exist no Event of Default under any of the Loan
Documents nor any fact or circumstance which, with the passage of time, giving
of notice or action by third parties could become an Event of Default under any
of the Loan Documents and Lender shall have received a certificate executed and
delivered by Borrower and Guarantors, in form and substance satisfactory to
Lender, confirming such fact.
(c) All representations and warranties set forth in this
Agreement, the Modification Documents and the other Loan Documents, as amended
and remade in accordance with the terms of this Agreement, shall be true,
correct, and complete in all material respects as if remade on and as of the
Effective Date and Lender shall have received a certificate executed and
delivered by Borrower and Guarantors, in form and substance satisfactory to
Lender, confirming such fact.
(d) All covenants to be performed by Borrower and Guarantors
on or before the Effective Date shall have been performed and Lender shall have
received a certificate executed and delivered by Borrower and Guarantors in form
and substance satisfactory to Lender, confirming such fact.
(e) The Modification Documents shall have been duly executed and
delivered by all parties thereto and shall be binding and enforceable upon the
parties thereto in accordance
28
with their terms. Those of the Modification Documents to be recorded or filed
shall have been successfully recorded or filed, as appropriate; provided,
however, that failure to record the Second Amendment to Deed of Trust shall not
be deemed to prevent the occurrence of the Effective Date.
(f) Lender shall have received and approved such endorsement or
endorsements to the Title Policies (and all outstanding reinsurance agreements)
as Lender may deem necessary or appropriate to insure that as of the Effective
Date, the Original Deed of Trust as amended by the Modification to Deed of Trust
will be a valid first lien securing the full amount of the Loan, on a good and
indefeasible title to the Trust Estate, vested in Borrower, free and clear of
all encumbrances (including without limitation xxxxxx and inchoate mechanics'
and materialmen's liens, whether or not filed) except the Permitted Exceptions
(and that all reinsurance agreements remain in effect with respect to the Title
Policies as so endorsed).
(g) Lender shall have received such opinions from counsel to
Borrower and Guarantors, in form and substance reasonably satisfactory to
Lender, as Lender may in its discretion require in respect of the Modification
Documents, this Agreement, the other Loan Documents, and any other documents,
including, without limitation, that the consummation of the transactions
contemplated by the Modification Documents and this Agreement, will not violate
any law, statute, rule, regulation or order of any court or Governmental
Authority applicable to any of Borrower or Guarantors or to which any of the
property of any of such Persons may be subject.
29
(h) There shall have been delivered to Lender with respect to
each general Partner of Borrower and each general Partner of a general Partner
of Borrower those organizational documents required to be delivered pursuant to
Section 5.04 hereof.
(i) Lender shall have received evidence satisfactory to Lender
that there are no conditional sales contracts, chattel mortgages, leases of
personalty, financing statements, or title retention agreements which affect the
Premises.
(j) Lender shall have received and approved all financial
information reasonably requested by Lender concerning Borrower and Guarantors.
(k) All instruments and agreements in connection with the
transactions contemplated by this Agreement and the Modification Documents shall
be satisfactory in form and substance to Lender in its sole but reasonable
discretion.
Section 6.02 Termination. If the Effective Date has not occurred by
-----------
October 31, 1994, or if, prior to such date an Event of Default shall occur,
then, in its absolute discretion, Lender may terminate this Agreement, in which
case (i) this Agreement shall, except where otherwise expressly provided, be
null, void, and of no further force or effect and (ii) all original Loan
Documents shall remain in effect in accordance with their terms.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.01 Entire Agreement; Exhibits and Schedules. This
----------------------------------------
Agreement, taken together with all of the other Loan Documents (as modified by
this Agreement), the Modification Documents and other documents delivered by
Borrower and Guarantors embodies the entire agreement with respect to the
subject matter hereof, and supersedes or incorporates all prior
30
negotiations or agreements written and oral. The Exhibits and Schedules
attached to this Agreement are incorporated herein by this reference and made a
material part hereof unless otherwise stated herein.
Section 7.02 Counterparts. This Agreement may be executed in any
------------
number of counterparts with the same effect as if the parties hereto had signed
the same document. All such counterparts shall constitute one instrument.
Section 7.03 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the District of Columbia.
Section 7.04 Severability. If any of the terms and provisions
------------
specified herein is held by a court of law to be in violation of any applicable
local, state or federal ordinance, statute, law, administrative or judicial
decision, or public policy, and if such court should declare such term or
provision to be illegal, invalid, unlawful, void, voidable, or unenforceable as
written, then such provision shall be given full force and effect to the fullest
possible extent that it is legal, valid and enforceable, and the remainder of
the terms and provisions herein shall be construed as if such illegal, invalid,
unlawful, void, voidable or unenforceable term or provision was not contained
therein.
Section 7.05 Successors and Assigns. All covenants and agreements
----------------------
herein shall bind the respective successors and assigns of the parties hereto
(but this provision is not intended nor shall it be construed to permit Borrower
or any of Guarantors to transfer or assign its or their rights and obligations
hereunder or under the Loan Documents except as permitted by the provisions of
the Loan Documents), whether so expressed or not, and all such covenants shall
31
inure to the benefit of such respective nominees, successors and assigns,
whether so expressed or not.
Section 7.06 Time of the Essence. Time is of the essence with regard
-------------------
to the performance of the terms and provisions of this Agreement.
Section 7.07 Headings. The titles and headings of Articles and
--------
Sections of this Agreement are intended for convenience only, and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Section 7.08 Notices. Any notice, request, demand, instruction or
-------
other communication given in connection with this Agreement shall be in writing
and shall be given in the manner provided in the Loan Agreement at the addresses
set forth in the Loan Agreement.
Section 7.09 Survival. The terms, covenants, representations, and
--------
warranties in this Agreement shall survive the consummation of the transactions
contemplated hereby.
IN WITNESS WHEREOF, the undersigned have executed this Loan
Modification and Extension Agreement as of the day and year first written above.
SOUTHWEST MARKET LIMITED
PARTNERSHIP, a District of Columbia
limited partnership
By: Boston Southwest Associates Limited
Partnership, a Massachusetts limited
partnership, General Partner
ATTEST: By: Independence Square, Inc., a
Delaware corporation, its
Managing General Partner
By:
----------------------------------- ------------------------------------
Name: Name:
Title:
32
WITNESS:
------------------------------------ ----------------------------------------
Name: XXXXXXXX X. XXXXXXXXX (signing solely
to evidence those obligations and
agreements of Guarantor set forth
herein)
WITNESS:
------------------------------------ ----------------------------------------
Name: XXXXXX X. XXXXX (signing solely to
evidence those obligations and
agreements of Guarantor set forth
herein)
ATTEST: THE SUMITOMO BANK, LIMITED, a Japanese
banking institution, acting through its
NEW YORK BRANCH
By:
------------------------------------ -------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Joint General Manager
33
EXHIBIT "A"
ALLONGE
THIS ALLONGE ("Allonge") made as of the _____ day of September, 1994
by and between THE SUMITOMO BANK, LIMITED, a Japanese banking institution acting
through its NEW YORK BRANCH ("Lender") and SOUTHWEST MARKET LIMITED PARTNERSHIP,
a limited partnership organized and existing under the laws of the District of
Columbia ("Borrower");
WITNESSETH:
WHEREAS, Borrower and Lender are the parties to that certain
Construction Loan Agreement dated as of February 22, 1991, pursuant to which
Lender advanced to Borrower the aggregate principal amount of One Hundred
Twenty-Five Million and No/100 Dollars ($125,000,000); and
WHEREAS, the advances made by Lender to Borrower under the
Construction Loan Agreement identified above and Borrower's obligation to repay
same with interest are evidenced by that certain Promissory Note made by
Borrower as of February 27, 1991 to the order of Lender in the original
principal amount of up to One Hundred Twenty-Five Million and No/100 Dollars
($125,000,000.00) (the "Note"); and
WHEREAS, Borrower's obligations under the Construction Loan Agreement
and Promissory Note identified above and under the other "Loan Documents" as
defined in the Construction Loan Agreement are secured by, among other things,
that certain Construction Loan Deed of Trust and Security Agreement made by
Borrower as of February 22, 1991 and effective as of February 27, 1991 to Xxxxxx
X. Xxxxxx and Xxxxxx X. Xxxxx for the benefit of Lender; and
WHEREAS, Borrower, Xxxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxx, and Lender
have entered into that certain Loan Modification and Extension Agreement dated
as of September __, 1994 (the "Extension Agreement"), pursuant to which Borrower
and Lender have agreed, among other things, to execute and deliver this Allonge
in order to modify certain terms of the Note in the manner set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in accordance with the terms
of the Extension Agreement, Borrower and Lender hereby agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
-----------
have the meanings given to such terms in the Construction Loan Agreement
identified above, as amended, modified, and supplemented by the Extension
Agreement, and as hereafter amended, modified, supplemented or restated (the
Construction Loan Agreement, together with all amendments,
34
modifications, supplements and restatements thereto and thereof being
hereinafter referred to as the "Loan Agreement").
2. Incorporation of Allonge. This Allonge shall be appended to and
------------------------
incorporated into and shall be a part of the Note.
3. Amendment of Note. The Note shall be and hereby is amended as follows:
-----------------
a. Deed of Trust. In Section 1 of the Note, the definition of Deed
-------------
of Trust is hereby amended to read in its entirety as follows:
"Deed of Trust" shall mean that certain Construction Loan Deed of
-------------
Trust and Security Agreement with an effective date of February 27, 1991
between Borrower and Lender, as amended by that certain First Amendment to
Construction Loan Deed of Trust and Security Agreement dated as of
September 9, 1994 and effective as of September 21, 1994, by and among
Lender, Borrower and others, securing this Note and encumbering certain
property located in the District of Columbia, as more particularly
described therein, as such Deed of Trust may from time to time be amended,
modified, supplemented or restated.
b. Eurodollar Rate. In Section 1 of the Note, the definition of
---------------
Eurodollar Rate is hereby amended to read in its entirety as follows:
"Eurodollar Rate" shall mean (a) for the period commencing on and
---------------
including September __, 1994 and continuing through but not including
February 27, 1998, LIBOR plus seventy one-hundredths of one percent
(0.70%), (b) for the period commencing on and including February 27, 1998
and continuing through but not including February 27, 2001, LIBOR plus
eighty one-hundredths of one percent (0.80%), and (c) for the period
commencing on and including February 27, 2001 and continuing through but
not including February 27, 2003, LIBOR plus one percent (1.00%).
c. Fixed Rate. In Section 1 of the Note, the definition of Fixed
----------
Rate is hereby amended to read in its entirety as follows:
"Fixed Rate" shall mean the fixed per annum rate of interest made
----------
applicable to the Loan pursuant to Article III of the Loan Agreement or
Article IV of the Extension Agreement, which rate (a) if made
applicable to the Loan prior to February 27, 1998 shall include
Lender's spread of seventy one-hundredths of one percent (0.70%) and
shall increase on February 27, 1998 by ten one-hundredths of one
percent (0.01%), thus increasing Lender's aggregate spread to eighty
one-hundredths of one percent (0.80%) and on February 27, 2001 by an
additional twenty one-hundredths of one percent (0.20%), thus
increasing Lender's aggregate spread to one percent (l.0%); (b) if made
applicable to the Loan on or after February 27, 1998 but prior to
February 27, 2001, shall include Lender's spread of eighty one-
hundredths of one percent (0.80%) and shall
35
increase on February 27, 2001 by twenty one-hundredths of one percent
(0.20%), thus increasing Lender's aggregate spread to one percent
(1.00%); and (c) if made applicable to the Loan on or after February
27, 2001, shall include Lender's spread of one percent (1.00%).
d. Funding Costs. In Section 1 of the Note, the definition of
-------------
Funding Costs is hereby amended by adding after each instance in such definition
of the term "Loan Agreement" the following language:
or the Loan Extension and Modification Agreement dated September __,
1994 by and between Lender and Borrower
e. Loan Agreement. In Section 1 of the Note, the definition of
--------------
Loan Agreement is hereby amended to read in its entirety as follows:
"Loan Agreement" shall mean that certain Construction Loan
--------------
Agreement, dated as of February 22, 1991, between Borrower and Lender,
as amended by that certain Loan Modification and Extension Agreement,
dated as of September __, 1994, by and among Borrower, Xxxxxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxx, and Lender, as such Loan Agreement may from
time to time be further amended, modified, supplemented or restated.
f. Maturity Date. In Section 1 of the Note, the definition of
-------------
Maturity Date is hereby amended to read in its entirety as follows:
"Maturity Date" shall mean February 27, 2003 or, if such date
-------------
is not a Business Day, the first Business Day immediately following
February 27, 2003.
g. Prime Rate. In Section 1 of the Note, the first sentence of
----------
the definition of Prime Rate is hereby amended to read in its entirety as
follows :
"Prime Rate" shall mean the floating commercial loan interest
----------
rate of Citibank, N.A., publicly announced from time to time as its
"Prime Rate"; except that during the last two (2) weeks of every
calendar quarter ("Two-Week Period") the Prime Rate shall mean the sum
of (a) LIBOR for an Interest Period equal to and coincident with such
Two-Week Period plus (b)(i) during the period commencing on and
including September __, 1994 and continuing through but not including
February 27, 1998, seventy one-hundredths of one percent (0.70%), (ii)
during the period commencing on and including February 27, 1998 and
continuing through but not including February 27, 2001, eighty one-
hundredths of one percent (0.80%), and (c) during the period commencing
on and including February 27, 2001 and continuing through but not
including February 27, 2003, one percent (1.00%).
h. Modification of Section 3(b).
----------------------------
36
(i) The fourth sentence of Section 3(b) of the Note is
hereby amended to read in its entirety as follows:
The Fixed Rate may not be designated for any Portion of Principal that
does not consist of the entire outstanding principal balance of the
Loan or for an Interest Period that ends on any day other than the
Maturity Date.
(ii) The following language is hereby added at the end of
Section 3(b) of the Note:
Notwithstanding anything contained in this Section 3(b) to the
contrary, for that Portion of Principal equal to the amount of the
quarterly principal payment next due in accordance with Section 6(a) of
this Note, Borrower shall not be entitled to elect an Interest Period
for the Eurodollar Rate, if applicable, which would extend beyond the
applicable principal payment date.
i. Modification to Section 3(d). Section 3(d) of the Note is
----------------------------
hereby amended by deleting "(i)" in the first line thereof and deleting the
second and third sentences thereof.
j. Amortization. At the end of Section 6(a) of the Note, the
------------
following language is hereby added:
Anything in the preceding sentence to the contrary notwithstanding,
Borrower shall, regardless of the interest rate or rates then in effect
under this Note, on each December __, March __, June __, and September 26,
prior to the Maturity Date (or the next preceding Business Day, if any of
such dates is not a Business Day), pay to Lender for application to the
outstanding principal balance of this Note (a) Two Hundred Eighty-One
Thousand and Two Hundred Fifty Dollars ($281,250) commencing with December
__, 1994 and continuing through and including December __, 1997, and (b)
Three Hundred Seventy-Five Thousand Dollars ($375,000) commencing on March
__, 1998 and continuing through and including December __, 2002. Each such
prepayment shall be deemed to be a voluntary prepayment for all purposes
under this Section 6 and the other provisions of this Note and the other
Loan Documents.
k. Modification of Section 6(b). Clause (A) of Section 6(b) is
----------------------------
hereby amended to read in its entirety as follows:
(A) the Fixed Rate less (1) during the period from and including September
__, 1994 to but not including February 27, 1998, seventy one-hundredths
percent (0.70%); (2) during the period from and including February 27, 1998
to but not including February 27, 2001, eighty one-hundredths percent
(0.80%); and (3) during the period from and including February 27, 2001 to
but not including the Maturity Date, one percent (1.00%) over
37
l. Late Charge. The words "or any quarterly payment of principal
-----------
to be made under Section 6(a) hereinabove" are hereby added in the first
sentence of Section 25 after the words "provided for herein" and before the
words "shall not be paid when due".
4. Reaffirmation of Note. Except as expressly amended by this
---------------------
Allonge, the Note remains in full force and effect in accordance with its terms.
Borrower acknowledges and agrees that as of the date hereof there exist no
offsets, defenses, counterclaims or abatements to the obligations of Borrower
under the Note.
5. Counterparts. This Allonge may be executed in counterparts, each
------------
of which shall be deemed an original, but all of which taken together constitute
one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Allonge to be
duly executed, delivered and affixed to that certain Promissory Note made by
Borrower as of February 27, 1991 to the order of Lender in the original
principal amount of up to One Hundred Twenty-Five Million and No/100 Dollars
($125,000,000.00), all as of the day and year first above written.
ATTEST: THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH, Lender
By:
------------------------------------- -----------------------------------
Title: Xxxxxx X. Xxxxxxx, Xx.
Joint General Manager
SOUTHWEST MARKET LIMITED
PARTNERSHIP, a District of Columbia
limited partnership, Borrower
By: Boston Southwest Associates
Limited Partnership, a
Massachusetts limited partnership,
General Partner
ATTEST: By: Independence Square, Inc., a
Delaware corporation, its
managing General Partner
By:
------------------------------------- -------------------------------
Title: Name:
Title:
38
EXHIBIT "B"
AFTER RECORDING RETURN TO:
Commercial Settlements, Inc.
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Xx.
FOR DELIVERY TO:
Xxxxxx, Xxxx & Xxxxxxxx
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
SECOND AMENDMENT TO CONSTRUCTION LOAN DEED OF
TRUST
AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO CONSTRUCTION LOAN DEED OF TRUST AND SECURITY
AGREEMENT (this "Second Amendment to Deed of Trust") is made as of the _____ day
of September, 1994, and effective as of the _____ day of __________, 1994, by
and among SOUTHWEST MARKET LIMITED PARTNERSHIP, a District of Columbia limited
partnership ("Trustor"), THE SUMITOMO BANK, LIMITED, a Japanese banking
institution acting through its NEW YORK BRANCH ("Beneficiary"), and XXXXXX X.
XXXXXX and XXXXXX X. XXXXX, Trustees, either of whom may act (collectively,
"Trustee");
00
X X X X X X X X X X:
-------------------
WHEREAS, Beneficiary and Trustor are the parties to that certain
Construction Loan Agreement dated as of February 22, 1991, by and between
Trustor and Beneficiary (the "Original Loan Agreement"); and
WHEREAS, Trustor is justly indebted to Beneficiary in the principal
sum of XXX XXXXXXX XXXXXX-XXXX XXXXXXX XXX X0/000 XXXXXX XXXXXX DOLLARS (U.S.
$125,000,000), such amount having been advanced by Beneficiary to Trustor
pursuant to the Original Loan Agreement and being evidenced by that certain
Promissory Note (the "Original Note"), dated February 27, 1991, in the principal
amount of One Hundred Twenty-Five Million and No/100 Dollars ($125,000,000); and
WHEREAS, the Original Note is secured by that certain Construction
Loan Deed of Trust and Security Agreement (the "Initial Deed of Trust"), by and
among Trustor, Beneficiary and Trustee, dated as of February 22, 1991 and
effective as of February 27, 1991, which was recorded in the Land Records of the
District of Columbia on February 27, 1991 as Instrument No. 10516; and
WHEREAS, the Initial Deed of Trust was amended by that certain First
Amendment to Construction Loan Deed of Trust and Security Agreement (the "First
Amendment to Deed of Trust"), by and among Trustor, Beneficiary and Trustee,
dated as of September 9, 1994 and effective as of September 21, 1994, which was
recorded in the Land Records of the District of Columbia on September 21, 1994
as Instrument No. 76268 (the Initial Deed of Trust as amended by the First
Amendment to Deed of Trust shall hereinafter be referred to as the "Original
Deed of Trust"); and
40
WHEREAS, Beneficiary and Trustor have agreed to amend the Original
Loan Agreement, the Original Note and the Original Deed of Trust pursuant to
that certain Loan Modification and Extension Agreement, dated as of September
__, 1994 (the "Modification Agreement"), by and among Trustor, Beneficiary, and
Xxxxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxx (collectively "Guarantors"); and
WHEREAS, Beneficiary and Trustor desire with this document to amend
and modify the Original Deed of Trust in accordance with the Modification
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings given them in the original Deed of Trust;
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Trustor hereby covenants and
agrees with Beneficiary as follows:
Section 1. General Definitions. The following terms defined in the
-------------------
Original Deed of Trust are hereby redefined as follows:
(a) Assignment of Project Documents. Throughout the Original Deed
-------------------------------
of Trust, the term "Assignment of Project Documents" shall be deemed to refer to
that certain Collateral Assignment of Project Documents, dated as of February
27, 1991, by and between Trustor as assignor and Beneficiary as assignee, as
amended by that certain First Modification to Collateral Assignment of Project
Documents, of even date herewith, as such Assignment of Project Documents from
time to time may be further amended, modified, supplemented, restated or
extended.
41
(b) Assignment of Rents. Throughout the Original Deed of Trust, the
-------------------
term "Assignment of Rents" shall be deemed to refer to that certain Collateral
Assignment of Leases, Rents, Profits and Income and Pledge of Accounts, dated as
of February 22, 1991 and effective as of February 27, 1991, by and between
Trustor as assignor and Beneficiary as assignee, recorded in the Land Records of
the District of Columbia on February 27, 1991 as Instrument No. 10517, as
amended by that certain First Amendment to Collateral Assignment of Leases,
Rents, Profits and Income and Pledge of Accounts, bearing date of September __,
1994 and effective as of September __, 1994, as such Assignment of Rents from
time to time may be further amended, modified, supplemented, restated or
extended.
(c) Environmental Guaranty. Throughout the Original Deed of Trust,
----------------------
the term "Environmental Guaranty" shall be deemed to mean the Environmental
Guaranty from Guarantors to Beneficiary, dated February 22, 1991, as reaffirmed
by the Modification Agreement, as such Environmental Guaranty may from time to
time be further reaffirmed, amended, modified, supplemented, restated or
extended.
(d) Interest Guaranty. Throughout the Original Deed of Trust, the
-----------------
term "Interest Guaranty" shall be deemed to mean the Interest Guaranty and
Indemnity from Guarantors to Beneficiary, dated February 22, 1991, as amended by
that certain First Amendment to Interest Guaranty and Indemnity dated as of
September __, 1994, by and between Beneficiary and Guarantors, as reaffirmed by
the Modification Agreement, as such Interest Guaranty may from time to time be
further reaffirmed, amended, modified, supplemental, restated or extended.
42
(e) Loan Agreement. Throughout the original Deed of Trust, the term
--------------
"Loan Agreement" shall be deemed to refer to the Original Loan Agreement, as
amended by the Modification Agreement, as such Loan Agreement from time to time
may be further amended, modified, supplemented, restated or extended.
(f) Note. Throughout the Original Deed of Trust, the term "Note"
----
shall be deemed to refer to the Original Note, as amended by that certain
Allonge dated September __, 1994, as such Note may from time to time be further
amended, modified, supplemented, restated or extended.
(g) Out-of-Pocket Cost. The definition of "Out-of-Pocket Costs" is
------------------
amended as follows:
(i) The following is added in the fourth (4th) line thereof,
immediately following the words "third parties": "and to affiliated third
parties (so long as such costs, fees and expenses to affiliated third
parties do not exceed such costs, fees or expenses as would be incurred in
a transaction with an unaffiliated third party)".
(ii) The following is added in the fifth (5th) line thereof,
immediately following the word "limitation,": "Funding Costs, ".
Section 2. Representations and Warranties. Trustor hereby represents and
------------------------------
warrants that all of the representations and warranties set forth in the
original Deed of Trust other than those set forth in Section 1.21 and 1.23
(which Trustor shall not be deemed to have remade) are true, correct and
complete as of and as if made again on the date hereof.
Section 3. Reaffirmation of Original Indebtedness. This Second Amendment
--------------------------------------
to Deed of Trust shall not constitute a refinancing of the Indebtedness nor
shall anything contained herein or
43
in any other agreement or instrument between Trustor and Beneficiary constitute,
or be deemed to constitute, any limitation on the validity or enforceability or
priority of the Original Note as amended and restated by an Allonge of even date
herewith, the Original Deed of Trust as amended hereby or any other instrument
or agreement securing payment of, evidencing or otherwise pertaining to the
Indebtedness nor shall this Second Amendment to Deed of Trust be deemed to
create any interest different from that created by the Original Deed of Trust,
which interest continues unimpaired and in full force and effect in accordance
with the terms of the Original Deed of Trust as amended and modified by this
Second Amendment to Deed of Trust.
Section 4. No Defenses. Trustor represents and warrants to
-----------
Beneficiary that, as of the date hereof, there exist no defenses, claims,
counterclaims, setoffs, offsets or rights of recoupment to, against or with
respect to any portion of the Indebtedness.
Section 5. Ratification. Except as expressly modified by this Second
------------
Amendment to Deed of Trust, all of the terms and conditions of the original Deed
of Trust shall remain in full force and effect in accordance with their terms.
Section 6. Counterparts. This Second Amendment to Deed of Trust may
------------
be executed in counterparts, each of which shall be deemed an original, but all
of which taken together constitute one and the same document.
44
IN WITNESS WHEREOF, the parties have executed this Second Amendment to
Construction Loan Deed of Trust and Security Agreement as of the day and year
first above written.
TRUSTOR:
-------
SOUTHWEST MARKET LIMITED PARTNERSHIP, a
District of Columbia limited partnership
By: Boston Southwest Associates Limited
Partnership, a Massachusetts limited
partnership, General Partner
ATTEST: By: Independence Square, Inc., a
Delaware corporation, its
managing General Partner
By: By:
---------------------------------- ----------------------------------
Name: Name:
Title:
BENEFICIARY:
-----------
ATTEST: THE SUMITOMO BANK, LIMITED, a Japanese
banking institution acting through its
NEW YORK BRANCH
By: By:
---------------------------------- --------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Joint General Manager
WITNESS: TRUSTEE:
-------
------------------------------------- -----------------------------------------
Name: Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxx,
trustee, either of whom may act
45
