EXHIBIT 10.15
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LOAN AGREEMENT
Dated as of October 21, 1998
Between
180 X. XXXXXXX, L.L.C.
as Borrower
AND
THE CAPITAL COMPANY OF AMERICA LLC
as Lender
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TABLE OF CONTENTS
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Page
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SCHEDULES
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Schedule 1 - Matters Regarding Representations
Schedule 2 - Rent Roll
Schedule 3 - Required Repairs
EXHIBITS
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Exhibit A - Form of Guaranty
Exhibit B - Form of Note
Exhibit C - List of Property Loan Documents
Exhibit D - Form of Rate Lock Agreement
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LOAN AGREEMENT
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LOAN AGREEMENT dated as of October 21, 1998 (the "Agreement") between 000
X. XXXXXXX, L.L.C., a limited liability company duly organized and validly
existing under the laws of the State of Delaware ("Borrower") and THE CAPITAL
COMPANY OF AMERICA LLC, a limited liability company organized under the laws of
the State of Delaware (together with its permitted successors and assigns,
"Lender").
All capitalized terms used herein shall have the respective meanings set
forth in Section 1 hereof.
W I T N E S S E T H :
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WHEREAS, Borrower desires to obtain the Loan 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;
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:
"AFFILIATE" shall mean, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person or of an Affiliate
of such Person.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"APPROVED CAPITAL EXPENSES" shall mean Capital Expenses incurred by Owner
with respect to the Property which (i) are included in the Operating Budget for
the Current Month for the Property which has been approved by Lender, (ii) are
not included in the Operating Budget for the Current Month, but are entitled to
be incurred by Owner under the Cash Collateral Account Agreement without
Borrower's approval, or (iii) are approved by Lender.
"APPROVED OPERATING EXPENSES" shall mean Operating Expenses incurred by
Owner with respect to the Property which (i) are included in the Operating
Budget for the Property for the Current Month which has been approved by Lender,
(ii) are not included in the approved Operating Budget for the Property for the
Current Month, but are entitled to be incurred by Owner under the Cash
Collateral Account Agreement without Borrower's approval, or (iii) are approved
by Lender.
"ASSIGNMENT OF MANAGEMENT FEES" shall mean, with respect to the Property,
that certain first priority Collateral Assignment of Rights To Management Fees
and Security Agreement, dated as of the date hereof, from Manager, as assignor,
to Lender, as assignee, assigning to Lender as security for the Loan, all of
Manager's rights pursuant to receiving payments of any kind or nature pursuant
to the Management Agreement (including fees received pursuant thereto), as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"ASSIGNMENT OF LOAN DOCUMENTS" shall mean, with respect to the Property,
that certain first priority Collateral Assignment of Loan Documents and Pledge
Agreement dated as of the date hereof, from Borrower, as assignor, to Lender, as
assignee, assigning to Lender as security for the Loan, all of Borrower's
interest in and to the Property Loan Documents, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"AWARD" shall have the meaning set forth in Section 7.1.3.
"BORROWER" shall mean 000 X. XxXxxxx, L.L.C., together with its permitted
successors and assigns.
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"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York or Illinois are not open for
business.
"CAPITAL AMERICA" shall mean The Capital Company of America LLC.
"CAPITAL EXPENSES" shall mean capital expenditures as determined in
accordance with GAAP.
"CASH COLLATERAL ACCOUNT" shall mean that account established and
maintained pursuant to the Cash Collateral Account Agreement.
"CASH COLLATERAL ACCOUNT AGREEMENT" shall mean that certain Account
Assignment, Security and Cash Collateral Agreement dated as of January 30, 1995,
as amended among Borrower (as assignee of Allstate Life Insurance Company), and
LaSalle Lake Investors, one of the entities comprising Owner, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"CASH COLLATERAL ACCOUNT BANK" shall mean LaSalle National Bank, or any
successor approved by Lender.
"CASUALTY/CONDEMNATION PREPAYMENTS" shall have the meaning set forth in
Section 2.3.2.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"CONDEMNATION" shall have the meaning set forth in Section 7.1.3.
"CONDEMNATION RESTORATION" shall have the meaning set forth in Section
7.1.3.
"CONTROL" shall mean with respect to any Person either (i) ownership
directly or through other entities, of more than 50% of all beneficial equity
interest in such Person or (ii) the power to direct the management, operation
and business of such Person.
"CUSTODY AGREEMENT" shall mean that certain Custody Agreement dated as of
January 30, 1995, among Borrower (as assignee of Allstate Insurance Company),
LaSalle National Bank, and LaSalle Investors as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"CURRENT MONTH" shall mean, as of the date of determination, the then
current calendar month.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, the Note, together with all interest accrued and unpaid thereon
and all other sums due to Lender in respect of the Loan, including any sums due
under the Note, this Agreement, the Mortgage or in any other Loan Document.
"DEBT CONSTANT" shall mean at any time the greater of (a) 9.23% and (b) the
Hypothetical Loan Constant.
"DEBT SERVICE" shall mean, with respect to any particular period of time,
scheduled principal and interest payments under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any date, a ratio in which
(a) the numerator is the Net Operating Income for the 12-month period
immediately preceding such date and (b) the denominator is the Debt constant
multiplied by the outstanding principal balance of the loan as of the date of
determination.
"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 mean, with respect to the Loan, a rate per annum equal
to the lesser of (a) the maximum rate permitted by applicable law or (b) five
percent (5%) above the Interest Rate.
"DEVELOPMENT BUDGET" shall mean the Construction/Development Budget
delivered to and approved by Lender, as amended from time to time.
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"EXCHANGE ACT" shall have the meaning set forth in Section 9.2(a).
"EVENT OF DEFAULT" shall have the meaning set forth in Section 8.1.
"FISCAL YEAR" shall mean each twelve month period commencing on January 1
and ending on December 31 during each year of the term of the Loan.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental xxxx (xxxxxxx,
xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether now or hereafter
in existence having jurisdiction over Borrower or the Property.
"GUARANTOR" shall mean Prime Group Realty, L.P.
"GUARANTY" shall mean the Guaranty from Guarantor in the form of Exhibit A.
"HYPOTHETICAL LOAN CONSTANT" shall mean the mortgage loan constant
calculated using a 360-month amortization schedule and an interest rate equal to
the sum of the Treasury Rate plus 2.00%.
"IMPROVEMENTS" shall mean the improvements located on the Property.
"including" shall mean "including, without limitation".
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in Section
10.13(b).
"INDEPENDENT DIRECTOR" shall have the meaning set forth in Section 4.1(dd).
"INSURANCE PREMIUMS" shall have the meaning set forth in Section 7.1.1.
"INSURANCE PROCEEDS" means the proceeds of any insurance policies carried
pursuant to the Loan Documents or otherwise with respect to the Property.
"INSURED CASUALTY" shall have the meaning specified in Section 7.1.1(d).
"INTEREST RATE" shall mean the rate of interest determined in accordance
with terms of the Note.
"LEASE" shall mean any lease, sublease or sub-sublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted 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, sub-sublease, or other agreement entered into in connection
with such lease, sublease, sub-sublease, 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.
"LEGAL REQUIREMENTS" shall mean, with respect to the Property, all federal,
state, county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Property or any part thereof or the construction, use,
alteration or operation thereof, or any part thereof, whether now or hereafter
enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to
Borrower, at any time in force affecting the Property or any part thereof,
including any which may (i) require repairs, modifications or alterations in or
to the Property or any part thereof or (ii) in any way limit the use and
enjoyment thereof.
"LENDER" shall mean The Capital Company of America LLC, together with its
successors and assigns.
"LIABILITIES" shall have the meaning set forth in Section 9.2(b).
"LICENSES" shall have the meaning set forth in Section 4.1(w).
"LIEN" shall mean, with respect to the Property, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting the Property or Property
Loan or any portion thereof or Borrower, including any conditional sale or other
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title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
and mechanic's, materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the loan made to Borrower by Lender pursuant hereto in
the original principal amount of $20,000,000.00 subject to possible increase as
provided in Section 2.7 to an amount no greater than $45,000,000 and evidenced
by the Note and secured by the other Loan Documents.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Assignment of Loan Documents, the Assignment of Management Fees, the Guaranty
and all other documents, agreements and instruments evidencing, securing or
delivered to Lender in connection with the Loan.
"MANAGEMENT AGREEMENT" shall mean, with respect to the Property, a
management agreement entered into by and between Owner and the Manager, 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.
"MANAGEMENT FEE" shall mean the fee payable to Manager pursuant to the
Management Agreement.
"MANAGER" shall mean Prime Group Realty Services, Inc., a Maryland
corporation, or Prime Group Realty, L.P.
"MATURITY DATE" shall mean the date on which the final payment of principal
of the Note becomes due and payable as therein provided, whether at the Stated
Maturity Date by declaration of acceleration, or otherwise.
"MORTGAGE" shall mean that certain first priority Mortgage, Assignment of
Leases and Rents, Security Agreement and Financing Statement executed and
delivered by Owner and encumbering the Property, as the same may be amended,
restated, replaced, supplemented, consolidated or otherwise modified from time
to time, which is collaterally assigned to Lender pursuant to the Assignment of
Loan Documents.
"NET OPERATING INCOME" shall mean, for any period, the difference between
all Operating Income during such period, minus all Operating Expenses during
such period. Net Operating Income shall be audited, or shall be determined in
accordance with agreed-upon procedures determined by Lender.
"NOTE" shall mean that certain Note of even date herewith, made by Borrower
in favor of Lender, substantially in the form of Exhibit B annexed hereto, as
the same may be amended, restated, replaced, supplemented, consolidated or
otherwise modified from time to time.
"OFFICERS' CERTIFICATE" shall mean a certificate delivered to Lender by
Borrower which is signed by a senior executive officer of Borrower.
"OPERATING BUDGET" shall mean the budget for the Property delivered to and
approved by Lender, as amended from time to time.
"OPERATING EXPENSES" shall mean, as to any period, all operating expenses
relating to the Property during such period, including the following items:
(i) all expenses for the operation of the Property including management
fees in respect thereof, all insurance premiums and expenses, accounting
expenses, advertising expenses, expenses for architectural services, bank
charges, utility charges, expenses for extermination, cleaning and trash removal
services, expenses relating to window washing, landscaping and security
services, reasonable and necessary legal expenses incurred in connection with
the operation of the Property, tenant improvements and marketing costs;
(ii) impositions, water charges, property and real estate taxes, sewer
rents, other than fines, penalties, interest on such impositions (or portions
thereof) that are payable by reason of Borrower's failure to pay an imposition
timely;
(iii) the cost of routine interior and exterior maintenance, repairs and
minor alterations, the cost of which can be expensed under GAAP; and
(iv) wages, benefits, payroll taxes, uniforms and other related expenses
for employees of Borrower of its Affiliates to the extent engaged in the repair,
operation, or maintenance of the Property.
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Operating Expenses will not include debt service, capital expenses, non-cash
items such as depreciation and amortization and any extraordinary one-time
expenditures not considered operating expenses under GAAP.
"OPERATING INCOME" shall mean, as to any period, all regular on-going
revenues received by Owner from the operation of the Property during such
period, including (i) Rents and (ii) all other amounts received which in
accordance with GAAP are required to be or are included in Owner's annual
financial statements as operating income of the Property; provided, that
Operating Income will not include (1) income from non-recurring income sources;
(2) advance Rents or other payments; (3) deposits or escrows; (4) any income
otherwise includable in Operating Income but paid to a Person other than
Borrower; (5) proceeds of Casualty insurance or Condemnation Awards; or (6)
income from a sale, financing or other capital transaction.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including 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.
"OWNER" shall mean collectively or individually as the context may require,
the owners of fee title to the Property, the lessee's interest in any ground
lease of the Property, and to the extent any of the foregoing are land trusts,
the beneficiaries thereof.
"PAYMENT DATE" shall mean the eleventh (11th) day of each calendar month
or, if in any month the eleventh (11th) day is not a Business Day, then the
Payment Date for such month shall be the first Business Day thereafter.
"PERMITTED ENCUMBRANCES" shall mean, with respect to the Property,
collectively, (i) the Liens and security interests created by the Property Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to the Property or any part thereof, (iii) Liens, if
any, for Taxes or Other Charges not yet payable or delinquent or which are being
protested in accordance with the provisions of Section 5.1(b), (iv) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender's sole discretion, or are hereafter created in accordance with this
Agreement or the Mortgage and (v) Liens which attach in accordance with the
provisions of Section 6.1(b).
"PERMITTED INDEBTEDNESS" shall mean the Debt.
"PERMITTED INVESTMENTS" shall mean investments permitted under the terms of
the Cash Collateral Account Agreement.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, 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.
"POLICIES" shall have the meaning specified in Section 7.1.1(c).
"POOLING AND SERVICING AGREEMENT" shall mean the Servicing Agreement
entered into with the Servicer in connection with any Securitization of the
Loan.
"PROPERTY" shall mean that certain parcel of real property and improvements
thereon owned by Owner and encumbered by the Property Loan Documents, together
with all rights pertaining to such property and improvements, and known as 000
X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx.
"PROPERTY LOAN" shall mean that certain loan evidenced and secured by the
Property Loan Documents.
"PROPERTY LOAN DOCUMENTS" shall mean the documents evidencing and securing
a loan to Owner as described on Exhibit C hereto.
"PROPERTY VALUE" shall mean the lesser of (A) the most recent appraised
value of the Property determined by an appraisal satisfactory to Lender and (B)
Net Operating Income of the trailing twelve month period divided by 10%.
"PROVIDED INFORMATION" shall have the meaning set forth in Section 9.1.
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"QUALIFIED SURVEy" shall mean a current title survey, certified to the
title company and Lender and their successors and assigns, that (A) is in form
and content reasonably satisfactory to Lender, (B) is prepared by a professional
and properly licensed land surveyor satisfactory to Lender in accordance with
the 1997 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys,
(C) meets the classification of an "Urban Survey" and includes the following
additional items from the list of "Optional Survey Responsibilities and
Specifications" (Table A): 1, 2, 3, 4, 5, 6, 7a-b, 8, 9, 10, 11 and 13, (D)
reflects the same legal description contained in the Title Insurance Policy
relating to the Property, and (E) contains a certification in form and substance
reasonably acceptable to Lender.
"QUALIFIED TITLE INSURANCE POLICY" shall mean a Title Insurance Policy
issued by First American Title Insurance Company or another title company
acceptable to Lender, with reinsurance and direct access agreements acceptable
to Lender, which Title Insurance Policy shall (A) provide coverage in the amount
of the Loan, (B) insure Lender that the Mortgage creates a valid lien on the
Property encumbered thereby of the requisite priority, 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), (C) contain such endorsements and affirmative coverages as Lender
may reasonably request, (D) name Lender as the insured and (E) be assignable.
"RATING AGENCY" shall mean each of Standard & Poor's Ratings Group, a
division of XxXxxx-Xxxx, Inc., Xxxxx'x Investors Service, Inc., Duff & Xxxxxx
Credit Rating Co. and Fitch Investors Service, Inc. or any other
nationally-recognized statistical rating agency which has been approved by
Lender.
"REGISTRATION STATEMENT" shall have the meaning set forth in Section
9.2(b).
"RENTS" shall mean, with respect to the Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including all oil and gas or other mineral royalties and bonuses),
income, receivables, receipts, revenues, deposits (including 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 Owner or its agents or employees from any
and all sources arising from or attributable to the Property, including all
receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of the Property and proceeds, if any, from business interruption or
other loss of income insurance.
"RENT ROLL" shall have the meaning set forth in Section 4.1(aa).
"REQUIRED RECORDS" shall have the meaning set forth in Section 5.1(k).
"RESIZING DATE" shall mean each March 11 and September 11, commencing on
March 11, 2000.
"RESTORATION" shall have the meaning set forth in Section 7.1.2(b).
"SPE MEMBER" shall have the meaning set forth in Section 4.1(dd).
"SECONDARY MARKET TRANSACTION" shall mean any transaction in which Lender
(i) sells the Loan, the Note and the other Loan Documents to one or more
investors as a whole loan, (ii) participates the Loan to one or more investors,
(iii) deposits the Loan, the Mortgage, the Note and other Loan Documents with a
trust, which trust may sell certificates to investors evidencing an ownership
interest in the trust assets or (iv) otherwise sells the Loan or an interest
therein to investors.
"SECURITIES" shall have the meaning set forth in Section 9.1.
"SECURITIES ACT" shall have the meaning set forth in Section 9.2(a).
"SECURITIZATION" shall have the meaning set forth in Section 9.1.
"SECURITY AGREEMENT" shall have the meaning set forth in Section
2.3.3(vii).
"SERVICER" shall mean the entity appointed by Lender to service the Loan or
its successor in interest, or if any successor servicer is appointed pursuant to
the Pooling and Servicing Agreement, such successor servicer.
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"STATE" shall mean the State of Illinois.
"STATED MATURITY DATE" shall mean November 11, 2001, subject to extension
in accordance with Section 2.3.2.
"SUBORDINATION AGREEMENT" shall mean collectively, all of the agreements
entered into in connection with subordinating the Subordinate Loan to the
Property Loan.
"SUBORDINATE PROPERTY LOAN" shall mean the loan secured by a second
mortgage on the Property.
"SUCCESSOR BORROWER" shall have the meaning set forth in Section 2.3.3(c).
"SURVEY" shall mean a survey of the Property in question prepared by a
surveyor licensed in the State and satisfactory to Lender and the company or
companies issuing the Title Insurance Policies, and containing a certification
of such surveyor satisfactory to Lender.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in Section
7.3.1.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof.
"TERM" shall mean the entire term of this Agreement, which shall expire
upon repayment in full of the Debt and full performance of each and every
obligation to be performed by Borrower pursuant to the Loan Documents.
"TITLE INSURANCE POLICY" shall mean, with respect to the Property, the ALTA
mortgagee title insurance policy in the form (acceptable to Lender) issued with
respect to the Property and insuring the lien of the Mortgage encumbering the
Property.
"TRANSFER" shall have the meaning set forth in Section 6.1(j).
"TREASURY RATE" shall mean, at any time of determination, the yield on the
bid price appear on such date on Telerate page 500 for the second most recently
issued 10-year, non-callable U.S. Treasury security or, if there is no such U.S.
Treasury security, the then prevailing yield on the U.S. Treasury security then
being used by Lender to price 10-year fixed rate mortgage loans.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code
as in effect in the State.
"UNDERWRITER GROUP" shall have the meaning set forth in Section 9.2(b).
"UNDERWRITTEN NET OPERATING INCOME" for the 12-month period ending with the
most recently completed calendar month, all Operating Income minus all Operating
Expenses during such period, as determined by Lender; provided that, in
determining Underwritten Net Operating Income, adjustments shall be made to
reflect market and submarket occupancy and other factors determined to be
relevant by Lender, including the following adjustments: (i) Operating Income
will be adjusted (A) to include only Rents based on such trailing 12 month
period plus credit (as determined by Lender) for investment grade credit rated
tenants and other tenants approved by Lender which have been in occupancy for
less than one year; (B) to exclude Rents from temporary or month to month
tenants; provided, however, that such income will be included only to the extent
it is determined by Lender to be both stabilized and recurring, but only in an
amount not to exceed a maximum of 50% of such Rent collected in such trailing 12
month period; (C) to exclude Rents from tenants operating under bankruptcy
protection; (D) to xxxx any above market Leases to market rents; (E) to reflect
any Rent adjustments or cancellation option in any Leases; (F) for
reimbursements (not in excess of corresponding expense items) based on such
trailing 12 month period to the extent it is determined by Lender, in its
discretion, to be both stabilized and recurring; (G) to include other income on
a case-by-case basis but only to the extent it is determined by Lender to be
both stabilized and recurring and (H) a vacancy and credit loss allowance equal
to the greater of: (1) actual historical vacancy and/or credit loss (2) 10% of
underwritten gross revenues and (3) market vacancy allowances as determined by
Lender. (ii) Operating Expenses will be adjusted to reflect (A) the greater of:
(1) the actual expenses for such trailing 12 month period (except real estate
taxes and insurance, which will be included at their stabilized, recurring
levels), (2) the average actual annual expenses over the past three years but
excluding any non-recurring items Capital Expenses; and (3) projected annual
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expenses based on then current occupancy levels; (B) a normalized allowance for
costs of free rent, downtime, tenant improvement and leasing commissions
pursuant to Lender's standard underwriting assumptions and other assumptions
based on market information as determined by Lender during its due diligence,
without duplication for costs deducted under other sections of this definition
and subject to a minimum of $1.25 per occupied square foot; (C) a reserve for
Capital Expenses equal to at least $0.25 per square foot of rentable space per
annum (or such higher amount as is recommended in a third-party engineering
report); (D) a management fee equal to the greater of the Management Fee or 5%
of total revenues; and (E) other adjustments as determined by Lender in its
discretion consistent with its due diligence findings and prevailing market
conditions. In determining Underwritten Net Operating Income, all pro forma
adjustments to revenue and expenses shall be approved by Lender in its
discretion and shall be subject to Lender's full due diligence.
"U.S. OBLIGATION" shall mean direct non-callable obligations of the United
States of America.
Section 1.2 PRINCIPLES OF CONSTRUCTION. All references to sections,
schedules and exhibits are to sections, schedules and exhibits in or to this
Agreement unless otherwise specified. 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. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, as modified herein.
II. GENERAL
Section 2.1 THE LOAN.
2.1.1 COMMITMENT. Subject to and upon the terms and conditions set forth
herein, including the conditions precedent set forth in Section 3.1, Lender
hereby agrees to make the Loan to Borrower on the Closing Date, in the aggregate
original principal amount set forth in the Note and which Loan shall mature on
the Stated Maturity Date. Borrower hereby agrees to accept the Loan on the
Closing Date, subject to and upon the terms and conditions set forth herein.
2.1.2 DISBURSEMENT TO BORROWER. Borrower may request and receive only one
borrowing hereunder in respect of the Loan, except to the extent Borrower
qualifies for additional disbursements pursuant to Section 2.7. Borrower shall
receive the Loan upon the Closing, subject to the direction given by Borrower as
to the application of Loan proceeds for the uses set forth in Section 2.1.4. Any
amount borrowed and repaid hereunder in respect of the Loan may not be
reborrowed.
2.1.3 THE NOTE. The Loan shall be evidenced by the Note, in the aggregate
original principal amount of the Loan. The Note shall bear interest as provided
therein. The Note shall be subject to repayment as provided in Section 2.3,
shall be entitled to the benefits of this Agreement and shall be secured by the
Mortgage and the other Loan Documents.
2.1.4 USE OF PROCEEDS OF LOAN. Borrower shall use the proceeds of the Loan
(i) to pay costs and expenses incurred in connection with the Closing of the
Loan, as approved by Lender and (ii) with respect to the remainder, if any, as
Borrower directs.
Section 2.2 INTEREST; MONTHLY PAYMENTS.
2.2.1 GENERALLY. Borrower shall pay interest on the outstanding principal
balance of the Loan in accordance with the terms of the Note.
2.2.2 DEFAULT RATE. After the occurrence and during the continuance of an
Event of Default, the entire outstanding principal balance of the Loan shall
bear interest at the Default Rate, and shall be payable upon demand from time to
time, to the extent permitted by applicable law. Payment or acceptance of the
increased rates provided for in this subsection is not a permitted alternative
to timely payment and shall not constitute a waiver of any Default or Event of
Default or an amendment to this Agreement or any other Loan Document and shall
not otherwise prejudice or limit any rights or remedies of Lender.
Section 2.3 LOAN REPAYMENT.
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2.3.1 REPAYMENT AND EXIT FEE. Borrower shall repay any outstanding
principal indebtedness of the Loan in full on the Maturity Date of the Loan,
together with interest thereon to (but excluding) the date of repayment.
Borrower shall have the right to prepay all or any portion of Loan at any time.
Any repayment of the Loan (whether at maturity, by acceleration, pursuant to
Section 2.7, or otherwise) shall be accompanied by a fee equal to 1% of any
principal portion of the Loan that is repaid prior to the date which is one year
from the date hereof, and 2% of any portion of the Loan that is repaid
thereafter, unless such repayment is from the proceeds of permanent financing
provided by Lender.
2.3.2 EXTENSION OPTION. The Stated Maturity may be extended for up to two
one-year periods, so long as for each extension: (i) Borrower provides notice to
Lender exercising such one year extension option no later than ninety days prior
to the then current Stated Maturity, (ii) no Default exists at the time the
extension is exercised or the time the extension period commences, (iii) the
Debt Service Coverage Ratio is not less than 1.40:1 at the time the extension is
exercised and at the commencement of the extension period, (iv) no Default
exists under the terms of the Guaranty by the Guarantor, and (v) Borrower pays
an extension fee to Lender of 1% of the then outstanding Loan amount in
connection with the first extension period and .5% of the then outstanding Loan
amount for the second extension period.
Section 2.4 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms thereof, release the Lien of the Loan
Documents if not theretofore released.
Section 2.5 PAYMENTS AND COMPUTATIONS.
2.5.1 MAKING OF PAYMENTS. Each payment by Borrower hereunder or under the
Note shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender by
11:00 a.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the first
Business Day thereafter.
2.5.2 COMPUTATIONS. Interest payable hereunder or under the Note by
Borrower shall be computed on the basis of the actual number of days elapsed in
a 360-day year.
2.5.3 LATE PAYMENT CHARGE. If any principal, interest or any other sums due
under the Loan Documents is not paid by Borrower on the date on which it is due,
Borrower shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law 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 the Loan Documents.
Section 2.6 CASH MANAGEMENT ARRANGEMENTS.
(a) All Rents (other than security deposits) will be transmitted directly
into an account maintained by Owner but pledged to Borrower at the Cash
Collateral Account Bank pursuant to the Cash Collateral Account Agreement. All
other income or revenue received by Borrower or Manager in connection with the
Property will be deposited into the Cash Collateral Account on the date of
receipt. Any amounts so deposited into the Cash Collateral Account shall be
applied and disbursed in accordance with the terms and provisions of this
Agreement and the Cash Collateral Account Agreement.
(b) Borrower hereby assigns and pledges to Lender all of its right, title
and interest in the Cash Collateral Account Agreement and Custody Agreement and
agrees to notify the Cash Collateral Account Bank of Lender's interest, and that
the Lender shall be entitled to exercise all of Borrower's rights under the Cash
Collateral Account Agreement and Custody Agreement.
(c) Anything hereinabove in this Section to the contrary notwithstanding,
from and after the occurrence and during the continuance of an Event of Default,
Lender shall be entitled to notify the Cash Collateral Account Bank, subject to
the terms of the Cash Collateral Account Agreement, to deliver, assign and sell
the Collateral (as defined in the Cash Collateral Account Agreement) to Lender
and such proceeds shall be applied to the payment of Debt Service on the Loan
(including, if applicable, interest at the Default Rate), required reserves and
Approved Operating Expenses and/or to the payment of the principal amount of the
Note, in such order as Lender shall determine in its sole discretion.
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Section 2.7 RESIZING. As of each Resizing Date, Lender shall resize the
Loan based upon the following formula. The resized Loan Amount shall be equal to
(a) Underwritten Net Operating Income divided by 1.4, divided by (b) the Debt
Constant. Borrower, at its sole cost and expense, shall promptly provide to
Lender upon request all documentation and information determined by Lender in
its sole discretion to be necessary to complete its underwriting analysis in
connection with the resizing of the Loan, including without limitation, leases,
rent rolls, property operating and financial statements, and such third party
reports and other information and documents determined by Lender in its sole
discretion to be necessary to assess the condition, operation and value of the
Property. Borrower shall provide all such information not later than sixty days
prior to the Resizing Date. If any information requested by Lender is not
provided, then Lender shall be entitled to make its own good faith judgment with
regard to the missing information when making its resizing determination. Lender
agrees to notify Borrower as to the Resizing Amount thirty days prior to the
Resizing Date provided it has received the requested information in a timely
fashion. If the Resized Loan Amount is less than the then current outstanding
Loan amount, Borrower shall repay such difference on the Resizing Date. If the
resized Loan Amount is greater than the then outstanding amount of the Loan, as
of any Resizing Date occurring on March 11th, then Lender shall advance to
Borrower on the Resizing Date upon request made by Borrower no later than two
(2) business days prior to the Resizing Date, the amount requested by Borrower
for an additional disbursement of the Loan so long as (i) such amount does not
increase the outstanding balance of the Loan to an amount greater than the
Resized Loan Amount (or 85% of the outstanding principal balance of the Property
Loan, whichever is less), (ii) no Default has occurred and is continuing, (iii)
all of Borrower's representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all material respects as of
the Resizing Date, (iv) the outstanding principal balance of the Property Loan
is not more than 70% of the Property Value, (v) Borrower pays a fee to Lender
equal to 1% of the incremental loan proceeds advanced, and (vi) Borrower
delivers to Lender a disbursement request that has been consented to by Lake
Investors, LaSalle Land Partnership, L.P., and LaSalle Mayfair Joint Venture.
III. CONDITIONS PRECEDENT
Section 3.1 CONDITIONS PRECEDENT TO THE LOAN. The obligation of Lender to
make the Loan hereunder is subject to the fulfillment by Borrower or waiver by
Lender of the following conditions precedent no later than the Closing Date:
(a) REPRESENTATION 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 no Default or Event of Default shall have occurred and be continuing; 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.
(b) LOAN AGREEMENT AND NOTE. Lender shall have received a copy of this
Agreement and the Note, in each case, duly executed and delivered on behalf of
Borrower.
(c) DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES.
(i) Loan Documents. Lender shall have received from Borrower fully
executed and acknowledged counterparts of the Other Loan Documents.
(ii) Title Insurance. Lender shall have received an update of the
Qualified Title Insurance Policy for the Property Loan.
(iii) Survey. Lender shall have received a Qualified Survey for the
Property.
(iv) Insurance. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its reasonable discretion, and evidence of the payment of all premiums
payable for the existing policy period which period shall not be less than one
year in advance. Lender shall also have received an acknowledgement from the
insurer of Lender's collateral assignment of the Borrower's right to receive
insurance proceeds and make decisions in connection with such insurance
policies.
(v) Environmental Reports. Lender shall have received an environmental
report in respect of the Property reasonably satisfactory to Lender.
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(vi) Zoning. With respect to the Property, Lender shall have received,
at Lender's option, an ALTA 3.1 zoning endorsement for the Title Insurance
Policy in substance reasonably satisfactory to Lender.
(d) 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.
(e) Delivery of Organizational Documents. On or before the Closing Date,
Borrower shall deliver or cause to be delivered to Lender (i) copies certified
by Borrower of all organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or qualification to do
business, as Lender may reasonably request, including 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.
(f) Opinions of Borrower's Counsel. Lender shall have received opinions of
Borrower's counsel (i) with respect to non-consolidation, true sale or true
contribution, and fraudulent transfer issues and (ii) with respect to due
execution, authority, enforceability of the Loan Documents and such other
matters as Lender may reasonably require, all such opinions in form, scope and
substance reasonably satisfactory to Lender and Lender's counsel.
(g) Delivery of Property Loan Documents. Lender shall have received the
originals of the Property Loan Documents, endorsed or assigned in blank.
(h) Basic Carrying Costs. Borrower or Owner shall have paid or deposited
into an applicable reserve fund all deposits required pursuant to the terms of
the Property Loan Documents.
(i) 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 all
such counterpart originals or certified copies of such documents as Lender may
reasonably request.
(j) Financial Statements. Lender shall have received financial statements
prepared in accordance with agreed upon procedures for the Property for such
periods as Lender may request.
(k) Leases, Rent Roll and Estoppel Certificates. Borrower shall have
provided Lender with original executed or certified copies of each of the Leases
in effect as of the date hereof, a current rent roll, and original executed
copies of estoppel certificates (or confirmations by the tenant of estoppel
certificates previously provided) in the form previously approved by Lender,
from those tenants as Lender may request.
(l) Debt Service Coverage Ratio. The Debt Service Coverage Ratio shall be
at least 1.10 to 1.
(m) Appraisals. Lender shall have received an appraisal for the Property
satisfactory to Lender.
(n) Engineering Reports. Lender shall have received a structural
engineering report, reasonably acceptable to Lender, identifying, among other
things, (i) deferred maintenance for the Property and the cost thereof and (ii)
a ten (10) year schedule of anticipated capital expenditures and the per annum
cost thereof.
(o) Utility Service and Tax Assessment. Borrower shall have delivered
evidence that all utility services required for the Property are available and
that the Property is subject to separate tax assessment.
(p) Absence of Adverse Changes. Lender shall have determined that there
have been no material developments prior to the Closing Date which could, in
Lender's sole judgment, adversely affect the operation of the Property or the
ability of Borrower to repay the Loan or the ability of Borrower to perform any
of its covenants and agreements set forth in this Agreement and the other Loan
Documents.
(q) Fee. Lender shall have received a structuring fee in the amount of 1%
of the principal amount of the Loan disbursed.
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IV. REPRESENTATIONS AND WARRANTIES
Section 4.1 BORROWER REPRESENTATIONS CONCERNING BORROWER AND LOAN
DOCUMENTS. Borrower represents and warrants as of the date hereof and as of the
Closing Date that:
(a) Organization. Borrower has been duly organized and is validly existing
and in good standing with requisite limited liability company power and
authority to own its properties and to transact the businesses in which it is
now engaged. Borrower is 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. Borrower possesses 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 (other than those which the failure to have would not reasonably be
expected to have a material adverse effect on the Borrower, the Property or the
Loan), and the sole business of Borrower is the ownership of the Property Loan.
(b) Proceedings. Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents. This Agreement and such other Loan Documents have been duly executed
and delivered by or on behalf of Borrower and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, 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).
(c) No Conflicts. The execution, delivery and performance of this Agreement
and the other Loan Documents by Borrower 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 pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, partnership agreement or other agreement or instrument to which
Borrower is a party or by which Borrower's property or assets is subject, nor
will such action result in any violation of the provisions of any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower or any of its properties or assets (other than such
actions described herein which would not reasonably be expected to have a
material adverse effect on the Borrower, the Property, or the Loan), and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental agency or
body required for the execution, delivery and performance by any Borrower of
this Agreement or any other Loan Documents has been obtained and is in full
force and effect.
(d) Litigation. There are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority or other agency now pending or
threatened against or affecting Borrower, which actions, suits or proceedings,
if determined against Borrower or the Property, is reasonably likely to
materially adversely affect the condition (financial or otherwise) or business
of Borrower.
(e) Agreements. Borrower is not a party to any agreement or instrument or
subject to any restriction which would reasonably be expected to materially
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 it or the Property is bound.
(f) No Bankruptcy Filing. Borrower is not 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 its assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it.
(g) Full and Accurate Disclosure. To Borrower's knowledge no statement of
fact made by Borrower in this Agreement or in any of the other Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no material fact presently known to Borrower which has not been
disclosed to Lender which adversely affects, nor as far as Borrower can foresee,
might materially adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower.
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(h) No Plan Assets. Borrower is not an "employee benefit plan," as defined
in Section 3(3) of ERISA, subject to Title I of ERISA, and 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.
(i) Financial Information. All financial data, including the statements of
cash flow and income and operating expense, that have been delivered to Lender
by Borrower in respect of the Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of the
Property as of the date of such reports and (iii) to the extent prepared by an
independent certified public accounting firm, have been prepared in accordance
with GAAP consistently applied throughout the periods covered, except as
disclosed therein. Borrower has no 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
reasonably likely to have a materially adverse effect on the Property or the
operation thereof, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no
materially adverse change in the financial condition, operations or business of
Borrower from that set forth in said financial statements.
(j) Federal Reserve Regulations. No part of the proceeds of the Loan will
be used for the purpose of purchasing or acquiring any "margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
or for any other purpose which would be inconsistent with such Regulation U or
any other Regulations of such Board of Governors, or for any purposes prohibited
by Legal Requirements or by the terms and conditions of this Agreement or the
other Loan Documents.
(k) Not a Foreign Person. Borrower is not a "foreign person" within the
meaning ofss.1445(f)(3) of the Code.
(l) Enforceability. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury, nor would the exercise of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable,
and Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
(m) Single-Purpose. Borrower hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Debt shall be paid in full:
(i) Borrower does not and will not own any asset or property other
than (A) the Property Loan and (B) incidental personal property necessary for
the ownership or operation of the Property Loan.
(ii) Borrower will not engage in any business other than the ownership
of the Property Loan and will in all material respects conduct and operate its
business as presently conducted and operated.
(iii) Borrower will not enter into any contract or agreement with any
of its Affiliates or constituent parties, Guarantor or any Affiliate of any
constituent party or Guarantor, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than any such party.
(iv) Borrower has not incurred, and Borrower will not incur, any
indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than the Permitted Indebtedness.
Except as set forth in the immediately preceding sentence, no indebtedness other
than the Debt may be secured (subordinate or pari passu) by the Property Loan.
(v) Borrower has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party, Guarantor or any
Affiliate of any constituent party or Guarantor), except for advances approved
by Lender to pay redevelopment costs in connection with the Property that are
secured by the Property Loan Documents.
(vi) Borrower is and will remain solvent and will pay its debts and
liabilities (including employment and overhead expenses) from its assets as the
same shall become due.
(vii) Borrower has done or caused to be done and will do all things
necessary to observe corporate, partnership, or limited liability company
formalities, as the case may be, and preserve its existence.
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(viii) Borrower will not permit any constituent party or Guarantor to,
amend, modify or otherwise change the partnership certificate, partnership
agreement, articles of incorporation and bylaws, trust, operating agreement or
other organizational documents of Borrower or such constituent party or
Guarantor in a manner which would adversely affect Borrower's existence as a
single purpose entity.
(ix) Borrower will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party and Borrower
will file its own tax returns.
(x) Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate, any constituent party, Guarantor or any Affiliate of any
constituent party or Guarantor), shall conduct business in its own name and
shall maintain and utilize separate stationery, invoices and checks.
(xi) Borrower will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
(xii) Neither Borrower nor any constituent party will seek the
dissolution or winding up, in whole or in part, of Borrower.
(xiii) Borrower will not commingle its funds and other assets with
those of any Affiliate or constituent party, Guarantor, or any Affiliate of any
constituent party or Guarantor, or any other person.
(xiv) Borrower has and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party, Guarantor,
or any Affiliate of any constituent party or Guarantor, or any other Person.
(xv) Borrower does not and will not hold itself out to be responsible
for the debts or obligations of any other Person.
(xvi) Borrower shall at all times have one member (the "SPE Member")
who is a "single purpose entity" and shall at all times comply with each of the
representations, warranties, and covenants contained in this Section 4.1 as if
such representation, warranty or covenant was made directly by such SPE Member.
(xvii) The charter of the SPE Member shall at all times have at least
one duly appointed member of its board of directors (an "Independent Director")
reasonably satisfactory to Lender who shall not have been at the time of such
individual's appointment, and may not have been at any time during the preceding
five (5) years (i) a member of, or an officer or employee of, Borrower or any of
its shareholders, subsidiaries or Affiliates (except as an Independent Director
on any of their boards of directors), (ii) a customer, or supplier, Borrower or
any of its members, subsidiaries or Affiliates (except as an Independent
Director on any of their boards of directors), (iii) a person or other entity
controlling any such member, supplier or customer or (iv) a member of the
immediate family of any such shareholder, officer, employee, supplier or
customer of any other director of the SPE Member. As used herein, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person or entity,
whether through ownership of voting securities, by contract or otherwise.
(xviii) The board of directors of the SPE Member shall not take any
action which, under the terms of any certificate of incorporation, bylaws or any
voting trust agreement with respect to any common stock, requires the vote of
the board of directors of the SPE Member unless at the time of such action there
shall be at least one member who is an Independent Director.
(xix) Borrower shall conduct its business so that the assumptions made
with respect to Borrower in that certain opinion letter dated as of the Closing
Date delivered by Borrower's counsel in connection with the Loan shall be true
and correct in all respects.
(n) Investment Company Act. Borrower is not (i) an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (ii) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (iii) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
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(o) Fraudulent Transfer. Borrower has not entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor, and
Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of
Borrower's assets is and will, immediately following the execution and delivery
of the Loan Documents, be greater than Borrower's probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute and matured. Borrower's assets do not and, immediately
following the execution and delivery of the Loan Documents 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 debts and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
Borrower).
Section 4.2 BORROWER REPRESENTATIONS CONCERNING PROPERTY AND PROPERTY LOAN
DOCUMENTS. Borrower represents and warrants as of the date hereof and as of the
Closing Date.
(a) The Property Loan Documents are not subject to an assignment or pledge,
and the Borrower has good and marketable title to, and is the sole owner of, the
Property Loan Documents, free and clear of any loan participations, third party
claims or other Liens.
(b) The Borrower has full right and authority to sell, assign and transfer
the Property Loan and the collateral assignment to the Lender constitutes a
legal, valid and binding assignment of the Property Loan.
(c) The Borrower is pledging the Property Loan free and clear of any and
all liens, pledges, charges or security interests of any nature encumbering the
Property Loan.
(d) The Property Loan Documents are legal, valid and binding obligations of
the Owner, enforceable in accordance with their terms, and there is no valid
defense, counterclaim, right of rescission or right of set-off or abatement
available to the Owner with respect to such Property Loan Documents.
(e) The Property Loan Documents create a valid, collateral or first
priority assignment of, or a valid first priority security interest in, certain
rights under the Leases, subject only to a license granted to the Owner to
exercise certain rights and to perform certain obligations of the lessor under
such leases, including the right to operate the Property, no Person other than
the Owner owns any interest in any payments due under such leases that is
superior to or of equal priority with the Borrower's interest therein.
(f) The Property Loan has not been waived, modified, altered, satisfied,
canceled, subordinated or rescinded and the Property has not been released from
the lien of the Property Loan Documents in any manner except as provided in the
documents identified in Exhibit C.
(g) The Property Loan Documents create a valid and enforceable first lien
on the Property, and the Property, is free and clear of any mechanic's and
materialmen's liens which are prior to or equal with the lien of the Property
Loan Documents, except those which are insured against by a lender's title
insurance policy (as described below).
(h) The Borrower has not taken any action, nor has knowledge that the Owner
has taken any action, that would cause the representations and warranties made
by the Owner with respect to the Property Loan not to be true.
(i) The Borrower has no knowledge that the representations an warranties
made by the Owner with respect to the Property Loan are not true in any material
respect.
(j) The lien created by the Property Loan Documents is insured by an ALTA
lender's title insurance policy, or its equivalent as adopted in the applicable
jurisdiction issued by one or more nationally recognized title insurance
companies, insuring the Borrower as to a valid and first priority lien of the
Mortgage in at least the original principal amount of such Loan, subject only to
(a) the lien of current real property taxes, ground rents, water charges, sewer
rents and assessments not yet due and payable, (b) covenants, conditions and
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restrictions, rights of way, easements and other matters of public record set
forth in the Title Policy, none of which, individually or in the aggregate,
materially interferes with the current use or operation of the Property or the
security intended to be provided by such Mortgage or with the Owner's ability to
pay its obligations when they become due or the value, use or operation of the
related Mortgaged Property and (c) the exceptions (general and specific) set
forth in such insurance policy, none of which, individually or in the aggregate,
materially interferes with the security intended to be provided by such Mortgage
or with the Owner's ability to pay its obligations when they become due or the
value, use or operation of the Property; the Borrower and Lender, its successors
or assigns are the sole named insureds of such policy as their interests may
appear; no claims have been made under such policy and the Borrower has not done
anything (by act or omission), and the Borrower has no knowledge of any matter,
which would impair or diminish the coverage of such policy in any material
respect.
(k) The current outstanding principal balance of the Property Loan is
$62,518,231.47. Borrower has no obligation to make any additional advances under
the Property Loan Documents.
(l) No building or other improvement on the Property has been affected in
any material manner or suffered any material loss as a result of any fire, wind,
explosion, accident or other cause and the Property is free of any damage that
would materially and adversely affect the value of the Property as security for
the Property Loan and is in good repair; there is no proceeding pending for the
total or partial condemnation of the Property.
(m) To Borrower's knowledge the Owner is in possession of all material
licenses, permits and other authorizations necessary and required by all
applicable laws for the conduct of its business and all such licenses, permits
and authorizations are valid and in full force and effect.
(n) (i) The Property is insured by a fire and extended perils insurance
policy, issued by an insurer meeting the requirements under the Property Loan in
an amount not less than the replacement cost and the amount necessary to avoid
the operation of any co-insurance provisions with respect to the Property;
(ii) The Property is covered by business interruption insurance (for
at least 18 months of rent interruptions) and the Property is covered by
comprehensive general liability insurance in amounts generally required by
institutional lenders for similar properties;
(iii)All premiums on any insurance policies required to be paid as of
the Closing Date have been paid;
(iv) The insurance policies require at least 30 days prior notice to
the insured of termination or cancellation, and no such notice has been
received; and
(v) The Property Loan Documents obligate the Owner to maintain all
such insurance and, at such Owner's failure to do so, authorize the Borrower to
maintain such insurance at the Owner's cost and expense and to seek
reimbursement therefor from such Owner.
(o) There is no default, breach, violation or event of acceleration
existing under the Property Loan Documents and, to the Borrower's knowledge, no
event that, with the passage of time or with notice and the expiration of any
grace or cure period, would and does constitute a default, breach, violation or
event of acceleration and the Borrower has not waived any default, breach,
violation or event of acceleration.
(p) To the best of Borrower's knowledge, Owner is not a debtor in a state
or federal bankruptcy or insolvency preceding. To the best of Borrower's
knowledge, the Property, is in material compliance with all applicable federal,
state and local laws pertaining to environmental hazards, and no notice of
violation of such laws has been issued by any governmental agency or authority;
the Borrower has not taken any action that would cause the Property not to be in
material compliance with all federal, state and local laws pertaining to
environmental hazards.
(q) To Borrower's knowledge the Property is in compliance, in all material
respects, with all applicable laws, zoning ordinances, rules, covenants and
restrictions affecting the construction, occupancy, use and operation of such
Property. All inspections, licenses and certificates required, including
certificates of occupancy (if applicable), whether by law, ordinance, regulation
or insurance standards to be made or issued with respect to the Property, have
been obtained and are in full force and effect.
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(r) The Property is not located in a special flood hazard area as defined
by the Federal Insurance Administration, or if it is, and flood insurance was
available, a flood insurance policy meeting any requirements of the Federal
Insurance Administration is in effect.
(s) The Property (i) is located on or adjacent to a dedicated road, or has
access to an irrevocable easement permitting ingress and egress, (ii) is served
by public utilities, water and sewer (or septic facilities), (iii) is a separate
tax parcel (or has reserved funds sufficient to cover taxes for the entire tax
parcel) and (iv) has parking as required under applicable law.
(t) The Borrower has not advanced additional funds for principal and
interest or taxes and insurance or knowingly received any advance of funds from
a party other than the Owner for the payment of any amount required by the
Property.
(u) The Property Loan Documents contain no provision
limiting the right or ability of the Borrower to assign, transfer and convey the
Property Loan Documents to any other Person.
(v) Attached hereto as Schedule 2 is a rent roll (the "Rent Roll") for the
Property. The Rent Roll is true, correct and complete in all material respects
with respect to the subject matter thereof. The only Leases affecting the
Property are those reflected in the Rent Roll. To Borrower's knowledge following
inquiry as a duly diligent lender, except as set forth in Schedule 1: (i) each
Lease is in full force and effect; (ii) except for those Leases with terms that
have not yet commenced, the tenants under the Leases have accepted possession of
and are in occupancy of all of their respective demised premises (unless such
demised premises or portions thereof, have been subleased), have commenced the
payment of rent under such Leases and there are no offsets, claims or defenses
to the enforcement thereof; (iii) all rents due and payable under the Leases
have been paid and no portion thereof has been paid for any period more than
thirty (30) days in advance; (iv) the rent payable under each Lease is the
amount set forth in the Rent Roll and there is no claim or basis for a claim by
the tenant thereunder for an adjustment to the rent; (v) no tenant has made any
claim against the landlord under the Leases which remains outstanding and there
are no defaults on the part of the landlord under any Lease and no event has
occurred which, with the giving of notice or passage of time, or both, would
constitute such default; and (vi) there is no present material default by any
tenant under any Lease. None of the Leases contains any option to purchase or
right of first refusal to purchase the Property or any part thereof. The Leases
have not been assigned or pledged except to Lender and Borrower, and no other
person whatsoever has any interest therein except the tenants and Landlord
thereunder pursuant to the Leases.
(w) To Borrower's actual knowledge, the survey for the Property delivered
to Lender in connection with this Agreement does not fail to reflect any
material matter affecting the Property or the title thereto.
Section 4.3 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 survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower. 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. AFFIRMATIVE COVENANTS
---------------------
Section 5.1 BORROWER COVENANTS. From the date hereof and until payment and
performance in full of all obligations of Borrower under the Loan Documents,
Borrower hereby covenants and agrees with Lender that:
(a) Existence; Compliance with Legal Requirements; Insurance. 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
and comply with all Legal Requirements applicable to it and cause the Owner to
comply with all Legal Requirements applicable to Owner or the Property. Borrower
shall at all times maintain, preserve and protect all franchises and trade names
and preserve all the remainder of its property used or useful in the conduct of
its business and shall cause the Owner to 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.
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(b) Taxes and Other Charges. Borrower shall cause Owner to pay all Taxes
and Other Charges now or hereafter levied or assessed or imposed against the
Property or any part thereof as the same become due and payable, other than
those which it is protesting in good faith by appropriate proceedings diligently
pursued in accordance with this Section. Borrower will deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes and
Other Charges have been so paid or are not then delinquent no later than thirty
(30) days prior to the date on which the Taxes and/or Other Charges would
otherwise be delinquent if not paid. Borrower shall permit suffer and when due
shall cause to be paid and discharged by owner any lien or charge whatsoever
which may be or become a lien or charge against the Property (other than those
liens or charges which Owner is protesting in good faith by appropriate
proceedings, diligently pursued in accordance with the terms of the Property
Loan Documents).
(c) Litigation. Borrower shall give prompt written notice to Lender of any
litigation or governmental proceedings pending or threatened against Borrower
which is reasonably likely to materially adversely affect Borrower's condition
(financial or otherwise) or business or, to Borrower's knowledge, the Property
or Owner.
(d) Premises. Borrower shall cooperate with Lender in exercising its
inspection rights under the Property Loan Documents to permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower's or the Property's condition, financial or
otherwise, or of the occurrence of any Default or Event of Default of which
Borrower has knowledge hereunder or under the Property Loan Documents.
(f) Cooperate in Legal Proceedings. Borrower shall cooperate fully with
Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way materially adversely affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
other Loan Documents and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.
(g) 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 Borrower.
(h) Insurance Benefits. Borrower shall cooperate with Lender in obtaining
for Lender the benefits of any Insurance Proceeds lawfully or equitably payable
in accordance with Section 7.1 hereof in connection with the Property, and
Lender shall be reimbursed for any expenses incurred in connection therewith
(including attorneys' fees and disbursements, and the expense of an appraisal on
behalf of Lender in case of a fire or other casualty affecting the Property or
any part thereof) out of such Insurance Proceeds.
(i) Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
(A) furnish 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 furnished to it pursuant
to the terms of the Property Loan Documents.
(B) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure its obligations under the Loan Documents, as
Lender may reasonably require, so long as Borrower's obligations or liability
are not materially increased thereby or any of Borrower's rights or remedies are
not materially diminished thereby; and
(C) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Loan Documents, as
Lender shall reasonably require from time to time, so long as Borrower's
obligations and liability are not materially increased thereby and Borrower's
rights and remedies are not materially diminished thereby.
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(j) Financial Reporting.
(i) Borrower will cause Owner to keep and maintain on a Fiscal Year
basis, in accordance with GAAP or another method of preparation approved by
Lender, proper and accurate books, records and accounts reflecting all of the
financial affairs of the Property and all items of income and expense in
connection with the operation of the Property and in connection with any
services, equipment or furnishings provided in connection with the operation of
the Property, whether such income or expense be realized by Owner or by any
other Person whatsoever, excepting lessees unrelated to and unaffiliated with
Owner who have leased from Owner portions of the Property for the purpose of
occupying the same. Lender shall have the right from time to time at all times
during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Borrower or other Person maintaining such
books, records and accounts and to make such copies or extracts thereof as
Lender shall desire. After the occurrence and during the continuance of an Event
of Default, Borrower shall pay any costs and expenses incurred by Lender to
examine accounting records with respect to the Property, as Lender shall
determine to be necessary or appropriate in the protection of Lender's interest.
(ii) Borrower will furnish to Lender promptly upon receipt all
financial reports and other information and documentation provided to Borrower
under the Property Loan Documents. Borrower shall also cause Manager to provide
such information regarding the Property as may be requested from time to time
provided such information is customarily maintained by Borrower.
(k) Business and Operations. Borrower will continue to engage in the
business presently conducted by it. Borrower will qualify to do business and
will remain in good standing under the laws of each jurisdiction as and to the
extent the same are required for the conduct of its business.
(l) Title to the Property Loan. Borrower will warrant and defend (i) the
title to the Property Loan and (ii) the validity and priority of the Lien of the
Assignment of Loan Documents, in each case against the claims of all Persons
whomsoever. 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 Loan, other than as permitted hereunder,
is claimed by another Person.
(m) Costs of Enforcement. In the event (i) that the Loan Documents are put
into the hands of an attorney for collection, suit, action or foreclosure, or
(ii) of the bankruptcy, insolvency, rehabilitation or other similar proceeding
in respect of Borrower or Owner or an assignment by Borrower or Owner 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 in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, which shall be
due and payable together with all required service or use taxes.
(n) Estoppel Statement.
(i) After request by Lender, Borrower shall within ten (10) days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(A) the unpaid principal amount of the Note and the Property Loan, (B) the
Interest Rate of the Note, (C) the date installments of interest and/or
principal were last paid on the Note and Property Loan, (D) any offsets or
defenses to the payment of the Debt, if any and (E) that the Note, this
Agreement, the Mortgage and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(ii) After request by Lender (but no more frequently than once in any
year), Borrower shall within ten (10) days furnish Lender with a certificate
reaffirming all representations and warranties of Borrower set forth herein and
in the other Loan Documents as of the date requested by Lender or, to the extent
of any changes to any such representations and warranties, so stating such
changes.
(o) 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.
(p) Amendments by Borrower. Borrower 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 Borrower without the
prior written consent of Lender.
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(q) Confirmation of Representations. In addition to and not in limitation
of the covenants and agreements of Borrower contained in Section 9.1, Borrower
shall deliver, in connection with any Secondary Market Transaction, (i)
Officer's Certificates certifying as to the accuracy of all representations made
by Borrower in the Loan Documents as of the date of the closing of such
Secondary Market Transaction (with such modification thereto to make such
representation factually accurate) and (ii) certificates of the relevant
Governmental Authorities in all relevant jurisdictions indicating the good
standing and qualification of Borrower as of the date of the Secondary Market
Transaction.
(r) Budgets. Borrower shall furnish to Lender promptly upon receipt all
budgets and other information received by Borrower under the terms of the Cash
Collateral Account Agreement or Management Agreement. Borrower shall not approve
any budget or consent to any disbursement requiring its approval without the
prior consent of Lender.
(s) No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of the Property (i) with any other real property constituting a
tax lot separate from the Property and (ii) 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 the Property.
(t) Principal Place of Business. Borrower shall not change its principal
place of business set forth on the first page of this Agreement without first
giving Lender thirty (30) days prior written notice.
(u) Interest Rate Protection. Attached hereto as Exhibit D is Lender's
standard form of forward rate lock agreement (the "Rate Lock Agreement"). The
defined terms used in this Section 5.1(x) and not otherwise defined herein shall
have the meanings set forth in the Rate Lock Agreement. If at any time during
the term of the Loan the hypothetical loan constant determined by using the
Benchmark Treasury Rate, a loan spread of 200 basis points, and assuming a
thirty year amortization schedule would exceed 9.23%, then Borrower will be
required to immediately lock an interest rate pursuant to the Rate Lock
Agreement for an Anticipated Loan Amount equal to the outstanding balance of the
Loan, for an effective term of ten years, and for a Rate Lock Period expiring no
earlier than the Stated Maturity Date. The "number of months forward" for
purposes of the Rate Lock Agreement shall be the number of months from the time
of the rate lock to the Stated Maturity Date. Borrowers agree to enter execute a
Rate Lock Agreement reflecting the terms of the rate lock upon notice from
Lender but all references to a Rate Lock Deposit shall be deleted. Borrower
hereby irrevocably designates Capital America as its attorney-in-fact to lock
its interest rate in accordance with the foregoing and do all things necessary
and required in order to effectuate and consummate the rate lock and such rate
lock shall be governed by the terms of the Rate Lock Agreement with the same
effect as if Borrower and Capital America had actually executed it. Any such
agreement shall be considered a Loan Document hereunder and shall be secured by
all the Loan Documents and covered by the terms of the Guaranty. Borrower
acknowledges and agrees that although Lender has the right to unilaterally lock
the rate at any time the hypothetical debt service constant exceeds 9.23%,
Lender shall have no liability to Borrower if it does not lock such rate or if
it does not lock the rate at the lowest possible rate provided that Lender
agrees to act in good faith to lock the rate at a market rate at the time the
rate lock occurs. Borrower further acknowledges that the rate locked will affect
the pricing on any permanent financing that may be available from Lender in
order to repay this Facility. If Borrower obtains permanent financing from
Lender the hedge position pursuant to the Rate Lock Agreement can be used in
connection with such permanent financing. If Borrower repays the Loan and does
not obtain permanent financing from Lender, then Borrower acknowledges that the
corresponding hedge positions in connection with the Rate Lock Agreement will
need to be unwound and that any losses incurred shall be the responsibility of
Borrower. If any gains are realized in connection with the unwinding of such
hedge position, then such gains will be applied by Lender to reduce the
outstanding balance of the Loan.
Section 5.2 SPECIAL COVENANTS REGARDING THE PROPERTY LOAN.
(a) Notice of Defaults. Promptly upon becoming aware of the same, the
Borrower shall notify the Lender of any default or event of default (howsoever
denominated) under any Property Loan Document which continues beyond any
applicable notice or grace period. The Borrower shall deliver to the Lender,
promptly after receipt thereof, copies of all material notices and other
material correspondence from Owner.
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(b) Enforcement. Subject to the Loan Documents, Borrower shall, with
Lender's prior written consent (which shall not be unreasonably withheld or
delayed), enforce all of the material terms, conditions and provisions of the
Property Loan Documents; provided, however, Borrower will not take any
enforcement or other action that could adversely affect the priority of the
Property Loan Documents. If an event of default (however denominated) shall
occur under the Property Loan, Borrower shall, at Lender's direction, take such
lawful and appropriate enforcement or other remedial actions as deemed
reasonably necessary by Lender subject to the Loan Documents. If Lender consents
to Borrower foreclosing the Mortgage or acquiring the Property by conveyance in
lieu of foreclosure, then Borrower shall take all steps reasonably necessary so
that upon such foreclosure, Lender shall simultaneously receive a first mortgage
on the Property to secure the Loan and such related collateral as may be
customary for Lender to receive in connection with similar first mortgage loans.
(c) Subordinate Loan. Borrower shall not consent to any modification or
amendment of, or waive any of the terms and conditions of, the Subordination
Agreement or any of the documents evidencing or securing the Subordinate Loan,
Borrower shall not consent to the granting of any additional security or any
guaranty for all or any part of the Subordinate Loan.
(d) Application of Funds. Any funds received or collected by Borrower in
respect of the Property Loan in any manner whatsoever, whether by payment,
prepayment, foreclosure or otherwise, shall be received and held by Borrower in
accordance with and subject to the provisions of this Agreement and the other
Loan Documents and the same shall be paid to such escrow or other accounts or
over to Lender as required under this Agreement and the other Loan Documents. If
Borrower receives any prepayment of principal, Borrower shall be required to
prepay a like amount of the outstanding balance of the Loan. Borrower shall not
modify or attempt to modify the instructions to the Cash Collateral Account Bank
and any such attempted modification shall be deemed null and void and of no
force and effect.
(e) Notice of Casualty or Condemnation. Borrower shall promptly notify
Lender of any casualty or the commencement of any condemnation proceedings which
affect any portion of the Property.
(f) Release or Amendment. The Borrower shall not release any collateral
securing, or any Person liable for, the payment or performance of all or any
part of the Property Loan or amend or modify any of the Property Loan Documents
without the prior written consent of Lender. Without limiting the foregoing
Borrower shall not accept a conveyance of the Property in lieu of foreclosure
with Lender's prior written consent.
(g) Performance. Borrower shall perform all of its material obligations
under the Property Loan Documents.
(h) Management Agreement. The Borrower shall not consent to any waiver,
termination, amendment or cancellation of any management agreement, without the
Lender's prior written consent.
(i) Leases. If, under the terms of any of the Property Documents, Owner is
obligated to obtain Borrower's consent to any new Lease or other occupancy
arrangement relating to the Property, or any amendment to an existing Lease,
then, prior to granting such consent, Borrower shall be obligated to provide to
Lender any information provided to Borrower by Owner regarding such Lease and to
obtain Lender's prior written approval of Borrower granting such consent (which
approval shall not be unreasonably withheld or delayed) and shall be deemed
given unless Lender affirmatively denies such request within ten (10) Business
Days.
(j) Consents and Waivers. Borrower shall not grant any consents or waivers
under the terms of the Property Loan Documents without the prior written consent
of Lender.
VI. NEGATIVE COVENANTS
------------------
Section 6.1 Borrower's Negative Covenants. From the date hereof until
payment and performance in full of all obligations of Borrower under the Loan
Documents, Borrower covenants and agrees with Lender that it will not do,
directly or indirectly, any of the following:
(a) Dissolution. Borrower shall not dissolve, terminate, liquidate,
merge with or consolidate into another Person.
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(b) Change In Business. Borrower shall not enter into any line of
business other than the ownership and operation of the Property Loan.
(c) Debt Cancellation. Borrower shall not cancel or otherwise forgive
or release any claim or debt owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business in its
reasonable judgment.
(d) Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or any of the members of
Borrower except in the ordinary course of business and on terms which are fully
disclosed to Lender in advance and are no less favorable to Borrower or such
Affiliate than would be obtained in a comparable arms-length transaction with an
unrelated third party.
(e) Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any of the Property or seek any variance
under any existing zoning ordinance or permit the use of any portion of any of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
(f) Debt. Borrower shall not create, incur or assume any debt
(including subordinate debt) other than the Debt. In addition, no Person owning
any interest in Borrower shall pledge, transfer or otherwise dispose of its
interest in Borrower to secure any financing for the benefit of such Person,
Borrower or the Property.
(g) Transfers. Borrower shall not, without the prior written consent
of Lender, suffer or permit the sale, assignment or transfer (collectively,
"Transfer") of (i) all or any part of the Property Loan, (ii) any direct
interest in Borrower or (iii) any direct or indirect interest in any member of
Borrower other than (A) the issuance or transfer of beneficial interests in
Prime Group Realty Trust, a Maryland real estate investment trust, so long as
such issuance or transfer does not result in a change in Control of Prime Group
Realty Trust and so long as such issuance or transfer does not affect the
non-consolidation opinion delivered by Borrower, and (B) the issuance or
transfer of limited partner interests in Prime Group Realty L.P., a Delaware
limited partnership, or a conversion of a one percent general partnership
interest owned beneficially by The Xxxxx Group, L.L.C. in Prime Group Realty
L.P. into a limited partnership interest in Prime Group Realty L.P., so long as
such issuance or transfer does not result in a change in Control of Prime Group
Realty L.P. and so long as such issuance or transfer does not affect the
non-consolidation opinion delivered by Borrower. No Transfer consented to by
Lender pursuant to clause (ii) or (iii) above shall be permitted unless Lender
shall have received (a) evidence in writing from the applicable Rating Agencies
to the effect that such a Transfer will not result in a qualification,
withdrawal or downgrading of the ratings in effect immediately prior to such
Transfer for the Securities issued in connection with the Securitization which
are then outstanding and (b) a non-consolidation opinion satisfactory to Lender
from the transferee's counsel. On or before the completion of any such permitted
Transfer, Borrower will pay all reasonable expenses of Lender incurred in
connection therewith. Notwithstanding anything to the contrary contained in this
clause (j), holders of interests in Borrower (or holders of interests in any
entity directly or indirectly holding an interest in Borrower) as of the date
hereof (the "Interest Holders") shall have the right to transfer their interest
in Borrower (or any entity directly or indirectly holding an interest in
Borrower) to another Person who is not an Interest Holder, including without
limitation immediate family members for estate planning purposes, without
Lender's consent; provided, however, that:
(i) after taking into account any prior transfers pursuant to
this sentence, whether to the proposed transferee or otherwise, no such transfer
(or series of transfers) shall result in (A) the proposed transferee, together
with all members of his/her immediate family or any affiliates thereof, owning
in the aggregate (directly, indirectly or beneficially) more than 20% of the
interests in Borrower (or any entity directly or indirectly holding an interest
in Borrower) or (B) a transfer in the aggregate of more than 20% of the
interests in Borrower as of the date hereof;
(ii) no such transfer of interest shall result in a change of
control of Borrower;
(iii) Borrower shall give Lender notice of such transfer together
with copies of all instruments effecting such transfer not less than ten (10)
days prior to the date of such transfer;
(iv) no Event of Default has occurred and remains uncured; and
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(v) the legal and financial structure of Borrower after such
transfer and its members and the single purpose nature and bankruptcy remoteness
of Borrower and its shareholders, partners or members satisfies Lender's then
current applicable underwriting criteria and requirements, including without
limitation the requirement at the request of Lender to deliver written
confirmations from the Rating Agencies that such transfer or series of transfers
will not result in a qualification, downgrade or withdrawal of the then
applicable ratings.
For purposes of this clause (j), (A) a change of control of Borrower shall be
deemed to have occurred if there is any change in the identity of the individual
or entities or group of individuals or entities who have the right, by virtue of
any partnership agreement, articles of incorporation, bylaws, articles of
organization, operating agreement or any other agreement, with or without taking
any formative action, to cause Borrower to take some action or to prevent,
restrict or impede Borrower from taking some action which, in either case,
Borrower could take or could refrain from taking were it not for the rights of
such individuals; and (B) an "immediate family member" shall mean a spouse or a
child of any Interest Holder.
VII. CASUALTY; CONDEMNATION; ESCROWS
-------------------------------
Section 7.1 INSURANCE; CASUALTY AND CONDEMNATION.
7.1.1 INSURANCE.
(a) Borrower, at no cost to Lender, for the mutual benefit of Borrower and
Lender, shall cause Owner to keep the Property insured and obtain and maintain
during the Term policies of insurance insuring against loss or damage by
standard, "all-risk" perils in accordance with the Property Loan Documents. Such
insurance (i) shall be in an amount equal to the greatest of (A) the then full
replacement cost of the Property without deduction for physical depreciation,
(B) the outstanding principal balance of the Loan and (C) such amount that the
insurer would not deem Borrower a co-insurer under said policies and (ii) and
shall have deductibles no greater than five percent (5%) of the full replacement
cost of the Property. The premiums for such policies of insurance carried in
accordance with this paragraph shall be paid annually in advance and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Borrower, at no cost to Lender, for the mutual benefit of Borrower and
Lender, shall also cause Owner to obtain and maintain during the Term the
following policies of insurance:
(i) Flood insurance if any part of the Property is located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards and in which flood insurance has been made available under the
National Flood Insurance Program in an amount at least equal to the Debt or the
maximum limit of coverage available with respect to the Property under said
program, whichever is less.
(ii) Commercial general liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate for any policy year. In addition, at
least $10,000,000 excess and/or umbrella liability insurance shall be obtained
and maintained for any and all claims, including all legal liability imposed
upon Borrower and all court costs and attorneys' fees incurred in connection
with the ownership, operation and maintenance of the Property.
(iii) Rental loss and/or business interruption insurance in an amount
equal to the greater of (A) the estimated gross revenues from the operations of
the Property for the next succeeding eighteen (18) month period or (B) the
projected operating expenses (including Debt Service) for the maintenance and
operation of the Property for the next succeeding eighteen (18) month period.
The amount of such insurance shall be increased from time to time during the
Term as and when the Rents increase or the estimate of (or the actual) gross
revenue, as may be applicable, increases.
(iv) Insurance against loss or damage from (A) leakage of sprinkler
systems and (B) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and equipment, pressure vessels or similar apparatus
now or hereafter installed in any of the Improvements (without exclusion for
explosions), in an amount at least equal to $2,000,000 for the Property.
(v) Worker's compensation insurance with respect to any employees of
Borrower, as required by any governmental authority or legal requirement.
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(vi) 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
Property against such risks (including fire and extended coverage and collapse
of the Improvements to agreed limits) as Lender may request, in form and
substance acceptable to Lender.
(vii) Coverage to compensate for the cost of demolition and the
increased cost of construction for the Property in an amount satisfactory to
Lender.
(viii) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests.
(c) All policies of insurance (the "Policies") required pursuant to Section
7.1.1(b) shall be issued by companies reasonably approved by Lender and licensed
to do business in the State, with a claims paying ability rating of "A" or
better by Standard & Poor's Ratings Group; (ii) shall name Borrower and its
successors and/or assigns as their interest may appear as the mortgagee; (iii)
shall contain a Non-Contributory Standard Lender Clause and a Lender's Loss
Payable Endorsement, or their equivalents, naming Borrower as the person to
which all payments made by such insurance company shall be paid; (iv) shall
contain a waiver of subrogation against Lender; (v) shall be maintained
throughout the Term without cost to Lender; (vi) shall be assigned and the
certificates thereof delivered to Lender; and (vii) shall contain endorsements
providing that neither Borrower, Lender nor any other party shall be a
co-insurer under said Policies and that Lender shall receive at least thirty
(30) days prior written notice of any modification, reduction or cancellation of
any of the Policies; and (viii) shall be satisfactory in form and substance to
Lender and shall be approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. Borrower shall require Owner to pay the
premiums for such Policies (the "Insurance Premiums") as the same become due and
payable and shall furnish to Lender evidence of the renewal of each of the
Policies with receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Lender. If Borrower does not
furnish such evidence and receipts at least ten (10) days prior to the
expiration of any expiring Policy, then Lender may procure, but shall not be
obligated to procure, such insurance and pay the Insurance Premiums therefor,
and Borrower agrees to reimburse Lender for the cost of such Insurance Premiums
promptly on demand. Within thirty (30) days after request by Lender, Borrower
shall require Owner to obtain, provided Borrower has the right to do so under
the Property Loan Documents, such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws, and changes
in prudent customs and practices.
(d) If any Property is damaged or destroyed, in whole or in part, by fire
or other casualty (an "Insured Casualty"), Borrower shall give prompt notice
thereof to Lender. Following the occurrence of an Insured Casualty, unless the
Loan is repaid in full, Borrower shall cause Owner to promptly proceed to
restore, repair, replace or rebuild the Property to be of at least equal value
and of substantially the same character as prior to such damage or destruction,
all to be effected in accordance with Legal Requirements. The expenses incurred
by Lender in the adjustment and collection of insurance proceeds shall become
part of the Debt and be secured hereby and shall be reimbursed by Borrower to
Lender upon demand.
7.1.2 CASUALTY AND APPLICATION OF PROCEEDS.
(a) In case of loss or damages covered by any of the Policies, the
following provisions shall apply subject to the terms, provisions and conditions
of the Property Loan Documents:
(i) If an Insured Casualty does not exceed $200,000, Borrower may
settle and adjust (or allow Owner to settle and adjust) any claim without the
consent of Lender; provided that such adjustment is carried out in a competent
and timely manner. In such case, Borrower is hereby authorized to collect and
receipt for any such insurance proceeds.
(ii) If an Insured Casualty shall equal or exceed $200,000, Borrower
may settle and adjust (or allow Owner to settle and adjust) any claim but only
with the consent of Lender and agree with the insurance company or companies on
the amount to be paid on the loss, and the proceeds of any such policy shall be
due and payable solely to Borrower, as mortgagee, but in accordance with the
terms hereof held in escrow by Lender (to the extent permitted under the
Property Loan Documents) and otherwise pursuant to the Cash Collateral Account
Agreement and Custody Agreement.
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(b) In the event of an Insured Casualty where the loss is in an aggregate
amount less than $2,000,000, and if, in the reasonable judgment of Lender, the
Property can be restored within six (6) months to an economic unit not less
valuable and not less useful than the same was prior to the Insured Casualty,
and after such restoration will adequately secure the Debt, then, if no Default
or Event of Default shall have occurred and be then continuing, the proceeds of
insurance (after reimbursement of any expenses incurred by Lender) shall be
applied to reimburse Owner for the cost of restoring, repairing, replacing or
rebuilding the Property or part thereof subject to the Insured Casualty (the
"Restoration"), in the manner set forth herein. Borrower hereby covenants and
agrees to cause Owner to commence and diligently prosecute such Restoration;
provided that (i) Borrower shall pay all costs (and if required by Lender,
Borrower shall deposit the total thereof with Lender in advance) of such
Restoration in excess of the net proceeds of insurance made available pursuant
to the terms hereof; (ii) the Restoration shall be done in compliance with all
Legal Requirements; and (iii) Lender shall have received evidence reasonably
satisfactory to it that, during the period of the Restoration, the sum of (A)
income derived from the Property, as reasonably determined by Lender, plus (B)
proceeds of rent loss insurance or business interruption insurance, if any, to
be paid will equal or exceed the sum of (I) expenses in connection with the
operation of the Property and (II) the Debt Service under the Loan.
(c) Except as provided above, the proceeds of insurance collected upon any
Insured Casualty shall, at the option of Lender in its sole discretion, be
applied to the payment of the Debt or applied to allow Borrower to reimburse
Owner for the cost of any Restoration, in the manner set forth below. If such
proceeds are applied to the Debit, no fee pursuant to Section 2.3.1 shall be due
in connection with such payment.
(d) If Borrower is entitled to reimbursement out of insurance proceeds held
by Lender, such proceeds shall be disbursed from time to time upon Lender being
furnished with (i) evidence satisfactory to it of the estimated cost of
completion of the Restoration, (ii) funds or, at Lender's option, assurances
satisfactory to Lender that such funds are available, sufficient in addition to
the proceeds of insurance to complete the proposed Restoration, (iii) such
architect's certificates, waivers of lien, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey and such other evidences of cost,
payment and performance as Lender may reasonably require and approve and (iv)
all plans and specifications for such Restoration, such plans and specifications
to be approved by Lender prior to commencement of any work. In addition, no
payment made prior to the final completion of the Restoration shall exceed
ninety percent (90%) of the value of the work performed from time to time; funds
other than proceeds of insurance shall be disbursed prior to disbursement of
such proceeds; and at all times, the undisbursed balance of such proceeds
remaining in the hands of Lender, together with funds deposited for that purpose
or irrevocably committed to the satisfaction of Lender by or on behalf of
Borrower for that purpose, shall be at least sufficient in the reasonable
judgment of Lender to pay for the cost of completion of the Restoration, free
and clear of all liens or claims for lien. Any surplus which may remain out of
insurance proceeds held by Lender after payment of such costs of Restoration
shall be paid to Borrower.
7.1.3 CONDEMNATION.
(a) Borrower shall promptly give Lender written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting the Property (a "Condemnation") and shall deliver to Lender copies of
any and all papers served in connection with such Condemnation. Following the
occurrence of a Condemnation, Borrower, regardless of whether an Award is
available, shall promptly cause Owner to proceed to restore, repair, replace or
rebuild the Property to the extent practicable to be of at least equal value and
of substantially the same character as prior to such Condemnation, all to be
effected in accordance with Legal Requirements.
(b) Lender is hereby irrevocably appointed as Borrower's attorney-in-fact,
coupled with an interest, with exclusive power to exercise all of Borrower's
rights to collect, receive and retain any award or payment in respect of a
Condemnation (an "Award") and to make any compromise or settlement in connection
with such Condemnation, subject to the provisions of this Section and the
Property Loan Documents. Notwithstanding any Condemnation by any public or
quasi-public authority (including any transfer made in lieu of or in
anticipation of such a Condemnation), Borrower shall continue to pay the Debt at
the time and in the manner provided for in the Note, in this Agreement and the
other Loan Documents and the Debt shall not be reduced unless and until any
Award shall have been actually received and applied by Lender to expenses of
collecting the Award and to discharge of the Debt. Lender shall not be limited
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to the interest paid on the Award by the condemning authority but shall be
entitled to receive out of the Award interest at the rate or rates provided in
the Note. Borrower shall cause any Award that is payable to Borrower to be paid
directly to Lender.
(c) In the event of any Condemnation where the Award is in an aggregate
amount less than $2,000,000, and if, in the reasonable judgment of Lender, the
Property can be restored within six (6) months to an economic unit not less
valuable and not less useful than the same was prior to the Condemnation, and
after such restoration will adequately secure the Debt, then, if no Default or
Event of Default shall have occurred and be then continuing, the proceeds of the
Award (after reimbursement of any expenses incurred by Lender) shall be applied
to reimburse Owner for the cost of restoring, repairing, replacing or rebuilding
the Property or part thereof subject to Condemnation (the "Condemnation
Restoration") in the manner set forth below. Subject to the Loan Documents,
Borrower hereby covenants and agrees to cause Owner to commence and diligently
to prosecute such Condemnation Restoration; provided that (i) Borrower shall
cause Owner to pay all costs (and if required by Lender, Borrower shall deposit
the total thereof with Lender in advance) of such Condemnation Restoration in
excess of the Award made available pursuant to the terms hereof; (ii) the
Condemnation Restoration shall be done in compliance with all Legal
Requirements; and (iii) Lender shall have received evidence reasonably
satisfactory to it that, during the period of the Condemnation Restoration, the
sum of (A) income derived from the Property, as reasonably determined by Lender,
plus (B) proceeds of rent loss insurance or business interruption insurance, if
any, to be paid will equal or exceed the sum of (I) expenses in connection with
the operation of the Property and (II) the Debt Service under the Loan.
(d) Except as provided above, the Award collected upon any Condemnation
shall, at the option of Lender in its sole discretion, be applied to the payment
of the Debt or applied to allow Borrower to reimburse Owner for the cost of the
Condemnation Restoration in the manner set forth below. If the Award is applied
to the Debt, no fee pursuant to Section 2.3.1 shall be due in connection with
such payment.
(e) In the event Borrower is entitled to reimbursement out of the Award
received by Lender, such proceeds shall be disbursed from time to time upon
Lender being furnished with (i) evidence satisfactory to it of the estimated
cost of completion of the Condemnation Restoration, (ii) funds or, at Lender's
option, assurances satisfactory to Lender that such funds are available,
sufficient in addition to the proceeds of the Award to complete the Condemnation
Restoration, (iii) such architect's certificates, waivers of lien, contractor's
sworn statements, title insurance endorsements, bonds, plats of survey and such
other evidences of costs, payment and performance as Lender may reasonably
require and approve; and (iv) all plans and specifications for such Condemnation
Restoration, such plans and specifications to be approved by Lender prior to
commencement of work. In addition, no payment made prior to the final completion
of the restoration, repair, replacement and rebuilding shall exceed ninety
percent (90%) of the value of the work performed from time to time; (y) funds
other than proceeds of the Award shall be disbursed prior to disbursement of
such proceeds; and (z) at all times, the undisbursed balance of such proceeds
remaining in the hands of Lender, together with funds deposited for that purpose
or irrevocably committed to the satisfaction of Lender by or on behalf of
Borrower for that purpose, shall be at least sufficient in the reasonable
judgment of Lender to pay for the costs of completion of the Condemnation
Restoration free and clear of all liens or claims for lien. Any surplus which
may remain out of the Award received by Lender after payment of such costs of
restoration, repair, replacement or rebuilding shall, in the sole and absolute
discretion of Lender, be retained by Lender and applied to payment of the Debt.
Section 7.2 REQUIRED REPAIR; REQUIRED REPAIR FUNDS.
7.2.1 REQUIRED REPAIRS: DEPOSITS. Borrower shall cause the performance of
the repairs, if any, at the Property set forth on Schedule 3 annexed hereto (the
"Required Repairs"). Borrower shall complete each of the Required Repairs on or
before the deadline for same set forth on Schedule 3. On the Closing Date,
Borrower shall deposit with Lender or cause to be deposited the amount set forth
on Schedule 3 hereto to perform the Required Repairs for the Property. Amounts
so deposited with Lender (the "Required Repair Fund") shall be held by Lender in
an account (the "Required Repair Account") in Lender's name at a financial
institution selected by Lender in its sole discretion and shall be invested in
Permitted Investments.
7.2.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges, assigns and
grants a security interest to Lender, as security for payment of all sums due in
respect of the Loan and the performance of all other terms, conditions and
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covenants of the Loan Documents and this Agreement on Borrower's part to be paid
and performed, all of Borrower's right, title and interest in and to the
Required Repair Fund and the Required Repair Account. Borrower shall not,
without obtaining the prior written consent of Lender, further pledge, assign or
grant any security interest in the Required Repair Fund or the Required Repair
Account or permit any lien or encumbrance to attach thereto, or any levy to be
made thereon, or any UCC-l Financing Statements, except those naming Lender as
the secured party, to be filed with respect thereto.
7.2.3 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse to Borrower
all Required Repair Funds in the Required Repair Account upon satisfaction by
Borrower of each of the following conditions: (a) Borrower shall submit a
written request for payment to Lender at least thirty (30) days prior to the
date on which Borrower requests such payment be made (except in the case of an
emergency repair which requires immediate attention, in which event Borrower may
submit such payment request within ten (10) days), (b) on the date such request
is received by Lender and on the date such payment is to be made, no Event of
Default shall exist and remain uncured, (c) Lender shall have received an
Officer's Certificate from Borrower certifying that all Required Repairs at the
Property for which disbursement has been requested have been completed (i) in a
good and workmanlike manner and (ii) in accordance with all applicable Legal
Requirements, such certificate to be accompanied by a copy of each license,
permit or other approval, if any, required by any Governmental Authority for the
use or occupancy of the Property, (d) Lender shall have received an Officer's
Certificate from Borrower (i) identifying each Person that supplied materials or
labor in connection with the Required Repairs for which disbursement has been
requested (ii) stating that each such Person has been paid in full or will be
paid in full with the funds disbursed, such certificate to be accompanied by a
copy of appropriate lien waivers or other evidence of payment satisfactory to
Lender, (e) at Lender's option, a title search for the Property indicating that
the Property is free from all liens, claims and other encumbrances not
previously approved by Lender and (f) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Repairs at the
Property have been completed and paid for or will be paid for with the proceeds
of such disbursement. Lender shall be required to make only one disbursement
from the Required Repair Account during a month and such disbursement shall be
made only upon satisfaction of each condition contained in this Section 7.2.3.
Upon completion of all Required Repairs in accordance with the terms hereof,
Lender shall disburse to Borrower any amounts then remaining in the Required
Repair Account.
7.2.4 FAILURE TO PERFORM REQUIRED REPAIRS. It shall be an Event of Default
under this Agreement if (a) Borrower does not complete the Required Repairs at
the Property by the required deadline for each repair as set forth on Schedule 3
or (b) Borrower does not satisfy each condition contained in Section 7.2.3
hereof. Upon the occurrence of an Event of Default, Lender, at its option, may
withdraw all Required Repair Funds from the Required Repair Account and Lender
may apply such funds either to completion of the Required Repairs at the
Property or toward payment of the Debt in such order, proportion and priority as
Lender may determine in its sole discretion. Lender's right to withdraw and
apply Required Repair Funds shall be in addition to all other rights and
remedies provided to Lender under this Agreement and the other Loan Documents.
Section 7.3 TAX AND INSURANCE ESCROW FUND.
7.3.1 TAX AND INSURANCE ESCROW FUND. Borrower shall cause to be deposited
in a subaccount under the terms of the Custody Agreement (a) on each Payment
Date, (i) one-twelfth (1/12) of the Taxes that Lender reasonably estimates will
be payable during the next ensuing twelve (12) months in order to accumulate
with Lender sufficient funds to pay all such Taxes at least thirty (30) days
prior to their respective due dates and (ii) one-twelfth (1/12) of the Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage
afforded by the 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 and (b) on the Closing Date, an
amount which, when combined with the monthly deposits described in (a) above,
shall be sufficient to pay the next installment of Taxes and the next required
payment of Insurance Premiums on the due date therefor (said amounts in (a) and
(b) above hereinafter called the "Tax and Insurance Escrow Fund"). The Tax and
Insurance Escrow Fund, and the payments of interest or principal or both,
payable pursuant to the Note, shall be added together and shall be paid as an
aggregate sum by Borrower to Lender. Lender will permit the Tax and Insurance
Escrow Fund to be applied to payments of Taxes and Insurance Premiums required
to be made by Borrower pursuant to Section 5.1 hereof or to reimburse Borrower
for such amounts upon presentation of evidence of payment and an Officer's
Certificate in form and substance satisfactory to Lender; subject, however, to
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Borrower's right to contest Taxes in accordance with Section 5.1(b) hereof. In
authorizing any payment relating to the Tax and Insurance Escrow Fund, Lender
may do so according to any xxxx, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such xxxx,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If at any time Lender determines
that the Tax and Insurance Escrow Fund is not or will not be sufficient to pay
the items set forth in (a) and (b) 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 delinquency of the Taxes and/or expiration of
the Policies, as the case may be.
7.3.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges, assigns and
grants a security interest to Lender, as security for payment of all sums due
under the Loan and the performance of all other terms, conditions and provisions
of the Loan Documents and this Agreement on Borrower's part to be paid and
performed, of all Borrower's right, title and interest in and to the Tax and
Insurance Escrow Fund. Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in the
Tax and Insurance Escrow Fund, or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto.
7.3.3 APPLICATION OF TAX AND INSURANCE ESCROW FUND. Upon the occurrence and
during the continuance of an Event of Default, Lender may direct that any sums
then present in the Tax and Insurance Escrow Fund be applied to the payment of
the following items in any order in its sole discretion: (a) Taxes and Other
Charges; (b) Insurance Premiums; (c) interest on the unpaid principal balance of
the Note; (d) amortization of the unpaid principal balance of the Note; or (e)
all other sums payable pursuant to this Agreement and the other Loan Documents.
Section 7.4 CAPITAL RESERVE FUND.
7.4.1 CAPITAL RESERVE FUND. Borrower shall cause to be deposited in a
subaccount under the terms of the Custody Agreement on each Payment Date an
amount equal to one-twelfth (1/12th) of the product obtained by multiplying $.25
by the aggregate amount of square feet of rentable space in the Property (said
amounts hereinafter called the "Capital Reserve Fund"). Lender will consent to
the application the Capital Reserve Fund to payment of Approved Capital Expenses
pursuant to the terms hereof; provided, however, if the Loan shall have been
accelerated or if there is an Event of Default which is continuing, then Lender
may direct that such Capital Reserve Fund be applied against the Debt in such
priority and proportions as Lender in its sole and absolute discretion shall
deem proper.
7.4.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges and assigns to
Lender, and grants to Lender a security interest in all Borrower's right, title
and interest in and to the Capital Reserve Fund, as security for payment of all
sums due under the Loan and the performance of all other terms, conditions and
provisions of the Loan Documents and this Agreement on Borrower's part to be
paid and performed. Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in the
Capital Reserve Fund, or permit any lien or encumbrance to attach thereto, or
any levy to be made thereon, or any UCC-1 Financing Statements, except those
naming Lender as the secured party, to be filed with respect thereto. This
Agreement is, among other things, intended by the parties to be a security
agreement for purposes of the Illinois Uniform Commercial Code.
7.4.3 APPLICATION OF CAPITAL RESERVE FUND. Upon the occurrence and during
the continuance of an Event of Default, Lender may direct that any sums then
present in the Capital Reserve Fund be applied to the payment of the following
items in any order in its sole discretion: (a) Capital Expenses; (b) interest on
the unpaid principal balance of the Note; (c) amortization of the unpaid
principal balance of the Note; or (d) all other sums payable pursuant to this
Agreement and the other Loan Documents.
7.4.4 PAYMENT OF CAPITAL EXPENSES. Funds held in the Capital Reserve Fund
may be used for Approved Capital Expenses in accordance with the terms of the
Cash Collateral Account Agreement.
Section 7.5 COLLATERAL SHORTFALL RESERVE FUND.
7.5.1 COLLATERAL SHORTFALL RESERVE FUND. Borrower shall cause to be
deposited with Lender the amount of the "Collateral Shortfall Deposit" (said
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amount hereinafter called the "Collateral Shortfall Reserve Fund") required
pursuant to the terms of that certain Standstill Agreement dated as of December
15, 1997 by and between Mayfair Joint Venture, LaSalle Land Partnership, L.P.,
LaSalle Lake Investors, and Borrower (as assignee of Prime Group Realty, L.P.).
7.5.2 GRANT OF SECURITY INTEREST. Borrower hereby pledges and assigns to
Lender, and grants to Lender a security interest in all Borrower's right, title
and interest in and to the Collateral Shortfall Reserve, as security for payment
of all sums due under the Loan and the performance of all other terms,
conditions and provisions of the Loan Documents and this Agreement on Borrower's
part to be paid and performed. Borrower shall not, without obtaining the prior
written consent of Lender, further pledge, assign or grant any security interest
in the Collateral Shortfall Reserve Fund, or permit any lien or encumbrance to
attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto. This Agreement is, among other things, intended by the parties
to be a security agreement for purposes of the Illinois Uniform Commercial Code.
7.5.3 APPLICATION OF COLLATERAL SHORTFALL RESERVE. Funds held in the
Collateral Shortfall Reserve Fund shall be used for payment of Debt Service upon
presentation to Lender of evidence satisfactory to Lender that sufficient funds
for payment of such Debt Service are not available in the account held pursuant
to the Custody Agreement for such purpose provided that upon the occurrence and
during the continuance of an Event of Default, Lender may direct that any sums
present in the Collateral Shortfall Reserve Fund be applied to the payment of
all sums payable pursuant to this Agreement and any other Loan Document in such
order as Lender may determine.
Section 7.6 PAYMENT OF APPROVED OPERATING EXPENSES. Funds held in the Cash
Collateral Account may be used for Approved Operating Expenses in accordance
with the terms of the Cash Collateral Account Agreement, provided that such use
shall be in Lender's discretion if an Event of Default has occurred and remains
uncured. VIII. DEFAULTS
Section 8.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of default
hereunder (each, an "Event of Default"):
(i) if any portion of the Debt is not paid when due;
(ii) if any of the Taxes or Other Charges are not paid when the same
are due and payable, subject to the right to contest Taxes and Other Charges in
accordance with Section 5.1(b) hereof, provided that such event shall not have
been cured within five (5) days;
(iii) if insurance on the Property is not kept in full force and
effect in accordance with the terms of this Agreement and the Property Loan
Documents, or if the certificates are not delivered to Lender within five (5)
Business Days following request;
(iv) if, without Lender's prior written consent, (A) Borrower
transfers or encumbers all or any portion of the Property Loan or (B) any direct
or indirect interest in Borrower is transferred or assigned except as expressly
permitted under Section 6.1(j) hereof;
(v) if any representation or warranty made by Borrower herein or in
any other Loan Document, or in any report, certificate, financial statement or
other instrument, agreement or document furnished by Borrower in connection with
this Agreement or any other Loan Document, shall be false or misleading in any
material respect as of the date the representation or warranty was made;
(vi) if Borrower or Owner shall make an assignment for the benefit of
creditors, or if Borrower or Owner shall generally not be paying its debts as
they become due;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower or Owner or if Borrower or Owner 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 Owner, or
if any proceeding for the dissolution or liquidation of Borrower shall be
instituted; and if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower or Owner, the same is not
discharged, stayed or dismissed within sixty (60) days;
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(viii) if Borrower attempts to assign its respective rights under this
Agreement in contravention of the Loan Documents or any of the other Loan
Documents or any interest herein or therein;
(ix) if Borrower defaults in any of its negative covenants contained
in Section 6.1 or any covenant contained in Section 4.1(dd) hereof;
(x) if an Event of Default as defined or described in any of the other
Loan Documents occurs, whether as to Borrower or the Property, or if any other
such event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate the maturity of any portion of the Debt or to permit
Lender to accelerate the maturity of all or any portion of the Debt;
(xi) if an Event of Default occurs under the Property Loan Documents;
(xii) if Borrower shall be in default under any term, covenant or
provision set forth herein which specifically contains a notice requirement or
grace period after the giving of such notice or the expiration of such grace
period; or (xiii) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xii) above, for fifteen (15) days after notice to Borrower
from Lender, in the case of any Default which can be cured by the payment of a
sum of money, or for thirty (30) days after notice from Lender in the case of
any other Default; provided, however, that if such non-monetary Default is
susceptible of cure but cannot reasonably be cured within such 30-day period and
provided further that Borrower shall have commenced to cure such Default within
such 30-day period and thereafter diligently and expeditiously proceeds to cure
the same, such 30-day period shall be extended for an additional period of time
as is reasonably necessary for Borrower in the exercise of due diligence to cure
such Default, such additional period not to exceed sixty (60) days.
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter Lender may, 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, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrower and in and to the Property
Loan Documents, including declaring the Debt to be immediately due and payable,
and Lender may enforce or avail itself of any or all rights or remedies provided
in the Loan Documents against Borrower and the Property, including all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt 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 any other Loan Document to the contrary notwithstanding.
Section 8.2 REMEDIES.
(a) Upon the occurrence 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 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 Debt 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. 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 is not 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.
(c) Subject to the Property Loan Documents, Lender shall have the right
from time to time to sever the Note and the other Loan Documents into one or
more separate notes, mortgages and other security documents in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
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sentence, all in form and substance reasonably satisfactory to Lender. In the
event Borrower fails to execute within five (5) days, Borrower hereby absolutely
and irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof.
Section 8.3 REMEDIES CUMULATIVE. The rights, powers and remedies of Lender
under this Agreement shall be cumulative and not exclusive of any other right,
power or remedy which Lender 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 shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
IX. SPECIAL PROVISIONS
------------------
Section 9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.
9.1.1 COOPERATION. At Lender's request (to the extent not already required
to be provided by Borrower under this Agreement), Borrower, at no cost and
expense to Borrower, shall use reasonable efforts to satisfy the market
standards to which Lender customarily adheres or which may be reasonably
required in the marketplace or by the Rating Agencies in connection with one or
more sales or assignments of the Note or participations therein or
securitizations of rated single or multiclass securities (the "Securities")
secured by or evidencing ownership interests in the Note and the Mortgage (each
such sale, assignment, participation and/or securitization, a "Secondary Market
Transaction"). Without limiting the generality of the foregoing, Borrower shall,
at the request of Lender in connection with any Secondary Market Transaction, at
no cost and expense to Borrower and so long as the Loan is still outstanding:
(a) (i) provide such financial and other information with respect to the
Property, Borrower and its Affiliates, Manager and any tenants of the Property
in Borrower's possession, (ii) provide business plans and budgets relating to
the Property and (iii) subject to the Property Loan Documents perform or permit
or cause to be performed or permitted such site inspection, appraisals, surveys,
market studies, environmental reviews and reports (Phase I's and, if
appropriate, Phase II's), engineering reports and other due diligence
investigations of the Property, as may be reasonably requested from time to time
by Lender or the Rating Agencies or as may be necessary or appropriate in
connection with a Secondary Market Transaction or Exchange Act requirements (the
items provided to Lender pursuant to this paragraph (a) being called the
"Provided Information"), together, if customary, with appropriate verification
of and/or consents to the Provided Information through letters of auditors or
opinions of counsel of independent attorneys acceptable to Lender and the Rating
Agencies;
(b) at Borrower's expense, cause counsel to render opinions as to
non-consolidation, fraudulent conveyance, true sale and true contribution and
any other opinion customary in securitization transactions with respect to the
Property, Borrower and its Affiliates, which counsel and opinions shall be
reasonably satisfactory to Lender and the Rating Agencies;
(c) make such representations and warranties as of the closing date of any
Secondary Market Transaction with respect to the Property, Borrower and the Loan
Documents as are customarily provided in such transactions and as may be
reasonably requested by Lender or the Rating Agencies and consistent with the
facts covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents;
(d) provide current certificates of good standing and qualification with
respect to Borrower from appropriate Governmental Authorities; and
(e) execute such amendments to the Loan Documents and Borrower's
organizational documents, enter into a lock-box or similar arrangement with
respect to the Rents and establish and fund such reserve funds (including
reserve funds for deferred maintenance and capital improvements) as may be
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requested by Lender or the Rating Agencies or otherwise to effect a Secondary
Market Transaction, provided that nothing contained in this subsection (e) shall
result in a material economic change in the transaction.
Lender shall pay all reasonable third party costs and expenses incurred by
Lender in connection with a Secondary Market Transaction
9.1.2 USE OF INFORMATION. Borrower understands that all or any portion of
the Provided Information and the Required Records may be included in disclosure
documents in connection with a Secondary Market Transaction, including a
prospectus or private placement memorandum (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 or other parties relating
to the Secondary Market Transaction. In the event that the Disclosure Document
is required to be revised, Borrower shall cooperate with Lender in updating the
Provided Information or Required Records for inclusion or summary in the
Disclosure Document or for other use reasonably required in connection with a
Secondary Market Transaction by providing all current information pertaining to
Borrower, Manager and the Property necessary to keep the Disclosure Document
accurate and complete in all material respects with respect to such matters.
Such disclosure may include the opinion or judgment of Lender or Servicer
concerning the Provided Information or other matters disclosed, and despite
reasonable good faith efforts by Lender and/or Servicer, the disclosure may be
erroneous or incomplete. Borrower hereby consents to any and all such
disclosures of such information.
9.1.3 BORROWER OBLIGATIONS REGARDING DISCLOSURE DOCUMENTS. In connection
with a Disclosure Document, Borrower shall:
(a) if requested by Lender, certify in writing that Borrower has carefully
examined those portions of such Disclosure Document, pertaining to Borrower, the
Property, the Manager and the Loan, including applicable portions of the
sections entitled "Special Considerations", "Description of the Mortgages",
"Description of the Mortgage Loans and Mortgaged Property", "The Manager", "The
Borrower" and "Certain Legal Aspects of the Mortgage Loan", and such portions
(and portions of any other sections reasonably requested and pertaining to
Borrower, the Property, the Manager or the Loan) do not 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) indemnify (i) any underwriter, syndicate member or placement agent
(collectively, the "Underwriters") retained by Lender or its issuing company
affiliate (the "Issuer") in connection with a Secondary Market Transaction, (ii)
Lender and (iii) the Issuer that is named in the Disclosure Document or
registration statement relating to a Secondary Market Transaction (the
"Registration Statement"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"CCA Group"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the "Underwriter Group") for any losses,
claims, damages or liabilities (the "Liabilities") to which Lender, the CCA
Group or the Underwriter Group may become subject (including reimbursing all of
them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any of the Required Records or in any of the
applicable portions of such sections of the Disclosure Document applicable to
Borrower, Manager, the Property (but only to the extent such information is
supplied by Borrower) or the Loan, or arise out of or are based upon the
Borrower's omission or alleged omission to state therein a material fact
required to be stated in the applicable portions of such sections or necessary
in order to make the statements in the applicable portions of such sections in
light of the circumstances under which they were made, not materially
misleading, provided, however, that Borrower shall not be required to indemnify
Lender for any Liabilities relating to untrue statements or omissions which
Borrower identified to Lender in writing at the time of Borrower's examination
of such Disclosure Document; and
(c) reimburse any member of the CCA Group for any legal or other expenses
reasonably incurred by such member in connection with investigating or defending
the Liabilities.
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Borrower's Liability under clause (a) or (b) above shall be limited to
Liabilities arising out of or based upon any such materially untrue statement or
omission made therein in reliance upon and in conformity with information
furnished to Lender by or on behalf of Borrower in connection with the
preparation of those portions of the Disclosure Document pertaining to Borrower,
Manager, the Property (but only to the extent such information is supplied by
Borrower) or the Loan or in connection with the underwriting of the debt,
including financial statements of Borrower, operating statements, rent rolls and
other Required Records, environmental site assessment reports and property
condition reports with respect to the Property. The foregoing indemnity will be
in addition to any liability which Borrower may otherwise have.
9.1.4 BORROWER INDEMNITY REGARDING FILINGS. In connection with filings
under the Exchange Act, Borrower shall (i) indemnify Lender, the CCA Group and
the Underwriter Group for any Liabilities to which Lender, the CCA Group or the
Underwriter Group may become subject insofar as the Liabilities arise out of or
are based upon the Borrower's omission or alleged omission to state in the
Provided Information or Required Records a material fact required to be stated
by Borrower in the Provided Information or Required Records in order to make the
statements in the Provided Information or Required Records, in light of the
circumstances under which they were made not misleading and (ii) reimburse
Lender, the CCA Group or the Underwriter Group for any legal or other expenses
actually incurred by Lender, CCA Group or the Underwriter Group in connection
with defending or investigating the Liabilities.
9.1.5 INDEMNIFICATION PROCEDURE. Promptly after receipt by an indemnified
party under Section 9.1.3 or 9.1.4 of notice of the commencement of any action
for which a claim for indemnification is to be made against Borrower, such
indemnified party shall notify Borrower in writing of such commencement, but the
omission to so notify the Borrower will not relieve Borrower from any liability
that it may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to Borrower. In the event that any action is
brought against any indemnified party, and it notifies Borrower of the
commencement thereof, Borrower 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 of commencement, to assume the defense thereof
with counsel satisfactory to such indemnified party in its discretion. After
notice from Borrower to such indemnified party under this Section 9.1.5,
Borrower shall not be responsible for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, if the defendants in
any such action include both Borrower and an indemnified party, and any
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 additional to those available to Borrower, then 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. Borrower shall not be liable for the expenses
of more than one separate counsel unless there are legal defenses available to
it that are different from or additional to those available to another
indemnified party.
9.1.6 CONTRIBUTION. In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in Section 9.1.3
or 9.1.4 is for any reason held to be unenforceable by an indemnified party in
respect of any Liabilities (or action in respect thereof) referred to therein
which would otherwise be indemnifiable under Section 9.1.3 or 9.1.4, Borrower
shall contribute to the amount paid or payable by the indemnified party as a
result of such Liabilities (or action in respect thereof); 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 from any
Person 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 CCA 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; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it may not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.
9.1.7 RATING SURVEILLANCE. Lender will retain the Rating Agencies to
provide rating surveillance services on Securities. The pro rata expenses of
such surveillance will be paid for by Borrower based on the applicable
percentage of such expenses determined by dividing the then outstanding
Principal by the then aggregate outstanding amount of the pool created in the
Secondary Market Transaction which includes the Loan.
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Section 9.2 RESERVED.
Section 9.3 RESERVED.
Section 9.4 EXCULPATION. Subject to the qualifications below, Lender shall
not enforce the liability and obligation of Borrower to perform and observe the
obligations contained in the Note, this Agreement or the other Loan Documents by
any action or proceeding wherein a money judgment shall be sought against
Borrower, except that subject to the provisions of the Loan Documents governing
remedies, Lender may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Lender to
enforce and realize upon its interest under the Note, this Agreement and the
other Loan Documents, or any other collateral given to Lender pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property Loan, the
Property, in the Rents and in any other collateral given to Lender, and Lender,
by accepting the Note, the Mortgage and the other Loan Documents, agrees that it
shall not xxx for, seek or demand any deficiency judgment against Borrower in
any such action or proceeding under or by reason of or under or in connection
with the Note, this Agreement or the other Loan Documents. The provisions of
this section shall not, however, (a) constitute a waiver, release or impairment
of any obligation evidenced or secured by any of the Loan Documents; (b) impair
the right of Lender to name Borrower as a party defendant in any action or suit
for foreclosure and sale under the Loan Documents; (c) affect the validity or
enforceability of or any guaranty made in connection with the Loan or any of the
rights and remedies of Lender thereunder; (d) constitute a prohibition against
Lender commencing any other appropriate action or proceeding in order for Lender
to fully realize the security granted by the Mortgage or to exercise its
remedies against the Property; or (e) constitute a waiver of the right of Lender
to enforce the liability and obligation of Borrower, by money judgment or
otherwise, to the extent of any loss, damage, cost, expense, liability, claim or
other obligation incurred by Lender (including attorneys' fees and costs
reasonably incurred) arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by Borrower or any guarantor in
connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower;
(iii) the misapplication or conversion by Borrower of (A) any insurance
proceeds paid by reason of any loss, damage or destruction to the Property, (B)
any awards or other amounts received in connection with the condemnation of all
or a portion of the Property, or (C) any Rents following an Event of Default;
and
(iv) Borrower's indemnification of Lender set forth in Section 9.2.
Notwithstanding anything to the contrary in this Agreement or any of the Loan
Documents, (x) Lender shall not be deemed to have waived any right which Lender
may have under Sections 506(a), 506(b), 1111(b) or any other provisions of the
U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured by
the Mortgage or to require that all collateral shall continue to secure all of
the Debt owing to Lender in accordance with the Loan Documents, and (y) the Debt
shall be fully recourse to Borrower in the event that: (aa) the first full
monthly payment of principal and interest under the Note is not paid when due;
(bb) Borrower fails to permit on site inspections of the Property, fails to
provide financial information, fails to maintain its status as a single purpose
entity or fails to appoint a new property manager upon the request of Lender
after an Event of Default, each as required by, and in accordance with the terms
and provisions of, this Loan Agreement; (cc) Borrower fails to obtain Lender's
prior written consent to any subordinate financing or other voluntary lien
encumbering the Property Loan; or (dd) Borrower fails to obtain Lender's prior
written consent to any assignment, transfer, or conveyance of the Property Loan
or any interest therein.
Section 9.5 TERMINATION OF MANAGER. If an Event of Default is continuing,
Borrower shall, at the request of Lender, use good faith efforts to cause the
termination of the Management Agreement and the replacement of the Manager with
a manager approved by Lender on terms and conditions satisfactory to Lender.
Section 9.6 RETENTION OF SERVICER. Lender reserves the right to retain the
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, the Pooling and Servicing Agreement or the Cash Collateral Account
Agreement or otherwise, together with such other powers as are reasonably
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incidental thereto. Borrower shall pay any reasonable fees and expenses of the
Servicer in connection with an assumption or modification of the Loan or
enforcement of the Loan Documents.
X. MISCELLANEOUS
-------------
Section 10.1 SURVIVAL. This Agreement and all covenants, 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 Debt is outstanding and unpaid (but the accuracy
thereof shall be determined as of the Closing Date). Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the legal representatives, successors and assigns of such party. All
covenants, promises and agreements in this Agreement made by Borrower, shall
inure to the benefit of the respective legal representatives, successors and
assigns of Lender.
Section 10.2 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 10.3 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF ILLINOIS, AND MADE BY
LENDER AND ACCEPTED BY BORROWER IN THE STATE OF ILLINOIS, AND THE PROCEEDS OF
THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF ILLINOIS,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING
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 ILLINOIS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA,
EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND
ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF ILLINOIS SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER
OR THEREUNDER. 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.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING
OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE
COURT IN CHICAGO, ILLINOIS, AND BORROWER AND LENDER WAIVE ANY OBJECTION WHICH
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING, AND BORROWER AND LENDER HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT CT CORPORATION, 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 CHICAGO,
ILLINOIS, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE OF BORROWER 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
ILLINOIS. 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 CHICAGO, ILLINOIS
(WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS) AND
(iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES
TO HAVE AN OFFICE IN CHICAGO, ILLINOIS OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.
Section 10.4 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, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
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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 10.5 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 10.6 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 or (b) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, 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):
If to Lender:
The Capital Company of America
c/o The Capital Company of America
Client Services, LLC
000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Legal Department
with copies to:
The Capital Company of America
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Jr.
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
If to Borrower:
c/o Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
with copies to:
Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Winston & Xxxxxx
00 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
and
Mayfair Joint Venture
LaSalle Land Partnership, X.X.
XxXxxxx Lake Investors
000 X. XxXxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
-38-
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
Section 10.7 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER AND BORROWER ARE EACH HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER.
Section 10.8 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 10.9 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 10.10 PREFERENCES. Lender shall have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower to any
portion of the obligations of Borrower hereunder. 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 10.11 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. To the extent permitted by law,
Borrower hereby expressly waives the right to receive any notice from Lender
with respect to any matter for which this Agreement or the other Loan Documents
do not specifically and expressly provide for the giving of notice by Lender to
Borrower.
Section 10.12 REMEDIES OF BORROWER. In the event that a claim or
adjudication is made that Lender or its agents, including Servicer, have acted
unreasonably or unreasonably delayed acting in any case where by law or under
this Agreement or the other Loan Documents, Lender or such agent, as the case
may be, has an obligation to act reasonably or promptly, Borrower agrees that
neither Lender nor its agents, including Servicer, shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
Section 10.13 EXPENSES; INDEMNITY.
(a) Except as otherwise provided in this Agreement, Borrower covenants and
agrees to reimburse Lender (or the holder of the Loan, as applicable) upon
receipt of written notice from such holder for all reasonable 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 any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Property); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
-39-
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including confirming compliance with environmental and insurance
requirements; (iii) Lender's ongoing performance 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;
(iv) 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 requested by Lender; (v)
Borrower complying with any requests made pursuant to Section 9.1 hereof
(subject to the limitations contained in such section); (vi) the filing and
recording fees and expenses, 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 Liens in favor of Lender
pursuant to this Agreement and the other Loan Documents; (vii) 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; and (viii) 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; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender. Any costs and expenses due and payable to Lender hereunder which are not
paid by Borrower within ten (10) days after demand may be paid from any amounts
in the Cash Collateral Account, with notice thereof to Borrower.
(b) Borrower shall indemnify and hold harmless Lender from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the reasonable fees and disbursements of counsel
for Lender in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not Lender shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against Lender
in any manner relating to or arising out of (i) any breach by Borrower of its
obligations under, or any material misrepresentation by Borrower contained in
this Agreement or the other Loan Documents, (ii) the use or intended use of the
proceeds of the Loan or (iii) any information provided by Borrower, or contained
in any documentation approved by Borrower and in any way relating to the
issuance, offering and sale of the Securities (collectively, the "Indemnified
Liabilities"); provided, however, that Borrower shall not have any obligation to
Lender hereunder to the extent that such Indemnified Liabilities arise from the
gross negligence, illegal acts, fraud or willful misconduct of Lender. To the
extent that the undertaking to indemnify and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, Borrower shall contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Lender.
Section 10.14 EXHIBITS INCORPORATED. The Exhibits 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 10.15 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 10.16 NO JOINT VENTURE OR PARTNERSHIP. 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 or lender.
Section 10.17 PUBLICITY. All news releases, publicity or advertising by
Borrower or their 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, CCA, the Loan purchaser, the Servicer or the trustee in a
Securitization shall be subject to the prior written approval of Lender.
-40-
Section 10.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest extent
Borrower may legally do so, Borrower waives all rights to a marshalling of the
assets of Borrower, Borrower's partners, if any, and others with interests in
Borrower, and of Borrower's properties, or to a sale in inverse order of
alienation in the event of foreclosure of the interests hereby created, 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 related indebtedness without any prior
or different resort for collection, of the right of Lender or any deed of trust
trustee to the payment of the related indebtedness out of the net proceeds of
the Property in preference to every other claimant whatsoever.
Section 10.19 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents, including Servicer.
Section 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS. 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 counsel in connection with the
negotiation and drafting 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.
Section 10.21 BROKERS AND FINANCIAL ADVISORS. Borrower and Lender hereby
each represents to the other that it has dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrower and Lender hereby
agree to indemnify and hold the other harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way relating to or
arising from a claim by any Person that such Person acted on behalf of the
indemnifying party in connection with the transactions contemplated herein. The
provisions of this Section 10.21 shall survive the expiration and termination of
this Agreement and the repayment of the Debt.
Section 10.22 NO THIRD PARTY BENEFICIARIES. 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 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 10.23 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, are superseded by the terms of
this Agreement and the other Loan Documents.
Section 10.24 INTERPRETATION. Notwithstanding anything to the contrary in
this Agreement or the other Loan Documents, all references in this Loan
Agreement and the other Loan Documents to "the continuance of an Event of
Default until cured" or analogous language shall specifically require the
acceptance by Lender, in its sole discretion, of such cure for such Event of
Default to be deemed cured.
[signatures contained on following page]
-41-
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER: 180 X. XXXXXXX, L.L.C.
--------
By: Prime Group Realty, L.P., a Delaware limited
partnership, as Administrative Member
By: Prime Group Realty Trust, a Maryland real
estate investment trust, as managing
general partner
By: /s/ Xxxxx Xxxxxxxx
---------------------- Name: Xxxxx Xxxxxxxx
Title: Senior Vice President
LENDER: THE CAPITAL COMPANY OF AMERICA LLC, a
------- Delaware limited liability company,
By:/s/ Xxxx Xxxxx
------------------------
Name: Xxxx Xxxxx
Title: Director
-42-
SCHEDULE 1
----------
Matters Regarding Representations
---------------------------------
None.
-43-
SCHEDULE 2
----------
Rent Roll
---------
[Exhibit Omitted]
-44-
SCHEDULE 3
----------
Required Repairs
----------------
Borrower shall complete the repairs described on the pages attached to this
Schedule 3 within one (1) year after the date of execution of this Agreement.
Borrower shall not be required to deposit or cause to be deposited with Lender
any sums in connection with said repairs.
EXHIBIT A
---------
Form of Guaranty
----------------
EXHIBIT B
---------
Form of Note
------------
-45-
EXHIBIT C
---------
List of Property Loan Documents
-------------------------------
[Exhibit Omitted]
-46-
EXHIBIT D
---------
Form of Rate Lock Agreement
---------------------------
Date
Name Title
XxxXxxxxxx
Xxxxxxx0 Xxxxxxx0
Xxxx, Xxxxx PostalCode
Re: Interest Rate Lock Agreement
----------------------------
Gentlemen:
BorSponsor ("Borrower's Sponsor") and The Capital Company of America LLC
("Lender") have entered into a Commitment Letter dated as of CmtLtrDate (the
"Commitment Letter") whereby Lender intends, subject to the conditions set forth
therein, to make a fixed rate permanent mortgage loan (the "Loan") to a special
purpose entity (the "Borrower") in the anticipated principal amount of up to
$PermLoanAmt (the "Anticipated Loan Amount") secured by the real property and
other assets (the "Property") set forth in the Commitment Letter with an
effective maturity of EffTerm years. Prior to the closing of the Loan,
Borrower's Sponsor has requested Lender to rate lock (the "Rate Lock") an amount
equal to the Anticipated Loan Amount and to lock an interest rate (the "Locked
Loan Rate") for the Loan prior to Lender's completion of due diligence on the
Property and prior to the satisfaction of other conditions to closing set forth
in the Commitment Letter. In order to grant Borrower's Sponsor's request,
Borrower's Sponsor and Lender agree as follows:
1. Terms not otherwise defined herein or on Annex A attached hereto shall have
the meaning set forth in the Commitment Letter.
2. Borrower's Sponsor shall deposit with Lender an amount equal to two percent
(2%) of the Anticipated Loan Amount (the "Initial Rate Lock Deposit").
Hereinafter, the term "Rate Lock Deposit" shall mean the Initial Rate Lock
Deposit and any Additional Rate Lock Deposit as hereinafter defined.
Subject to the conditions set forth below, the Locked Loan Rate on the
Anticipated Loan Amount shall be set at (i) LoanSpread% the (" Loan Spread
") plus (ii) the "Benchmark Treasury Rate". The "Benchmark Treasury Rate"
shall be equal to the Benchmark Swap Rate minus the Benchmark Swap Spread.
The "Benchmark Swap Spread" shall be the then prevailing bid side forward
swap spread for EffTerm year interest rate swaps MonthsFwd months forward.
The "Benchmark Swap Rate" shall be the then prevailing offer rate on a
forward interest rate swap beginning onExpClosDate and maturing on
EffMaturDate versus 3 month LIBOR assuming semi-annual payments calculated
on a 30/360 basis. The Rate Lock shall be executed upon (i) Borrower's
Sponsor's deposit of the Initial Rate Lock Deposit and (ii) a request via
telephone by Borrower's Sponsor to Lender requesting Lender to lock the
interest rate in accordance with the terms of this Agreement. Lender shall
within three business days confirm in writing to Borrower's Sponsor the
Locked Loan Rate, the Benchmark Treasury Rate, the Benchmark Swap Rate and
the Benchmark Swap Spread. The Locked Loan Rate shall be applicable with
respect to the Anticipated Loan Amount only if the Loan is funded at any
time from the date hereof through the earlier of (i) 12:00 p.m. (New York
Time) ExpClosDate or (ii) the termination of the Commitment Letter (the
"Rate Lock Period"). In addition, during the term of this Agreement,
Borrower's Sponsor shall pay Lender in advance, a fee each month equal to 8
basis points multiplied by the Anticipated Loan Amount.
3. (a) If, in the good faith opinion of Lender, at any time during the Rate
Lock Period, Lender determines that there are Losses hereunder equal to or
greater than 50% of the Rate Lock Deposit, Borrower's Sponsor will be
required, no later than 1:00 p.m. (New York Time) on the business day
following notice of any such Losses (the "Losses Payment Date") to deposit
with Lender (by wire transfer of immediately available funds) the amount of
such Losses which amount shall be known as an "Additional Rate Lock
Deposit". Borrower's Sponsor's failure to pay Lender the Additional Rate
Lock Deposit by 1:00 p.m. (New York Time) on the Losses Payment Date will
result in a default hereunder and under the Commitment Letter and Lender
may, at its sole discretion, at any time thereafter fully or partially
terminate the Rate Lock.
(b) If, in the good faith opinion of Lender, at any time, it
appears that the actual principal amount of the Loan will be less than the
Anticipated Loan Amount (such reduced amount, the "Revised Loan Amount"), Lender
may break the Rate Lock with respect to the difference between the Anticipated
Loan Amount and the Revised Loan Amount. In such event, the Locked Loan Rate
will not be applicable to such amount, and, in the event that there are Losses
on account of such breakage, Borrower's Sponsor shall pay to Lender Lender's
Expenses, if any, via wire transfer within two business days following delivery
of notice by Lender of such Losses. Failure of Borrower's Sponsor to pay such
Lender's Expenses will result in a default hereunder and under the Commitment
Letter and/or the Loan Documents.
4. In the event that the Loan is funded in an amount at least equal to the
Anticipated Loan Amount on or prior to the expiration of the Rate Lock
Period, neither Borrower, Borrower's Sponsor nor Lender will have any
obligation to the other with respect to the Rate Lock, other than Lender's
obligation to either return the Rate Lock Deposit to Borrower's Sponsor or
apply it to pay fees and expenses associated with the closing of the Loan.
In the event that the Loan is funded in an amount which is less than the
Anticipated Loan Amount, Lender may break the Rate Lock with respect to
such Breakage Principal and shall apply the Rate Lock Deposit to Losses, if
any, which may result therefrom and then to fees and expenses associated
with closing the Loan. In the event that (i) the Rate Lock Period has
expired and Lender has not yet funded the Loan or (ii) there shall exist a
default hereunder, under the Commitment Letter and/or under the Loan
Documents, Lender may break the entire Rate Lock and Lender's only
obligation to Borrower's Sponsor and/or Borrower shall be to return the
Rate Lock Deposit after setting off Lender's Expenses. If the Rate Lock
Deposit is not sufficient to pay Lender's Expenses hereunder, Borrower's
Sponsor shall pay Lender the difference within two business days following
termination of the Rate Lock. Lender's right to fully or partially
terminate the Rate Lock pursuant to the terms of the Agreement is absolute
and is not conditioned upon the giving of any notice to Borrower or
Borrower's Sponsor.
In the event that the Loan is funded in an amount which is greater than the
Anticipated Loan Amount, the Locked Loan Rate will not be applicable to such
excess amount and the final interest rate on the Loan will be determined as set
forth in the Commitment Letter and/or Loan Documents.
-47-
5. Borrower's Sponsor acknowledges that Losses, if any, sustained due to
breaking the Rate Lock will be related, to a large extent, to movements in
the Breakage Benchmark Treasury Rate, as well as general movements in the
U.S. Treasury and related swap markets and any related changes to the yield
curve. Changes in the Breakage Benchmark Treasury Rate will be subject to
the then prevailing conditions of the U.S. Treasury market and related swap
markets which is subject to potentially rapid and extreme price
fluctuations and varying levels of liquidity. Therefore, any action taken
by Lender with respect to breaking the Rate Lock shall be taken by Lender
as promptly as practicable after taking into consideration the
circumstances surrounding the break of the Rate Lock, including, but not
limited to, the then prevailing conditions in the U.S. Treasury market and
the related swap markets. Because of the potentially volatile nature of the
U.S. Treasury market and the related swap markets, Lender has been granted
rights to act (or not act) in its sole discretion. Borrower's Sponsor and
Borrower acknowledge and accept Lender's right to act (or not act) in its
sole discretion as provided herein and waives any potential claim or cause
of action Borrower and/or Borrower's Sponsor may have against Lender with
respect to any action taken (or not taken) by Lender pursuant to the
provisions set forth herein. Borrower's Sponsor and Borrower further
acknowledge that based upon market conditions, there can be no degree of
certainty as to the rate of the Breakage Benchmark Treasury Rate used to
calculate Losses until the Rate Lock is actually terminated by Lender. In
addition, Borrower's Sponsor and Borrower acknowledge that the Anticipated
Loan Amount is not a commitment by Lender regarding the final size of the
Loan. Such amount will be determined according to the terms of the
Commitment Letter and/or Loan Documents.
6. The obligations of Borrower's Sponsor and Lender pursuant to this Agreement
are independent of their obligations pursuant to the Commitment Letter,
even in the event of a termination of the Rate Lock. This Agreement shall
in no way be construed to be a commitment by Lender or any affiliate to
fund the Loan or purchase or sell any securities on behalf of Borrower,
Borrower's Sponsor and/or any third party. In addition, this Agreement
shall in no way be construed to reduce Borrower's Sponsor and/or Borrower's
obligations pursuant to the Commitment Letter.
7. This Agreement shall terminate upon the earlier of (i) the expiration or
termination of the Rate Lock Period, (ii) any event which causes Lender's
commitment to fund the Loan to terminate, as set forth in the Commitment
Letter, (iii) any event which causes Lender to terminate the Rate Lock or
(iv) upon notice to Borrower and/or Borrower's Sponsor by Lender that it
does not intend to proceed with the Loan; provided, however, that this
Agreement shall survive until all obligations of the parties hereto have
been fully satisfied.
8. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be
performed therein, notwithstanding any choice-of-law rules to the contrary.
The parties hereto hereby waive any and all right to a trial by jury in
connection with any and all matters relating hereto.
9. This Agreement may be executed in any number or counterparts, each of which
when so executed shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10. Borrower's Sponsor and Borrower may not, without the prior written consent
of Lender, assign, transfer or set over to another, in whole or in part,
all or any part of their benefits, rights, duties and obligations
hereunder.
11. This Agreement may be amended, changed or modified by Borrower's Sponsor,
Borrower and Lender only by an instrument in writing setting forth the
terms of such change, modification or amendment, and signed by each party.
12. All notices, demands, consents or requests that are either required or
desired to be given or furnished hereunder shall be in writing and shall be
sent to the appropriate party at the following address: (i) if to Borrower
and/or Borrower's Sponsor, at the address set forth on the first page
hereof, Attention: Name and (ii) if to Lender, at the address set forth
on the first page hereof, Attention: Banker with a copy of such notice
to the same address, Attention: Xxxxx X. Xxxx, Esq., General Counsel. Any
such notice sent by means of telecopy shall be deemed to be received on the
day such telecopy is sent once orally confirmed by sender by telephone.
-48-
13. This Agreement constitutes the entire and final agreement between
Borrower's Sponsor and/or Borrower and Lender with respect to the subject
matter hereof, and there are no other agreements, understandings,
undertakings, representations or warranties among the parties hereto with
respect to the subject matter hereof except as set forth herein.
14. Each of Borrower's Sponsor and Borrower agrees to indemnify and hold Lender
and each of its affiliates (including its officers, directors, partners,
employees and agents) harmless against any and all losses, claims damages,
costs, expenses or liabilities in connection with, arising out of or as a
result of the transactions and matters referred to or contemplated by this
Agreement, except to the extent that it is finally judicially determined
that any such loss, claim, damage, cost, expense or liability results
primarily from the gross negligence or bad faith of such indemnified party
or any of its agents or representatives.
If the foregoing is in accordance with your understanding of our Agreement,
please sign and return to the undersigned a counterpart hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement by and among
Borrower's Sponsor, Borrower and Lender.
Very truly yours,
THE CAPITAL COMPANY OF AMERICA LLC
By:___________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above.
BorSponsor
on behalf if itself and Borrower
By:______________________
Name:
Title:
-49-
Annex A
-------
"BENCHMARK SWAP SPREAD" shall mean, at the time of the Rate Lock, the then
prevailing bid side forward swap spread for EffTerm year interest rate swaps
MonthsFwd months forward.
"BENCHMARK SWAP RATE" shall mean, at the time of the Rate
Lock, the then prevailing offer rate on a forward interest rate swap beginning
on ExpClosDate and maturing on EffMaturDate versus 3 month LIBOR
assuming semi-annual payments calculated on a 30/360 basis.
"BENCHMARK TREASURY RATE" shall mean the Benchmark Swap Rate minus the
Benchmark Swap Spread.
"BREAKAGE AMOUNT" means an amount equal to the product of (i) the Breakage
Principal and (ii) the Price Difference.
"BREAKAGE BENCHMARK TREASURY RATE" shall mean the Spot Swap Rate minus the
Spot Swap Spread.
"BREAKAGE PRINCIPAL" means at the time of calculation, (A) in connection
with breakage associated with reductions to the Anticipated Loan Amount pursuant
to Section 3(b), the amount of such reductions or (B) in connection with
breakage associated with the closing of the Permanent Loan or the termination of
the Rate Lock, the difference of (i) the Anticipated Loan Amount minus (ii) any
reductions to the Anticipated Loan Amount pursuant to Section 3(b) minus (iii)
the Permanent Loan Amount.
"INTENDED PAYMENTS" means, for the purpose of the calculation of the Price
Difference, each and every payment of principal and/or interest that would have
been made with respect to the Loan had the Loan closed with a principal amount
equal to the Anticipated Loan Amount on the date breakage is calculated with an
interest rate equal to the Locked Loan Rate assuming that the principal is
repaid in full in EffTerm years and assuming that the Loan is otherwise
consistent with the terms of the Commitment Letter.
"LENDER'S EXPENSES" means the sum of (a) Losses, plus (b) all fees,
commissions and other expenses (including reasonable attorneys' fees) incurred
by Lender in connection with the closing out of all or any portion of the Rate
Lock or otherwise in connection with this Agreement.
"LOCKED LOAN RATE" means the Benchmark Treasury Rate plus the Loan Spread.
"LOSSES" means the Breakage Amount if the Breakage Amount is a positive
number.
"PRICE DIFFERENCE" means, as of the time of calculation, the difference
obtained by subtracting (i) 1 from (ii) the quotient obtained by dividing (1)
the present value (as determined below) of the Intended Payments, determined as
if the Loan were funded on the day of calculation, by (2) the Anticipated Loan
Amount. The present value of the Intended Payments shall be calculated by
discounting the Intended Payments by the Breakage Benchmark Treasury Rate plus
the Loan Spread. The Price Difference can be either positive or negative.
"PERMANENT LOAN AMOUNT" means the actual funded amount of the Loan.
"SPOT SWAP SPREAD" means, at the time of calculation, the then prevailing
offer side swap spread for EffTerm year interest rate swaps.
"SPOT SWAP RATE" means, at the time of calculation, the then prevailing bid
rate on a EffTerm year interest rate swap versus 3 month LIBOR.
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