MEZZANINE LOAN AGREEMENT
MEZZANINE LOAN AGREEMENT dated as of June 8, 2007 (as the same may be modified, supplemented, amended or otherwise changed, this “Agreement”) by and between BEHRINGER HARVARD SANTA CLARA M, LLC, a Delaware limited liability company (“Borrower”) and CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation (together with its successors and assigns, “Lender”).
1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1 Specific Definitions. The following terms have the meanings set forth below:
Acceptable Counterparty: any Counterparty to the Interest Rate Cap Agreement that has and shall maintain, until the expiration of the applicable Interest Rate Cap Agreement, a long-term unsecured debt rating of not less than “AA-” (or the equivalent) by the Rating Agencies and a short term unsecured debt rating of not less than “A-1+” (or the equivalent) by the Rating Agencies.
Additional Advance: any advance made under the Note in accordance with the terms of Section 2.1.4 of this Agreement.
Adjusted Debt Service: with respect to any particular period of time, the payments of principal and interest that would be due on the outstanding principal balance of the Loan assuming a loan constant equal to the Market Constant Rate for such period.
Adjusted Mortgage Debt Service: the meaning ascribed to the term “Debt Service” in the Mortgage Loan Agreement.
Adjusted Prime Rate: an interest rate per annum equal to the Prime Rate in effect from time to time plus the Prime Rate Spread per annum.
Affiliate: as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person or is a director or officer of such Person or of an Affiliate of such Person.
Affiliated Loans: a loan made by Lender to a parent, subsidiary or such other entity affiliated with Borrower, any Guarantor and any other loan that is cross-collateralized with the Loan.
Approved Accountant: a “Big Four” accounting firm or other independent certified public account acceptable to Lender.
Approved Bank: a bank, the long term unsecured debt obligations of which are rated at least “AA” by S&P and its successors, and the equivalent by Fitch and its successors and Moody’s and its successors (unless Lender approves in writing a financial institution other than a bank or a lower rating, in each case in Lender’s sole and absolute discretion).
Approved Leasing Expenses: actual out-of-pocket expenses incurred by Mortgage Borrower in leasing space at the Property pursuant to Leases entered into in accordance with the Loan Documents, including brokerage commissions (including those paid pursuant to the Management Agreement) and tenant improvements, which expenses (i) are (A) specifically approved by Lender in connection with approving the applicable Lease, (B) incurred in the ordinary course of business and on market terms and conditions in connection with Leases which do not require Lender’s approval under the Loan Documents, or (C) otherwise approved by Lender, which approval shall not be unreasonably withheld or delayed, and (ii) are substantiated by executed Lease documents and brokerage agreements.
Assignment of Interest Rate Cap: that certain Collateral Assignment of Interest Rate Cap Agreement made by Borrower to Lender dated as of the date hereof required by this Agreement as security for the Loan, consented to by the Counterparty, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
Behringer Harvard REIT: Behringer Harvard REIT I, Inc., a Maryland corporation.
Behringer Harvard Operating Partnership: Behringer Harvard Operating Partnership I LP, a Texas limited partnership.
Behringer Harvard Opportunity REIT: Behringer Harvard Opportunity REIT I, Inc., a Maryland corporation.
BHR Partners: BHR Partners, LLC, a Delaware limited liability company.
Borrower: has the meaning set forth in the preamble to this Agreement.
Borrower’s Designee: the Manager or such other Person as Borrower, with the consent of Lender (not to be unreasonably withheld), may from time to time designate as “Borrower’s Designee”; provided that there shall be only one Borrower’s Designee at any time.
Building 800: the improvements on the Property located at 800 Central Expressway, Santa Clara, California.
Business Day: any day other than a Saturday, Sunday or any day on which commercial banks in New York, New York are authorized or required to close.
Capital Expenses: expenses that are capital in nature or required under GAAP to be capitalized.
CBRE: CBRE Real Estate Services Inc., a Delaware corporation.
Collateral: (i) the Collateral as defined in the Pledge Agreement, and (ii) all other collateral for the Loan granted in the Loan Documents.
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Code: the Internal Revenue Code of 1986, as amended and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.
Control: with respect to any Person, either (i) ownership directly or indirectly of forty-nine percent (49%) or more of all equity interests in such Person or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise.
Counterparty: any Person which is the issuer of the Interest Rate Cap Agreement.
Debt: the unpaid Principal, all interest accrued and unpaid thereon, any Spread Maintenance Premium and all other sums due to Lender in respect of the Loan or under any Loan Document.
Debt Service: with respect to any particular period, the scheduled interest payments due under the Note in such period.
Default: the occurrence of any event under any Loan Document which, with the giving of notice or passage of time, or both, would be an Event of Default.
Default Rate: a rate per annum equal to the lesser of (i) the maximum rate permitted by applicable law, or (ii) five percent (5%) above the Interest Rate (as applicable prior to the occurrence of an Event of Default), compounded monthly.
Deposit Bank: JPMorgan Chase Bank, N.A., a national banking corporation, or such other bank or depository selected by Lender in its discretion.
Eligible Account: a separate and identifiable account from all other funds held by the holding institution that is either (i) an account or accounts (A) maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (B) as to which Lender has received a Rating Comfort Letter from each of the applicable Rating Agencies with respect to holding funds in such account, or (ii) a segregated trust account or accounts maintained with the corporate trust department of a federal depository institution or state chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulations §9.10(b), having in either case corporate trust powers, acting in its fiduciary capacity, and a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal and state authorities. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
Eligible Institution: a depository institution insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody’s and F-1+ by Fitch, in the case of accounts in which funds are held for thirty (30) days or less or, in the case of Letters of Credit or accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by Moody’s.
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ERISA: the Employment Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
ERISA Affiliate: all members of a controlled group of corporations and all trades and business (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under any or all of Section 414(b), (c), (m) or (o) of the Code.
Eurodollar Rate: with respect to any Interest Period, an interest rate per annum equal to LIBOR plus the Spread.
Facility End Date: the last Business Day to occur in the thirty-fifth Interest Period.
GAAP: generally accepted accounting principles in the United States of America as of the date of the applicable financial report.
Governmental Authority: any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) now or hereafter in existence.
Guarantor: Behringer Harvard Opportunity REIT or any other entity guaranteeing any payment or performance obligation of Borrower.
Harvard Fund I: individually or collectively, Behringer Harvard Short-Term Opportunity Funds I, L.P., a Texas limited partnership and/or Behringer Harvard Mid-Term Value Enhancement Fund I, L.P. a Texas limited partnership and/or Behringer Harvard Strategic Opportunity Fund LLP, a Texas limited partnership, and/or any other fund for which Behringer Harvard Holdings, LLC, or an Affiliate of it under its Control, serves as general partner, manager or advisor.
Harvard REIT: individually or collectively, the Behringer Harvard Operating Partnership and/or Behringer Harvard REIT and/or Behringer Harvard Opportunity REIT, and/or any other fund for which Behringer Harvard Holdings, LLC, or an Affiliate of it under its Control, serves as general partner, manager or advisor.
HPT: HPT Management Services LP, a Texas limited partnership.
Initial Advance: an initial advance of the Loan made on the date hereof in the original principal amount of $17,000,000.00.
In Place Base Rent and Recoveries: fixed base rent and recoveries paid by tenants that have occupied the space covered by their respective leases and have commenced paying rent and the free rent or rent abatement periods under such leases have expired, and there are no defaults under such leases (nor does there exist any event or condition, which with the passage of time or the giving of notice, or both, could result in such a default).
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In Place Debt Service Coverage Ratio: as of any date, the ratio calculated by Lender in which:
(a) the numerator is the Net Operating Income (which shall be computed utilizing the sum of (i) the current annualized In Place Base Rent and Recoveries (with adjustments for increases in such amounts occurring within the twelve (12) month period following the calculation date) and (ii) any other income deemed recurring by Lender within the twelve (12) month period following the calculation date) minus annualized expenses per the Approved Annual Budget (with adjustments, as reasonably determined by Lender), and which such Net Operating Income and expenses shall be subject to Lender’s DSC Adjustments; and
(b) the denominator is the aggregate amount of Adjusted Debt Service and Adjusted Mortgage Debt Service which would be due and payable for such period.
Interest Period: in connection with the calculation of interest accrued with respect to any specified Payment Date, the period from and including the fifteenth (15th) day of the prior calendar month to and including the fourteenth (14th) day of the calendar month in which the applicable Payment Date occurs; provided, however, that with respect to the Payment Date occurring in June, 2007, the Interest Period shall be the period commencing on the Closing Date to and including June 14, 2007. Each Interest Period, except for the Interest Period ending June 14, 2007, shall be a full month and shall not be shortened by reason of any payment of the Loan prior to the expiration of such Interest Period.
Interest Rate: (A) from and including the date of this Agreement through June 14, 2007, an interest rate per annum equal to 7.07%; and (B) from and including June 15, 2007 and for each successive Interest Period through and including the date on which the Debt is paid in full, an interest rate per annum equal to (I) the Eurodollar Rate or (II) the Adjusted Prime Rate, if the Loan begins bearing interest at the Adjusted Prime Rate in accordance with the provisions of Section 2.2.3 hereof.
Interest Rate Cap Agreement: the Interest Rate Cap Agreement (together with the confirmation and schedules relating thereto), between SMBC Derivative Products Limited and Borrower obtained by Borrower and dated as of the date hereof. The Interest Rate Cap Agreement shall be written on the then current standard ISDA documentation, and shall provide for interest periods and calculations consistent with the payment terms of this Agreement. After delivery of a Replacement Interest Rate Cap Agreement to Lender, the term “Interest Rate Cap Agreement” shall be deemed to mean such Replacement Interest Rate Cap Agreement.
Key Principal: Behringer Harvard Holdings, LLC, a Delaware limited liability company.
Leases: all leases and other agreements or arrangements heretofore or hereafter entered into providing for the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Property or the Improvements, including any guarantees, extensions, renewals, modifications or amendments thereof and all additional remainders, reversions and other rights and estates appurtenant thereunder.
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Leasing Costs: tenant improvement and leasing commission obligations under existing Leases or incurred in connection with the re-leasing of any space at the Property pursuant to Leases approved by Lender in accordance with Section 5.10 hereof.
Legal Requirements: statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower, Mortgage Borrower, any Loan Document or all or part of the Collateral, the Property or the construction, ownership, use, alteration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instrument, either of record or known to Borrower or Mortgage Borrower, at any time in force affecting all or part of the Collateral or the Property.
Lender’s DSC Adjustments: Lender’s adjustments to projected revenue and expense items based on each of the following:
(1) a credit loss/vacancy allowance equal to the greatest of 7.0%, actual vacancy or market vacancy;
(2) reduction of above market rents to market as reasonably determined by Lender with the most recent like-kind leases executed at the subject property being given the greatest weight in determining market rent;
(3) increases in expenses from amounts set forth in the Approved Annual Budget as determined by Lender;
(4) management fees equal to the greater of actual management fees and 3% of total revenues;
(5) material increases in future operating expenses as determined by Lender;
(6) an annual minimum replacement reserve equal to $91,229;
(7) an annual tenant improvement/leasing costs reserve equal to $342,108; and
(8) the exclusion of rents and recoveries attributable to space where Mortgage Borrower has received notice of tenant’s intention to vacate.
LIBOR: for the first Interest Period 5.32% per annum. For each Interest Period thereafter LIBOR shall mean the quoted offered rate for one-month United States dollar deposits with leading banks in the London interbank market that appears as of 11:00 a.m. (London time) on the related LIBOR Determination Date on the display page designated as Telerate Page 3750.
If, as of such time on any LIBOR Determination Date, no quotation is given on Telerate Page 3750, then the Lender shall establish LIBOR on such LIBOR Determination Date by requesting four Reference Banks meeting the criteria set forth herein to provide the quotation offered by its principal London office for making one-month United States dollar deposits with
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leading banks in the London interbank market as of 11:00 a.m., London time, on such LIBOR Determination Date.
(i) If two or more Reference Banks provide such offered quotations, then LIBOR for the next Interest Period shall be the arithmetic mean of such offered quotations (rounded upward if necessary to the nearest whole multiple of 1/1,000%).
(ii) If only one or none of the Reference Banks provides such offered quotations, then LIBOR for the next Interest Period shall be the Reserve Rate.
(iii) If on any LIBOR Determination Date, Lender is required but is unable to determine the LIBOR in the manner provided in paragraphs (i) and (ii) above, LIBOR for the next Interest Period shall be LIBOR as determined on the preceding LIBOR Determination Date.
All percentages resulting from any calculations of LIBOR referred to in this Agreement will be carried out to five decimal places and all U.S. dollar amounts used in or resulting from such calculations will be rounded upwards to the nearest cent. The establishment of LIBOR on each LIBOR Determination Date by the Lender shall be final and binding, absent manifest error. Lender shall use its commercially reasonable efforts to notify Borrower of LIBOR after LIBOR is determined on each LIBOR Determination Date, provided that any failure of Lender to so notify Borrower shall not have any effect on Borrower’s obligation to make the payments required hereunder nor impose any liability on Lender.
LIBOR Business Day: a day upon which (i) United States dollar deposits may be dealt in on the London interbank markets and (ii) commercial banks and foreign exchange markets are open in London, England and in New York, New York, USA.
LIBOR Determination Date: with respect to any Interest Period, the date that is two (2) LIBOR Business Days prior to the fifteenth (15th) calendar day of the month in which such Interest Period commenced.
Lien: any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement, restrictive covenant, preference, assignment (intended as security), security interest or any other encumbrance, charge or transfer (intended as security) of, or any agreement to enter into or create any of the foregoing, on or affecting all or any part of the the Collateral, the Property or any interest therein, or any direct or indirect interest in Mortgage Borrower or Borrower, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
Loan Documents: this Agreement and all other documents, agreements and instruments now or hereafter evidencing or securing the Loan or pursuant to which any Person incurs, has incurred or assumes any obligation to or for the benefit of Lender, or makes any certification, representation or warranty to Lender in connection with the Loan, including the following, each of which is dated as of the date hereof: (i) the Note, (ii) the Pledge and Security Agreement made by Borrower to Lender which covers the Collateral, (iii) the Guaranty of
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Recourse Obligations made by Guarantor for the benefit of Lender, and (iv) the Consent and Subordination of Manager made by Manager and consented to by Borrower (the “Consent and Subordination”); as each of the foregoing may be (and each of the foregoing defined terms shall refer to such documents as they may be) amended, restated, replaced, supplemented or otherwise modified from time to time (including pursuant to Section 9.1 hereof).
Loan Party: individually and collectively, as the context requires, Borrower, Guarantor or any Mortgage Loan Party.
Loan to Value Ratio: as of the date of its calculation, the ratio of (i) the outstanding principal amount of the Loan and the Mortgage Loan to (ii) the most recent appraised value (according to the most recently available appraisal of the Property).
Management Agreement: the Fourth Amended and Restated Property Management and Leasing Agreement, pursuant to which Manager is to manage the Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with Section 5.12.
Manager: HPT or any successor, assignee or replacement manager appointed by Mortgage Borrower in accordance with Section 5.12.
Market Constant Rate: at the time of any calculation, an interest rate per annum equal to the greatest of (a) the Interest Rate then in effect; (b) 7.15%; and (c) the “on-the-run” ten year Treasury Rate plus 100 basis points.
Material Agreement: all agreements, other than the Management Agreement, the Sub-Management Agreement, the Leases and any agreements for the performance of the work relating to the Building 800 Work Expenditures or Building 800 Leasing Costs Expenditures, entered into by any Loan Party affecting or relating to the Property, the Collateral or any other direct or indirect ownership interest of a Loan Party in Mortgage Borrower or Borrower requiring the payment of more than $250,000 in the aggregate in payments or liability in any annual period or which is not cancelable without penalty or premium on no more than thirty (30) days notice.
Material Alteration: any alteration affecting structural elements of the Property the cost of which exceeds $250,000; provided, however, that in no event shall (i) any Required Repairs (if any), (ii) any tenant improvement work performed pursuant to any Lease existing on the date hereof or entered into hereafter in accordance with the provisions of this Agreement, (iii) alterations performed as part of a Restoration, constitute a Material Alteration, or (iv) any Work relating to the Building 800 Work Expenditures or Building 800 Leasing Costs Expenditures.
Maturity Date: the date on which the final payment of principal of the Note becomes due and payable as therein provided, whether at the Stated Maturity Date, by declaration of acceleration, or otherwise.
Maximum Loan Amount: TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00).
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Monthly Debt Service Payment Amount: the monthly amount of interest due and payable pursuant to this Agreement and the Note.
Mortgage Borrower: Behringer Harvard Santa Clara LP, a Delaware limited partnership.
Mortgage Borrower GP: Behringer Harvard Santa Clara GP, LLC, a Delaware limited liability company.
Mortgage Debt Service: with respect to any particular period, the scheduled interest payments due under the Mortgage Note in such period.
Mortgage Event of Default: the meaning ascribed to the term “Event of Default” in the Mortgage Loan Agreement.
Mortgage Extension Option: the meaning ascribed to the term “Extension Option” in the Mortgage Loan Agreement.
Mortgage Guarantor: the meaning ascribed to the term “Guarantor” in the Mortgage Loan Agreement.
Mortgage Interest Rate Cap Agreement: the meaning ascribed to the term “Interest Rate Cap Agreement” in the Mortgage Loan Agreement.
Mortgage Lender: the owner and holder of the Mortgage Loan.
Mortgage Loan: that certain loan made by Mortgage Lender to Mortgage Borrower on the date hereof pursuant to the Mortgage Loan Agreement, as the same may be amended or split pursuant to the terms of the Mortgage Loan Documents.
Mortgage Loan Agreement: that certain Loan Agreement, dated as of the date hereof, between Mortgage Borrower and Mortgage Lender.
Mortgage Loan Documents: all documents or instruments evidencing, securing or guaranteeing the Mortgage Loan, including without limitation, the Mortgage Loan Agreement.
Mortgage Loan Party: individually and collectively, as the context may require, Mortgage Borrower and Mortgage Guarantor.
Mortgage Note: that certain Promissory Note, dated as of the date hereof, given by Mortgage Borrower to Mortgage Lender in the maximum principal amount of FIFTY-NINE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($59,500,000.00).
Mortgage Permitted Indebtedness: the meaning ascribed to the term “Permitted Indebtedness” in the Mortgage Loan Agreement.
Mortgage Securities: the meaning ascribed to the term “Securities” in the Mortgage Loan Agreement.
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Net Liquidation Proceeds After Debt Service: with respect to any Liquidation Event, all amounts paid to or received by or on behalf of Mortgage Borrower in connection with such Liquidation Event, including, without limitation, proceeds of any sale, refinancing or other disposition or liquidation, less (i) in the event of a Liquidation Event consisting of a Casualty or Condemnation, Lender’s, Mortgage Borrower’s and/or Mortgage Lender’s reasonable costs incurred in connection with the recovery thereof, (ii) in the event of a Liquidation Event consisting of a Casualty or Condemnation, the costs incurred by Mortgage Borrower in connection with a restoration of all or any portion of the Property made in accordance with the Mortgage Loan Documents, (iii) in the event of a Liquidation Event consisting of a Casualty or Condemnation or a Transfer, amounts required or permitted to be deducted therefrom and amounts paid pursuant to the Mortgage Loan Documents to Mortgage Lender, (iv) in the event of a Liquidation Event consisting of a Casualty or Condemnation, those proceeds paid to Mortgage Borrower pursuant to Section 7.4.3 of the Mortgage Loan Agreement as a surplus that remains out of the Proceeds or the Award, (v) in the case of a foreclosure sale, disposition or transfer of the Property in connection with realization thereon following an Event of Default under the Mortgage Loan, such reasonable and customary costs and expenses of sale or other disposition (including attorneys’ fees and brokerage commissions), (vi) in the case of a foreclosure sale, such costs and expenses incurred by Mortgage Lender under the Mortgage Loan Documents as Mortgage Lender shall be entitled to receive reimbursement for under the terms of the Mortgage Loan Documents, (vii) in the case of a refinancing of the Mortgage Loan, such costs and expenses (including attorneys’ fees) of such refinancing, and (viii) the amount of any prepayments required pursuant to the Mortgage Loan Documents in connection with any such Liquidation Event.
Net Operating Income: for any period, the underwritten net cash flow of the Property determined by Lender in its sole discretion exercised in good faith (uniformly and consistently applied in the same manner as Lender exercises similar discretion in other loans of this type and nature for comparable properties) in accordance with Lender’s then current underwriting standards for loans of this type and the then current underwriting standards of the Rating Agencies.
Note: that certain promissory note dated as of even date hereof evidencing the Maximum Loan Amount.
Officer’s Certificate: a certificate delivered to Lender by Borrower, which is signed by the manager or a senior executive officer of Borrower.
Other Charges: all maintenance charges, impositions other than Taxes, and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied or assessed or imposed against the Property or any part thereof.
Out-Parcel: Building 800 and any other area of the Property as delineated on Exhibit A attached hereto.
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Owner’s Title Insurance Policy: that certain ALTA extended coverage owner’s policy of title insurance issued in connection with the closing of the Mortgage Loan insuring the Mortgage Borrower as the owner of the Property.
Payment Date: the ninth (9th) day of each calendar month during the term of the Loan or, if such day is not a Business Day, the immediately preceding Business Day. The first Payment Date hereunder shall be July 9, 2007.
Permitted Encumbrances: (i) the Liens created by the Mortgage Loan Documents, (ii) all Liens and other matters disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes or Other Charges not yet delinquent, (iv) any workers’, mechanics’ or other similar Liens on the Property provided that any such Lien is bonded or discharged within 30 days after Borrower first receives notice of such Lien, and (v) such other title and survey exceptions as Lender approves in writing in Lender’s discretion.
Permitted Transfers:
(i) a Lease entered into in accordance with the Loan Documents;
(ii) a Permitted Encumbrance;
(iii) [intentionally omitted];
(iv) provided that no Event of Default shall then exist, a Transfer of an indirect interest in Borrower to any Person (including the Transfer or issuance of publicly traded shares or of operating partnership units in the Harvard REIT, Behringer Harvard Opportunity REIT, Harvard Fund I or the Behringer Harvard Operating Partnership, which shall be permitted whether or not an Event of Default shall exist) provided that (A) such Transfer shall not (x) cause the transferee (other than Key Principal), together with its Affiliates, to acquire Control of Borrower or to increase its indirect interest in Borrower to an amount which equals or exceeds forty-nine percent (49%) or (y) result in Borrower no longer being Controlled by Key Principal, (B) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not less than ten (10) days prior to the date of such Transfer (other than with respect to Transfers of “unit interests” in Harvard Fund I), and (C) the legal and financial structure of Borrower and its member(s) or partners, as applicable, and the special purpose nature and bankruptcy remoteness of Borrower and its member(s) or partners, as applicable, after such Transfer, shall satisfy Lender’s then current applicable underwriting criteria and requirements;
(v) provided that no Event of Default shall then exist, a Transfer of an indirect interest in Borrower related to or in connection with the estate planning of such transferor to (1) the spouse, children or grandchildren of such transferor (and/or any spouse of a child or grandchild), or any other immediate family member of such transferor, or (2) a trust established for the benefit of any such parties, provided that (A) such Transfer shall not cause a change in the Control of Borrower, (B) such Transfer shall not result in a change of the day to day management and operations of the Property, (C) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not less than ten (10) days after the date of such Transfer and (D) the legal and financial structure of Borrower, and its member(s) or partners, as applicable, and the special purpose nature and bankruptcy remoteness
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of Borrower and its member(s) or partners, as applicable, after such Transfer, shall satisfy Lender’s then current applicable underwriting criteria and requirements; or
(vi) a Transfer of an indirect interest in Borrower that occurs by devise or bequest or by operation of law upon the death of a natural person that was the holder of such interest to a member of the immediate family of such interest holder or a trust established for the benefit of such immediate family member, provided that (A) no such Transfer shall result in a change of the day to day operations of the Property, (B) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not less than 30 days after the date of such Transfer, (C) Borrower shall continue to be a Special Purpose Bankruptcy Remote Entity, (D) if any such Transfer would result in a change of Control of Borrower and occurs prior to the occurrence of a Secondary Market Transaction, such Transfer is approved by Lender in writing within thirty (30) days after any such Transfer, and (E) if any such Transfer would result in a change of Control of Borrower and occurs after the occurrence of a Secondary Market Transaction, Borrower, at Borrower’s sole cost and expense, shall, within thirty (30) days after any such Transfer, (a) deliver (or cause to be delivered) (x) a Rating Comfort Letter to Lender, and (y) a substantive non-consolidation opinion to Lender and the Rating Agencies with respect to such Borrower and such transferee in form and substance satisfactory to Lender and the Rating Agencies, (b) obtain the prior written consent of Lender which shall not be unreasonably withheld, and (c) reimburse Lender for all reasonable expenses incurred by Lender in connection with such Transfer.
Person: any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other person or entity, and any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
Plan: (i) an employee benefit or other plan established or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate makes or is obligated to make contributions and (ii) which is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
Pledge Agreement: that certain Pledge and Security Agreement, dated as of the date hereof, executed and delivered by Borrower to Lender, as security for the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
Prime Rate: on a particular date, a rate per annum equal to the rate of interest published in The Wall Street Journal as the “prime rate”, as in effect on such day, with any change in the prime rate resulting from a change in said prime rate to be effective as of the date of the relevant change in said prime rate; provided, however, that if more than one prime rate is published in The Wall Street Journal for a day, the average of the prime rates shall be used; provided, further, however, that the Prime Rate (or the average of the prime rates) will be rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%. In the event that The Wall Street Journal should cease or temporarily interrupt publication, then the Prime Rate shall mean the daily average prime rate published in another business newspaper, or business section of a newspaper, of national standing chosen by Lender. If The Wall Street Journal resumes publication, the substitute index will immediately be replaced by the
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prime rate published in The Wall Street Journal. In the event that a prime rate is no longer generally published or is limited, regulated or administered by a governmental or quasi-governmental body, then Lender shall select a comparable interest rate index which is readily available to Borrower and verifiable by Borrower but is beyond the control of Lender. Lender shall give Borrower prompt written notice of its choice of a substitute index and when the change became effective. Such substitute index will also be rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%. The determination of the Prime Rate by Lender shall be conclusive and binding absent manifest error.
Prime Rate Spread: the difference (expressed as the number of basis points, whether negative or positive) between (a) LIBOR plus the Spread on the date LIBOR was last applicable to the Loan and (b) the Prime Rate on the date that LIBOR was last applicable to the Loan.
Principal: the outstanding principal balance of the Loan.
Pro Forma Debt Service Coverage Ratio: as of any date, the ratio calculated by Lender in which:
(a) the numerator is the Net Operating Income (which shall be computed utilizing the pro forma gross potential revenue of the Property (including giving credit for rents to be due and payable under all Leases approved in accordance with the terms hereof during the twelve (12) month period following the calculation date) (as reasonably determined by Lender) minus annualized expenses per the Approved Annual Budget (with adjustments, as reasonably determined by Lender), and which such Net Operating Income and expenses shall be subject to Lender’s DSC Adjustments; and
(b) the denominator is the aggregate amount of Adjusted Debt Service and Adjusted Mortgage Debt Service which would be due and payable for such period.
Property: the parcel of real property and Improvements thereon owned or leased by Mortgage Borrower and encumbered by the Mortgage; together with all rights pertaining to such real property and Improvements, and all other collateral for the Mortgage Loan as more particularly described in the granting clauses of the Mortgage and referred to therein as the “Property”. The Property is commonly known as Hitachi Data Systems Campus, Santa Clara, California.
Qualifying Sub-Manager: a sub-manager of the Property which (a) is a reputable management company having at least five (5) years’ experience in the management of commercial properties with similar uses as the Property and in the jurisdiction in which the Property is located, (b) has, for at least five (5) years prior to its engagement as sub-manager, managed at least five (5) properties of the same property type as the Property, (c) at the time of its engagement as sub-manager manages at least 1,000,000 square feet of office space, and (d) is not the subject of a bankruptcy or similar insolvency proceeding.
Rating Agency: each of Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”), and Fitch, Inc., a division of Fitch Ratings Ltd. (“Fitch”), or any other nationally-recognized
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statistical rating organization to the extent any of the foregoing have been engaged by Lender or its designee in connection with or in anticipation of any Secondary Market Transaction.
Rating Comfort Letter: a letter issued by each of the applicable Rating Agencies which confirms that the taking of the action referenced to therein will not result in any qualification, withdrawal or downgrading of any existing ratings of Securities or Mortgage Securities created in a Secondary Market Transaction of the Loan or the Mortgage Loan.
Reference Bank: a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market that has an established place of business in London. If any such Reference Bank should be removed from the Telerate Page 3750 or in any other way fail to meet the qualifications of a Reference Bank, Lender may designate alternative Reference Banks meeting the criteria specified above.
Rents: all rents, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of Mortgage Borrower, Manager or any of their agents or employees (other than fees paid under the Management Agreements and salaries paid to employees) from any and all sources arising from or attributable to the Property and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Property or rendering of services by Mortgage Borrower, Manager or any of their agents or employees and proceeds, if any, from business interruption or other loss of income insurance.
Replacement Interest Rate Cap Agreement: an interest rate cap agreement from an Acceptable Counterparty with terms identical to the Interest Rate Cap Agreement with a termination date no earlier than (i) the Stated Maturity Date, or (ii) if the Loan is extended pursuant to the terms hereof, the applicable Extended Maturity Date.
Reserve Rate: the rate per annum which Lender determines to be either (i) the arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 1/1,000%) of the one-month United States dollar lending rates that at least three major New York City banks selected by Lender are quoting, at 11:00 a.m. (New York time) on the relevant LIBOR Determination Date, to the principal London offices of at least two of the Reference Banks, or (ii) in the event that at least two such rates are not obtained, the lowest one-month United States dollar lending rate which New York City banks selected by Lender are quoting as of 11:00 a.m. (New York time) on such LIBOR Determination Date to leading European banks.
Secondary Market Transaction: a sale, assignment, participation and/or Securitization of the Loan.
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Servicer: a servicer selected by Lender to service the Loan, including any “master servicer” or “special servicer” appointed under the terms of any pooling and servicing agreement or similar agreement entered into as a result of a Secondary Market Transaction.
Spread: (i) with respect to the Initial Advance, one and three quarters percent (1.75%) per annum and (ii) with respect to each Additional Advance, one and three quarters percent (1.75%) per annum.
Spread Maintenance Premium: with respect to any repayment of the outstanding principal amount of the Loan prior to June 14, 2008, a payment to Lender in an amount (without duplication of any Interest Shortfall) equal to the sum of each future installment of interest that would be payable under the Note on the outstanding principal amount of the Loan from the date of such prepayment through and including June 14, 2008 assuming an interest rate equal to the Spread, discounted at an interest rate per annum equal to LIBOR as of the date of such repayment.
State: the state in which the Property is located.
Stated Maturity Date: June 9, 2010, as such date may be extended pursuant to the terms hereof.
Sub-Manager: CBRE or any successor, assignee or replacement sub-manager appointed by Mortgage Borrower in accordance with Section 5.12.
Sub-Management Agreement: the Property Management Subcontract, between HPT and CBRE, pursuant to which CBRE is to sub-manage the Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with Section 5.12.
Strike Rate: (i) 6% for the initial term of the Loan; and (ii) with respect to each Extension Period, the greater of (A) 6% and (B) the highest strike rate, as determined by Lender at the commencement of each such Extension Period, which rate when added to the applicable Spread (as defined herein and the Mortgage Loan Agreement) would result in an In Place Debt Service Coverage Ratio on the then outstanding principal balances of the Loan and the Mortgage Loan of 1.00:1.00 (assuming that the aggregate amount of Adjusted Debt Service and Adjusted Mortgage Debt Service for purposes of calculating such In Place Debt Service Coverage Ratio would be due at such Strike Rate plus the applicable Spread); provided, however, Borrower may obtain an Interest Rate Cap Agreement with a strike rate lower than the strike rate as determined above and such lower strike rate shall be deemed the “Strike Rate” for all purposes hereunder; provided, further, however, that the Strike Rate on the Interest Rate Cap Agreement and the Mortgage Interest Rate Cap Agreement shall be the same.
Taxes: all real estate and personal property taxes, assessments, water rates or sewer rents, maintenance charges, impositions, vault charges and license fees, now or hereafter levied or assessed or imposed against all or part of the Property.
Telerate Page 3750: the display designated as page 3750 on the Dow Jones Telerate Service (or such other page as may replace page 3750 on that service or such other
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service as may be nominated by the British Bankers-Association as the information vendor for the purposes of displaying British Bankers-Association Interest Settlement Rates for U.S. dollar deposits).
Term: the entire term of this Agreement, which shall expire upon repayment in full of the Debt and full performance of each and every obligation to be performed by Borrower pursuant to the Loan Documents (other than surviving indemnity obligations with respect to matters as to which no claim for indemnification is then pending).
Title Insurance Policy: the ALTA mortgagee title insurance policy in the form acceptable to Mortgage Lender issued with respect to the Property and insuring the Lien of the Mortgage.
Transfer: any sale, conveyance, transfer, lease or assignment, or the entry into any agreement to sell, convey, transfer, lease or assign, whether by law or otherwise, of, on, in or affecting (i) all or part of the Collateral or the Property (including any legal or beneficial direct or indirect interest therein) or (ii) any direct or indirect interest in Borrower (including any profit interest).
UCC or Uniform Commercial Code: the Uniform Commercial Code as in effect in the State or the state in which any of the Cash Management Accounts are located, as the case may be.
UCC Title Insurance Policy: a UCC title insurance policy in the form acceptable to Lender issued with respect to the Collateral and insuring the lien of the Pledge Agreement encumbering such Collateral.
Welfare Plan: an employee welfare benefit plan, as defined in Section 3(1) of ERISA.
Work: capital improvements, replacements, repairs and alterations.
1.2 Index of Other Definitions. The following terms are defined in the sections or Loan Documents indicated below:
“Acquired Property” – 6.3.6
“Acquired Property Statements” – 6.3.6
“Act” – Schedule 5
“Annual Budget” - 6.3.5
“Applicable Taxes” - 2.2.5
“Approved Annual Budget” - 6.3.5
“Award” - Mortgage Loan Agreement
“Bankruptcy Act” – 5.35
“Bankruptcy Proceeding” - 4.7
“Borrower’s Recourse Liabilities” - 10.1(a)
“Breakage Costs” – 2.2.3(d)
“Building 800 Leasing Costs Expenditures” – Mortgage Loan Agreement
“Building 800 Work Expenditures” – Mortgage Loan Agreement
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“Cash Management Accounts” - 3.9
“Casualty” – Mortgage Loan Agreement
“Casualty/Condemnation Prepayment” - 2.3.2
“Casualty/Condemnation Subaccount” - Mortgage Loan Agreement
“Citigroup” – 9.2(b)
“Citigroup Group” – 9.2(b)
“Clearing Account” – Mortgage Loan Agreement
“Clearing Account Agreement” - Mortgage Loan Agreement
“Clearing Bank” - Mortgage Loan Agreement
“Condemnation” – Mortgage Loan Agreement
“Consent and Subordination” - 1.1 (Definition of Loan Documents)
“Deposit Account” - Mortgage Loan Agreement
“Deposit Account Agreement” - Mortgage Loan Agreement
“Disclosure Document” - 9.2(a)
“Distributions” – 5.40
“Easements” - 4.14
“Election” – 5.35
“Environmental Laws” - 4.21
“Equipment” - Mortgage
“Event of Default” - 8.1
“Exchange Act” - 9.2(a)
“Exchange Act Filing” – 9.2(a)
“Extended Maturity Date” - 2.2.1(b)
“Extension Option” – 2.2.1(b)
“Extension Period” – 2.2.1(b)
“First Extension Option” – 2.2.1(b)
“Fitch” - 1.1 (Definition of Rating Agency)
“Hazardous Substances” - 4.21
“Improvements” - Mortgage
“Indemnified Liabilities” - 5.30
“Indemnified Party” - 5.30
“Independent Director” - Schedule 5
“Insolvency Action” – 10.1(b)
“Insurance Premiums” - Mortgage Loan Agreement
“Insured Casualty” - Mortgage Loan Agreement
“Intercreditor Agreement” – 9.4
“Interest Reserve Fund” – 3.4
“Interest Reserve Subaccount” – 3.4
“Interest Shortfall” – 2.3.4(b)
“Late Payment Charge” - 2.5.3
“Lender’s Consultant” - 5.8.1
“Lender’s Losses” – 10.1(a)
“Liabilities” – 9.2(b)
“Licenses” - 4.11
“Liquidation Event” – 2.3.2
“Loan” - 2.1
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“Maximum Additional Advance Amount” – 2.1.2
“Moody’s” - 1.1 (Definition of Rating Agency)
“Mortgage” – Mortgage Loan Agreement
“New Payment Date” – 2.2.6
“Notice” - 6.1
“OFAC” – 5.33
“Offering Document Date” – 6.3.6
“Out-Parcel Release” – 2.4.1
“Permitted Indebtedness” - 5.22
“Permitted Investments” - Deposit Account Agreement
“Policies” - Mortgage Loan Agreement
“Prepayment Date” – 2.3.4
“Prepayment Notice” - 2.3.4
“Proceeds” - Mortgage Loan Agreement
“Proposed Lease” - 5.10.2
“Provided Information” - 9.1
“Qualified Carrier” - Mortgage Loan Agreement
“Registration Statement” – 9.2(b)
“Remaining Parcel” – 2.4.1(g)
“Remedial Work” - 5.8.2(c)
“Rent Roll” - 4.16
“Replacement Reserve Subaccount” – Mortgage Loan Agreement
“Required Repairs” – Mortgage Loan Agreement
“Restoration” - Mortgage Loan Agreement
“S&P” - 1.1 (Definition of Rating Agency)
“Second Extension Option” – 2.2.1(b)
“Securities” - 9.1
“Securities Act” - 9.2(a)
“Securitization” – 9.1
“Security Deposit Subaccount” - Mortgage Loan Agreement
“Significant Casualty” - Mortgage Loan Agreement
“Single Member Bankruptcy Remote LLC” – Schedule 5
“SNDA” – 5.10.4
“Sole Member” – Schedule 5
“Special Member” – Schedule 5
“Special Purpose Bankruptcy Remote Entity” - 5.13
“Springing Recourse Event” - 10.1(b)
“Standard Statements” – 6.3.6
“Subaccounts” - Mortgage Loan Agreement
“Tax and Insurance Subaccount” - Mortgage Loan Agreement
“Tenant Improvement Funds” – Mortgage Loan Agreement
“Tenant Improvement Reserve Subaccount” – Mortgage Loan Agreement
“Third Party Report” – 9.2(f)
“TI Leases” – Mortgage Loan Agreement
“Toxic Mold” - 4.21
“Underwriter Group” – 9.2(b)
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1.3 Principles of Construction. Unless otherwise specified, (i) all references to sections and schedules are to those in this Agreement, (ii) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision, (iii) all definitions are equally applicable to the singular and plural forms of the terms defined, (iv) the word “including” means “including but not limited to,” and (v) accounting terms not specifically defined herein shall be construed in accordance with GAAP. With respect to terms defined by cross-reference to the Mortgage Loan Documents, such defined terms shall have the definitions set forth in the Mortgage Loan Documents as of the date hereof, and no modifications to the Mortgage Loan Documents shall have the effect of changing such definitions for the purpose of this Agreement unless Lender expressly agrees that such definitions as used in this Agreement have been revised or Lender consents to the modification documents. With respect to any provisions incorporated by reference herein from the Mortgage Loan Agreement, such provisions shall be deemed a part of this Agreement notwithstanding the fact that the Mortgage Loan shall no longer be effective for any reason.
2. GENERAL LOAN TERMS
2.1 Loan Commitment; Disbursement to Borrower.
2.1.1 Agreement to Lend and Borrow.
Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept the Initial Advance of the Loan on the Closing Date.
2.1.2 Additional Advance.
Subject to and upon the terms and conditions herein set forth, Lender agrees in accordance with Section 2.1.4 hereof to make the Additional Advance to Borrower in the amount of $3,000,000.00 (the “Maximum Additional Advance Amount”). Any amount borrowed and repaid hereunder in respect of the Loan (or any portion thereof comprising the Additional Advance) may not be reborrowed.
2.1.3 Limitation on Additional Advance.
The Additional Advance shall be used solely to fund the Additional Interest Reserve Deposit.
2.1.4 Request for Additional Advance; Conditions Precedent.
(a) Subject to and upon the terms and conditions herein set forth, Lender agrees to make the Additional Advance to Borrower in the amount of $3,000,000.00 for the purpose of funding the Additional Interest Reserve Deposit. The Additional Advance shall be considered added to the unpaid principal balance of the Loan as of the day the Additional Advance is made for purposes of Borrower’s payment obligations under this Agreement, and repayment thereof, together with interest thereon at the Interest Rate and shall be secured by the Pledge Agreement and other collateral given for the Loan.
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(b) Provided that no Event of Default shall have occurred and be continuing, Lender shall make the Additional Advance to Borrower to fund the Additional Interest Reserve Deposit in an amount equal to $3,000,000.00 on the date required for such Additional Interest Reserve Deposit under Section 3.4 hereof. Borrower shall, or Lender on behalf of Borrower shall, deposit such Additional Advance in the Interest Reserve Subaccount, which shall be disbursed in accordance with Section 3.4.
(c) In the event that the then-outstanding principal balance of the Loan (after giving effect to the making of the Additional Advance) is greater than the combined notional amounts of all Interest Rate Cap Agreements previously delivered to Lender in accordance with the terms hereof, Borrower shall have delivered to Lender a fully executed supplemental Interest Rate Cap Agreement, and Borrower shall have delivered to Lender an Assignment of Interest Rate Cap with respect to such Interest Rate Cap Agreement. The Interest Rate Cap Agreement delivered pursuant to this subsection (c) shall (i) be effective through the end of the current Loan Term, (2) have a notional amount (when added to the combined notional amounts of any Interest Rate Cap Agreements previously delivered to Lender in accordance with the terms hereof) not less than the outstanding principal balance of the Loan (after giving effect to the making of the Additional Advance), (iii) provide for payments to be made by the Counterparty if, at any time during the term of the Loan, the LIBOR Rate exceeds the Strike Rate and (iv) otherwise satisfy all requirements of Section 2.6 hereof.
(d) If the insured amount under the UCC Title Insurance Policy is less than the amount of the then-outstanding principal balance of the Loan (after giving effect to the funding of the Additional Advance), Borrower shall deliver to Lender a UCC Title Insurance Policy or endorsement thereto with respect to such Additional Advance in form and substance reasonably satisfactory to Lender, redating the date of such policy and insuring the priority of the lien on the Collateral in the amount of the then-outstanding principal balance of the Loan (after giving effect to the funding of the Additional Advance).
(e) Upon the satisfaction of each of the conditions precedent to the Additional Advance, Lender shall disburse the Additional Advance, in accordance with this Section 2.1.4.
(f) [Intentionally Omitted].
(g) [Intentionally Omitted].
(h) Lender shall have no obligation to advance the Additional Advance at any time during which an Event of Default exists. The making of the Additional Advance by Lender at the time when an Event of Default has occurred and is then continuing shall not be deemed a waiver or cure by Lender of that Event of Default, nor shall Lender’s rights and remedies by prejudiced in any manner thereby. Any amount borrowed and repaid hereunder in respect of the Loan (or any portion thereof comprising the Additional Advance) may not be reborrowed.
Lender’s obligations to perform in accordance with this Section 2.1.4 and to make the Additional Advance in accordance with the terms and provisions of this Agreement are an independent contract made by Lender to Borrower separate and apart from any other obligation
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of Lender to Borrower under the other provisions of this Agreement and the other Loan Documents. The obligations of Borrower under this Agreement and the other Loan Documents shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower, or any other party, against Lender by reason of Lender’s failure to perform its obligations under this Section 2.1.4.
2.1.5 Intentionally Omitted.
2.1.6 Repayment in Full.
In the event the then outstanding principal balance of the Loan has been repaid in full, Borrower’s right to receive the Additional Advance shall automatically terminate, and upon such termination, Borrower shall have no right to reinstate Lender’s obligation to make the Additional Advance.
2.1.7 Intentionally Omitted.
2.1.8 The Note, Pledge Agreement and Loan Documents.
The Loan shall be evidenced by the Note and secured by the Pledge Agreement and the other Loan Documents.
2.1.9 Use of Proceeds.
Borrower shall use the proceeds of the Initial Advance solely to contribute such funds to Mortgage Borrower as may be needed to refinance any existing loan relating to the Property and for the purposes set forth in any disbursement letter or settlement statement entered into in connection herewith. Borrower shall use the proceeds of the Additional Advance in accordance with Section 2.1.4 hereof. All of the proceeds of the Mortgage Loan advanced to Mortgage Borrower have been and shall be used solely in accordance with the Mortgage Loan Agreement.
2.2 Interest; Loan Payments; Late Payment Charge.
2.2.1 Payments.
(a) Interest. Interest on the outstanding principal balance of the Loan shall accrue from the Closing Date to the end of the Interest Period in which the Maturity Date occurs at the Interest Rate. Monthly installments of interest only shall be paid on each Payment Date commencing on July 9, 2007 and on each subsequent Payment Date thereafter up to and including the Maturity Date for the Interest Period in which such Payment Date or Maturity Date occurs. Interest on the outstanding principal amount of the Loan for the period through and including June 14, 2007 shall be paid by Borrower on the Closing Date. The outstanding principal balance of the Loan together with all accrued and unpaid interest thereon shall be due and payable on the Maturity Date, including, without limitation, all interest that would accrue on the outstanding principal balance of the Loan through the end of the Interest Period in which the Maturity Date occurs (even if such period extends beyond the Maturity Date).
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(b) Extension of the Maturity Date. Borrower shall have the option to extend the term of the Loan beyond the initial Maturity Date for two (2) successive terms (each, an “Extension Option”) of one (1) year each (each, an “Extension Period”) to (y) the Payment Date occurring in June, 2011 (the “First Extension Option”) and (z) the Payment Date occurring in June, 2012 (the “Second Extension Option”) (each such date, the “Extended Maturity Date”), respectively, and, as to each Extension Option, upon satisfaction of the following terms and conditions:
(1) no Event of Default shall have occurred and be continuing at the time the applicable Extension Option is exercised and on the date that the applicable Extension Period is commenced;
(2) Borrower shall notify Lender of its irrevocable election to extend the Maturity Date as aforesaid not earlier than one hundred twenty (120) days and no later than sixty (60) days prior to the then applicable Maturity Date;
(3) Borrower shall obtain and deliver to Lender on or prior to the commencement of each such Extension Period, one or more Replacement Interest Rate Cap Agreements, which Replacement Interest Rate Cap Agreements shall be effective commencing on the first day of such Extension Option and shall have a maturity date not earlier than the next succeeding Extended Maturity Date;
(4) in connection with each Extension Option, Borrower shall have delivered to Lender together with its notice pursuant to subsection (b)(2) of this Section 2.2.1 and as of the commencement of the applicable Extension Option, an Officer’s Certificate in form reasonably acceptable to the Lender certifying that each of the representations and warranties of Borrower contained in the Loan Documents is true, complete and correct in all material respects as of the date of such Officer’s Certificate except to the extent such representations and warranties are matters which by their nature can no longer be true and correct as a result of the passage of time;
(5) the In Place Debt Service Coverage Ratio is at least 1.00:1.00;
(6) Borrower shall deposit into the Interest Reserve Subaccount an amount reasonably estimated by Lender, consistent with its then current underwriting standards, sufficient to make all Debt Service and Mortgage Debt Service payments as they become due and payable during the applicable Extension Period; and
(7) the Mortgage Extension Option corresponding to the applicable Extension Period shall have been exercised in accordance with the terms of the Mortgage Loan Agreement.
(c) All references in this Agreement and in the other Loan Documents to the Maturity Date shall mean the applicable Extended Maturity Date in the event the applicable Extension Option is exercised.
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(d) All payments and other amounts due under the Note, this Agreement and the other Loan Documents shall be made without any setoff, defense or irrespective of, and without deduction for, counterclaims.
2.2.2 Interest Calculation. Interest on the outstanding principal balance of the Loan shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate equal to the Interest Rate divided by three hundred sixty (360) by (c) the outstanding principal balance.
2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs.
(a) (i) In the event that Lender shall have determined (which determination shall be conclusive and binding upon Borrower absent manifest error) that by reason of circumstances affecting the interbank eurodollar market, adequate and reasonable means do not exist for ascertaining LIBOR, then Lender shall forthwith give notice by telephone of such determination, to Borrower at least one (1) Business Day prior to the last day of the related Interest Period, with a written confirmation of such determination promptly thereafter. If such notice is given, the Loan shall bear interest at the Adjusted Prime Rate beginning on the first day of the next succeeding Interest Period. (ii) If, pursuant to the terms of this Section 2.2.3(a), the Loan is bearing interest at the Adjusted Prime Rate and Lender shall determine (which determination shall be conclusive and binding upon Borrower absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, Lender shall give notice thereof to Borrower by telephone of such determination, confirmed in writing, to Borrower as soon as reasonably practical, but in no event later than one (1) Business Day prior to the last day of the then current Interest Period. If such notice is given, the Loan shall bear interest at the Eurodollar Rate beginning on the first day of the next succeeding Interest Period. Notwithstanding any provision of this Agreement to the contrary, in no event shall Borrower have the right to elect to have the Loan bear interest at either the Eurodollar Rate or the Adjusted Prime Rate.
(b) If any requirement of law or any change therein or in the interpretation or application thereof, shall hereafter make it unlawful for Lender in good faith to make or maintain the portion of the Loan bearing interest at the Eurodollar Rate, (I) the obligation of Lender hereunder to make the Loan bearing interest at the Eurodollar Rate shall be canceled forthwith and (II) the Loan shall automatically bear interest at the Adjusted Prime Rate on the next succeeding Payment Date or within such earlier period as required by Applicable Law. Borrower hereby agrees promptly to pay Lender (within ten (10) days of Lender’s written demand therefor), any additional amounts necessary to compensate Lender for any reasonable costs incurred by Lender in making any conversion in accordance with this Agreement, including, without limitation, any interest or fees payable by Lender to lenders of funds obtained by it in order to make or maintain the Loan hereunder. Upon written demand from Borrower, Lender shall demonstrate in reasonable detail the circumstances giving rise to Lender’s determination and the calculation substantiating the Adjusted Prime Rate and any additional costs incurred by Lender in making the conversion. Lender’s written notice of such costs, as certified to Borrower, shall be conclusive absent manifest error.
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(c) In the event that any change in any requirement of any Applicable Law or in the interpretation or application thereof, or compliance in good faith by Lender with any request or directive (whether or not having the force of law) hereafter issued from any Governmental Authority which is generally applicable to all Lenders subject to such Governmental Authority’s jurisdiction:
(1) shall hereafter impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of Lender which is not otherwise included in the determination of LIBOR hereunder;
(2) shall, if the Loan is then bearing interest at the Eurodollar Rate, hereafter have the effect of reducing the rate of return on Lender’s capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration Lender’s policies with respect to capital adequacy) by any amount deemed by Lender to be material; or
(3) shall, if the Loan is then bearing interest at the Eurodollar Rate, hereafter impose on Lender any other condition, the result of which is to increase the cost to Lender of making, renewing or maintaining loans or extensions of credit or to reduce any amount receivable hereunder;
then, in any such case, Borrower shall promptly pay Lender (within ten (10) days of Lender’s written demand therefor), any additional amounts necessary to compensate Lender for such additional cost or reduced amount receivable which Lender deems to be material. If Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.3(c), Lender shall provide Borrower with written notice specifying in reasonable detail the event or circumstance by reason of which it has become so entitled and the additional amount required to fully compensate Lender for such additional cost or reduced amount. A certificate as to any additional costs or amounts payable pursuant to the foregoing sentence submitted by Lender to Borrower shall be conclusive absent manifest error. This provision shall survive payment of the Note and the satisfaction of all other obligations of Borrower under the Note, this Agreement and the other Loan Documents.
(d) Borrower agrees to indemnify Lender and to hold Lender harmless from any loss or expense which Lender sustains or incurs as a consequence of (I) any default by Borrower in payment of the principal of or interest on the Loan while bearing interest at the Eurodollar Rate, including, without limitation, any such loss or expense arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Eurodollar Rate, (II) any prepayment (whether voluntary or mandatory) of the Loan on a day that is not a Payment Date, including, without limitation, such loss or expense arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Eurodollar Rate hereunder and (III) the conversion (for any reason whatsoever, whether voluntary or involuntary) of the Interest Rate from the Eurodollar Rate to the Adjusted Prime Rate with respect to any portion of the outstanding principal amount of the Loan then bearing interest at the Eurodollar Rate on a date other than the Payment Date immediately following the last day
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of an Interest Period, including, without limitation, such loss or expenses arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Eurodollar Rate hereunder (the amounts referred to in clauses (I), (II) and (III) are herein referred to collectively as the “Breakage Costs”). This provision shall survive payment of the Note and the satisfaction of all other obligations of Borrower under this Agreement and the other Loan Documents.
2.2.4 Default Rate. After the occurrence and during the continuance of an Event of Default, the entire unpaid Debt shall bear interest at the Default Rate, and shall be payable upon demand from time to time, to the extent permitted by applicable law.
2.2.5 Taxes. Any and all payments by Borrower hereunder and under the other Loan Documents shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on Lender’s income, and franchise taxes imposed on Lender by the law or regulation of any Governmental Authority (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to in this Section 2.2.5 as “Applicable Taxes”). If Borrower shall be required by law to deduct any Applicable Taxes from or in respect of any sum payable hereunder to Lender, the following shall apply: (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.2.5), Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. Payments pursuant to this Section 2.2.5 shall be made within ten days after the date Lender makes written demand therefor. If the amounts payable hereunder relate to Applicable Taxes which are not of general application to lending institutions making secured mortgage loans at such time, Borrower shall have the option to prepay the Loan in full without any Spread Maintenance Premium unless Lender, at its option, elects not to require Borrower to pay such Applicable Taxes pursuant to this Section 2.2.5. Notwithstanding the foregoing, if the Loan is transferred to a transferee which is organized under the laws of any jurisdiction other than the United States of America or any state thereof, the transferor shall cause such transferee, concurrently with the effectiveness of such transfer, to furnish to the transferor and Borrower either a United States Internal Revenue Service Form 4224 or United States Internal Revenue Service Form 1001 (wherein such transferee claims entitlement to complete exemption from United States federal withholding tax on all interest payments hereunder); provided, however, that in the event that the transferor fails to cause the transferee to furnish either such Form, Borrower shall deduct any Applicable Taxes to the extent required by law and payments shall be made net of any Applicable Taxes without regard to the provisions of clause (i) of the second sentence of this Section 2.2.5.
2.2.6 New Payment Date. Lender shall have the right, to be exercised not more than once during the term of the Loan, to change the Payment Date to a date other than the ninth day of each month (a “New Payment Date”), on 30 days’ written notice to Borrower; provided, however, that any such change in the Payment Date: (i) shall not modify the amount of regularly scheduled monthly interest payments, except that the first payment of interest payable on the New Payment Date shall be accompanied by interest at the interest rate herein provided for the
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period from the Payment Date in the month in which the New Payment Date first occurs to the New Payment Date, and (ii) shall extend the Stated Maturity Date to the New Payment Date occurring in the month set forth in the definition of Stated Maturity Date.
2.3 Loan Repayment.
2.3.1 Repayment. Borrower shall repay the entire outstanding principal balance of the Note in full on the Maturity Date, together with interest thereon to (but excluding) the date of repayment and any other amounts due and owing under the Loan Documents. Borrower shall have no right to prepay all or any portion of the Principal except in accordance with Section 2.2.5, Section 2.3.2, Section 2.3.4 and Section 2.4 hereof. Except during the continuance of an Event of Default, all proceeds of any repayment, including any prepayments of the Loan, shall be applied by Lender as follows in the following order of priority: First, accrued and unpaid interest at the Interest Rate together with all interest that would be due through the end of the current Interest Period; Second, to Principal; and Third, to any other amounts then due and owing under the Loan Documents. If prior to June 14, 2008 the Debt is accelerated by reason of an Event of Default, then Lender shall be entitled to receive, in addition to the unpaid Principal and accrued interest and other sums due under the Loan Documents, an amount equal to the Spread Maintenance Premium. During the continuance of an Event of Default, all proceeds of repayment, including any payment or recovery on the Collateral (whether through foreclosure, assignment-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in the Loan Documents, be applied in such order and in such manner as Lender shall elect in Lender’s discretion.
2.3.2 Liquidation Events.
(a) In the event of (i) any Casualty to all or any portion of the Property, (ii) any Condemnation of all or any portion of the Property, (iii) a Transfer of the Property in connection with realization thereon by Mortgage Lender following an Event of Default under the Mortgage Loan, including, without limitation, a foreclosure sale, or (iv) any refinancing of the Property or the Mortgage Loan (each, a “Liquidation Event”), Borrower shall cause the related Net Liquidation Proceeds After Debt Service to be deposited directly into an account designated by Lender. On each date on which Lender actually receives a distribution of Net Liquidation Proceeds After Debt Service, such distribution shall be applied in the same manner as repayments under Section 2.3.1, and such prepayment shall include interest that would have accrued on the Principal prepaid through the end of the current Interest Period. Provided that no Event of Default is continuing, any such mandatory prepayment under clauses (i) and (ii) above shall be without the payment of the Spread Maintenance Premium. Notwithstanding anything to the contrary contained herein, each prepayment under this Section 2.3.2 shall be applied in inverse order of maturity and shall not extend or postpone the due dates of the monthly installments due under the Note or this Agreement, or change the amounts of such installments.
(b) Borrower shall promptly notify Lender of any Liquidation Event once Borrower has knowledge of such event. Borrower shall be deemed to have knowledge of (i) a sale (other than a foreclosure sale) of the Property on the date on which a contract of sale for such sale is entered into, and a foreclosure sale, on the date notice of such foreclosure sale is
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given, and (ii) a refinancing of the Property, on the date on which a commitment for such refinancing is entered into. The provisions of this Section 2.3.2 shall not be construed to contravene in any manner the restrictions and other provisions regarding refinancing of the Mortgage Loan or Transfer of the Property set forth in this Agreement and the other Loan Documents.
(c) In addition, and notwithstanding anything to the contrary contained herein or in any other Loan Document, provided no Event of Default is continuing, no Spread Maintenance Premium shall be payable in connection with any prepayment of the Debt in connection with a simultaneous prepayment of the Mortgage Loan (i) required by Mortgage Lender under Section 5 or 6 of the Mortgage or (ii) at the election of Mortgage Borrower pursuant to Section 7.4.2 of the Mortgage Loan Agreement.
2.3.3 Intentionally Omitted.
2.3.4 Optional Prepayments. Borrower may, at its option, prepay the Loan (i) in whole at any time during the term of the Loan or, (ii)(A) after June 14, 2008 or (B) in connection with the Out-Parcel Release pursuant to Section 2.4.1(b) hereof, in part, upon satisfaction of the following conditions:
(a) Except with respect to a partial prepayment of the Loan in connection with the Out-Parcel Release, Borrower shall provide prior written notice (the “Prepayment Notice”) to Lender specifying the date (the “Prepayment Date”) upon which the prepayment is to be made, which notice shall be delivered to Lender not less than thirty (30) days prior to such payment; provided, however, that such notice may be revoked up to ten (10) days prior to the Prepayment Date provided Borrower pays to Lender all actual out-of-pocket expenses reasonably incurred by Lender in connection with the Prepayment Notice;
(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i) all accrued and unpaid interest calculated at the Interest Rate on the amount of principal being prepaid through and including the Prepayment Date together with an amount equal to the interest that would have accrued at the Interest Rate on the amount of principal being prepaid through the end of the Interest Period in which such prepayment occurs notwithstanding that such Interest Period extends beyond the date of prepayment (the “Interest Shortfall”), (ii) if such prepayment occurs prior to June 14, 2008, the Spread Maintenance Premium; (iii) Breakage Costs; and (iv) all other sums then due under this Agreement, the Note or the other Loan Documents;
(c) Mortgage Borrower shall have simultaneously with such prepayment made a pro rata prepayment of the Mortgage Loan;
(d) If a Prepayment Notice is given by Borrower to Lender pursuant to this Section 2.3.4, the amount designated for prepayment and all other sums required under this Section 2.3.4 shall be due and payable on the Prepayment Date unless the applicable Prepayment Notice has been revoked in accordance with this Section 2.3.4; and
(e) Such prepayment shall not be prohibited pursuant to the Mortgage Loan Documents.
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2.4 Release of Property.
2.4.1 Partial Release. Provided no Event of Default has occurred and is continuing, Borrower shall have the right to cause Mortgage Borrower to obtain a release (an “Out-Parcel Release”) of the Out-Parcel from the lien of the Mortgage upon compliance with (or waiver by Lender of) the following terms and conditions:
(a) Borrower shall give Lender at least thirty (30) days, but no more than ninety (90) days, prior written notice of its request to obtain an Out-Parcel Release;
(b) Borrower shall prepay the loan in accordance with Section 2.3.4 on a pro-rata basis with the Mortgage Loan, such that the aggregate principal balance of the Loan and the Mortgage Loan following the Out-Parcel Release is less than seventy-five percent (75%) of the value of the remaining Property, as determined by Lender in its reasonable discretion. In connection with any such determination, Lender shall have the right to require Borrower to deliver at Borrower’s own cost, an updated appraisal of the remaining Property in form and substance reasonably acceptable to Lender;
(c) The Pro Forma Debt Service Coverage Ratio for the Property following the Out-Parcel Release shall be greater than 1.20:1.00 (after giving effect to any prepayments made pursuant to Section 2.4.1(b) hereof);
(d) Borrower shall provide evidence reasonably acceptable to a prudent institutional lender that upon an Out-Parcel Release (i) the balance of the Property shall continue to be subject to the lien of the Mortgage, (ii) ingress and egress to and from the portion of the Property remaining subject to the lien of the Mortgage will not be terminated or restricted as a result of the Out-Parcel Release, (iii) the Out-Parcel Release shall not cause or result in a violation of any of the provisions of any of the Leases, and (iv) the remaining Property shall be in compliance with all applicable Legal Requirements;
(e) Borrower shall provide Lender with an endorsement to Owner’s Title Insurance Policy insuring that the Out-Parcel Release shall not adversely affect or impair the title insurance provided in the Owner’s Title Insurance Policy and insuring the easements referenced in Section 2.4.1(k) hereof;
(f) Borrower shall provide Lender with such surveys, descriptions, title insurance endorsements, computations of acreage and other information as Lender may in its reasonable discretion require in connection with the Out-Parcel Release;
(g) If required by any Legal Requirement, Borrower shall cause Mortgage Borrower to obtain all subdivisions and zoning approvals with respect to the portion of the Property remaining subject to the lien of the Mortgage as may be reasonably required by Lender to ensure that the parcel being released and the portion of the Property remaining subject to the lien of the Mortgage (the “Remaining Parcel”) shall be independent of each other for all building, zoning, subdivision and taxing purposes;
(h) [Intentionally Omitted];
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(i) Lender shall have received evidence reasonably satisfactory to Lender that following the Out-Parcel Release, the provisions of Section 5.13 shall remain true and correct in all material respects;
(j) Borrower shall have caused Mortgage Borrower to comply with any requirements applicable to such release of the Out-Parcel contained in any of the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the Property and the release does not violate any of the provisions of such documents in any respect that would result in a termination (or give any other party thereto the right to terminate), or extinguishment or other loss of material rights of Mortgage Borrower or in a material increase in Mortgage Borrower’s obligations under such documents;
(k) Borrower shall deliver to Lender copies of each proposed permanent easement, cross easement and mutual or non-exclusive easement for ingress, egress, access, pedestrian walkways, parking, traffic flow, utilities and services being shared by the portion of the property being released and the portion of the Property remaining subject to the lien of the Mortgage which may be required by any governmental authority or which are necessary for the operation of such parcels, all of which are subject to Lender’s reasonable approval;
(l) Borrower shall pay all of Lender’s reasonable costs and expenses, including reasonable counsel fees and disbursements incurred in connection with the Out-Parcel Release from the lien of the Mortgage, the review and approval of the documents and information required to be delivered in connection therewith and all recording fees and title charges;
(m) Borrower shall provide Lender with a certificate certifying the requirements set forth in this Section 2.4.1 have been satisfied; and
(n) All of the provisions of Section 2.4.1 of the Mortgage Loan Agreement have been satisfied.
2.4.2 Release on Payment in Full. Lender shall, upon the written request and at the expense of Borrower, upon payment in full of the Debt in accordance herewith, release or, if requested by Borrower, assign to Borrower’s designee (without any representation or warranty by and without any recourse against Lender whatsoever), the Lien of the Loan Documents if not theretofore released, and remit any remaining reserve funds held hereunder to Borrower.
2.5 Payments and Computations.
2.5.1 Making of Payments. Each payment by Borrower shall be made in funds settled through the New York Clearing House Interbank Payments System or other funds immediately available to Lender by 11:00 a.m., New York City time, on the date such payment is due, to Lender by deposit to such account as Lender may designate by written notice to Borrower. Whenever any such payment shall be stated to be due on a day that is not a Business Day, such payment shall be made on the first Business Day thereafter. All such payments shall be made irrespective of, and without any deduction, set-off or counterclaim whatsoever and are payable without relief from valuation and appraisement laws and with all costs and charges incurred in the collection or enforcement thereof, including attorneys’ fees and court costs.
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Schedule 5
Definition of Special Purpose Bankruptcy Remote Entity
A “Special Purpose Bankruptcy Remote Entity” means (x) a limited liability company that is a Single Member Bankruptcy Remote LLC, or (y) a corporation, limited partnership or limited liability company which at all times since its formation and at all times thereafter (i) was and will be organized solely for the purpose of (A) owning the Collateral, (B) owning or leasing the Property or (C) acting as a general partner of the limited partnership that owns or leases the Property or member of the limited liability company that owns or leases the Property; (ii) has not engaged and will not engage in any business unrelated to (A) the ownership of the Collateral (B) the ownership or leasing of the Property, (C) acting as general partner of the limited partnership that owns or leases the Property or (D) acting as a member of the limited liability company that owns or leases the Property, as applicable; (iii) has not had and will not have any assets other than those related to the Property or its partnership interest in the limited partnership that owns or leases the Property, or the membership interest in the limited liability company which has a partnership interest in the limited partnership that owns or leases the Property, as applicable; (iv) has not engaged, sought or consented to and will not engage in, seek or consent to any (A) dissolution, winding up, liquidation, consolidation, merger, asset sale (except as expressly permitted by this Agreement), transfer of partnership or membership interests or the like, or (B) amendment of its limited partnership agreement, articles of incorporation, articles of organization, certificate of formation or operating agreement (as applicable); (v) if such entity is a limited partnership, has and will have, as its only general partners, Special Purpose Bankruptcy Remote Entities that are corporations or that are Single Member Bankruptcy Remote LLC’s; (vi) if such entity is a corporation or a Single Member Bankruptcy Remote LLC, has and will have at least one Independent Director, and has not caused or allowed and will not cause or allow the board of directors or board of managers, as applicable, of such entity to take any action requiring the unanimous affirmative vote of one hundred percent (100%) of the members of its board of directors or board of managers, as applicable, unless all of the directors or managers, as applicable, and all Independent Directors shall have participated in such vote; (vii) if such entity is a limited liability company, has and will have at least one member that has been and will be a Special Purpose Bankruptcy Remote Entity that has been and will be a corporation or a Single Member Bankruptcy Remote LLC and such corporation or such Single Member Bankruptcy Remote LLC is the managing member of such limited liability company; (viii) if such entity is a limited liability company with more than one member, has and will have articles of organization, a certificate of formation and/or an operating agreement, as applicable, providing that (A) such entity will dissolve only upon the bankruptcy of the managing member, (B) the vote of a majority-in-interest of the remaining members is sufficient to continue the life of the limited liability company in the event of such bankruptcy of the managing member and (C) if the vote of a majority-in-interest of the remaining members to continue the life of the limited liability company following the bankruptcy of the managing member is not obtained, the limited liability company may not liquidate the Property without the consent of the applicable Rating Agencies for as long as the Loan is outstanding; (ix) has not, and without the unanimous consent of all of its partners, directors or members (including all Independent Directors), as applicable, will not, with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest (A) file a bankruptcy, insolvency or reorganization petition or otherwise
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institute insolvency proceedings or otherwise seek any relief under any laws relating to the relief from debts or the protection of debtors generally, (B) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for such entity or for all or any portion of such entity’s properties, (C) make any assignment for the benefit of such entity’s creditors or (D) take any action that might cause such entity to become insolvent; (x) has remained and will remain solvent and has maintained and will maintain adequate capital in light of its contemplated business operations; (xi) has not failed and will not fail to correct any known misunderstanding regarding the separate identity of such entity; (xii) has maintained and will maintain its accounts, books and records separate from any other Person; provided, however, that the financial statements of such Person may be included in the consolidated financial statements of another Person in accordance with GAAP, provided that in each case, such financial statements identify such Person as a separate member of such consolidated group and include an express statement to the effect that the assets of such Person are not available to satisfy the claims of creditors of such other Person, and will file its own tax returns; provided, however, that if such entity is a so-called “disregarded entity” under applicable law for tax purposes, and such entity is required or permitted to be included in a consolidated return of another entity, then such entity may be included in the consolidated return of such other entity; (xiii) has maintained and will maintain its books, records, resolutions and agreements as official records; (xiv) has not commingled and will not commingle its funds or assets with those of any other Person; (xv) has held and will hold its assets in its own name; (xvi) has conducted and will conduct its business in its name or under the trade name of the Property, (xvii) subject to the proviso in clause (xii) above, has maintained and will maintain its financial statements, accounting records and other entity documents separate from any other Person; (xviii) has paid and will pay its own liabilities, including the salaries of its own employees, out of its own funds and assets; (xix) has observed and will observe all partnership, corporate or limited liability company formalities, as applicable; (xx) subject to sub clause (xxx) below, has maintained and will maintain an arm’s-length relationship with its Affiliates; (xxi) (a) if such entity owns the Property, has and will have no indebtedness other than the Loan and Permitted Indebtedness (subject to the provisions of Section 5.22 of this Agreement), or (b) if such entity acts as the general partner of a limited partnership which owns the Property, has and will have no indebtedness (in addition to such liability as it has by virtue of its status as general partner) other than unsecured trade payables in the ordinary course of business relating to acting as general partner of the limited partnership which owns the Property which (1) do not exceed, at any time, $10,000 and (2) are paid within thirty (30) days of the date incurred, or (c) if such entity acts as a managing member of a limited liability company which owns the Property, has and will have no indebtedness other than unsecured trade payables in the ordinary course of business relating to acting as a member of the limited liability company which owns the Property which (1) do not exceed, at any time, $10,000 and (2) are paid within thirty (30) days of the date incurred, or (d) if such entity acts as the managing member of a limited liability company which acts as the general partnership of the limited partnership that owns the Property, has and will have no indebtedness (in addition to such liability as it has by virtue of its status as managing member) other than unsecured trade payables in the ordinary course of business relating to acting as managing member of the limited liability company which acts as general partner of the partnership which owns the Property which (1) do not exceed, at any time, $10,000 and (2) are paid within thirty (30) days of the date incurred; (xxii) except, if applicable, by virtue of its status as a managing member of the general partner, has not and will not assume or guarantee or become obligated for
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the debts of any other Person or hold out its credit as being available to satisfy the obligations of any other Person except for the Loan; (xxiii) has not and will not acquire obligations or securities of its partners, members or shareholders; (xxiv) has allocated and will allocate fairly and reasonably shared expenses, including shared office space, and uses separate stationery, invoices and checks; (xxv) except in connection with the Loan, has not pledged and will not pledge its assets for the benefit of any other Person; (xxvi) has held itself out and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name and not as a division or part of any other Person; (xxvii) has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person; (xxviii) has not made and will not make loans to any Person; (xxix) has not identified and will not identify its partners, members or shareholders, or any Affiliate of any of them, as a division or part of it; (xxx) except for the Management Agreement, has not entered into or been a party to, and will not enter into or be a party to, any transaction with its partners, members, shareholders or Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are no less favorable to it than would be obtained in a comparable arm’s-length transaction with an unrelated third party; (xxxi) has and will have no obligation to indemnify its partners, officers, directors, members or Special Members, as the case may be, or has such an obligation that is fully subordinated to the Debt and will not constitute a claim against it if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation; and (xxxii) to the fullest extent permitted under applicable law, will consider the interests of its creditors in connection with all corporate, partnership or limited liability actions, as applicable.
“Independent Director” means (x) in the case of a Single Member Bankruptcy Remote LLC: a natural person selected by Borrower and reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment as an Independent Director of the Single Member Bankruptcy Remote LLC, does not thereafter become while serving as an Independent Director (except pursuant to an express provision in the Single Member Bankruptcy Remote LLC’s limited liability company agreement providing for the Independent Director to become a Special Member (defined below) upon the sole member of such Single Member Bankruptcy Remote LLC ceasing to be a member in such Single Member Bankruptcy Remote LLC) and shall not have been at any time during the preceding five years (i) a shareholder/partner/member of, or an officer or employee of, Borrower or any of its shareholders, subsidiaries or Affiliates, (ii) a director of any shareholder, subsidiary or Affiliate of Borrower, (iii) a customer of, or supplier to, Borrower or any of its shareholders, subsidiaries or Affiliates, (iv) a Person who Controls any such shareholder, supplier or customer, or (v) a member of the immediate family of any such shareholder/ director/partner/member, officer, employee, supplier or customer or of any director of Borrower (other than as an Independent Director); and (y) in the case of a corporation, an individual selected by Borrower and reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment as a director, does not thereafter become while serving as an Independent Director and shall not have been at any time during the preceding five years (i) a shareholder/partner/member of, or an officer, employee, consultant, agent or advisor of, Borrower or any of its shareholders, subsidiaries, members or Affiliates, (ii) a director of any shareholder, subsidiary, member, or Affiliate of Borrower other than Borrower’s general partner or managing member, (iii) a customer of, or supplier to, Borrower or any of its shareholders, subsidiaries or Affiliates that derives more than ten percent (10%) of its purchases or income from its activities with Borrower or any Affiliate of Borrower, (iv) a Person
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who Controls any such shareholder, supplier or customer, or (v) a member of the immediate family (including a grandchild or sibling) of any such shareholder/director/partner/member, officer, employee, supplier or customer or of any other director of Borrower’s general partner or managing member. A natural person who otherwise satisfies the foregoing definition of Independent Director except for being the independent director, manager or special member of a “special purpose entity” affiliated with the Borrower that does not own a direct or indirect equity interest in the Borrower shall not be disqualified from serving as an Independent Director if such individual is at the time of initial appointment, or at any time while serving as an Independent Director, an Independent Director of a “special purpose entity” affiliated with the Borrower (other than any entity that owns a direct or indirect equity interest in the Borrower).
“Single Member Bankruptcy Remote LLC” means a limited liability company organized under the laws of the State of Delaware which at all times since its formation and at all times thereafter (i) complies with the following clauses of the definition of Special Purpose Bankruptcy Remote Entity above: (i), (ii), (iii), (iv), (ix), (x), (xi) and (xiii) through (xxxii); (ii) has maintained and will maintain its accounts, books and records separate from any other person; (iii) has and will have an operating agreement which provides that the business and affairs of such Single Member Bankruptcy Remote LLC shall be managed by its sole member (the “Sole Member”), and at all times there shall be at least one duly appointed Independent Director, and the Sole Member will not, without the written consent of its Independent Director (1) take any action affecting its status as a “Special Purpose Bankruptcy Remote Entity” (as set forth in this Schedule 5) or (2) take any other “Material Action” (which for purposes hereof means any action to consolidate or merge such Single Member Bankruptcy Remote LLC with or into any Person, or sell all or substantially all of the assets of such Single Member Bankruptcy Remote LLC other than in connection with a payment in full of the Loan in accordance with the terms of the Loan Documents, or to institute proceedings to have such Single Member Bankruptcy Remote LLC be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against such Single Member Bankruptcy Remote LLC or file a petition seeking, or consent to, reorganization or relief with respect to such Single Member Bankruptcy Remote LLC under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of such Single Member Bankruptcy Remote LLC or a substantial part of its property, or make any assignment for the benefit of creditors of such Single Member Bankruptcy Remote LLC, or admit in writing such Single Member Bankruptcy Remote LLC’s inability to pay its debts generally as they become due, or take action in furtherance of any such action, or, to the fullest extent permitted by law, dissolve or liquidate such Single Member Bankruptcy Remote LLC); (iv) has and will have an operating agreement which provides that, as long as any portion of the Debt remains outstanding, (A) upon the occurrence of any event that causes Sole Member to cease to be a member of such Single Member Bankruptcy Remote LLC (other than (x) upon an assignment by Sole Member of all of its limited liability company interest in such Single Member Bankruptcy Remote LLC and the admission of the transferee, if permitted pursuant to the organizational documents of such Single Member Bankruptcy Remote LLC and the Loan Documents, or (y) the resignation of Sole Member and the admission of an additional member of such Single Member Bankruptcy Remote LLC, if permitted pursuant to the organizational documents of such Single Member Bankruptcy Remote LLC and the Loan Documents), the person acting as an Independent Director of such Single Member Bankruptcy Remote LLC shall, without any action of any Person and simultaneously with Sole Member ceasing to be a member of such Single Member Bankruptcy
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Remote LLC, automatically be admitted as the sole member of such Single Member Bankruptcy Remote LLC (the “Special Member”) and shall preserve and continue the existence of such Single Member Bankruptcy Remote LLC without dissolution, (B) no Special Member may resign or transfer its rights as Special Member unless (x) a successor Special Member has been admitted to such Single Member Bankruptcy Remote LLC as a Special Member, and (y) such successor Special Member has also accepted its appointment as an Independent Director and (C) except as expressly permitted pursuant to the terms of this Agreement, Sole Member may not resign and no additional member shall be admitted to such Single Member Bankruptcy Remote LLC; (v) has and will have an operating agreement which provides that, as long as any portion of the Debt remains outstanding, (A) such Single Member Bankruptcy Remote LLC shall be dissolved, and its affairs shall be would up only upon the first to occur of the following: (x) the termination of the legal existence of the last remaining member of such Single Member Bankruptcy Remote LLC or the occurrence of any other event which terminates the continued membership of the last remaining member of such Single Member Bankruptcy Remote LLC in such Single Member Bankruptcy Remote LLC unless the business of such Single Member Bankruptcy Remote LLC is continued in a manner permitted by its operating agreement or the Delaware Limited Liability Company Act (the “Act”) or (y) the entry of a decree of judicial dissolution under Section 18-802 of the Act; (B) upon the occurrence of any event that causes the last remaining member of such Single Member Bankruptcy Remote LLC to cease to be a member of such Single Member Bankruptcy Remote LLC or that causes Sole Member to cease to be a member of such Single Member Bankruptcy Remote LLC (other than (x) upon an assignment by Sole Member of all of its limited liability company interest in such Single Member Bankruptcy Remote LLC and the admission of the transferee, if permitted pursuant to the organizational documents of such Single Member Bankruptcy Remote LLC and the Loan Documents, or (y) the resignation of Sole Member and the admission of an additional member of such Single Member Bankruptcy Remote LLC, if permitted pursuant to the organizational documents of such Single Member Bankruptcy Remote LLC and the Loan Documents), to the fullest extent permitted by law, the personal representative of such member shall be authorized to, and shall, within 90 days after the occurrence of the event that terminated the continued membership of such member in such Single Member Bankruptcy Remote LLC, agree in writing to continue the existence of such Single Member Bankruptcy Remote LLC and to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of such Single Member Bankruptcy Remote LLC, effective as of the occurrence of the event that terminated the continued membership of such member in such Single Member Bankruptcy Remote LLC; (C) the bankruptcy of Sole Member or a Special Member shall not cause such member or Special Member, respectively, to cease to be a member of such Single Member Bankruptcy Remote LLC and upon the occurrence of such an event, the business of such Single Member Bankruptcy Remote LLC shall continue without dissolution; (D) in the event of dissolution of such Single Member Bankruptcy Remote LLC, such Single Member Bankruptcy Remote LLC shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of such Single Member Bankruptcy Remote LLC in an orderly manner), and the assets of such Single Member Bankruptcy Remote LLC shall be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act; and (E) to the fullest extent permitted by law, each of Sole Member and the Special Member shall irrevocably waive any right or power that they might have to cause such Single Member Bankruptcy Remote LLC or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion
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of the assets of such Single Member Bankruptcy Remote LLC, to compel any sale of all or any portion of the assets of such Single Member Bankruptcy Remote LLC pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of such Single Member Bankruptcy Remote LLC.
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