Borrower or the Trust is or is to become a party and the transactions contemplated hereby and thereby do not require (i) the approval or consent of any governmental agency or authority other than those already obtained and delivered to the Agent, or (ii) filing with any governmental agency or authority, other than filings which will be made with the SEC when and as required by law or deemed appropriate by the Trust.
The Borrower and the Trust each has good fee title to all of its respective properties, assets and rights of every name and nature purported to be owned by it, including, without limitation, that:
(a) Pima Norte holds good and clear record and marketable fee simple title to the Project and all assets or properties relating thereto, subject to no Liens other than Permitted Liens.
(b) The Borrower and the Trust will, as of the Closing Date, own all of the assets as reflected in the financial statements of the Borrower and the Trust described in §7.4, or acquired since the date of such financial statements (except property and assets sold or otherwise disposed of in the ordinary course of business since that date).
assets, condition (financial or otherwise) or properties of the Trust or the Borrower. The Borrower possesses all Permits relating to the Project.
§7.7Litigation. Except as disclosed onSchedule 7.7, there are no actions, suits, proceedings or investigations of any kind pending or, to the Borrower’s or the Trust’s knowledge, threatened against the Borrower, the Trust or any of their respective Subsidiaries or the Project before any court, tribunal or administrative agency or board that, if adversely determined, could reasonably be expected to, either individually or in the aggregate, materially adversely affect the business, operations, assets, condition (financial or otherwise) or properties of the Trust or the Borrower, or materially impair the right of the Trust or the Borrower to carry on its businesses substantially as now conducted by it, or result in any substantial liability not fully covered by insurance, or for which adequate reserves are not maintained, as reflected in the applicable consolidated financial statements or SEC Filings of the Borrower and the Trust, or which question the validity of this Agreement or any of the other Loan Documents, or any action taken or to be taken pursuant hereto or thereto.
§7.8.No Materially Adverse Contracts, Etc. Neither the Borrower, the Trust nor any of their respective Subsidiaries is subject to any charter, corporate, partnership, limited liability company or other legal restriction, or any judgment, decree, order, rule or regulation that has or could reasonably expected in the future to have a materially adverse effect on the business, operations, assets, condition (financial or otherwise) or properties of the Trust, the Borrower or the Project. None of the Borrower, the Trust or any of their respective Subsidiaries is a party to any contract or agreement that has had, or could reasonably be expected to have, any materially adverse effect on the business, operations, assets, condition (financial or otherwise) or properties of the Trust, the Borrower or the Project.
§7.9.Compliance With Other Instruments, Laws, Etc. Neither the Borrower, the Trust nor any of their respective Subsidiaries is in violation of any provision of its partnership agreement, operating agreement, charter or other Organizational Document, as the case may be, or any agreement or instrument to which it may be subject or by which it or any of its properties may be bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that could reasonably be expected to result, individually or in the aggregate, in the imposition of substantial penalties or materially and adversely affect the business, operations, assets, condition (financial or otherwise) or properties of the Trust, the Borrower or the Project. Without limitation of the foregoing, the Borrower is in compliance with, and neither the entering into of the Loan Documents or the use of the proceeds of the Loans will violate: any law, rule or regulation relating to anti-terrorism or money laundering, including the Anti-Terrorism Order, the Patriot Act, the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.
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§7.10.Tax Status. (i) Each of the Borrower, the Trust and their respective Subsidiaries (a) has made or filed all federal, state and local income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (b) has paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings, and (c) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply, and (ii) there are no unpaid taxes claimed to be due by the taxing authority of any jurisdiction, and the respective officers of the Borrower and the Trust and their respective Subsidiaries know of no basis for any such claim.
§7.11No Event of Default. No Default or Event of Default has occurred and is continuing.
§7.12.Investment Company Acts. None of the Borrower, the Trust or any of their respective Subsidiaries is an “investment company”, or an “affiliated company” or a “principal underwriter” of an “investment company”, as such terms are defined in the Investment Company Act of 1940.
§7.13.Name; Jurisdiction of Organization; Absence of UCC Financing Statements, Etc. The exact legal name of the Borrower and the Trust, and their respective jurisdictions of organization and tax identification numbers, are set forth onSchedule 7.13 attached hereto. Except for Permitted Liens, there is no financing statement, security agreement, chattel mortgage, real estate mortgage, equipment lease, financing lease, option, encumbrance or other document filed or recorded with any filing records, registry, or other public office, that purports to cover, affect or give notice of any present or possible future lien or encumbrance on, or security interest in, the Project or the member interests of Pima Norte. Except in favor of the Agent, neither the Borrower nor the Trust has pledged or granted any lien on or security interest in or otherwise encumbered or transferred any of their respective interests in any Subsidiary (including in the case of the Trust, its interests in Whitestone OP).
§7.14.Absence of Liens. Pima Norte is the owner of the Project free from any Lien, except for Permitted Liens.
§7.15.Certain Transactions. Except as set forth onSchedule 7.15, none of the officers, partners, directors, or employees of the Trust, the Borrower or any of their Subsidiaries is presently a party to any transaction with the Borrower, the Trust or any of their respective Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, partner, member, director or such employee or, to the knowledge of the Borrower or the Trust, any corporation, partnership, limited liability company, trust or other entity in which any officer, partner, director, or any such employee or natural Person related to such officer, partner, director or employee or other
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Person in which such officer, partner, member, director or employee has a direct or indirect beneficial interest has a substantial interest or is an officer, director, member, trustee or partner.
§7.16.Employee Benefit Plans; Multiemployer Plans; Guaranteed Pension Plans. Except as disclosed in the SEC Filings or onSchedule 7.16, none of the Borrower, the Trust nor any ERISA Affiliate maintains or contributes to any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan.
§7.17.Regulations U and X. No portion of the Term Loan is to be used for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
§7.18.Environmental Compliance. The Borrower has caused Phase I and other environmental assessments or similar assessments (collectively, the “Environmental Reports”) to be conducted to investigate the past and present environmental condition and usage of the Project, true and complete copies of which have been delivered to the Agent. To the Borrower’s knowledge, except as otherwise expressly disclosed onSchedule 7.18, the Borrower makes the following representations and warranties:
(a) None of the Borrower, its Subsidiaries, the Trust or any operator of the Project or any portion thereof, or any operations thereon is in violation, or alleged violation, of any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation, those arising under the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986 (“SARA”), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to health, safety or the environment (hereinafter “Environmental Laws”), which violation or alleged violation has, or its remediation would have, by itself or when aggregated with all such other violations or alleged violations, a material adverse effect on the business, operations, assets, condition (financial or otherwise), properties or prospects of the Trust or the Borrower, or constitutes a Disqualifying Environmental Event.
(b) None of the Borrower, the Trust or any of their respective Subsidiaries has received written notice from any third party, including, without limitation, any federal, state or local governmental authority, (i) that it has been identified by the United States Environmental Protection Agency (“EPA”) as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986), (ii) that any hazardous waste, as defined by 42 U.S.C. § 9601(5), any hazardous substances as defined by 42 U.S.C. § 9601(14), any pollutant or contaminant as defined by 42 U.S.C. §9601(33) or any toxic substances, oil or hazardous materials or other chemicals or substances regulated by any Environmental
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Laws (“Hazardous Substances”) which it has generated, transported or disposed of have been found at any site at which a federal, state or local agency or other third party has conducted or has ordered that the Borrower, the Trust or any of their respective Subsidiaries conduct a remedial investigation, removal or other response action pursuant to any Environmental Law, or (iii) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding (in each case, contingent or otherwise) arising out of any third party’s incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the release of Hazardous Substances, which event described in any such notice would have a material adverse effect on the business, operations, assets, condition (financial or otherwise), properties or prospects of the Trust or the Borrower, or constitutes a Disqualifying Environmental Event.
(c) (i) No portion of the Project has been used for the handling, processing, storage or disposal of Hazardous Substances except in accordance with applicable Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Project except in accordance with applicable Environmental Laws, (ii) in the course of any activities conducted by the Borrower, the Trust, their respective Subsidiaries or the operators of the Project or any ground or space tenants on the Project, no Hazardous Substances have been generated or are being used on the Project except in accordance with applicable Environmental Laws, (iii) there has been no present or past releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping (a “Release”) or threatened Release of Hazardous Substances on, upon, into or from the Project in violation of applicable Environmental Laws, (iv) there have been no Releases in violation of applicable Environmental Laws upon, from or into any real property in the vicinity of the Project which, through soil or groundwater contamination, may have come to be located on the Project, and (v) to the best of Borrower’s Knowledge, any Hazardous Substances that have been generated on the Project during ownership thereof by the Borrower, the Trust, their respective Subsidiaries or the operations of the Project have been transported off-site only in compliance with all applicable Environmental Laws; any of which events described in clauses (i) through (v) above would have a material adverse effect on the business, operations, assets, condition (financial or otherwise), properties or prospects of the Trust or the Borrower, or constitutes a Disqualifying Environmental Event.
(d) None of the Borrower, the Trust or the Project is subject to any applicable Environmental Law requiring the performance of Hazardous Substances site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any governmental agency or the recording or delivery to other Persons of an environmental disclosure document or statement, by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the effectiveness of any other transactions contemplated hereby.
§7.19.Subsidiaries.Schedule 7.19 sets forth, as of the Closing Date, all of the respective Subsidiaries of the Trust and the Borrower.
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§7.20.Loan Documents. All of the representations and warranties by or on behalf of the Borrower and the Trust and their respective Subsidiaries made in this Agreement and in the other Loan Documents or any document or instrument delivered to the Agent or the Lenders pursuant to or in connection with any of such Loan Documents are true and correct in all material respects and do not include any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make such representations and warranties not materially misleading.
§7.21.REIT Status The Trust is qualified as a REIT and has not taken any action that would prevent it from maintaining its qualification as a REIT for its tax years ending December 31, 2005 or December 31, 2006, or from maintaining such qualification at all times during the term of this Agreement.
§7.22.No Condemnation. (i) No condemnation of any material portion of the Project, (ii) no condemnation or relocation of any roadways abutting the Project which are material to the Project, and (iii) no proceeding to deny access to the Project from any point or planned point of access to the Project which is material to the Project, has commenced or, to the best of Borrower’s knowledge, is contemplated by any Governmental Authority.
§7.23.Utilities. The Project will have adequate water, gas and electrical supply, storm and sanitary sewerage facilities, other required public utilities, fire and police protection, and means of access between the Project and public highways; none of the foregoing will be foreseeably delayed or impeded by virtue of any requirements under any applicable Laws.
§7.24.Brokerage Fees. No brokerage fees or commissions are payable by or to any person in connection with this Agreement or the Loan to be disbursed hereunder.
§7.25.Independent Parcel. The Project is taxed separately without regard to any other property and for all purposes the Project may be mortgaged, conveyed and otherwise dealt with as an independent parcel.
§7.26.Major Lease. The Borrower and its agents have not entered into any Major Lease, subleases under a Major Lease or other arrangements for occupancy of more than 10,000 square feet of net leasable space within the Project other than as listed onSchedule 7.26. True, correct and complete copies of all Major Leases, as amended, have been delivered to Lender and, at Lender’s request, Borrower will deliver true, correct and complete copies of any or all other Leases, as amended, to Lender. All Major Leases are in full force and effect. Borrower is not in default under any Major Lease and Borrower has disclosed to Lender in writing any material default by the tenant under any Major Lease.
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§7.27.No Encroachment. No building or other improvement related to the Project encroached in any material respect upon any property line, building line, setback line, side yard line or any recorded or visible easement (or other easement of which the Borrower is aware or has reason to believe may exist) with respect to the Project unless permitted by easement or other agreement for purposes of granting an easement.
§7.28.Federal Tax Identification Numbers. Each Borrower has obtained a Federal Tax Identification Number as set forth inSchedule 7.19.
§8.AFFIRMATIVE COVENANTS OF THE BORROWER AND THE TRUST. The Borrower and the Trust, on their own behalf and on behalf of their respective Subsidiaries, jointly and severally covenant and agree that:
§8.1.Punctual Payment. The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Term Loan and all interest, fees, charges and other amounts and Obligations provided for in this Agreement and the other Loan Documents, all in accordance with the terms of this Agreement, the Notes and the other Loan Documents.
§8.2.Maintenance of Office; Jurisdiction of Organization, Etc.. Each of the Borrower and the Trust will maintain its chief executive office in Houston, Texas, or at such other place in the United States of America as each of them shall designate by written notice to the Agent to be delivered at least thirty (30) days prior to any change of chief executive office, where, subject to §21, notices, presentations and demands to or upon the Borrower and the Trust in respect of the Loan Documents may be given or made. Neither the Trust nor the Borrower will change its jurisdiction of organization, name or corporate structure without giving the Agent at least thirty (30) days prior written notice of such change, and, in the case of a change in corporate structure, without the prior written consent of the Agent, which consent may not be unreasonably withheld.
§8.3.Records and Accounts. Each of the Borrower and the Trust will (a) keep, and cause each of its Subsidiaries to keep, true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP and (b) maintain adequate accounts and reserves for all taxes (including income taxes), contingencies, depreciation and amortization of its properties and the properties of its Subsidiaries.
§8.4.Financial Statements, Certificates and Information. The Borrower and the Trust will deliver to the Agent (with copies to the Agent for each Lender):
(a) as soon as practicable, but in any event not later than ninety (90) days after the end of each fiscal year of the Trust, the audited consolidated balance sheet of the Trust and its Subsidiaries at the end of such year, and the related audited consolidated statements of income, changes in shareholder’s equity (or the equivalent thereof) and cash flows for the year then ended, in each case, setting forth in comparative
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form the figures as of the end of and for the previous fiscal year and all such statements to be in reasonable detail, prepared in accordance with GAAP, and, in each case, accompanied by an auditor’s report prepared without qualification by the Accountants; together with, at the Agent’s request, a written statement from such Accountants to the effect that they have read a copy of this Agreement, and that, in making the examination necessary to said certification, they have obtained no knowledge of any Default or Event of Default under §10 or otherwise under the provisions of this Agreement relating to the financial condition of the Trust or any of its Subsidiaries, or of any facts or circumstances that would cause the Trust not to continue to qualify as a REIT for federal income tax purposes, or, if such Accountants shall have obtained knowledge of any then existing Default, Event of Default or such facts or circumstances, they shall make disclosure thereof in such statement;
(b) as soon as practicable, but in any event not later than forty-five (45) days after the end of each of its March 31, June 30 and September 30 fiscal quarters, copies of the unaudited consolidated balance sheet of the Trust and its Subsidiaries, as at the end of such quarter, and the related unaudited consolidated statements of income, changes in shareholders’ equity and cash flows for the portion of the Trust’s fiscal year then elapsed, all in reasonable detail and prepared in accordance with GAAP (which may be provided by inclusion in the Form 10-Q of the Trust filed with the SEC for such period provided pursuant to clause (i) below), together with a certification by the principal financial or accounting officer of the Borrower and the Trust that the information contained in such financial statements fairly presents the financial position of the Trust and its Subsidiaries on the date thereof (subject to year-end adjustments none of which shall be materially adverse and the absence of footnotes);
(c) as soon as practicable, but in any event not later than ninety (90) days after the end of each of its fiscal years, statements of Net Operating Income and outstanding Indebtedness as at the end of such fiscal year and for the fiscal year then ended in respect of the Project, each prepared in accordance with GAAP consistent with the definitions of Net Operating Income and outstanding Indebtedness used in this Agreement and a rent roll and operating statement in respect of the Project, in each case certified by the chief financial or accounting officer of the Borrower as true and correct;
(d) as soon as practicable, but in any event not later than forty-five (45) days after the end of each of the fiscal quarters of the Borrower, (i) copies of the unaudited statements of Net Operating Income and outstanding Indebtedness as at the end of such quarter and for the portion of the fiscal year then elapsed in respect of the Project, prepared in accordance with GAAP consistent with the definitions of Net Operating Income and outstanding Indebtedness used in this Agreement, and a rent roll and operating statement in respect of the Project, certified by the chief financial or accounting officer of the Borrower to present fairly the Net Operating Income and outstanding Indebtedness and rent roll in respect of the Project, (ii) an occupancy analysis in respect of the Project certified by the chief financial officer of the Borrower to be true and complete, (iii) a schedule of revenues and expenses for the Project, and (iv) an updated
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build-out budget for the Project and an update on the status of the intended tenant improvements on the Property and conformity of expenditures to budget for such tenant improvements;
(e) simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, a statement in the form ofExhibit C hereto signed by the chief financial or accounting officer of the Borrower, and setting forth in reasonable detail computations evidencing compliance with the covenants contained in §10;
(f) promptly as they become available, a copy of each report submitted to the Borrower, the Trust or any of their respective subsidiaries by the Accountants in connection with each annual audit of the books of the Borrower, the Trust or such Subsidiary by such Accountants or in connection with any interim audit thereof pertaining to any phase of the business of the Borrower, the Trust or any such Subsidiary;
(g) contemporaneously with (or promptly after) the filing or mailing thereof, copies of all material of a financial nature sent to the holders of any Indebtedness of the Trust or any of its Subsidiaries (other than the Term Loan) for borrowed money, to the extent that the information or disclosure contained in such material refers to or could reasonably be expected to have a material adverse effect on the business, operations, assets, condition (financial or otherwise) or properties of the Trust, the Borrower or any other member of the Whitestone Group;
(h) contemporaneously with the filing or mailing thereof, copies of all material of a financial nature filed with the SEC or sent to the equityholders of the Trust;
(i) as soon as practicable, but in any event not later than ninety (90) days after the end of each fiscal year of the Trust, copies of the Form 10-K statement filed by the Trust with the SEC for such fiscal year, and as soon as practicable, but in any event not later than fifty (50) days after the end of each fiscal quarter of the Trust copies of the Form 10-Q statement filed by the Trust with the SEC for such fiscal quarter;
(j) in the case of the Borrower and the Trust, as soon as practicable, but in any event not later than thirty (30) days prior to the end of each of their respective fiscal years, a business plan for the next fiscal year (includingproforma projections for such period);
(k) together with the financial statements delivered pursuant to §8.4(a), a certification by the chief financial or accounting officer of the Borrower of the state and federal taxable income of the Trust and its Subsidiaries as of the end of the applicable fiscal year;
(l) in the event that the definition of “funds from operations” is revised by the Board of Governors of the National Association of Real Estate Investment
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Trusts, a report, certified by the chief financial or accounting officer of the Borrower, of the “funds from operations” of the Borrower based on the definition as in effect on the date of this Agreement and based on the definition as so revised from time to time, which such report shall be delivered to the Agent (with copies to the Agent for each Lender) with the financial statements required to be delivered pursuant to §8.4(a) or §8.4(b) above, as applicable;
(m) simultaneously with the delivery of the financial statements referred to in clauses (a) and (b) above, updated title searches with respect to the Project and evidence of the Agent’s continued first priority lien on the Property, or such other evidence of its priority lien as the Agent may require; and
(m) from time to time such other financial data and other information about the Borrower, the Trust, their respective Subsidiaries and the Project as the Agent or any Lender (through the Agent) may reasonably request, including, without limitation, evidence of adequate funds held by the Borrower to complete all build-out contemplated in connection with the Project.
Notwithstanding the foregoing, the Borrower shall be deemed to have complied with this covenant (other than with respect to items relating to the Project or the Property, or otherwise requested pursuant to clause (m) above) so long as Whitestone OP delivers the financial statements required to be delivered under §8.4 of the Revolving Credit Agreement in accordance with the terms thereof, so long as such Revolving Credit Agreement remains in effect.
§8.5.Notices.
(a)Defaults. The Borrower and the Trust will, promptly after obtaining knowledge of the same, notify the Agent in writing (with copies to the Agent for each Lender) of the occurrence of any Default or Event of Default. If any Person shall give any notice or take any other action in respect of (x) a claimed Default (whether or not constituting an Event of Default) under this Agreement or (y) a claimed failure by the Borrower, the Trust or any of their respective Subsidiaries, as applicable, to comply with any term, condition or provision of or under any note, evidence of Indebtedness, indenture or other obligation (i) in excess of $5,000,000, individually or in the aggregate, in respect of Indebtedness that is Without Recourse and (ii) in excess of $1,000,000, individually or in the aggregate, in respect of Indebtedness that is Recourse, to which or with respect to which any of them is a party or obligor, whether as principal obligor, guarantor or surety, and such failure to comply would permit the holder of such note or obligation or other evidence of Indebtedness to accelerate the maturity thereof, the Borrower shall forthwith give written notice thereof to the Agent and each of the Lenders, describing the notice or action and the nature of the claimed failure to comply.
(b)Environmental Events. The Borrower and the Trust will promptly give notice in writing to the Agent (with copies to the Agent for each Lender) (i) upon
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Borrower’s or the Trust’s obtaining knowledge of any material violation (as determined by the Borrower or the Trust in the exercise of its reasonable discretion) of any Environmental Law regarding the Project or Borrower’s or the Trust’s operations, (ii) upon Borrower’s or the Trust’s obtaining knowledge of any known Release of any Hazardous Substance at, from, or into the Project which it reports in writing or is reportable by it in writing to any governmental authority and which is material in amount or nature or which could materially affect the value of the Project, (iii) upon Borrower’s or the Trust’s receipt of any notice of material violation of any Environmental Laws or of any material Release of Hazardous Substances in violation of any Environmental Laws or any matter that may be a Disqualifying Environmental Event with respect to the Project, including a notice or claim of liability or potential responsibility from any third party (including without limitation any federal, state or local governmental officials) and including notice of any formal inquiry, proceeding, demand, investigation or other action with regard to (A) Borrower’s or the Trust’s or any other Person’s operation of the Project, (B) contamination on, from or into the Project, or (C) investigation or remediation of off-site locations at which Borrower or the Trust or any of its predecessors are alleged to have directly or indirectly disposed of Hazardous Substances, or (iv) upon Borrower’s or the Trust’s obtaining knowledge that any expense or loss has been incurred by such governmental authority in connection with the assessment, containment, removal or remediation of any Hazardous Substances with respect to which Borrower or the Trust may be liable or for which a lien may be imposed on the Project.
(c)Notification of Claims against the Project. The Borrower will, and will cause each Subsidiary to, promptly upon becoming aware thereof, notify the Agent in writing (with copies to the Agent for each Lender) of any setoff, claims, withholdings or other defenses to which the Project is subject, which (i) could reasonably be expected to have a material adverse effect on (x) the business, operations, assets, condition (financial or otherwise), properties or prospects of the Trust or the Borrower, or (y) the value of the Project, or (ii) with respect to the Project, constitute a Disqualifying Environmental Event, a Disqualifying Structural Event or a Lien.
(d)Notice of Litigation and Judgments. The Borrower and the Trust will give notice to the Agent in writing (with copies to the Agent for each Lender) within three (3) days of becoming aware of any litigation or proceedings threatened in writing or any pending litigation and proceedings an adverse determination in which could materially adversely affect the Borrower, the Trust, or the Project, or to which the Borrower, the Trust or any of their respective Subsidiaries is or is to become a party involving a claim against the Borrower, the Trust or any of their respective Subsidiaries that could reasonably be expected to have a materially adverse effect on the respective business, operations, assets, condition (financial or otherwise) or properties of the Trust, the Borrower or on the value or operation of the Project and stating the nature and status of such litigation or proceedings. The Borrower and the Trust will give notice to the Agent and each of the Lenders, in writing, in form and detail reasonably satisfactory to the Agent, within three (3) days of any judgment not covered by insurance, final or
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otherwise, against the Borrower, the Trust or any of such Subsidiaries in an amount in excess of $1,000,000.
§8.6.Existence of Borrower; Maintenance of the Project. The Borrower and the Trust will do or cause to be done all things necessary to, and shall, preserve and keep in full force and effect its respective existence in its jurisdiction of organization and will do or cause to be done all things necessary to preserve and keep in full force all of its respective rights and franchises and those of its respective Subsidiaries which may be necessary to properly and advantageously conduct the businesses conducted by it. The Borrower (a) will cause all necessary repairs, renewals, replacements, betterments and improvements to be made to the Project, all as in the judgment of the Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, and in any event, will keep all of the Project in a condition consistent with the Real Estate Assets currently owned or controlled by the Borrower or its Subsidiaries, (b) will cause all of its other properties and those of its Subsidiaries used or useful in the conduct of its business or the business of its Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment, (c) will not permit the Trust to directly own or lease the Project, and (d) will, and will cause each of its Subsidiaries to continue to engage primarily in the businesses now conducted by it.
§8.7.Existence of the Trust; Maintenance of REIT Status of the Trust; Maintenance of Properties; Etc.
(a) The Trust will do or cause to be done all things necessary to preserve and keep in full force and effect the Trust’s existence as a Maryland real estate investment trust. The Trust will at all times (i) maintain its status as a REIT and not take any action which could lead to its disqualification as a REIT and (ii) continue to operate as a self-directed and self-administered REIT and make public reports and filings as though it were listed on a nationally-recognized stock exchange. The Trust will not engage in any business other than the business of acting as a REIT and serving as the general partner and limited partner of the Borrower and matters directly relating thereto, and shall (x) conduct all or substantially all of its business operations through the Borrower or through subsidiary partnerships or other entities in which the Borrower owns 100% of the legal and economic interests and (y) own no real property or material personal property other than through its ownership interests in the Borrower. The Trust will (a) cause all of its properties and those of its Subsidiaries used or useful in the conduct of its business or the business of its Subsidiaries to be maintained and kept in good condition, repair and working order, and supplied with all necessary equipment, (b) cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Trust may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times and (c) cause each of its Subsidiaries to continue to engage primarily in the businesses now conducted by it.
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(b) No Borrower will enter into any transactions after the Closing Date that, if in effect on the Closing Date, would have required disclosure onSchedule 7.15 without the consent of the Agent.
(c) Neither of Whitestone III LP LTD and Whitestone III GP LLC will engage in any business other than the business of serving as the general partner or limited partner, as the case may be, of Whitestone III and matters directly relating thereto and shall not own any real property or material personal property other than through its ownership interests in Whitestone III.
§8.8.Insurance. The Borrower and the Trust will maintain with respect to the Project and their other properties, and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, insurance with respect to such properties and its business against such casualties and contingencies as shall be in accordance with the general practices of businesses engaged in similar activities in similar geographic areas and in amounts, containing such terms, in such forms and for such periods as may be reasonable and prudent and as otherwise required pursuant to Section 1.4 of the Deed of Trust.
§8.9.Taxes. The Borrower will, and will cause the Trust and each of their respective Subsidiaries to, pay or cause to be paid real estate taxes, other taxes, assessments and other governmental charges against the Project before the same become delinquent and will duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all taxes, assessments and other governmental charges imposed upon its sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies that if unpaid might by law become a lien or charge upon the Project;provided that any such tax, assessment, charge, levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or the Trust shall have set aside on its books adequate reserves with respect thereto; andprovided,further, that the Borrower or the Trust will pay all such taxes, assessments, charges, levies or claims forthwith prior to the attachment of any lien as security therefor. Promptly upon request by the Agent if required for bank regulatory compliance purposes or similar bank purposes, the Borrower will provide evidence of the payment of real estate taxes, other taxes, assessments and other governmental charges against the Project in the form of receipted tax bills or other form reasonably acceptable to the Agent, or evidence of the existence of applicable contests as contemplated herein.
§8.10.Inspection of Properties and Books. (a) The Borrower and the Trust will permit the Agent or any of its designated representatives upon reasonable notice (which notice may be given orally or in writing andprovided that no notice shall be required if a Default or Event of Default has occurred and is continuing), to visit and inspect any of the properties of the Borrower, the Trust or any of their respective Subsidiaries to examine the books of account of the Borrower, the Trust and their respective Subsidiaries and Whitestone Management (and to make copies thereof and extracts therefrom) and to
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discuss the affairs, finances and accounts of the Borrower, the Trust and their respective Subsidiaries and the Project with, and to be advised as to the same by, its officers, all at such reasonable times and intervals as the Agent may reasonably request.
(b) The Borrower hereby agrees that each of the Lenders and the Agent (and each of their respective, and their respective affiliates’, employees, officers, directors, agents and advisors (collectively, “Representatives”) is, and has been from the commencement of discussions with respect to the facility established by the Agreement (the “Facility”), permitted to disclose to any and all Persons, without limitation of any kind, the structure and tax aspects (as such terms are used in Code sections 6011 and 6111) of the Facility, and all materials of any kind (including opinions or other tax analyses) that are or have been provided to such Lender or the Agent related to such structure and tax aspects. In this regard, the Lenders and the Agent intend that this transaction will not be a “confidential transaction” under Code sections 6011, 6111 or 6112, and the regulations promulgated thereunder. Neither the Borrower, the Trust, nor any Subsidiary of any of the foregoing intends to treat the Term Loan or the transactions contemplated by this Agreement and the other Loan Documents as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). If the Borrower or the Trust determines to take any action inconsistent with such intention, the Borrower will promptly notify the Agent thereof. If the Borrower so notifies the Agent, the Borrower acknowledges that the Agent may treat the Term Loan as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and the Agent will maintain the lists and other records, including the identity of the applicable party to the Term Loan as required by such Treasury Regulation.
§8.11.Compliance with Laws, Contracts, Licenses, and Permits. The Borrower and the Trust will comply with, and will cause each of their respective Subsidiaries to comply with (a) all applicable laws and regulations now or hereafter in effect wherever its business is conducted that are material in any respect to the operation of their respective businesses in the ordinary course and consistent with past practices, including, without limitation, all such Environmental Laws and all such applicable federal and state securities laws, (b) the provisions of its partnership agreement, trust agreement, operating agreement or corporate charter and other Organizational Documents, as applicable, (c) all material agreements and instruments to which it is a party or by which it or any of its properties may be bound (including the Project and the Leases) and (d) all applicable decrees, orders, and judgments. If at any time while the Term Loan or Note or other Obligations is outstanding, any Permit shall become necessary or required in order that the Borrower may fulfill any of its obligations hereunder, the Borrower and the Trust and their respective Subsidiaries will immediately take or cause to be taken all reasonable steps within the power of the Borrower or the Trust, as applicable, to obtain such Permit and furnish the Agent with evidence thereof. Without limitation of the foregoing, the Borrower will continue to comply with all laws, rules and regulations relating to anti-terrorism or money laundering, including the Anti-Terrorism Order, the Patriot Act, the Trading with the Enemy Act, as amended, and the foreign assets control regulations of the
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United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and the enabling legislation or executive orders relating thereto.
§8.12.Use of Proceeds. Subject at all times to the other provisions of this Agreement, including without limitation §7.17, the Borrower will use the proceeds of the Term Loan solely to repay certain of its obligations under the Revolving Credit Agreement.
§8.13.Solvency of Borrower and Trust. The Borrower and the Trust shall remain solvent at all times.
§8.14.Further Assurances. The Borrower and the Trust will cooperate with the Agent and the Lenders and execute such further instruments and documents as the Lenders or the Agent shall reasonably request to carry out to their satisfaction the transactions contemplated by this Agreement and the other Loan Documents.
§8.15.Reserved.
§8.16.Environmental Indemnification. The Borrower and the Trust each covenants and agrees that it will indemnify and hold the Agent and each Lender, and each of their respective Affiliates, harmless from and against any and all claims, expense, damage, loss or liability incurred by the Agent or any Lender (including all reasonable costs of legal representation incurred by the Agent or any Lender, but excluding, as applicable, for the Agent or a Lender any claim, expense, damage, loss or liability as a result of the gross negligence or willful misconduct of the Agent or such Lender or any of their respective Affiliates) relating to (a) any Release or threatened Release of Hazardous Substances on the Project; (b) any violation of any Environmental Laws with respect to conditions at the Project or the operations conducted thereon; (c) the investigation or remediation of off-site locations at which the Borrower, the Trust or any of their respective Subsidiaries or their predecessors are alleged to have directly or indirectly disposed of Hazardous Substances; or (d) any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances relating to the Project (including, but not limited to, claims with respect to wrongful death, personal injury or damage to property). It is expressly acknowledged by the Borrower that, notwithstanding the introductory paragraph of this §8, this covenant of indemnification shall survive the repayment of the amounts owing under the Notes and this Agreement and the termination of this Agreement and the obligations of the Lenders hereunder and shall inure to the benefit of the Agent and the Lenders and their respective Affiliates, their respective successors, and their respective assigns under the Loan Documents permitted under this Agreement. The environmental indemnity provided herein shall be in addition to that provided in the Environmental Indemnity Agreement.
§8.17.Response Actions. The Borrower covenants and agrees that if any Release or disposal of Hazardous Substances shall occur or shall have occurred on the Project, in violation of applicable Environmental Laws, the Borrower will cause the prompt
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containment and removal of such Hazardous Substances and remediation of the Project as necessary to comply with all Environmental Laws and to preserve the value of the Project.
§8.18.Environmental Assessments. Without limitation of any other provision herein or in any other Loan Document, if the Agent reasonably believes, after discussion with the Borrower and review of any environmental reports provided by the Borrower, that a Disqualifying Environmental Event has occurred with respect to the Property, whether or not a Default or an Event of Default shall have occurred, the Agent may, from time to time, for the purpose of assessing and determining whether a Disqualifying Environmental Event has in fact occurred, cause the Borrower to obtain one or more environmental assessments or audits of the Property prepared by a hydrogeologist, an independent engineer or other qualified consultant or expert approved by the Agent to evaluate or confirm (i) whether any Hazardous Substances are present in the soil or water at the Property and (ii) whether the use and operation of the Property complies with all Environmental Laws. Environmental assessments may include without limitation detailed visual inspections of the Property including, without limitation, any and all storage areas, storage tanks, drains, dry wells and leaching areas, and, if and to the extent reasonable, appropriate and required pursuant to applicable Environmental Laws, the taking of soil samples, surface water samples and ground water samples, as well as such other investigations or analyses as the Agent deems appropriate. All such environmental assessments shall be at the sole cost and expense of the Borrower.
§8.19.Employee Benefit Plans.
(a)Notice. The Borrower and the Trust will notify the Agent (with copies to the Agent for each Lender) at least thirty (30) days prior to the establishment of any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan by any of them or any of their respective ERISA Affiliates other than those disclosed onSchedule 7.16 or disclosed in the SEC Filings, and neither the Borrower nor the Trust will establish any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan which could reasonably be expected to have a material adverse effect on the Borrower or the Trust.
(b)In General. Each Employee Benefit Plan maintained by the Borrower, the Trust or any of their respective ERISA Affiliates will be operated in compliance with the provisions of ERISA and, to the extent applicable, the Code, including but not limited to the provisions thereunder respecting prohibited transactions.
(c)Terminability of Welfare Plans. With respect to each Employee Benefit Plan maintained by the Borrower, the Trust or any of their respective ERISA Affiliates which is an employee welfare benefit plan within the meaning of §3(l) or §3(2)(B) of ERISA, the Borrower, the Trust, or any of their respective ERISA Affiliates, as the case may be, shall have the right to terminate each such plan at any time (or at any time subsequent to the expiration of any applicable bargaining agreement) without liability other than liability to pay claims incurred prior to the date of termination.
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(d)Unfunded or Underfunded Liabilities. The Borrower and the Trust will not at any time have accruing or accrued unfunded or underfunded liabilities with respect to any Employee Benefit Plan, Guaranteed Pension Plan or Multiemployer Plan, or permit any condition to exist under any Multiemployer Plan that would create a withdrawal liability.
§8.20.No Amendments to Certain Documents. The Borrower and the Trust will not at any time cause or permit its certificate of limited partnership, agreement of limited partnership (including without limitation the Agreement of Limited Partnership of the Borrower), articles of incorporation, by-laws, operating agreement, trust agreement or other Organizational Documents, as the case may be, to be modified, amended or supplemented in any respect whatever, without (in each case) the express prior written consent or approval of the Agent, if such changes could affect the Trust’s REIT status or otherwise adversely affect the rights of the Agent and the Lenders hereunder or under any other Loan Document. Any such modification, amendment or supplement shall, in any event, be subject to the other terms and provisions of this Agreement and the other Loan Documents.
§8.21.Personal Property. All of the Borrower’s personal property, fixtures, attachments and equipment delivered upon, attached to or used in connection with the operation of the Project shall always be located at the Project and shall be kept free and clear of all Liens, encumbrances and security interests, except those in favor of the Agent and except for Permitted Liens.
§8.22.Leases. Borrower shall provide the Agent and the Lenders with a copy of the fully executed original of all Leases promptly following their execution.
§9.CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE TRUST. The Borrower and the Trust, on their own behalf and on behalf of their respective Subsidiaries, jointly and severally covenant and agree that neither the Borrower nor the Trust will:
§9.1.Restrictions on Indebtedness. Create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Agent and the Lenders (and their respective Affiliates) arising under any of the Loan Documents;
(b) Indebtedness arising under the Revolving Credit Agreement;
(c) current liabilities of the Borrower incurred in the ordinary course of business other than through (i) the borrowing of money, or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services;
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(d) Indebtedness of Whitestone OP (other than relating to the Project) in an aggregate amount not in excess of $500,000 in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of §8.9 (but including, in any event, any Indebtedness secured by an M&M Lien);
(e) Indebtedness of Whitestone OP (other than relating to the Project) in an aggregate amount not in excess of $1,000,000 in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which, at the time, a good faith appeal or proceeding for review is being prosecuted, and in respect of which a stay of execution shall have been obtained pending such appeal or review;
(f) endorsements for collection, deposit or negotiation incurred in the ordinary course of business;
(g) Secured term loan Indebtedness of Whitestone OP and its Subsidiaries (but not Pima Norte) disclosed on Schedule 9.1(f) or incurred after the Closing Date,provided that: (i) such Indebtedness is Without Recourse to the Borrower or the Trust and is Without Recourse to any of the respective assets of any of the Borrower or the Trust other than to the specific Real Estate Asset or Assets acquired, refinanced or rehabilitated with the proceeds of such Indebtedness, and (ii) at the time any such Indebtedness is incurred and after giving effect thereto, there exists no Default or Event of Default hereunder;
(h) contingent liabilities of Whitestone OP disclosed in the financial statements referred to in §7.4 or onSchedule 9.1(g) hereto, and such other contingent liabilities of the Borrower having a combined aggregate potential liability of not more than $1,000,000 at any time;
(i) Indebtedness of Whitestone OP for the purchase price of capital assets (other than Real Estate Assets but including Indebtedness in respect of Capitalized Leases) incurred in the ordinary course of business,provided that the aggregate principal amount of Indebtedness permitted by this clause (i) shall not exceed $500,000 at any time outstanding; and
(j) Recourse Indebtedness of Whitestone OP incurred after the Closing Date (other than Indebtedness relating to or affecting the Project) in connection with the purchase of or the construction of or renovation of improvements on any Real Estate Asset,provided that (i) the aggregate principal amount of Indebtedness permitted by this clause (i) shall not exceed $40,000,000 at any time outstanding, and (ii) at the time any such Indebtedness is incurred and after giving effect thereto, there exists no Default or Event of Default hereunder.
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Notwithstanding the foregoing, in no event shall the Borrower, the Trust or any of their respective Subsidiaries incur or have outstanding (i) unhedged variable rate Indebtedness in excess of fifty percent (50%) of Consolidated Total Indebtedness, or (ii) any other revolving credit facility, whether secured or unsecured, or any unsecured Indebtedness for borrowed money.
It is understood and agreed that the provisions of this §9.1 shall not apply to Indebtedness of any Partially-Owned Entity that is Without Recourse to the Borrower or the Trust, or any of their respective assets. The terms and provisions of this §9.1 are in addition to, and not in limitation of, the covenants set forth in §10.
§9.2.Restrictions on Liens, Etc. (a) Create or incur or suffer to be created or incurred or to exist any lien, mortgage, pledge, attachment, security interest or other rights of third parties of any kind upon the Project or on the member interests of Pima Norte, whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement in connection with the operation of the Project; (c) suffer to exist with respect to the Project, any taxes, assessments, governmental charges and claims for labor, materials and supplies for which payment thereof is not being contested or for which payment notwithstanding a contest is required to be made in accordance with the provisions of §8.9 and has not been timely made; or (d) sell, assign, pledge or otherwise transfer for security any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse, relating to the Project (the foregoing types of liens and encumbrances described in clauses (a) through (d) being sometimes referred to herein collectively as “Liens”),provided that the Borrower may create or incur or suffer to be created or incurred or to exist the following (“Permitted Liens”):
(i) Liens securing taxes, assessments, governmental charges or levies which are not yet due and payable or which are not yet required to be paid under §8.9;
(ii) Liens arising out of deposits or pledges made in connection with, or to secure payment of, worker’s compensation, unemployment insurance, old age pensions or other social security obligations; and deposits with utility companies and other similar deposits made in the ordinary course of business;
(iii) Liens (other than affecting the Project or the equity interests of any Borrower or the Trust) in respect of judgments or award, the Indebtedness with respect to which is not prohibited by §9.1(e);
(iv) Encumbrances on properties (other than the Project) consisting of easements, rights of way, covenants, zoning and other land-use restrictions, building restrictions, restrictions on the use of real property and defects and irregularities in the title thereto; landlord’s or lessor’s Liens under Leases to which the Borrower is a party or
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bound; purchase options granted at a price not less than the market value of such property; and other minor Liens or encumbrances on properties, none of which interferes materially with the use of the property affected in the ordinary conduct of the business of the Borrower, and which matters (x) do not individually or in the aggregate have a material adverse effect on the business of the Borrower or the Trust and (y) do not make title to such property unmarketable by the conveyancing standards in effect where such property is located;
(v) any Leases entered into in the ordinary course of business;
(vii) Liens affecting the Project (but not the equity interests of the Borrower or the Trust) in respect of judgments or awards not in excess of $50,000 that are under appeal or have been in force for less than the applicable period for taking an appeal, so long as execution is not levied thereunder or in respect of which, at the time, a good faith appeal or proceeding for review is being diligently prosecuted, and in respect of which a stay of execution shall have been obtained pending such appeal or review;provided that the Borrower shall have obtained a bond or insurance or made other arrangements with respect thereto, in each case reasonably satisfactory to the Agent;
(viii) Liens securing Indebtedness for the purchase price of capital assets (other than Real Estate Assets but including Indebtedness in respect of Capitalized Leases for equipment and other equipment leases) to the extent not otherwise prohibited by §9.1;
(ix) M&M Liens securing an aggregate amount not in excess of $500,000 at any time, so long as each such M&M Lien is bonded within thirty (30) days of attachment; and
(x) other Liens (other than Liens affecting the Project or the equity interests of the Borrower or the Trust) in connection with any Indebtedness permitted under §9.1.
Nothing contained in this §9.2 shall restrict or limit the Borrower or any of their respective Wholly-owned Subsidiaries from creating a Lien in connection with any Real Estate Asset which is not an Eligible Unencumbered Property (as defined in the Revolving Credit Agreement) and otherwise in compliance with the other terms of this Agreement,provided that in no event will the Borrower, the Trust or any of their respective Subsidiaries create, incur or suffer to be created or incurred or to exist any Lien, other than in favor of the Agent, on the equity interests of the Borrower or the Trust. Without limitation of the foregoing, the Trust shall not create or incur or suffer to be created or incurred any Lien on any of its directly-owned properties or assets, including, in any event, its general partner interests and limited partner interests in the Borrower.
§9.3.Restrictions on Investments. Make or permit to exist or to remain outstanding any Investment except, with respect to the Borrower and its Subsidiaries only, Investments in:
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(a) (i) marketable direct or guaranteed obligations of the United States of America that mature within one (1) year from the date of purchase (including investments in securities guaranteed by the United States of America such as securities in so-called “overseas private investment corporations”) and (ii) demand deposits, certificates of deposit, bankers acceptances and time deposits of United States banks having total assets in excess of $1,000,000,000;
(b) (i) preferred stock or public bonds issued by companies listed on a nationally recognized exchange and having a rating of at least AAA, and (ii) shares in public REITs so long as such REIT is listed on a nationally recognized exchange and has a rating of at least AAA,provided that the aggregate investments in all such items described in clauses (i) and (ii) above will not at any time exceed five percent (5%) of the Fair Market Value of Real Estate Assets, andprovided,further, that no such investment shall be outstanding for longer than ninety (90) days;
(c) securities commonly known as “commercial paper” issued by a corporation organized and existing under the laws of the United States of America or any state thereof that at the time of purchase have been rated and the ratings for which are not less than “P 1” if rated by Moody’s, and not less than “A 1” if rated by S&P;
(d) Investments existing on the Closing Date and listed in the financial statements referred to in §7.4;
(e) other Investments hereafter in connection with the acquisition and development of Permitted Properties by the Borrower or any Wholly-owned Subsidiary of the Borrower,provided that the aggregate amounts actually invested by Borrower (or if not invested directly by the Borrower, actually invested by an Affiliate of the Borrower for which the Borrower has any funding obligation) and such Wholly-owned Subsidiary at any time in Real Estate Assets under Development (including all development costs) will not exceed twenty percent (20%) of the Fair Market Value of Real Estate Assets at the time of any such Investment, andprovided,further, that Investments in unimproved Land may at no time exceed fifteen percent (15%) of the Fair Market Value of Real Estate Assets;
(f) (i) any Investments now or hereafter made in any Wholly-owned Subsidiary; and (ii) Investments now or hereafter made in any Partially-Owned Entity (or other Person for which the Borrower has any funding obligation) so long as such Investment is made in connection with Permitted Properties andprovided that the aggregate amounts actually invested by Borrower (or if not invested directly by Borrower, actually invested by an Affiliate of the Borrower for which the Borrower has any funding obligation) and such Wholly-owned Subsidiary at any time in any Partially-Owned Entity (or other such Person) will not exceed thirty percent (30%) of the Fair Market Value of Real Estate Assets at the time of any such Investment; and
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(g) Investments in respect of (1) equipment, inventory and other tangible personal property acquired in the ordinary course of business, (2) current trade and customer accounts receivable for services rendered in the ordinary course of business and payable in accordance with customary trade terms, (3) advances in the ordinary course of business to employees for travel expenses, drawing accounts and similar expenditures, (4) prepaid expenses made in the ordinary course of business.
(h) Investments by the Borrower in Mortgage Notes,provided that the aggregate investment in such Mortgage Notes will not exceed twenty percent (20%) of the Fair Market Value of Real Estate Assets at the time of any such Investment.
In no event shall the aggregate of Investments (1) made pursuant to subclauses (a), (b) or (c) above (or otherwise in marketable securities to the extent permitted under this §9.3) exceed ten percent (10%) of the Fair Market Value of Real Estate Assets, and (2) made pursuant to subclauses (a), (b), (c), (d) to the extent relating to any of the types of Investments otherwise described in this clause (2), (e) to the extent relating to Real Estate Assets Under Development, (f)(ii), or (h) exceed thirty percent (30%) of the Fair Market Value of Real Estate Assets at any time.
Notwithstanding the foregoing, the Trust shall be permitted to make and maintain Investments in the Borrower and the Trust shall contribute to the Borrower, promptly upon, and in any event within three (3) Business Days of, the Trust’s receipt thereof, 100% of the aggregate proceeds received by the Trust in connection with any offering of stock or debt in the Trust (net of fees and expenses customarily incurred in such offerings).
§9.4.Merger and Consolidation.
(a) Become a party to any merger, consolidation, spin-off or other material business change without the prior written approval of the Majority Lenders (other than the merger or consolidation of a Borrower with and into Whitestone OP (with Whitestone OP being the surviving entity) so long as no Default or Event of Default has occurred and is continuing, or would occur and be continuing after giving effect to such merger or consolidation); or
(b) sell, transfer or otherwise dispose of any Real Estate Assets or other property, including any equity interest in any Person, except for (i) the sale, transfer or other disposition of obsolete or worn out property in the ordinary course of business, (ii) the sale or issuance of equity interests of the Trust and Whitestone OP in the ordinary course of business, (iii) the sale of Permitted Investments in the ordinary course of business and (iv) the sale, transfer or other disposition of property (other than the Project),provided that (A) such sale, transfer or disposition is at fair market value, (B) such sale, transfer or disposition will not result in a Material Adverse Effect and (C) in connection with the sale of any material Real Estate Asset, the Borrower shall have provided to the Agent a compliance certificate in the form ofExhibit C-2, hereto signed
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by the chief financial officer or chief accounting officer of the Borrower, setting forth in reasonable detail computations evidencing compliance with the covenants contained in §10 hereof and certifying that no Default or Event of Default would exist or occur and be continuing after giving effect to all such proposed such sale, transfer or disposition.
§9.5.Compliance with Environmental Laws. (a) Use the Project or any portion thereof as a facility for the handling, processing, storage or disposal of Hazardous Substances except for quantities of Hazardous Substances used in the ordinary course of business and in compliance with all applicable Environmental Laws, (b) cause or permit to be located on the Project any underground tank or other underground storage receptacle for Hazardous Substances except in compliance with Environmental Laws, (c) generate any Hazardous Substances on the Project except in compliance with Environmental Laws, or (d) conduct any activity at the Project or use the Project in any manner so as to cause a Release in violation of applicable Environmental Laws.
§9.6.Distributions.
(a) The Borrower will not declare or make (i) annual Distributions in excess of (x) 105% of “funds from operations” for the fiscal quarters ended March 31, 2007, June 30, 2007, September 30, 2007, December 31, 2007 and March 31, 2008 or (y) 95% of “funds from operations” for any fiscal quarter thereafter; or (ii) any Distributions during any period after any Event of Default has occurred;provided,however, (a) that the Borrower may at all times (including while an Event of Default is continuing) make Distributions to the extent (after taking into account all available funds of the Trust from all other sources) required in order to enable the Trust to continue to qualify as a REIT and (b) in the event that the Borrower cures any such Event of Default in clause (ii) above and the Agent has accepted such cure prior to accelerating the Loan, the limitation of clause (ii) above shall cease to apply with respect to such Event of Default.
(b) The Trust will not, during any period when any Event of Default has occurred and is continuing, make any Distributions in excess of the minimum Distributions required to be made by the Trust in order to maintain its status as a REIT.
(c) Notwithstanding the definition of “funds from operations” by the Board of Governors of the National Association of Real Estate Investment Trusts, for purposes of determining the Distributions permitted to be declared under Section 9.6(a)(i), (i) for any fiscal period ending on or after December 31, 2006 through December 31, 2007, Excluded Litigation Fees shall not reduce “funds from operations” and (ii) for all fiscal periods ending prior to March 11, 2008, “funds from operations” shall be calculated in a manner consistent with its calculation prior to the Trust becoming a self-managed fund and shall not be reduced by G and A Expenses.
§9.7.Reserved.
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§9.8.Default Under Leases. The Borrower will not suffer or permit any breach or default to occur in any of the Borrower’s material obligations under any of the Major Leases nor suffer or permit the same to terminate by reason of any failure of the Borrower to meet any requirement of any Major Lease including those with respect to any time limitation within which any of the Borrower’s work is to be done or the space is to be available for occupancy by the lessee to the extent any of the foregoing could reasonably be expected to result in a no material adverse change to the Net Operating Income of the Project. The Borrower shall notify Lender promptly in writing of any termination by any party of a Major Lease.
§10.FINANCIAL COVENANTS. The Borrower and the Trust, on their own behalf and on behalf of their respective Subsidiaries, jointly and severally covenant and agree that:
§10.1.Consolidated Total Leverage Ratio. At any time, (i) Consolidated Total Indebtedness as at the last day of any fiscal quarter shall not exceed sixty percent (60%) of (ii) the Fair Market Value of Real Estate Assets.
§10.2.Interest Coverage Ratio. As at the end of any fiscal quarter, the ratio of (i) Consolidated EBITDA for the four consecutive fiscal quarters ending on the last day of such fiscal quarter to (ii) Consolidated Total Interest Expense for the four consecutive fiscal quarters ending on the last day of such fiscal quarter must exceed 2.00 to 1.00.
§10.3.Fixed Charge Coverage Ratio. As at the end of any fiscal quarter, the ratio of (i) Consolidated EBITDA for the four consecutive fiscal quarters ending on the last day of such fiscal quarter to (ii) Consolidated Fixed Charges for the four consecutive fiscal quarters ending on the last day of such fiscal quarter must exceed 1.50 to 1.00.
§10.4.Secured Debt Leverage. At any time, (i) Consolidated Total Indebtedness (less any Unsecured Consolidated Total Indebtedness) as at the last day of any fiscal quarter shall not exceed forty percent (40%) of (ii) the Fair Market Value of Real Estate Assets.
§10.5.Reserved.
§10.6.Reserved.
§10.7.Reserved.
§10.8.Consolidated Tangible Net Worth. As at the end of any fiscal quarter or any other date of measurement, the Consolidated Tangible Net Worth of the Borrower and its Subsidiaries shall not be less than the sum of (i) $30,000,000plus (ii) 75% of the aggregate proceeds received by the Trust (net of fees and expenses customarily incurred in transactions of such type) in connection with any offering of stock in the Trust,plus (iii) 75% of the aggregate value of operating units issued by the Borrower in connection
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with asset or stock acquisitions (valued at the time of issuance by reference to the terms of the agreement pursuant to which such units are issued),provided that issuances of operating units to the Trust in connection with additional capital contributions made by the Trust in the Borrower shall be excluded from this clause (iii) on or prior to the date such determination of Consolidated Tangible Net Worth is made.
§11.Reserved.
§12.CONDITIONS TO THE TERM LOAN. The obligations of any Lender to make and maintain the Term Loan shall be subject to the satisfaction of the following conditions precedent on or prior to the Closing Date with, in each instance, the Agent having approved in its sole discretion each matter submitted to it in compliance with such conditions:
§12.1.Loan Documents. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto and shall be in full force and effect.
§12.2.Certified Copies of Organization Documents. The Agent shall have received (i) from the Whitestone OP a copy, certified as of a recent date by a duly authorized officer of the Trust, in its capacity as general partner of the Borrower, to be true and complete, of the Agreement of Limited Partnership of Whitestone OP and any other Organizational Document or other agreement governing the rights of the partners or other equity owners of Whitestone OP, (ii) from Pima Norte a copy, certified as of a recent date by a duly authorized officer of Whitestone OP, in its capacity as sole member of Pima Norte, to be true and complete, of the Agreement of Limited Partnership of Pima Norte and any other Organizational Document or other agreement governing the rights of the members or other equity owners of Pima Norte, (iii) from Whitestone III a copy, certified as of a recent date by a duly authorized officer of Whitestone OP, in its capacity as sole member of Whitestone III GP LLC, general partner of Whitestone III, to be true and complete, of the Agreement of Limited Partnership of Whitestone III and any other Organizational Document or other agreement governing the rights of the partners or other equity owners of Whitestone III, (iv) from Whitestone III GP LLC, a copy, certified as of a recent date by a duly authorized officer of Whitestone OP, in its capacity as sole member of Whitestone III GP LLC, to be true and complete, of the Agreement of Limited Partnership of Whitestone III GP LLC and any other Organizational Document or other agreement governing the rights of the members of Whitestone III GP LLC, (v) from Whitestone III LP LTD a copy, certified as of a recent date by a duly authorized officer of Whitestone OP, in its capacity as general partner of Whitestone III GP LLC, sole general partner of Whitestone III LP LTD, to be true and complete, of the Agreement of Limited Partnership of Whitestone III LP LTD and any other Organizational Document or other agreement governing the rights of the partners or other equity owners of Whitestone III LP LTD, and (vi) from the Trust a copy, certified as of a recent date by the appropriate officer of the State of Maryland to be true and correct, of the trust agreement of the Trust, in each case along with any other organization documents of the Borrower or the Trust
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and their respective general partners, as the case may be, and each as in effect on the date of such certification.
§12.3.Resolutions. All action on the part of the Borrower and the Trust necessary for the valid execution, delivery and performance by the Borrower and the Trust of this Agreement and the other Loan Documents to which any of them is or is to become a party shall have been duly and effectively taken, and evidence thereof satisfactory to the Agent shall have been provided to the Agent. The Agent shall have received from the Trust and the Borrower true copies of the resolutions adopted by its board of directors or trustees authorizing the transactions described herein and evidencing the due authorization, execution and delivery of the Loan Documents to which the Trust and/or the Borrower is a party, each certified by the secretary as of a recent date to be true and complete.
§12.4.Incumbency Certificate: Authorized Signers. The Agent shall have received from the Trust and the Borrower an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of the Trust and the Borrower, as applicable, and giving the name of each individual who shall be authorized: (a) to sign, in the name and on behalf of the Borrower and the Trust, as the case may be, each of the Loan Documents to which the Borrower or the Trust is or is to become a party; (b) to make Loan and Conversion Requests on behalf of the Borrower and (c) to give notices and to take other action on behalf of the Borrower or the Trust, as applicable, under the Loan Documents.
§12.5.Title Policy. The Agent shall have received from the Borrower an ALTA Loan Title Insurance Policy acceptable to Lender in its sole discretion, insuring the Loan, issued by the Title Insurer, insuring the lien of the Deed of Trust as a valid first, prior and paramount lien upon the Project and all appurtenant easements, and subject to no exceptions other than the Permitted Exceptions (the “Title Policy”). The Title Policy shall satisfy the requirements ofExhibit E-2, including, without limitation, a zoning endorsement;
§12.6.Certificates of Insurance. The Agent shall have received (a) certificates of insurance as to all of the insurance maintained by Borrower on the Project (including flood insurance if necessary) from the insurer or an independent insurance broker identifying insurers, types of insurance, insurance limits, and policy terms in each case naming the Agent as loss payee, additional insured and mortgagee and in form and substance satisfactory to the Agent and the Lenders; and (b) such further information and certificates from Borrower, its insurers and insurance brokers as the Agent may reasonably request.
§12.7.Environmental Reports. The Agent shall have received satisfactory Environmental Reports with respect to the Project, prepared at the Borrower’s expense by environmental engineers acceptable to the Agent. Such Environmental Reports shall be in form and substance satisfactory to the Agent and shall indicate that the Project is free
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of all Hazardous Substances. The Agent shall have the right to obtain third-party review of the Environmental Reports at the Borrower’s expense.
§12.8.Opinion of Counsel Concerning Organization and Loan Documents. The Agent shall have received favorable opinions addressed to the Lenders and the Agent in form and substance reasonably satisfactory to the Agent from counsel to the Borrower and the Trust and, if any, state specific local counsel who are reasonably satisfactory to Agent, each as counsel to the Borrower, the Trust and their respective Subsidiaries, with respect to applicable law.
§12.9.Structural Inspection Reports. At the Agent’s request, the Borrower shall deliver to the Agent a structural inspection report with respect to the Project prepared at the Borrower’s expense by structural engineers acceptable to the Agent. Such report shall be in form and substance satisfactory to the Agent. The Agent shall have the right to obtain third-party review of such report at the Borrower’s expense.
§12.10.Inspection of the Project. The Agent shall have completed to its satisfaction an inspection of the Project at the Borrower’s expense.
§12.11.Certifications from Government Officials; UCC-11 Reports.
The Agent shall have received (i) long-form certifications from government officials evidencing the legal existence, good standing and foreign qualification of the Borrower and the Trust, along with a certified copy of the certificate of limited partnership, formation or trust, as applicable, of the Borrower, all as of the most recent practicable date; (ii) UCC-11 search results from the appropriate jurisdictions for the Borrower and the Trust; and (iii) full coverage title search results with respect to the Project.
§12.13.Proceedings and Documents; Adverse Changes. All proceedings in connection with the transactions contemplated by this Agreement, the other Loan Documents and all other documents incident thereto shall be satisfactory in form and substance to the Agent’s counsel, and the Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Agent may reasonably request. There shall have occurred no material adverse change in government regulations or policies affecting the Borrower, the Agent or any Lender. No disruption or material adverse change in the financial or capital markets in general that could reasonably be expected to have a material adverse effect on the market for loan syndications.
§12.14.Fees. The Borrower shall have paid to the Agent, for the accounts of the Lenders or for its own account, as applicable, all of the fees and expenses that are due and payable as of the Closing Date in accordance with this Agreement or any separate fee letter entered into by the Borrower and the Trust and the Agent.
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§12.15.Closing Certificate. The Borrower and the Trust shall have delivered a Closing Certificate to the Agent, in form and substance satisfactory to the Agent.
§12.16.Patriot Act, Etc. The Borrower and the Trust shall have delivered to the Agent, sufficiently in advance of the Closing Date, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the Patriot Act.
§12.17.Governmental Regulation. Each Lender shall be satisfied that the making of the Term Loan is in compliance with any applicable regulations of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System.
§12.18.Property Financial Analysis. Each Lender shall have received such financial information regarding the Project as set forth in §8.4(d) and as further required by the Lenders calculated on apro forma basis and dated as of the Closing Date.
§12.19.Appraisal. The Agent shall, at the Borrower’s expense, order, receive and review an appraisal of the Project prepared by a member of the Appraisal Institute. The appraisal and the determination of the Project’s value is subject to the Agent’s appraisal department’s review, approval, and revision or adjustment in the Agent’s discretion.
§13.CONDITIONS TO ALL BORROWINGS. The obligations of any Lender to make its Term Loan on the Closing Date shall also be subject to the satisfaction of the following conditions precedent:
§13.1.Representations True; No Event of Default; Compliance Certificate. Each of the representations and warranties made by or on behalf of the Borrower, the Trust or any of their respective Subsidiaries contained in this Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true and correct in all respects; and no Default or Event of Default under this Agreement shall have occurred and be continuing on such date.
§13.2.No Legal Impediment. No change shall have occurred any law or regulations thereunder or interpretations thereof that in the reasonable opinion of the Agent or any Lender would make it illegal for any Lender to make the Term Loan on the Closing Date. No disruption or material adverse change in the financial or capital markets in general that could reasonably be expected to have a material adverse effect on the market for loan syndications.
§13.3.Governmental Regulation. Each Lender shall be satisfied that the making of the Term Loan is in compliance with any applicable regulations of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System.
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§14.EVENTS OF DEFAULT; ACCELERATION; ETC.
§14.1.Events of Default and Acceleration. If any of the following events (“Events of Default”) shall occur:
(a) the Borrower shall fail to pay any principal of any portion of the Term Loan when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment);
(b) the Borrower shall fail to pay any interest on any portion of the Term Loan or any other sums due hereunder or under any of the other Loan Documents or any fee letter (including, without limitation, amounts due under §8.16) when the same shall become due and payable, and such failure continues for three (3) days;
(c) the Borrower, the Trust or any of their respective Subsidiaries shall fail to comply, or to cause the Trust to comply, as the case may be, with any of the respective covenants contained in the following: §8.1 (except with respect to principal, interest and other sums covered by clauses (a) or (b) above); §8.2; §§8.4 through §8.10, inclusive; §8.12; §8.13; §8.19; §8.20; §9 and §11;
(d) the Borrower, the Trust or any of their respective Subsidiaries shall fail to perform any other term, covenant or agreement contained herein or in any of the other Loan Documents (other than those specified elsewhere in this §14) and such failure continues for thirty (30) days;
(e) any representation or warranty made by or on behalf of the Borrower, the Trust or any of their respective Subsidiaries in this Agreement or any of the other Loan Documents shall prove to have been false in any material respect upon the date when made or deemed to have been made or repeated;
(f) the Borrower, the Trust or any of its Subsidiaries or, to the extent of Recourse to the Borrower, the Trust or such Subsidiaries thereunder, any Partially-Owned Entity or other of their respective Affiliates, shall fail to pay when due, or within any applicable period of grace, any Consolidated Total Indebtedness which is in excess of (i) $5,000,000, either individually or in the aggregate, if such Indebtedness is without Recourse and (ii) $1,000,000, either individually or in the aggregate, if such Indebtedness is Recourse, or fail to observe or perform any material term, covenant, condition or agreement contained in any agreement, document or instrument by which it is bound evidencing, securing or otherwise relating to such Consolidated Total Indebtedness for such period of time (after the giving of appropriate notice if required) as would permit the holder or holders thereof or of any obligations issued thereunder in excess of (i) $5,000,000, either individually or in the aggregate, if such Indebtedness is without Recourse and (ii) $1,000,000, either individually or in the aggregate, if such Indebtedness is Recourse, to accelerate the maturity thereof;
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(g) any of the Borrower, the Trust or any of their respective Subsidiaries shall make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of any of the Borrower, the Trust or any of their respective Subsidiaries or of any substantial part of the properties or assets of any of such parties or shall commence any case or other proceeding relating to any of the Borrower, the Trust or any of their respective Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against any of the Borrower, the Trust or any of their respective Subsidiaries and (i) any of the Borrower, the Trust or any of their respective Subsidiaries shall indicate its approval thereof, consent thereto or acquiescence therein or (ii) any such petition, application, case or other proceeding shall continue undismissed, or unstayed and in effect, for a period of forty-five (45) days;
(h) a decree or order is entered appointing any trustee, custodian, liquidator or receiver or adjudicating any of the Borrower, the Trust or any of their respective Subsidiaries bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of any of the Borrower, the Trust or any of their respective Subsidiaries in an involuntary case under federal bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty (30) days, whether or not consecutive, any final judgment that is not fully insured against any of the Borrower, the Trust or any of their respective Subsidiaries that, with other outstanding uninsured final judgments, undischarged, unsatisfied and unstayed, against any of such parties exceeds in the aggregate $1,000,000;
(j) any of the Loan Documents or any provision of any Loan Document shall be canceled, terminated, revoked or rescinded otherwise than in accordance with the terms thereof (other than the Guaranty, which may not be terminated without the prior consent of the Agent) or with the express prior written agreement, consent or approval of the Agent, or any action at law, suit or in equity or other legal proceeding to make unenforceable, cancel, revoke or rescind any of the Loan Documents shall be commenced by or on behalf of the Borrower or any of its Subsidiaries or the Trust or any of its Subsidiaries, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents is illegal, invalid or unenforceable as to any material terms thereof; the Guaranty shall be terminated, revoked or rescinded; or the Agent shall at any time fail to have a perfected, first-priority security interest in the Project;
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(k) any “Event of Default” or default (after notice and expiration of any period of grace, to the extent provided), as defined or provided in any of the other Loan Documents, shall occur and be continuing;
(l) with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and the Agent shall have determined in their reasonable discretion that such event reasonably could be expected to result in liability of the Borrower or any of its Subsidiaries or the Trust or any of its Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and such event in the circumstances occurring reasonably could constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan; or a trustee shall have been appointed by the United States District Court to administer such Plan; or the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan;
(m) Reserved;
(n) the failure of James C. Mastandrea, for any reason, to cease to retain the title of President of the Trust and to perform the functions typically performed under such office and to be actively involved in strategic planning and decision-making for the Trust, unless within six (6) months after such failure, the board of directors or board of trustees has duly elected or appointed a qualified substitute to replace such individual who is acceptable to the Agent in its sole discretion (as notified to the Borrower by the Agent in writing); or the occurrence of any transaction in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of voting rights applicable to the Trust ordinarily entitled to vote in the election of directors or trustees, empowering such “person” or “group” to elect a majority of the board of directors or board of trustees of the Trust, who did not have such power before such transaction; or during any twelve-month period on or after the Closing Date, individuals who at the beginning of such period constituted the board of trustees of the Trust (together with any new Trustees whose election by the board of trustees or whose nomination for election by the shareholders of the Trust was approved by a vote of at least a majority of the members of the board of trustees then in office who either were members of the board of trustees at the beginning of such period or whose election or nomination for election was previously so approved) ceased for any reason to constitute a majority of the members of the board of trustees of the Trust then in office;
(o) without limitation of the other provisions of this §14.1, (i) the Trust shall at any time fail to be the sole general partner of Whitestone OP or shall at any time be in contravention of any of the requirements contained in the last paragraph of §9.2, (ii) Whitestone OP shall fail at any time to be the sole member of Pima Norte, or (iii) the Borrower or the Trust shall at any time fail to be self-managed;
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(p) any Event of Default under (and as defined in) the Revolving Credit Agreement; or
(q) any Disqualifying Environmental Event or Disqualifying Structural Event shall have occurred;
then, and in any such event, so long as the same may be continuing, the Agent may, and upon the request of the Majority Lenders shall, declare all amounts owing with respect to this Agreement, the Notes and the other Loan Documents to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower, the Trust and each of their respective Subsidiaries;provided that in the event of any Event of Default specified in §14.1(g) or 14.1(h), all such amounts shall become immediately due and payable automatically and without any requirement of notice from any of the Lenders or the Agent or action by the Lenders or the Agent. Without limitation of the foregoing, upon the occurrence of an Event of Default and/or the acceleration of the Loans or other enforcement action under any Loan Document, the Agent shall have the right to terminate the Management Agreement, effective on the date of such termination (or such later date as the Agent may elect).
§14.2.Reserved.
§14.3.Remedies. In the event that one or more Events of Default shall have occurred and be continuing, whether or not the Lenders shall have accelerated the maturity of the Loans pursuant to §14.1, the Majority Lenders may direct the Agent to proceed to protect and enforce the rights and remedies of the Agent and the Lenders under this Agreement, the Notes, any or all of the other Loan Documents or under applicable law by suit in equity, action at law or other appropriate proceeding (including for the specific performance of any covenant or agreement contained in this Agreement or the other Loan Documents or any instrument pursuant to which the Obligations are evidenced and, to the full extent permitted by applicable law, the obtaining of theex parte appointment of a receiver), and, if any amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right or remedy of the Agent and the Lenders under the Loan Documents or applicable law. No remedy herein conferred upon the Lenders or the Agent or the holder of any Note is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under any of the other Loan Documents or now or hereafter existing at law or in equity or by statute or any other provision of law.
§15.SECURITY INTEREST AND SET-OFF.
§15.1Security Interest. Borrower hereby grants to the Agent, on behalf of and for the benefit of the Lenders, and to each Lender, a lien, security interest and right of
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setoff as security for all liabilities and obligations to the Lenders, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Agent or any Lender or any entity under the control of KeyCorp. and its successors and assigns, or in transit to any of them.
§15.2Set-Off and Debit. (i) If any Event of Default or other event which would entitle the Agent to accelerate the Loans occurs, or (ii) at any time, whether or not any Default or Event of Default exists, in the event any attachment, trustee process, garnishment, or other levy or lien is, or is sought to be, imposed on any property of the Borrower; then, in any such event, any such deposits, balances or other sums credited by or due from the Agent or any Lender, or from any such affiliate of the Agent or any Lender, to the Borrower may to the fullest extent not prohibited by applicable law at any time or from time to time, without regard to the existence, sufficiency or adequacy of any other collateral, and without notice or compliance with any other condition precedent now or hereafter imposed by statute, rule of law or otherwise, all of which are hereby waived, be set off, debited and appropriated, and applied by the Agent or any Lender, as the case may be, against any or all of the Obligations irrespective of whether demand shall have been made and although such Obligations may be unmatured, in such manner as the Agent or the applicable Lender in its sole and absolute discretion may determine. Within five (5) Business Days of making any such set off, debit or appropriation and application, the Agent agrees to endeavor to notify the Borrower thereof,provided that the failure to give such notice shall not affect the validity of such set off, debit or appropriation and application. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Each of the Lenders agrees with each other Lender that (a) if an amount to be set off is to be applied to indebtedness of the Borrower to such Lender, other than the obligations evidenced by the Note held by such Lender, such amount shall be applied ratably to such other indebtedness and to the obligations evidenced by the Note held by such Lender, and (b) if such Lender shall receive from the Borrower, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim evidenced by the Note held by such Lender by proceedings against the Borrower at law or in equity or by proof thereof in bankruptcy, reorganization liquidation, receivership or similar proceedings, or otherwise, and shall retain and apply to the payment of the Note held by such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Note held by all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the Note held by it its proportionate payment as contemplated by this Agreement;provided that if all or any part of such excess payment is thereafter recovered
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from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest.
§15.3Right to Freeze. The Agent and each of the Lenders shall also have the right, at its option, upon the occurrence of any event which would entitle the Agent or any Lender to set off or debit as set forth in §15.2, to freeze, block or segregate any such deposits, balances and other sums so that the Borrower may not access, control or draw upon the same.
§15.4Additional Rights. The rights of the Agent, the Lenders and each affiliate of Administrative Agent and each of the Lenders under this §15 are in addition to, and not in limitation of, other rights and remedies, including other rights of set off, which the Agent or any Lender may have.
§16.THE AGENT.
§16.1.Authorization. (a) The Agent is authorized to take such action on behalf of each of the Lenders and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Agent, together with such powers as are reasonably incident thereto,provided that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Agent. The relationship between the Agent and the Lenders is and shall be that of agent and principal only, and nothing contained in this Agreement or any of the other Loan Documents shall be construed to constitute the Agent as a trustee or fiduciary for any Lender.
(b) The Borrower, without further inquiry or investigation, shall, and is hereby authorized by the Lenders to, assume that all actions taken by the Agent hereunder and in connection with or under the Loan Documents are duly authorized by the Lenders. The Lenders shall notify Borrower of any successor to Agent by a writing signed by Majority Lenders, which successor shall be reasonably acceptable to the Borrower so long as no Default or Event of Default has occurred and is continuing. The Borrower acknowledges that any lender that acquires KeyBank is acceptable as a successor to the Agent.
§16.2.Employees and Agents. The Agent may exercise its powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Agreement and the other Loan Documents. The Agent may utilize the services of such Persons as the Agent in its sole discretion may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by the Borrower.
§16.3.No Liability. Neither the Agent, nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent or employee thereof, shall be liable for any waiver, consent or approval given or any action
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taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Agent may be liable for losses due to its willful misconduct or gross negligence, as finally determined by a court of competent jurisdiction.
§16.4.No Representations. The Agent shall not be responsible for the execution or validity or enforceability of this Agreement, the Notes or any of the other Loan Documents or for the validity, enforceability or collectibility of any such amounts owing with respect to the Notes, or for any recitals or statements, warranties or representations made herein or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of the Trust or the Borrower or any of their respective Subsidiaries, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements in this Agreement or the other Loan Documents. The Agent shall not be bound to ascertain whether any notice, consent, waiver or request delivered to it by the Borrower or the Trust or any holder of any of the Notes shall have been duly authorized or is true, accurate and complete. The Agent has not made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to the Lenders, with respect to the credit worthiness or financial condition of the Borrower or any of its Subsidiaries or the Trust or any of the Subsidiaries or any tenant under a Lease or any other entity. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.
§16.5.Payments.
(a) A payment by the Borrower to the Agent hereunder or any of the other Loan Documents for the account of any Lender shall constitute a payment to such Lender. The Agent agrees to distribute to each Lender such Lender’spro rata share of payments received by the Agent for the accounts of all the Lenders, as provided herein or in any of the other Loan Documents. All such payments shall be made on the date received, if before 1:00 p.m., and if after 1:00 p.m., on the next Business Day. If payment is not made on the day received, the funds shall be invested by the Agent in overnight obligations, and interest thereon paidprorata to the Lenders.
(b) If in the reasonable opinion of the Agent the distribution of any amount received by it in such capacity hereunder, under the Notes or under any of the other Loan Documents might involve it in material liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction,provided that the Agent shall invest any such undistributed amounts in overnight obligations on behalf of the Lenders and interest thereon shall be paidpro rata to the Lenders. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each Person to whom any
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such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court.
(c) Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, any Lender that fails to adjust promptly such Lender’s outstanding principal and itspro rata Commitment Percentage as provided in §2.1, shall be deemed delinquent (a “Delinquent Lender”) and shall be deemed a Delinquent Lender until such time as such delinquency is satisfied. A Delinquent Lender shall be deemed to have assigned any and all payments due to it from the Borrower, whether on account of outstanding Loans, interest, fees or otherwise, to the remaining nondelinquent Lenders for application to, and reduction of, their respectiveprorata shares of all outstanding Loans. The Delinquent Lender hereby authorizes the Agent to distribute such payments to the nondelinquent Lenders in proportion to their respectiveprorata shares of all outstanding Loans. If not previously satisfied directly by the Delinquent Lender, a Delinquent Lender shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all outstanding Loans of the nondelinquent Lenders, the Lenders’ respectivepro rata shares of all outstanding Loans have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency.
§16.6.Holders of Notes. The Agent may deem and treat the payee of any Notes as the absolute owner thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder, assignee or transferee.
§16.7.Indemnity. The Lenders ratably and severally agree hereby to indemnify and hold harmless the Agent and its Affiliates from and against any and all claims, actions and suits (whether groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Agent has not been reimbursed by the Borrower as required by §17), and liabilities of every nature and character arising out of or related to this Agreement, the Notes, or any of the other Loan Documents or the transactions contemplated or evidenced hereby or thereby, or the Agent’s actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by the Agent’s willful misconduct or gross negligence, as finally determined by a court of competent jurisdiction.
§16.8.Agent as Lender. In its individual capacity as a Lender, KeyBank shall have the same obligations and the same rights, powers and privileges in respect to its Commitment and the Term Loan made by it, and as the holder of any of the Notes, as it would have were it not also the Agent.
§16.9.Notification of Defaults and Events of Default. Each Lender hereby agrees that, upon learning of the existence of a Default or an Event of Default, it shall (to the extent notice has not previously been provided) promptly notify the Agent thereof.
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The Agent hereby agrees that upon receipt of any notice under this §16.9 it shall promptly notify the other Lenders of the existence of such Default or Event of Default.
§16.10.Duties in Case of Enforcement. In the case one or more Events of Default have occurred and shall be continuing, and whether or not acceleration of the Obligations shall have occurred, the Agent shall, at the request, or may, upon the consent, of the Majority Lenders, and provided that the Lenders have given to the Agent such additional indemnities and assurances against expenses and liabilities as the Agent may reasonably request, proceed to enforce the provisions of this Loan Agreement and the other Loan Documents and the exercise of any other legal or equitable rights or remedies as it may have hereunder or under any other Loan Document or otherwise by virtue of applicable law, or to refrain from so acting if similarly requested by the Majority Lenders. The Agent shall be fully protected in so acting or refraining from acting upon the instruction of the Majority Lenders, and such instruction shall be binding upon all the Lenders. The Majority Lenders may direct the Agent in writing as to the method and the extent of any such foreclosure, sale or other disposition or the exercise of any other right or remedy, the Lenders hereby agreeing to severally indemnify and hold the Agent harmless from all costs and liabilities incurred in respect of all actions taken or omitted in accordance with such direction,provided that the Agent need not comply with any such direction to the extent that the Agent reasonably believes the Agent’s compliance with such direction to be unlawful or commercially unreasonable in any applicable jurisdiction. The Agent may, in its discretion but without obligation, in the absence of direction from the Majority Lenders, take such interim actions as it believes reasonably necessary to preserve the rights of the Lenders hereunder, including but not limited to petitioning a court for injunctive relief or appointment of a receiver. Each of the Lenders acknowledges and agrees that no individual Lender may separately enforce or exercise any of the provisions of any of the Loan Documents, including without limitation the Notes, other than through the Agent. The Agent shall advise the Lenders of all such action taken by the Agent.
§16.11.Successor Agent. KeyBank, or any successor Agent, may resign as Agent at any time by giving at least thirty (30) days prior written notice thereof to the Lenders and to the Borrower. Any such resignation shall be effective upon appointment and acceptance of a successor Agent, as hereinafter provided. Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Agent, which is a Lender under this Agreement,provided that so long as no Default or Event of Default has occurred and is continuing the Borrower shall have the right to approve any successor Agent, which approval shall not be unreasonably withheld. If, in the case of a resignation by the Agent, no successor Agent shall have been so appointed by the Majority Lenders and approved by the Borrower, and shall have accepted such appointment, within thirty (30) days after the retiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint any one of the other Lenders as a successor Agent. The Borrower acknowledges that any lender that acquires KeyBank is acceptable as a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested
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with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from all further duties and obligations as Agent under this Agreement. After any Agent’s resignation hereunder as Agent, the provisions of this §16 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. The Agent may be removed at the direction of the Majority Lenders in the event of a final judicial determination (in which the Agent had an opportunity to be heard) by a court of competent jurisdiction that the Agent had acted in a grossly negligent manner or in willful misconduct.
§16.12.Notices. Any notices or other information required hereunder to be provided to the Agent (with copies to the Agent for each Lender) shall be forwarded by the Agent to each of the Lenders promptly.
§16.13.Reserved.
§17.EXPENSES. The Borrower agrees to pay (a) the reasonable costs of producing and reproducing this Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) the reasonable fees, expenses and disbursements of the Agent’s outside counsel or any local counsel to the Agent incurred in connection with the preparation, administration or interpretation of the Loan Documents and other instruments mentioned herein, each closing hereunder, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (c) the fees, expenses and disbursements of the Agent incurred by the Agent in connection with the preparation, administration or interpretation of the Loan Documents and other instruments mentioned herein, including, without limitation, the costs incurred by the Agent in connection with its inspection of the Project, and, without double-counting amounts under clause (b) above, the fees and disbursements of the Agent’s counsel in preparing the documentation, (d) all, if any, title insurance premiums, appraisal fees, engineer’s, inspector’s and surveyor’s fees, (e) the fees, costs, expenses and disbursements of the Agent and its Affiliates incurred in connection with the syndication and/or participations of the Loans (whether occurring before or after the closing hereunder), including, without limitation, reasonable legal fees, travel costs, costs of preparing syndication materials and photocopying costs, (f) all reasonable expenses (including reasonable attorneys’ fees and costs, which attorneys may be employees of any Lender or the Agent, and the fees and costs of engineers, appraisers, surveyors, investment bankers, or other experts retained by any Lender or the Agent in connection with any such enforcement proceedings) incurred by any Lender or the Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Borrower or any of its Subsidiaries or the Trust or the administration thereof after the occurrence and during the continuance of a Default or Event of Default (including, without limitation, expenses incurred in any restructuring and/or “workout” of the Loans), and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to any Lender’s or the Agent’s relationship with the Borrower or any of its Subsidiaries or the Trust, (g) all reasonable fees, expenses and disbursements of the Agent incurred in connection with UCC searches and filings, UCC terminations or mortgage discharges, and the like, and (h) all costs
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incurred by the Agent in the future in connection with its inspection of the Project. The covenants of this §17 shall survive the repayment of the amounts owing under the Notes and this Agreement and the termination of this Agreement and the obligations of the Lenders hereunder.
§18.INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless the Agent and each of the Lenders and the shareholders, directors, agents, officers, subsidiaries and affiliates of the Agent and each of the Lenders from and against any and all claims, actions and suits, whether groundless or otherwise, and from and against any and all liabilities, losses (including amounts, if any, owing to any Lender pursuant to §§4.4, 4.5, 4.6 and 4.8), settlement payments, obligations, damages and expenses of every nature and character in connection therewith, arising out of this Agreement or any of the other Loan Documents or the transactions contemplated hereby or thereby or which otherwise arise in connection with the financing, including, without limitation, (a) any actual or proposed use by the Borrower or any of its Subsidiaries of the proceeds of any of the Loans, (b) the Borrower or any of its Subsidiaries entering into or performing this Agreement or any of the other Loan Documents, or (c) pursuant to §8.16, in each case including, without limitation, the reasonable fees and disbursements of counsel and allocated costs of internal counsel incurred in connection with any such investigation, litigation or other proceeding,provided,however, that the Borrower shall not be obligated under this §18 to indemnify any Person for liabilities arising from such Person’s own gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction. In litigation, or the preparation therefor, the Borrower shall be entitled to select counsel reasonably acceptable to the Majority Lenders, and the Agent (as approved by the Majority Lenders) shall be entitled to select their own supervisory counsel, and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of each such counsel. If and to the extent that the obligations of the Borrower under this §18 are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The provisions of this §18 shall survive the repayment of the amounts owing under the Notes and this Agreement and the termination of this Agreement and the obligations of the Lenders hereunder and shall continue in full force and effect as long as the possibility of any such claim, action, cause of action or suit exists.
§19.SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and warranties made herein, in the Notes, in any of the other Loan Documents or in any documents or other papers delivered by or on behalf of the Borrower or any of its Subsidiaries or the Trust pursuant hereto shall be deemed to have been relied upon by the Lenders and the Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of any of the Loans, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Agreement or the Notes or any of the other Loan Documents remains outstanding. The indemnification obligations of the Borrower provided herein and in the other Loan Documents shall survive the full repayment of amounts due and the
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termination of the obligations of the Lenders hereunder and thereunder to the extent provided herein and therein. All statements contained in any certificate or other paper delivered to any Lender or the Agent at any time by or on behalf of the Borrower or any of its Subsidiaries or the Trust pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower or such Subsidiary or the Trust hereunder.
§20.ASSIGNMENT; PARTICIPATIONS; ETC.
§20.1.Conditions to Assignment by Lenders. Except as provided herein, each Lender may assign to one or more Eligible Assignees (or to any other financial institution approved by the Agent) all or a portion (in a minimum amount of $1,000,000) of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment Percentage and Commitment and the same portion of the Loans at the time owing to it, the Notes held by it);provided that (a) the Agent and, other than during an Event of Default, the Borrower each shall have the right to approve any Eligible Assignee (or such other financial institution), which approval, in the case of an Eligible Assignee, shall not be unreasonably withheld or delayed, (b) subject to the provisions of §2.7, each Lender shall have at all times an amount of its Commitment of not less than $1,000,000 unless otherwise consented to by the Agent and (c) the parties to such assignment shall execute and deliver to the Agent, for recording in the Register (as hereinafter defined), an assignment and assumption, substantially in the form ofExhibit D hereto (an “Assignment and Assumption”), together with any Notes subject to such assignment. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Assumption, which effective date shall be at least two (2) Business Days after the execution thereof unless otherwise agreed or accepted by the Agent (provided that any assignee has assumed the obligation to fund any outstanding Libor Rate Loans), (i) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Assumption, have the rights and obligations of a Lender hereunder and thereunder, and (ii) the assigning Lender shall, to the extent provided in such assignment and upon payment to the Agent of the registration fee referred to in §20.3, be released from its obligations under this Agreement. Any such Assignment and Assumption shall run to the benefit of the Borrower and a copy of any such Assignment and Assumption shall be delivered by the Assignor to the Borrower.
Notwithstanding the provisions of subclause (a) of the preceding paragraph, any Lender may, without the consent of the Borrower, make an assignment otherwise permitted hereunder to (x) another Lender, and (y) an Affiliate of such Lender,provided that such Affiliate is an Eligible Assignee (unless otherwise approved by the Agent).
§20.2.Certain Representations and Warranties; Limitations; Covenants. By executing and delivering an Assignment and Assumption, the parties to the assignment thereunder confirm to and agree with each other and the other parties hereto as follows: (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, the assigning
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Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto; (b) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower and its Subsidiaries or the Trust or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by the Borrower and its Subsidiaries or the Trust or any other Person primarily or secondarily liable in respect of any of the Obligations of any of their obligations under this Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (c) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in §7.4 and §8.4 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (d) such assignee will, independently and without reliance upon the assigning Lender, the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (e) such assignee represents and warrants that it is an Eligible Assignee (unless otherwise approved by the Agent); (f) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; (g) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender; and (h) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Assumption.
§20.3.Register. The Agent shall maintain a copy of each Assignment and Assumption delivered to it and a register or similar list (the “Register”) for the recordation of the names and addresses of the Lenders and the Commitment Percentages of, and principal amount of the Loans owing to, the Lenders from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and the Lenders at any reasonable time and from time to time upon reasonable prior notice. Upon each such recordation, the assigning Lender agrees to pay to the Agent a registration fee in the sum of $3,500 and all legal fees and expenses incurred by the Agent in connection with such assignment.
§20.4.New Notes. Upon its receipt of an Assignment and Assumption executed by the parties to such assignment, together with each Note subject to such assignment, the Agent shall (a) record the information contained therein in the Register, and (b) give prompt notice thereof to the Borrower and the Lenders (other than the assigning Lender). Unless done simultaneously with the Assignment and Assumption, within three (3)
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Business Days after receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent, in exchange for each surrendered Note, a new Note to the order of such Eligible Assignee in an amount equal to the amount assumed by such Eligible Assignee pursuant to such Assignment and Assumption and, if the assigning Lender has retained some portion of its obligations hereunder, a new Note and other Note, if applicable, to the order of the assigning Lender in an amount equal to the amount retained by it hereunder. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Assumption and shall otherwise be in substantially the form of the assigned Notes. The surrendered Notes shall be canceled and returned to the Borrower.
§20.5.Participations. Each Lender may sell participations to one or more lending institutions or other entities in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents;provided that (a) each such participation shall be in an amount of not less than $1,000,000, (b) any such sale or participation shall not affect the rights and duties of the selling Lender hereunder to the Borrower and the Agent and the Lender shall continue to exercise all approvals, disapprovals and other functions of a Lender, (c) the only rights granted to the participant pursuant to such participation arrangements with respect to waivers, amendments or modifications of, or approvals under, the Loan Documents shall be the rights to approve waivers, amendments or modifications that would reduce the principal of or the interest rate on any Loans, extend the term or increase the amount of the Commitment of such Lender as it relates to such participant, reduce the amount of any fees to which such participant is entitled or extend any regularly scheduled payment date for principal or interest, and (d) no participant shall have the right to grant further participations or assign its rights, obligations or interests under such participation to other Persons without the prior written consent of the Agent, which consent shall not be unreasonably withheld.
§20.6.Pledge by Lender. Notwithstanding any other provision of this Agreement, any Lender at no cost to the Borrower may at any time pledge all or any portion of its interest and rights under this Agreement (including all or any portion of its Notes) to any of the twelve Federal Reserve Banks organized under §4 of the Federal Reserve Act, 12 U.S.C. §341. No such pledge or the enforcement thereof shall release the pledgor Lender from its obligations hereunder or under any of the other Loan Documents.
§20.7.No Assignment by Borrower. The Borrower shall not assign or transfer any of its rights or obligations under any of the Loan Documents without prior Unanimous Lender Approval.
§20.8.Disclosure. The Borrower agrees that, in addition to disclosures made in accordance with standard banking practices, any Lender may disclose information obtained by such Lender pursuant to this Agreement to assignees or participants and potential assignees or participants hereunder.
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§20.9.Syndication. The Borrower acknowledges that the Agent intends, and shall have the right, by itself or through its Affiliates, to syndicate or enter into co-lending arrangements with respect to the Term Loan and the Total Commitment. The Agent, in cooperation with the Borrower, will manage all aspects of the syndication, including the selection of co-lenders, the determination of when the Agent will approach potential co-lenders and the final allocations among co-lenders. Each of the Borrower and the Trust agrees to assist the Agent actively in achieving a timely syndication that is reasonably satisfactory to the Agent, such assistance to include, among other things, (a) direct contact during the syndication between the Borrower’s and the Trust’s senior officers, representatives and advisors, on the one hand, and prospective co-lenders, on the other hand at such times and places as the Agent may reasonably request, (b) providing to the Agent all financial and other information with respect to the Borrower and the Trust and the transactions contemplated hereby that the Agent may reasonably request, including but not limited to financial projections relating to the foregoing, and (c) assistance in the preparation of a confidential information memorandum and other marketing materials to be used in connection with the syndication, and the Borrower and the Trust agree to cooperate with the Agent’s and its Affiliate’s syndication and/or co-lending efforts, such cooperation to include, without limitation, the provision of information reasonably requested by potential syndicate members. The Agent shall be entitled with the consent of the Borrower (which shall not be unreasonably withheld or delayed), to change the structure or terms of the Term Loan if the Agent determines that such changes are advisable in order to ensure a successful syndication or an optimal credit structure for the Term Loan,provided the Total Commitment will not be reduced. In addition, the Borrower and the Trust agree that, prior to and during the syndication of the Total Commitment (which for purposes hereof shall be deemed to be completed ninety (90) days after the Closing Date), the Borrower nor the Trust will permit any offering, placement or arrangement of any competing issues of debt securities or commercial bank facilities of the Borrower, the Trust and any of their Subsidiaries, unless approved by the Agent.
§21.NOTICES, ETC. Except as otherwise expressly provided in this Agreement, all notices and other communications made or required to be given pursuant to this Agreement or the Notes shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by facsimile and confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrower or the Trust, at 2600 South Gessner, Suite 500, Houston TX 77063, attention James C. Mastandrea (facsimile: (713) 465-8847), with a copy to General Counsel, or to such other address for notice as the Borrower or the Trust shall have last furnished in writing to the Agent;
(b) if to the Agent, to KeyBank National Association, 1200 Abernathy Road NE, Suite 1550, Atlanta, Georgia 30328, attention Meredith Hall, Vice President
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(facsimile: (770) 510-2195), with a copy to Douglas Novitch, KeyBank National Association, 127 Public Square, Cleveland, OH 44114, or such other address for notice as the Agent shall have last furnished in writing to the Borrower, with a copy to Pamela M. MacKenzie, Esq., Goulston & Storrs, 400 Atlantic Avenue, Boston, Massachusetts 02110-3333 (facsimile: (617) 574-7615), or at such other address for notice as the Agent shall last have furnished in writing to the Person giving the notice; and
(c) if to any Lender, at such Lender’s address set forth onSchedule 2 hereto, or such other address for notice as such Lender shall have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier, or facsimile to the party to which it is directed, at the time of the receipt thereof by such party or the sending of such facsimile and (ii) if sent by registered or certified first-class mail, postage prepaid, on the third Business Day following the mailing thereof.
§22.WHITESTONE OP AS AGENT FOR THE BORROWER. The Borrower (other than Whitestone OP) hereby appoints Whitestone OP as its agent with respect to the receiving and giving of any notices, requests, instructions, reports, certificates (including, without limitation, compliance certificates), schedules, revisions, financial statements or any other written or oral communications hereunder. The Agent and each Lender is hereby entitled to rely on any communications given or transmitted by Whitestone OP as if such communication were given or transmitted by each and every Borrower;providedhowever, that any communication given or transmitted by any Borrower other than Whitestone OP shall be binding with respect to such Borrower. Any communication given or transmitted by the Agent or any Lender to Whitestone OP shall be deemed given and transmitted to each and every Borrower.
§23.GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWER AND ITS SUBSIDIARIES AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, THE STATE OF OHIO, THE STATE OF GEORGIA OR ANY OTHER COURT HAVING JURISDICTION OVER THE BORROWER AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER OR ITS SUBSIDIARIES BY MAIL AT THE ADDRESS SPECIFIED IN §21. THE BORROWER AND ITS SUBSIDIARIES HEREBY WAIVE ANY OBJECTION THAT ANY OF THEM MAY NOW OR
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HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
§24.HEADINGS. The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof.
§25.COUNTERPARTS. This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.
§26.ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in §28.
§27.WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE BORROWER AND ITS SUBSIDIARIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE BORROWER AND ITS SUBSIDIARIES HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH OF THE BORROWER AND ITS SUBSIDIARIES (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER OR THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER OR THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
§28.CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly provided in this Agreement, any consent or approval required or permitted by this Agreement may be given, and any term of this Agreement or of any of the other Loan
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Documents may be amended, and the performance or observance by the Borrower or the Trust or any of their respective Subsidiaries of any terms of this Agreement or the other Loan Documents or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Majority Lenders.
Notwithstanding the foregoing, Unanimous Lender Approval shall be required for any amendment, modification or waiver of this Agreement that:
(a) reduces or forgives any principal of the Term Loan or any interest thereon (including any general waiver of interest “breakage” costs) or any fees due any Lender hereunder, or permits any prepayment not otherwise permitted hereunder; or
(b) changes the unpaid principal amount of the Term Loan, reduces the rate of interest applicable to the Term Loan, or reduces any fee payable to the Lenders hereunder; or
(c) changes the date fixed for any payment of principal of or interest on the Term Loan (including, without limitation, any extension of the Maturity Date) or any fees payable hereunder (including, without limitation, the waiver of any monetary Event of Default); or
(d) changes the amount of any Lender’s Commitment (other than pursuant to an assignment permitted under §20.1) or increases the amount of the Total Commitment except as permitted hereunder; or
(e) modifies any provision herein or in any other Loan Document which by the terms thereof expressly requires Unanimous Lender Approval; or
(f) changes the definitions of Majority Lenders or Unanimous Lender Approval; or
(g) releases the Guaranty.
No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of the Agent or the Lenders or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial to such right or any other rights of the Agent or the Lenders. No notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.
Notwithstanding the foregoing, in the event that the Borrower requests any consent, waiver or approval under this Agreement or any other Loan Document, or an amendment or modification hereof or thereof, and one or more Lenders determine not to consent or agree to such consent, waiver, approval, amendment or modification, then the
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Lender then acting as Agent hereunder shall have the right to purchase the Commitment of such non-consenting Lender(s) at a purchase price equal to the then outstanding amount of principal, interest and fees then owing to such Lender(s) by the Borrower hereunder, and such non-consenting Lender(s) shall immediately upon request, sell and assign its Commitment and all of its other right, title and interest in the Loans and other Obligations to the Lender then acting as Agent pursuant to an Assignment and Assumption (provided that the selling Lender(s) shall not be responsible to pay any assignment fee in connection therewith).
§29.SEVERABILITY. The provisions of this Agreement are severable, and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.
§30.INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this §30 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, shall have been received by such Lender.
(Remainder of page intentionally left blank)
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a sealed instrument as of the date first set forth above.
| | | |
| KEYBANK NATIONAL ASSOCIATION, |
| Individually and as Administrative Agent |
| | | |
| By: | | |
| | |
| | Name: |
| | Title: |
| | | |
| WHITESTONE REIT OPERATING PARTNERSHIP, L.P. |
| | | |
| By: | Whitestone REIT, a Maryland real estate |
| | investment trust, its sole general partner |
| | | |
| By: | | |
| | |
| | James C. Mastandrea, President |
| | | |
| WHITESTONE PIMA NORTE LLC |
| | | |
| By: | Whitestone REIT Operating Partnership, L.P., |
| | a Delaware limited partnership, its sole member |
| | | |
| | By: | Whitestone REIT, a Maryland real estate |
| | | investment trust, its sole general partner |
| | | |
| | By: | |
| | | |
| | | James C. Mastandrea, President |
Signature Page to Term Loan Agreement
| | | | | |
| WHITESTONE REIT OPERATING PARTNERSHIP III LP |
| |
| By: | Whitestone REIT Operating Partnership III GP LLC,
a Texas limited liability company, its sole general partner |
| | |
| | By: | Whitestone REIT Operating Partnership, L.P.,
a Delaware limited partnership, its sole member |
| | |
| | | By: | Whitestone REIT, a Maryland real estate investment trust, its sole member |
| | | | |
| | | | By: | |
| | | | | |
| | | James C. Mastandrea, President |
| | | |
| | | |
| WHITESTONE REIT OPERATING PARTNERSHIP III GP LLC |
| | | |
| By: | Whitestone REIT Operating Partnership, L.P.,
a Delaware limited partnership, its sole member |
| | | |
| | By: | Whitestone REIT, a Maryland real estate investment trust, its sole member |
| | | |
| | By: | |
| | | |
| | | James C. Mastandrea, President |
| | | |
| HARTMAN REIT OPERATING PARTNERSHIP III LP LTD |
| | | |
| By: | Whitestone REIT Operating Partnership III GP LLC,
a Texas limited liability company, its sole general partner |
| | |
| | By: | Whitestone REIT Operating Partnership, L.P.,
a Delaware limited partnership, its sole member |
| | |
| | | By: | Whitestone REIT, a Maryland real estate investment trust, its sole general partner |
| | |
| | | By: | |
| | | | |
| | | James C. Mastandrea, President |
Signature Page to Term Loan Agreement
