EXHIBIT 10.14
LOAN AGREEMENT
Dated as of December 24, 1996
Between
BEDFORD PROPERTY INVESTORS, INC.
as Borrower
and
UNION BANK OF CALIFORNIA, N.A.
as Lender
LOAN AGREEMENT
This Loan Agreement ("Agreement") is made and entered into as of
December 24, 1996, between BEDFORD PROPERTY INVESTORS, INC., a
Maryland corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A.
("Lender").
R E C I T A L S:
A. Borrower has requested that Lender provide certain secured
credit accommodations to Borrower.
B. Lender is willing to provide such secured credit
accommodations to Borrower, on the terms and conditions set forth in
this Agreement. (Unless otherwise indicated, all Section references
herein refer to provisions of this Agreement.)
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following words and phrases shall
have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by or under common
control with, that Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
"Appraisal" means a written appraisal prepared by an MAI appraiser
acceptable to Lender in its sole discretion and subject to Lender's
customary independent appraisal requirements and prepared in
compliance with all applicable regulatory requirements, including,
without limitation, FIRREA.
"Appraised Value" means, as to any Property, the fair market value
of such Property as reflected in the then most-recent Appraisal of
such Property, as the same may have been adjusted by Lender based upon
its internal review of such Appraisal.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of
California, or which is a day on which banking institutions located in
the State of California are required or authorized by law or other
governmental action to close.
"Closing Date" means the date on which all of the conditions
precedent to Lender's obligations set forth in Section 3.01 shall have
been satisfied, as determined by Lender in its sole discretion, but in
no event later than January 15, 1997.
"Collateral" means, collectively, the Property, the Personal
Property and any other real or personal property in or upon which a
Lien is granted by Borrower, or as to which an assignment for security
purposes is made by Borrower from time to time, pursuant to this
Agreement, the Deeds of Trust or any other Loan Document.
"Contractual Obligation" as applied to any Person, means any
indenture, mortgage, deed of trust, lease, contract, undertaking,
document or instrument to which that Person is a party or by which it
or any of its properties is bound, or to which it or any of its
properties is subject (including, without limitation, any restrictive
covenant affecting such Person or any of its properties).
"Court Order" means any judgment, writ, injunction, decree, rule
or regulation of any court or Governmental Authority binding upon or
applicable to the Person in question.
"Debt Service" means, for the relevant one-year period, total
principal and interest due and payable on the Loan based upon a rate
of interest equal to the greater of (i) the Fixed Rate, or (ii) a rate
equal to two percent (2.00%) in excess of the then prevailing yield
(as published in The Wall Street Journal) for on-the-run (i.e., the
most recently auctioned) ten (10) year United States Treasury Notes,
as determined by Lender. In determining Debt Service, the outstanding
principal amount of the Loan shall be fully amortized over a twenty-
five year (25) term in equal monthly payments of principal and
interest.
"Debt Service Coverage Ratio" means the ratio of the Net Operating
Income for the relevant one-year period to Debt Service for the
relevant period.
"Deeds of Trust" mean, collectively, the Deeds of Trust,
Assignments of Rents, Security Agreements and Fixture Filings executed
and delivered by Borrower in favor of Lender pursuant to this
Agreement and encumbering all right, title and interest of Borrower in
the Property.
"Event of Default" means any of the events of default specified in
Section 7.01 of this Agreement.
"FIRREA" means the Financial Institutions Recovery, Reform and
Enforcement Act of 1989, as amended from time to time.
"Fixed Rate" means an interest rate equal to seven and one-half
percent (7.50%).
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board, or in
such other statements by such other entity as may be in general use by
significant segments of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any federal, state or local
governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality or public body, court,
administrative tribunal or public utility.
"Hazardous Substance" shall have the meaning given to it in the
Environmental Compliance Agreement of even date herewith executed by
Borrower in favor of Lender.
"Indebtedness", as applied to any Person, means (a) all
indebtedness, obligations or other liabilities of such Person with
respect to borrowed money created, incurred, assumed or guaranteed by
such Person, (b) all indebtedness, obligations or other liabilities of
such Person or others secured by a Lien on any asset of such Person,
whether or not such indebtedness, obligations or liabilities are
assumed by, or are a personal liability of, such Person (including,
without limitation, the principal amount of any assessment or similar
indebtedness encumbering any property), and (c) all other
indebtedness, obligations or other liabilities of such Person.
"Lease" means a lease, occupancy agreement or other agreement
creating possessory rights in all or any portion of a Property,
including any improvements included in a Property.
"Liabilities and Costs" means losses, costs, claims, damages,
liabilities and causes of action (including, without limitation, the
fees and costs of attorneys, expert witnesses and consultants, and the
cost of investigation and feasibility studies), direct or indirect,
known or unknown, absolute or contingent, post, present or future.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" means the secured credit accommodation in the principal
amount of Twenty-Five Million Dollars ($25,000,000) which Lender has
agreed to provide to Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement, the Note, the Deeds of
Trust, the Environmental Compliance Agreement, the Alternative Dispute
Resolution Agreement and the Agreement to Furnish Insurance, and all
other agreements, instruments and documents (together with all
amendments thereto and modifications and replacements thereof) now or
hereafter executed by Borrower, which evidence, guarantee or secure
the Obligations. Notwithstanding the inclusion of the Environmental
Compliance Agreement within the Loan Documents, all obligations of
Borrower under the Environmental Compliance Agreement shall at all
times be and remain unsecured.
"Major Agreement" means (a) any Lease covering more than 20,000
net rentable square feet, (b) any reciprocal easement agreement,
cross-parking or access agreement, covenants, conditions or
restrictions or other material agreement binding upon a Property, (c)
any management agreement with respect to a Property that (i) provides
for the payment of management fees in excess of five percent (5%) of
gross rents (including expense reimbursements accounted for as rent),
or (ii) is not terminable by Borrower (or any successor or assign of
Borrower) on not more than thirty days' prior written notice, and (d)
unless terminable by Borrower (or any successor or assign of Borrower)
on not more than thirty days' prior written notice: (i) any leasing
agreement with respect to a Property, and (ii) any other agreement,
contract or document or instrument material to the use, operation,
management or maintenance of a Property.
"Material Adverse Effect" means, with respect to a Person or
Property, a material adverse effect upon the business, the assets, the
condition (financial or otherwise), the income or the prospects of
such Person or Property, as determined by Lender.
"Net Operating Income" means the actual net cash flow derived by
Borrower from the relevant Property, before payment of principal and
interest under the Loan, as determined by Lender in its reasonable
discretion, and shall be further defined as follows: (i) the sum of
(A) stabilized and recurring cash rentals received by Borrower from
tenants occupying space in such Property; (B) cash reimbursements of
operating expenses, including real estate taxes and assessments and
premiums on casualty and liability insurance, received by Borrower
from such tenants; and (C) other normal and recurring operating income
received by Borrower from such Property and approved by Lender, less
(ii) all ownership and operating expenses of such Property, whether or
not recoverable from tenants, including, without limitation, real
estate taxes and assessments; premiums on casualty, liability and
other insurance carried by Borrower; utility, maintenance, repair,
janitorial, security, landscaping and general building costs and
expenses; and administrative costs and management fee.
"Note" means the Promissory Note Secured by Deeds of Trust of even
date herewith, in the aggregate principal amount of the Loan, executed
by Borrower in favor of Lender, as hereafter amended, supplemented,
replaced or modified.
"Obligations" means, from time to time, all Indebtedness of
Borrower owing to Lender (or any Person entitled to indemnification
pursuant to Section 8.02) pursuant to this Agreement or any other Loan
Document, or any of their respective transferees, successors or
assigns, of every type and description. The term includes, without
limitation, all principal, interest, charges, expenses, fees,
attorneys' fees and disbursements, expert witness fees and
disbursements, other consultant fees and disbursements, and any other
sum now or hereafter chargeable to Borrower under or in connection
with this Agreement or any other Loan Document.
"Person" means and includes any natural person, corporation,
limited partnership, general partnership, limited liability company,
joint stock company, joint venture, association, company, trust, bank,
trust company, land trust, business trust or other organization,
whether or not a legal entity, and any Governmental Authority.
"Personal Property" means the tangible and intangible personal
property of any Borrower in which Lender shall be granted a Lien
pursuant to the Deeds of Trust or any other Loan Document.
"Potential Event of Default" means a condition or event which
would constitute an Event of Default specified in Section 7.01 of this
Agreement following the giving of any notice and/or the passage of any
time period applicable to such condition or event.
"Property" means, collectively, the parcels of real property owned
by Borrower listed on Exhibit A attached hereto (subject to additions
and deletions in accordance with Sections 2.07 and 2.08), and more
particularly described in the Deeds of Trust under which Lender shall
be granted Liens pursuant to this Agreement.
ARTICLE II
LOAN
Section 2.01 Loan.
Subject to the terms of this Agreement, on the Closing Date,
Lender agrees to lend to Borrower and Borrower agrees to borrow from
Lender the principal sum of TWENTY-FIVE MILLION DOLLARS ($25,000,000);
said sum to be evidenced by the Note of even date herewith. The
Maturity Date under the Note is January 1, 2002. The Note shall be
secured by the Collateral. Notwithstanding any of the terms and
provisions of this Agreement or the Deeds of Trust, the Deeds of Trust
shall not secure the obligations of Borrower under the Environmental
Compliance Agreement.
Section 2.02
Use of Loan Proceeds. Amounts disbursed to or on behalf of Borrower
pursuant to the Note shall be used to leverage Borrower's prior
acquisition of the Property listed on Exhibit A hereto (for which cash
was previously paid).
Section 2.03
Debt Service on the Loan; Disqualification of the Property.03 Debt Service on
the Loan; Disqualification of the Property.
(a) Interest shall accrue on the Loan at the Fixed Rate, as
provided in the Note, and principal and interest shall be paid by
Borrower in the amounts and at the times provided for in the Note, all
the terms and provisions of which are fully incorporated into this
Agreement. The monthly amortization required under the Note will be
recalculated in the event of any prepayment of principal thereunder.
(b) Upon the occurrence of:
(i) a material uninsured casualty affecting any Property;
or
(ii) a (A) taking by any public authority through
condemnation, eminent domain or otherwise, or (B) casualty in
respect of which Borrower maintains insurance, in either such
case, if the improvements located on the affected Property
cannot be repaired or restored within nine (9) months after the
date of such taking or casualty to substantially the same
condition as that existing prior to such taking or casualty at a
cost that does not exceed the sum of (1) the net condemnation
award or insurance proceeds payable to Borrower with respect
thereto, plus (2) such additional amount for which Borrower
provides Lender with adequate security as to the availability of
funds for application to such restoration and/or repair; or
(iii) the discovery of any material Hazardous Substances
on any Property;
Lender may, in its sole discretion, determine to disqualify such
Property as Collateral for the Loan by written notice to Borrower.
Not later than ninety (90) days following delivery by Lender to
Borrower of such written notice of disqualification, Borrower shall
either (i) comply with all conditions applicable to a voluntary
release of such disqualified Property (including payment of the
applicable Release Price) as set forth in Section 2.07, or (ii) cause
a New Property to be substituted for such disqualified Property in
compliance with the requirements of Section 2.08.
Section
2.04 No Revolving Loan. The Loan is not a revolving loan, and
amounts repaid from time to time may not be reborrowed.
Section
2.05 Fees
(a) Loan Fee. On the Closing Date, Borrower shall pay to
Lender a loan fee in an amount of Two Hundred Fifty Thousand Dollars
($250,000), less any amount previously paid by Borrower to Lender
under the November 6, 1996 letter from Lender to Borrower. Borrower
hereby authorizes Lender to disburse on the Closing Date a portion of
the proceeds of the Loan in such amount directly to Lender in payment
of such loan fee.
(b) Payment of Fees. The fees described in this Section
2.05 and in any other provision of this Agreement represents
compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit and do not
constitute compensation for the use, detention or forbearance of
money, and the obligation of Borrower to pay the fees described herein
shall be in addition to, and not in lieu of, the obligation of
Borrower to pay interest, other fees and expenses otherwise described
in this Agreement or any other Loan Documents. Such fees shall be
payable when due in immediately available funds and shall be non-
refundable when paid.
Section
2.06 Payments.
(a) Manner and Time of Payment. All payments of principal,
interest and fees hereunder payable to Lender shall be made without
condition or reservation of right and free of set-off or counterclaim,
in immediately available funds, delivered to Lender not later than
2:00 p.m. (San Francisco, California time) on the date due; and funds
received by Lender after that time and date shall be deemed to have
been paid on the next succeeding Business Day.
(b) Prepayments. Borrower may at any time and from time to time
prepay all or any portion of the outstanding principal balance of the
Loan; provided, however, that, upon any such prepayment, Borrower
shall pay to Lender a prepayment fee (the "Prepayment Fee") equal to
the discounted present value of the excess, if any, of (i) the
interest that would have accrued on the prepaid amount from the
prepayment date to the Maturity Date under the Note, over (ii) the
interest that would accrue on such amount over such period using a per
annum interest rate equal to one and forty one-hundredths percent
(1.40%) plus the then prevailing yield (as published in The Wall
Street Journal) on United States Treasury Notes having a time to
maturity closest to the remaining term of the Loan, as determined by
Lender; provided further, however, that in no event shall the
Prepayment Fee be less than twenty-five one hundredths percent (0.25%)
of the amount prepaid in the case of any prepayment made prior to the
second anniversary of the Closing Date. In no event shall Lender be
obligated to make any payment or refund to Borrower, nor shall
Borrower be entitled to any setoff or other claim against Lender,
should the Prepayment Fee be less than zero. In addition to the
foregoing voluntary prepayments of principal under the Note, the
Prepayment Fee shall also be due and owing in the case of any
involuntary prepayment of principal under the Note as a consequence of
acceleration under the Note, application of proceeds of foreclosure
upon any Collateral, or otherwise. Notwithstanding the foregoing, the
Prepayment Fee shall not be due in connection with any prepayment
effected with insurance or condemnation proceeds pursuant to Lender's
election to require that such proceeds be so applied.
Section 2.07 Release of Property. Provided that no Event of Default or
Potential Event of Default then exists, at Borrower's written request
from time to time Lender shall cause a Property to be released from
the Lien of the Deed of Trust encumbering such Property, upon
satisfaction of the following conditions precedent:
(a) Borrower shall provide Lender with written notice of
Borrower's request for a release of a Property not less than thirty
(30) days prior to the date on which Borrower desires such release to
become effective;
(b) Borrower shall represent and warrant to Lender that (i)
no Event of Default or Potential Event of Default exists as of the
date of such release, and (ii) there has been no declared event of
default under Borrower's line of credit agented by Bank of America
NT&SA (or any successor facility) as of the date of such release;
(c) For the Property to be released, Lender shall have been
paid an amount equal to the release price allocable to such Property
as shown on Exhibit A hereto (the "Release Price"); provided, however,
that Borrower shall have the right to prepay additional outstanding
principal under the Loan in order to comply with subparagraph (d)
and/or subparagaph (e) below;
(d) The Debt Service Coverage Ratio applicable to the
Property remaining subject to the Lien of the Deeds of Trust shall be
equal to or greater than 1.3:1 as of the date of such release; in
calculating such Debt Service Coverage Ratio, (i) Net Operating Income
shall be calculated with reference to the Property remaining subject
to the Lien of the Deeds of Trust following the requested release,
(ii) the outstanding principal under the Loan shall reflect the
prepayment of principal required under subparagraph (c) above, and
(iii) Net Operating Income shall be determined by Lender on the basis
of the one-year ended as of the most recent calendar quarter for which
the Lender shall have received operating statements for such Property;
(e) In connection with (i) the first requested release of
Property for which the Release Price, when aggregrated with the
Release Prices for all Property previously released, would exceed
$6,250,000, and (ii) each requested release of Property thereafter:
(1) Lender shall have the right, in its sole discretion, to conduct
Appraisals of any or all of the Property that will remain part of the
Collateral following the requested release, and (2) the outstanding
principal balance of the Loan, immediately after giving effect to such
requested release (taking into account all prepayments to be effected
in connection therewith, and whether or not Lender has conducted new
Appraisals of any Property), shall not exceed sixty-five percent (65%)
of the aggregate Appraised Value of all such remaining Property; and
(f) Lender shall have been paid the applicable Prepayment
Fee, if any, with respect to all principal repaid pursuant to
subparagraph (c) above (including any amount prepaid in order to
comply with subparagraph (d) and/or subparagaph (e) above), together
with all escrow, closing and recording costs, the costs of preparing
and delivering a reconveyance of the Deed of Trust encumbering
released Property, and the costs of any title insurance endorsements
required by Lender.
Section 2.08 Substitution of Property. Provided that no Event of Default
or Potential Event of Default then exists, Borrower shall have the
right to substitute (a "Substitution") one of the Properties listed on
Exhibit A (the "Old Property") with other real property owned by
Borrower (the "New Property"), upon satisfaction of the following
conditions precedent:
(a) Approval by Lender of the New Property in its sole discretion,
including all matters pertaining thereto as referred to in Section
3.01(b); without limiting the foregoing, Borrower shall provide Lender
with any and all leases, financial statements, tenant credit reports,
rent rolls, preliminary title reports, licenses, permits and any other
documents, instruments or reports requested by Lender relating to the
New Property;
(b) Borrower shall make no more than (i) three (3) Substitutions
during the term of the Loan nor (ii) one (1) Substitution during any
one calendar year; provided, however, that a Substitution pursuant to
Section 2.03(b) shall not constitute a "Substitution" for purposes of
this Section 2.08(b);
(c) Borrower shall provide Lender with written notice of Borrower's
request for a Substitution not less than ninety (90) days prior to the
date on which Borrower desires such Substitution to become effective;
(d) The Net Operating Income attributable to the New
Property shall be equal to or greater than the Net Operating Income of
the Old Property, in each case for the one-year period ended as of the
most recent calendar quarter for which Lender has received operating
statements for each such Property;
(e) The then Appraised Value of the New Property shall be
equal to or greater than the original Appraised Value of the Old
Property;
(f) Lender shall have been paid a fee of twenty one-
hundredths of one percent (0.20%) multiplied by the Release Price
applicable to the Old Property as shown on Exhibit A hereto, together
with all appraisal, escrow, closing and recording costs, the costs of
preparing and delivering a reconveyance of the Deed of Trust
encumbering the Old Property, the costs of any title insurance
endorsements required by Lender, the costs of preparing and recording
a Deed of Trust to encumber the New Property, title insurance with
respect to the New Property acceptable to Lender, and all other costs
and expenses incurred by Lender in the connection with the
Substitution; and
(g) Borrower shall represent and warrant to Lender that (i)
no Event of Default or Potential Event of Default exists as of the
date of such Substitution, and (ii) there has been no declared event
of default under Borrower's line of credit agented by Bank of America
NT&SA (or any successor facility) as of the date of the such
Substitution.
The Release Price applicable to the Old Property as shown on Exhibit A
hereto shall be the applicable Release Price for the New Property.
Each Deed of Trust and other document or instrument executed and
delivered by Borrower in connection with the addition of the New
Property as Collateral shall constitute a Loan Document.
Section 2.09 Limitation on Borrower's Liability.09 Limitation on
Borrower's Liability. Lender's recovery
against Borrower under the Loan Documents shall be limited solely to
the Collateral (including all rents, issues, profits and income
therefrom and proceeds thereof) given to Lender as security for
Borrower's performance under the Loan Documents, and such recovery
shall not be a lien, or the basis of a claim of lien or levy of
execution, against the general assets of Borrower. Notwithstanding
the foregoing, Borrower and the general assets of Borrower shall be
fully and personally liable to Lender to the same extent that Borrower
would be liable absent the foregoing limitation of this paragraph for:
(a) fraud, willful misrepresentation, gross negligence or waste, to
the full extent of Lender's loss attributable thereto;
(b) failure to pay taxes, assessments or other charges attributable to
Borrower which can create liens on any portion of the Collateral
senior in priority to the lien of the Deed of Trust encumbering the
affected Collateral, including mechanic's liens, stop notices or
contractor's liens (to the full extent of any such taxes, assessments
or other charges);
(c) any loss which would have been covered by any policy of insurance
that Borrower is required to maintain, but failed to maintain, under
this Agreement or any of the other Loan Documents;
(d) tenant security deposits held by Borrower upon foreclosure of the
subject Property;
(e) any inaccuracy in or breach of any representation or warranty
pertaining to any Hazardous Substance or any failure in the due,
prompt and complete observance and performance of any covenant or any
other obligation imposed upon Borrower under or pursuant to the
Environmental Compliance Agreement;
(f) retention of any rents or other income, insurance proceeds,
condemnation or eminent domain awards or other similar funds or
payments attributable to any Collateral which, under the terms of any
Loan Document, should have been paid to Lender;
(g) the full amount of the Loan and all other obligations evidenced or
secured by the Loan Documents, in the event of any transfer of all or
any part of the Property without Lender's prior written approval; or
(h) all costs and expenses (including, without limitation,
attorneys' fees) incurred by Lender in enforcing its rights and
remedies under the Loan Documents subsequent to any of the following:
(i) an Event of Default under Section 7.01(e) below; (ii) an Event of
Default under Section 7.01(d) if the filing is made against Borrower
by any third party which was solicited or induced to do so by
Borrower; or (iii) after the occurrence of any Event of Default under
7.01(d) or 7.01(e): (A) any objection by Borrower to (1) any request
by Lender for the dismissal of any proceeding referred to in Section
7.01(d) or 7.01(e); (2) any attempt by Lender to obtain relief from
the automatic stay; or (3) any attempt by Lender to secure the
continuation of any receiver appointed pre-petition or to obtain
control, directly or through a receiver, of the rents, issues and
profits of any Property; (B) any request by Borrower for authority to
use cash collateral over Lender's objection; (C) any action brought by
Borrower or on its behalf against Lender; (D) any request by Borrower
to sell Collateral over Lender's objection; or (E) Borrower's taking
of any position adverse to Lender with respect to any plan of
reorganization proposed in any such proceedings.
The limitations of this Section 2.09 shall not be deemed to limit:
(i) any right Lender might otherwise have to obtain injunctive relief
against Borrower; (ii) any suit or action in connection with the
preservation, enforcement or foreclosure of the liens, mortgages,
assignments and security interests now or at any time hereafter
securing the payment and performance of the Obligations; or (iii) the
collection of amounts which may become owing or payable under or on
account of insurance, condemnation awards or damages for other public
actions or surety bonds maintained or provided by Borrower. In
addition, nothing herein shall be deemed to constitute a waiver of any
obligation evidenced by the Loan Documents, nor limit, amend, alter or
diminish any right which Lender may have under the provisions of
Sections 506(a), 506(b), 1111(b) or any other provision of the
Bankruptcy Reform Act of 1978, or any successor statute thereto, or
any similar provision under applicable state law, to file a claim for
the full amount of the Obligations or to require that all Collateral
shall continue to secure the Loan owing to Lender in accordance with
the Loan Documents.
ARTICLE III
CONDITIONS TO LOAN
Section
3.01 Conditions to Disbursement of Loan. The obligation of
Lender to make the Loan shall be subject to satisfaction of each of
the following conditions precedent on or before the Closing Date:
(a) Loan Documents. Borrower shall have executed,
acknowledged (if appropriate) and delivered to Lender each of the
following, in form and substance acceptable to Lender:
(i) this Agreement;
(ii) the Note;
(iii) the Deeds of Trust (which shall be executed
and acknowledged by Borrower as to each Property listed on
Exhibit A hereto);
(iv) UCC-1 Financing Statements with respect to
the Liens on the Personal Property granted under the Deeds
of Trust;
(v) each other Loan Document, including, without
limitation, the Environmental Compliance Agreement; and
(vi) all other documents, instruments or other items
to be executed and/or delivered by or on behalf of Borrower
pursuant to this Agreement or as Lender shall otherwise
require.
(b) Property Documents. Lender shall have received the
following documents with respect to each Property, in form and
substance acceptable to Lender:
(i) an Appraisal;
(ii) an ALTA Loan Policy of Title Insurance in the
amount of the Commitment (but with title insurance coverage
afforded thereby aggregated with the title insurance coverage
under the ALTA Loan Policy of Title Insurance for each other
Property by means of an appropriate tie-in indorsement),
issued by a title insurance company acceptable to Lender,
insuring Lender that the Deed of Trust encumbering such
Property constitutes a valid first priority Lien upon such
Property, subject only to such title exceptions as Lender
shall approve in its sole discretion, with such additional
endorsements, with such reinsurance and reinsurers and
otherwise in such form and substance as shall be acceptable to
Lender;
(iii) (A) Lessee Estoppel Certificates, in form and
substance approved by Lender, executed by each tenant marked
with an asterisk on Exhibit B hereto, (B) a Subordination and
Nondisturbance and Attornment Agreement from The Boeing
Company, and (C) to the extent obtained by Borrower on or
before the Closing Date: Lessee Estoppel Certificates
executed by other tenants shown Exhibit B, each of which shall
be in form and substance approved by Lender;
(iv) an environmental assessment for such Property,
prepared by an environmental consultant acceptable to Lender,
and satisfactory evidence that such Property is in compliance
with all laws and regulations is pertaining to Hazardous
Substances; and
(v) such other documents with respect to such
Property as are required pursuant to this Agreement or as
Lender shall otherwise require.
(c) Corporate Documents. Lender shall have received such
corporate documents with respect to Borrower as Lender shall require,
including evidence of authorization and incumbency of all Persons
executing the Loan Documents on behalf of Borrower.
(d) Performance. Borrower shall have performed in all
material respects all agreements and covenants to be performed by them
under this Agreement or the other Loan Documents on or before the
Closing Date.
(e) Material Adverse Changes. No change in Borrower or any
Property, as determined by Lender, shall have occurred which has a
Material Adverse Effect.
(f) Litigation, Other Proceedings. There shall not have
been instituted or threatened any litigation or proceeding in any
court or by or before any Governmental Authority affecting or
threatening to affect Borrower or any Property which has a Material
Adverse Effect, as determined by Lender.
(g) Perfection of Liens. All Deeds of Trust and financing
statements shall have been recorded or filed, as applicable, and
Lender shall have a valid, perfected first priority Lien on all of the
Property, the Personal Property and any other Collateral.
(h) No Event of Default. On the Closing Date, no Event of
Default or Potential Event of Default shall exist.
(i) Fees. On the Closing Date, Lender shall have received
the loan fee described in Section 2.05(a) and any other fees or other
amounts then due to Lender under this Agreement and the other Loan
Documents, and all expenses of Lender incurred prior to the Closing
Date (including without limitation all attorneys' and appraisers'
fees, environmental review costs and market study costs) shall have
been paid by Borrower.
(j) Consents and Approvals. Any licenses, permits,
consents and approvals of Governmental Authorities, and all corporate
action necessary to enable Borrower to enter into the financing
transactions contemplated by this Agreement shall have been obtained
and/or taken by Borrower (including, without limitation, any required
consents of shareholders).
(k) Insurance. Lender shall have received evidence that
Borrower has, with respect to the Collateral, property, casualty and
liability insurance satisfactory to Lender and issued by insurance
companies acceptable to Lender, and loss payable endorsements in form
and substance satisfactory to Lender naming Lender as loss payee with
respect to property and casualty insurance shall have been executed
and delivered to Lender, together with such certificates of insurance
and binders as are requested by Lender naming Lender as additional
insured with respect to liability insurance.
(l) Due Diligence. Lender shall have obtained and
completed its review of Appraisals of the Property and determination
of Appraised Values therefor and its review of the other Collateral,
and Lender shall have completed such other due diligence
investigations as it deems necessary, and such review and
investigations shall provide Lender with results and information
which, in Lender's determination, are satisfactory to permit Lender to
enter into this Agreement and fund the Loan.
(m) Representations and Warranties. All representations
and warranties of Borrower contained in this Agreement or the other
Loan Documents shall be true and correct in all material respects.
(n) Opinion(s) of Counsel. Lender shall have received an
opinion or opinions of counsel for Borrower dated as of the Closing
Date as to such matters as Lender shall require, in form and substance
satisfactory to Lender and its counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties. In order to induce
Lender to make the Loan, Borrower hereby represents and warrants to
Lender as follows as of the Closing Date:
(a) Organization; Power. (i) Borrower is a corporation,
duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) is duly qualified
to do business in and is in good standing under the laws of each
jurisdiction other than California in which it owns or leases real
property or in which the nature of its business requires it to be so
qualified, except for those jurisdictions where failure to so qualify
and be in good standing would not have a Material Adverse Effect on
Borrower, and (iii) has all requisite corporate power and authority to
own, operate and encumber its property and assets and to conduct its
business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the Loan
contemplated by the Loan Documents. Borrower has heretofore provided
to Lender true, correct and complete copies of the formation and other
organizational documents, and all amendments thereto, of Borrower; all
such formation and other organizational documents remain in full force
and effect and have not been amended or modified since the date on
which copies thereof were delivered to Lender.
(b) Authority. Borrower has the requisite legal, corporate
power and authority to execute, deliver and perform each of the Loan
Documents. The execution, delivery and performance thereof, and the
consummation of the transactions contemplated thereby, have been duly
authorized by all requisite corporate action of Borrower, and no other
corporate proceedings or authorizations on the part of Borrower are
necessary to consummate such transactions. Each of the Loan Documents
has been duly executed and delivered by Borrower and constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other
laws affecting creditors' rights generally.
(c) No Conflict. The execution, delivery and performance
by Borrower of the Loan Documents, and the transactions contemplated
thereby, do not and will not (i) conflict with or violate Borrower's
articles of incorporation, by-laws, or other organizational documents,
or (ii) conflict with, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any (A)
Contractual Obligation, (B) statute, ordinance, rule or regulation of
any Governmental Authority applicable to Borrower, the Property or its
other properties or assets or (C) Court Order, or (iii) result in or
require the creation or imposition of any Lien whatsoever upon any of
the properties or assets of Borrower (other than Liens in favor of
Lender arising pursuant to the Loan Documents).
(d) Consents and Authorizations. Borrower has obtained all
consents and authorizations required pursuant to its Contractual
Obligations with any other Person, and shall have obtained all
consents and authorizations of, and effected all notices to and
filings with, any Governmental Authority, as may be necessary to allow
Borrower to lawfully execute, deliver and perform its obligations
under the Loan Documents.
(e) Financial Statements. Borrower has heretofore
furnished to Lender its financial statements. Such financial
statements and related schedules and reports have been prepared in
accordance with GAAP, are true, correct and complete and present
fairly and accurately the financial condition of Borrower as of the
dates and the for periods indicated. There has been no change that
would have a Material Adverse Effect on Borrower, or the ability of
Borrower to perform its obligations under the Loan Documents, since
the date of such financial statements. There are no known material
unrealized or anticipated losses of Borrower.
(f) Projections and Forecasts. Each of the projections
delivered to Lender has been prepared by Borrower in light of the past
business and performance of Borrower and represents the reasonable
good faith estimates of Borrower's financial personnel.
(g) Litigation; Adverse Effects.
(i) There is no action, suit, proceeding,
governmental investigation or arbitration, at law or in
equity, or before or by any Governmental Authority, pending
or, to the best of Borrower's knowledge, threatened against
Borrower or any Property which could (A) result in a Material
Adverse Effect on Borrower or any Property, or (B) materially
and adversely affect the ability of Borrower to perform its
obligations contemplated in the Loan Documents.
(ii) Borrower is not (A) in violation of any
applicable law, which violation would have a Material Adverse
Effect on Borrower or any Property, or (B) subject to or in
default with respect to any Court Order which would have a
Material Adverse Effect on Borrower or any Property. There
are no proceedings pending or, to the best of Borrower's
knowledge, threatened against Borrower or any Property, which,
if adversely decided, would have a Material Adverse Effect on
Borrower or any Property.
(h) Payment of Taxes. All tax returns and reports to be
filed by Borrower have been timely filed, and all taxes, assessments,
fees and other governmental charges shown on such returns or otherwise
payable by Borrower have been paid when due and payable, except such
taxes, if any, as are being contested in good faith by appropriate
proceedings, and subject to such extensions of the filing and/or due
date thereof as Borrower shall have obtained. Borrower has no
knowledge of any proposed tax assessment against Borrower that will
have a Material Adverse Effect on Borrower, which is not being
actively contested in good faith by Borrower.
(i) Material Adverse Agreements. Borrower is not a party
to or subject to any Contractual Obligation or to any restriction
contained in its organizational documents which has a Material Adverse
Effect on Borrower.
(j) Performance.
(i) Borrower is not in default in the performance,
observance or fulfillment of any Contractual Obligation of
Borrower in favor of Bank of America NT & SA.
(ii) Borrower is not in default in the performance,
observance or fulfillment of any Contractual Obligation of
Borrower in favor of any other Person, and no condition exists
which, with the giving of notice or the passage of time or both,
would constitute such a default, in each case, except where the
consequences, direct or indirect, of such default or defaults, if
any, will not have a Material Adverse Effect on Borrower.
(k) Disclosure. The representations and warranties of
Borrower contained in this Agreement and the other Loan Documents and
all certificates, financial statements and other documents delivered
to Lender in connection therewith, do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. All
organizational documents, financial statements, Leases, agreements and
other documents and instruments delivered by Borrower to Lender
pursuant to this Agreement and the other Loan Documents are true,
correct and complete copies of the originals. Borrower has not
intentionally withheld any material fact from Lender in regard to any
matter addressed in or material to the Loan Documents.
(l) Requirements of Law. Borrower is in compliance with
all statutes, ordinances, rules and regulations of Governmental
Authorities applicable to Borrower or to the Property (including,
without limitation, the Americans with Disabilities Act of 1990, 42
U.S.C. 12101, et seq.), in each case, where the failure to so
comply will have a Material Adverse Effect on Borrower.
(m) Major Agreements; Leases. With respect to each
Property, Lender has received true, complete and correct copies of
each Major Agreement. All such Major Agreements are in full force and
effect and have not been modified or terminated, and no default or
event of default (or event or occurrence which with the passage of
time or the giving of notice, or both, will constitute a default or
event of default) exists or will exist under such Major Agreements as
a result of the consummation of the transactions contemplated by the
Loan Documents. Lender has also received true, correct and complete
copies of all Leases currently in effect and of the form lease, as
applicable, used for each Property. Except as reflected on the most
current rent rolls delivered to Lender, all Leases are in full force
and effect and no default or event or default (or event or occurrence
which with the passage of time or the giving of notice, or both, will
constitute a default or event of default) exists or will exist
thereunder as a result of the consummation of the transactions
contemplated by the Loan Documents. Other than the Leases provided to
Lender, there are no leases, occupancy agreements or other possessory
rights relating to the maintenance, occupancy, use or operation of any
of the Properties which are not terminable by Borrower upon thirty
(30) days or less notice, with penalty or premium.
(n) Title to Assets; No Liens. Borrower has good,
indefeasible and merchantable title to the Collateral and to all other
properties and assets owned by Borrower, and all of the Collateral is
free and clear of all Liens, except for any Liens permitted by Lender.
(o) Location of Borrower. Borrower's place of business
(or, if the Borrower has more than one place of business, its chief
executive office) is located at the address listed under Borrower's
signature on this Agreement.
(p) Status as a REIT. The Borrower (i) is a real estate
investment trust as defined in Section 856 of the Internal Revenue
Code (the "Code") (or any successor provision thereto), (ii) has not
revoked its election to be a real estate investment trust, (iii) has
not engaged in any "prohibited transactions" as defined in Section
856(b)(6)(iii) of the Code (or any successor provision thereto), and
(iv) for its current "tax year" (as defined in the Code) is and for
all prior tax years subsequent to its election to be a real estate
investment trust has been entitled to a dividends paid deduction which
meets the requirements of Section 857 of the Code.
(q) NYSE Listing. The common stock of Borrower is listed
for trading and traded on the New York Stock Exchange.
ARTICLE V
REPORTING COVENANTS
Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of the Obligations and the termination of this
Agreement:
Section 5.01 Financial Statements and Other Financial and
Operating Information. Borrower shall deliver or cause to be
delivered to Lender:
(a) Quarterly Property Statements. As soon as practicable,
and in any event within twenty (20) days after the end of each
calendar quarter, operating statements for each Property in a form
approved by Lender, and rent rolls and lease status reports in the
form customarily generated by Borrower for such Property, or other
form required by Lender, dated as of the last day of such quarter, in
form and substance satisfactory to Lender, certified by the Borrower.
(b) Quarterly Financial Statements. Within thirty (30)
days after the close of each calendar quarter, quarterly financial
statements of Borrower, consisting of a balance sheet, income
statement and statement of sources and uses of funds, together with
related schedules and supporting reports, when applicable. Such
financial statements shall be prepared in accordance with GAAP and
shall be accompanied by a certificate executed by the chief financial
officer of Borrower certifying the completeness, fairness and
consistency thereof without qualification or limitation.
(c) Annual Financial Statements. Within ninety (90) days
after the close of each calendar year, annual audited financial
statements of Borrower, consisting of a balance sheet, income
statement and statement of sources and uses of funds, together with
related schedules and supporting reports, when applicable. Such
financial statements shall be prepared in accordance with GAAP and
shall be accompanied by a certificate executed by Borrower's
independent public accountant certifying the completeness, fairness
and consistency thereof without qualification or limitation.
(d) Cash Flow Projections. Not later than thirty (30) days
prior to the end of each calendar year, a projection of Borrower
detailing expected sources and uses of funds from the Property for the
next calendar year, as well as cumulative actual cash flow statements
for the immediately preceding twelve (12)-month period, accompanied by
a certificate executed by the chief financial offficer of Borrower
certifying (i) as to the completeness, fairness and consistency of
such cash flow statements, and (ii) that such projection has been
prepared by Borrower in light of the past business and performance of
Borrower and represents the reasonable good faith estimates of
Borrower's financial personnel. With respect to the foregoing cash
flow statements, Borrower shall provide such additional supporting
details as Lender shall reasonably request.
(e) Knowledge of Event of Default. Promptly upon Borrower
obtaining knowledge of (i) any condition or event which constitutes an
Event of Default or Potential Event of Default, or (ii) any condition
or event which has a Material Adverse Effect on Borrower or any
Property, written notice specifying the nature and period of existence
of any such condition or event and what action Borrower has taken, is
taking and proposes to take with respect thereto. Each delivery of
quarterly financial statements by Borrower pursuant to subparagraph
(b) above shall be deemed to constitute a representation and warranty
by Borrower that there then exists no Event of Default or Potential
Event of Default, unless the same shall be qualified pursuant to a
written notice delivered with such financial statements in accordance
with this subparagraph (e).
(f) Litigation, etc. Promptly upon Borrower obtaining
knowledge of (i) the institution of, or threat of, any material
action, suit, proceeding, governmental investigation or arbitration
against or affecting Borrower or any Property not previously disclosed
in writing by Borrower to Lender pursuant to this Agreement, including
any casualty or eminent domain or other condemnation proceeding
affecting any Property, or (ii) any material development in any
action, suit, proceeding, governmental investigation or arbitration
already disclosed, which, in either case, has a Material Adverse
Effect on Borrower or any Property, written notice thereof to Lender
and such other information as may be reasonably available to Borrower
to enable Lender and its counsel to evaluate such matters.
(g) Election to Terminate Status as a REIT. Promptly upon
Borrower's election to revoke its election to be a real estate
investment trust (which election shall be made only upon the basis of
a resolution of Borrower's Board of Directors finding that it would be
in Borrower's best interests to revoke such election), written notice
thereof to Lender of such election.
(h) Other Information. Such other information, reports,
contracts, schedules, lists, documents, agreements and instruments in
the possession of Borrower with respect to (i) the Collateral, or (ii)
Borrower's business, assets, condition (financial or otherwise),
income or prospects as Lender may from time to time reasonably
request, including, without limitation, annual information with
respect to cash flow projections, budgets, operating statements
(current year and immediately preceding year), rent rolls, lease
expiration reports, leasing status reports, equity funding
requirements, contingent liability summaries, projections of leasing
fees and overhead budgets.
ARTICLE VI
OTHER COVENANTS
Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of the Obligations and the termination of this
Agreement:
Section 6.01 Existence, etc. Borrower shall at all times
maintain its corporate existence and shall do or cause to be done all
things necessary to preserve and keep in full force and effect its
rights to do business in, and shall remain in good standing in, each
jurisdiction in which the character of the properties owned or leased
by it therein or in which the transaction of its business makes such
qualification necessary. In addition, Borrower shall take such
actions as may be required to ensure that Borrower's common stock is
at all times listed for trading and traded on the New York Stock
Exchange, the American Stock Exchange, or the Nasdaq National Markets
System.
Section 6.02 Taxes. (i) Borrower shall pay and discharge all
taxes, assessments and other governmental charges assessed against or
imposed upon any Property or other properties or assets of Borrower
prior to the date on which any penalty or interest accrues thereon;
and (ii) Borrower shall pay and discharge all claims (including,
without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law
have or may become a Lien upon any Property or other properties or
assets of Borrower, prior to the time when any penalty or fine shall
be incurred with respect thereto; provided, however, that each of the
foregoing covenants shall be subject to the right of Borrower to
contest such taxes, assessments, other governmental charges and claims
in good faith by appropriate proceedings, and subject to such
extensions of the filing or due date thereof as Borrower shall have
obtained.
Section 6.03 Insurance. Borrower shall maintain with respect to
the Property such property, casualty and liability insurance in such
amounts, with such forms of coverage and with such insurance companies
as Lender shall from time to time require in accordance with the
provisions of the Deeds of Trust. In addition, Borrower shall file
with Lender, from time to time upon Lender's request, a detailed list
of the insurance then in effect and stating the names of the insurance
companies, the amounts and rates of the insurance, deductibles and co-
insurance features, if any, dates of the expiration thereof and the
properties and risks covered thereby.
Section 6.04 Compliance with Law. Borrower shall comply with
all statutes, ordinances, rules and regulations of Governmental
Authorities applicable to the Property, and Borrower shall obtain as
needed all licenses, permits and approvals of Governmental Authorities
necessary for Borrower's operation of the Property and maintain such
permits, licenses and approvals in good standing.
Section 6.05 Inspection of Properties; Books and Records.
Borrower shall permit any authorized representative designated by
Lender to visit and inspect any Property upon reasonable prior notice,
to inspect financial and accounting records and Leases, and to make
copies and take extracts therefrom, all at such times during normal
business hours and as often as Lender may reasonably request.
Section 6.06 Conduct of Business. Borrower shall engage
principally in the business of direct ownership, operation and
development of suburban office and industrial properties of the
general type owned by Borrower as of the Closing Date in the Western
United States, and any other business activities of Borrower will
remain incidental thereto.
Section 6.07 Tenant Estoppel Certificates; Subordination,
Nondisturbance and Attornment Agreements. Borrower shall exercise due
diligence to obtain as expeditiously as possible Tenant Estoppel
Certificates and Subordination, Nondisturbance and Attornment
Agreements, in form and substance approved by Lender, with respect to
all tenants listed on Exhibit B hereto, to the extent Borrower did not
obtain the same prior to the Closing Date.
Section 6.08 Leases; Major Agreements. Borrower shall at all
times comply with all obligations imposed upon it under all Leases
constituting Major Agreements and under all other Major Agreements,
and shall not enter into any such Lease or other Major Agreement
without Lender's prior written consent, which shall not be
unreasonably withheld or delayed. Borrower shall not enter into any
Lease, whether or not such Lease constitutes a Major Agreement, that
does not contain provisions pursuant to which the tenant thereunder
agrees to attorn to a mortgagee in the event of a foreclosure, subject
only to customary conditions.
Section 6.09 Chief Executive Office. Borrower shall not
relocate its place of business (or, if Borrower has more than one
place of business, its chief executive office), except upon prior
written notice to Lender.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01 Events of Default. Each of the following events or
occurrences shall constitute an Event of Default under this Agreement:
(a) Payment. Borrower shall fail to pay any installment of
the principal of or interest on the Loan when and as the same shall
become due and payable, whether on the due date thereof, by
acceleration or otherwise, or Borrower shall fail to make payment of
any other amount payable under this Agreement or the other Loan
Documents when and as the same shall become due and payable, and any
such failure shall continue for a period of five (5) days following
written notice thereof from Lender to Borrower; provided, however,
that following the first occasion during each year of the term of the
Loan for which Lender shall have given to Borrower such written notice
of Borrower's failure to pay any such amount when due and payable,
Borrower's failure to pay when due and payable any such amount shall
constitute an Event of Default without the requirement of any notice
from Lender.
(b) Other Covenants. Borrower shall fail to perform any
other covenant or obligation to be performed by Borrower under this
Agreement or any other Loan Document, including, without limitation,
the Environmental Compliance Agreement, and such failure shall
continue for thirty (30) days after written notice thereof from Lender
to Borrower specifying the failure and demanding that Borrower remedy
the same; provided, however, that if (i) Lender determines in good
faith that such failure can be cured within ninety (90) days, (ii) no
lien or security interest created by the Loan Documents will be
impaired, and (iii) Borrower diligently commences to cure such failure
within thirty (30) days after the date of Lender's notice and
thereafter diligently prosecutes such cure, such failure shall not
constitute an Event of Default unless it continues for ninety (90)
days after Lender's initial notice.
(c) Representations and Warranties. Any representation or
warranty made by Borrower in this Agreement or in the other Loan
Documents, or in any certificate, document or instrument furnished in
connection with this Agreement or the transactions contemplated
hereby, shall prove to have been false or misleading in any material
respect when made.
(d) Involuntary Bankruptcy; Appointment of Receiver.
(i) An involuntary case shall be commenced against
Borrower and the petition shall not be dismissed within thirty
(30) days after commencement of the case, or a court having
jurisdiction shall enter a decree or order for relief in
respect of Borrower in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or
(ii) A decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers shall be
entered against Borrower or over all or a substantial part of
the property of Borrower; or a warrant of attachment,
execution or similar process against any substantial part of
the property of Borrower shall be issued and the same shall
not be stayed, vacated, dismissed, bonded or discharged within
thirty (30) days of entry, appointment or issuance.
(e) Voluntary Bankruptcy; Appointment of Receiver.
Borrower shall have an order for relief entered with respect to it or
commence a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking of possession by
a receiver, trustee or other custodian for all or a substantial part
of its property; or Borrower shall make any assignment for the benefit
of creditors or shall be unable or fail, or admit in writing its
inability, to pay its debts as such debts become due.
(f) Solvency; Material Adverse Change. There shall have
occurred any change in the business, operations, properties, assets or
condition (financial or otherwise) of Borrower which Lender determines
could have a Material Adverse Effect upon Borrower.
Section 7.02 Rights and Remedies.
(a) Acceleration. Upon the occurrence of any Event of
Default described in Sections 7.01(d) or (e) of this Agreement with
respect to Borrower, the unpaid principal amount of and any and all
accrued interest on the Loan shall automatically become immediately
due and payable, with all additional interest from time to time
accrued thereon and without presentment, demand or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or
accelerate or notice of acceleration), all of which are hereby
expressly waived by Borrower. Upon the occurrence of any other Event
of Default, Lender, by written notice to Borrower, may declare the
unpaid principal amount of, any and all accrued and unpaid interest
on, the Loan and all of the other Obligations to be, and the same
shall thereupon be, immediately due and payable with all additional
interest from time to time accrued thereon and without presentment,
demand or protest or other requirements of any kind (including without
limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which
are hereby expressly waived by Borrower. Without limiting Lender's
authority hereunder, on or after the Maturity Date, Lender may
exercise any or all rights and remedies under the Loan Documents or
applicable law, including, without limitation, foreclosure upon all or
any part of the Collateral.
(b) Waiver of Demand. Demand, presentment, protest and
notice of nonpayment are hereby waived by Borrower. Borrower also
waives, to the extent permitted by law, the benefit of all valuation,
appraisal and exemption laws.
(c) Environmental Assessment. As part of a foreclosure
upon any Property or the acceptance by Lender of any deed in lieu of
foreclosure, Lender shall have the right to cause an environmental
assessment for such Property to be prepared by an environmental
consultant acceptable to Lender, the cost of which shall constitute an
Obligation of Borrower hereunder.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses.
(a) Generally. Borrower shall pay, or reimburse Lender
for, all of Lender's reasonable audit, legal, appraisal, valuation and
investigation expenses and for all other reasonable out-of-pocket
costs and expenses of every type and nature (including, without
limitation, the fees, expenses and disbursements of Lender's internal
appraisers, environmental advisors or legal counsel) incurred by
Lender in connection with (i) the negotiation, preparation and
execution of this Agreement, the Deeds of Trust and the other Loan
Documents, the obtaining of compliance with the closing conditions and
the making of the Loan; (ii) the pre-closing investigation and review
of Borrower and the Property, including appraisal fees and costs of
environmental assessment; (iii) title insurance premiums and
endorsement charges for the title insurance described in Section
3.01(b), recording fees and attorneys' fees and costs incurred in
connection therewith; (iv) the creation, perfection or protection of
Lender's Liens on the Collateral; (v) obtaining Appraisals of the
Properties (A) periodically, but not more frequently than once in any
calendar year, in order to comply with regulatory requirements
applicable to Lender, or (B) pursuant to Section 2.07(e) above, or (C)
during the continuance of an Event of Default; and (vi) the
protection, collection or enforcement of any of the Obligations or the
Collateral. On the Closing Date, Borrower shall pay, or reimburse
Lender for, all such costs and expenses paid or incurred by Lender as
of such date, and all other such costs and expenses shall be paid or
reimbursed by Borrower to Lender on demand.
(b) After Event of Default. Borrower further agrees to
pay, or reimburse Lender for, all reasonable out-of-pocket costs and
expenses, including, without limitation, attorneys' fees and
disbursements incurred by Lender after the occurrence of an Event of
Default (i) in enforcing any Obligations or in foreclosing against the
Collateral or exercising or enforcing any other right or remedy
available by reason of such Event of Default; (ii) in connection with
any refinancing or restructuring of the credit arrangements provided
under this Agreement in the nature of a "work-out" or in any
insolvency or bankruptcy proceeding; (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to
Borrower and related to or arising out of the transactions
contemplated hereby; (iv) in taking any other action in or with
respect to any suit or proceeding (whether in bankruptcy or
otherwise); (v) in protecting, preserving, collecting, leasing,
selling, taking possession of, or liquidating any of the Collateral;
or (vi) in attempting to enforce or enforcing any Lien on any of the
Collateral or any other rights under the Deeds of Trust.
Section 8.02 Indemnity. Borrower shall indemnify, defend and
hold harmless Lender and its Affiliates and participants and each of
the respective officers, directors, employees, agents, shareholders,
representatives, attorneys and consultants of each of the foregoing
(collectively called the "Indemnitees") from and against any and all
Liabilities and Costs imposed on, incurred by, or asserted against
such Indemnitees in any manner relating to or arising out of this
Agreement, the Deeds of Trust or the other Loan Documents, or any act,
event or transaction related or attendant thereto, the making of the
Loan and the management of the Loan, or the use or intended use of the
proceeds of the Loan (collectively, the "Indemnified Matters");
provided, however, that Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Matters to the extent
caused by or resulting from the willful misconduct or gross negligence
of that Indemnitee, as determined by a court of competent jurisdic-
tion.
Section 8.03 Notices and Delivery. Unless otherwise
specifically provided herein, any consent, notice or other
communication herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by courier
service or United States mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a
telecopy (or on the next Business Day if such telecopy is received on
a non-Business Day or after 5:00 p.m. on a Business Day) or three (3)
Business Days after deposit in the United States mail (registered or
certified, with postage prepaid and properly addressed). For the
purposes hereof, the addresses of the parties hereto (until notice of
a change thereof is delivered as provided in this Section 8.03) shall
be as set forth below each party's name on the signature pages hereof,
or, as to each party, at such other address as may be designated by
such party in a written notice to the other party.
Section 8.04 Survival of Warranties, Indemnities and Agreements.
All agreements, representations, warranties and indemnities made or
given herein shall survive the execution and delivery of this
Agreement and the other Loan Documents and the making and repayment of
the Loan hereunder and such indemnities shall survive termination
hereof.
Section 8.05 No Waiver; Remedies Cumulative. No failure or
delay on the part of Lender in the exercise of any power, right or
privilege under any of the Loan Documents shall impair such power,
right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights and
remedies existing under the Loan Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.
Section 8.06 Marshalling; Recourse to Security; Payments Set
Aside. Lender shall not be under any obligation to marshall any
assets in favor of Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent that Borrower
makes a payment or payments to Lender, or Lender shall enforce its
Liens or exercise its rights of setoff, and such payment or payments
or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such recovery, the Obliga-
tions or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
Section 8.07 Severability. In case any provision of this
Agreement or the other Loan Documents shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby.
Section 8.08 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
Section 8.09 Governing Law. This Agreement shall be governed
by, and shall be construed and enforced in accordance with, the laws
of the State of California.
Section 8.10 Successors and Assigns. This Agreement and the
other Loan Documents shall be binding upon the parties hereto, and
their respective successors and assigns, and shall inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. Notwithstanding the foregoing, Borrower's rights
hereunder, and Borrower's duties and Obligations hereunder, shall not
be assigned without the prior written consent of Lender.
Section 8.11 Sale of Loan, Participations. Lender may, at any
time, sell, transfer, assign, dispose of, grant participations in or
syndicate the Loan and the Loan Documents, provided that, unless
otherwise consented to by Borrower (such consent not to be
unreasonably withheld): (a) no more than three (3) Persons shall hold
interests in the Loan (as Lender, assignee or participant), and (b)
(i) Lender, or an assignee of Lender reasonably acceptable to
Borrower, shall at all times retain an interest in the Loan that is
greater than 50% (the "Majority Lender"), and (ii) Borrower shall not
be required to communicate with any Person holding an interest in the
Loan other than the Majority Lender. Lender shall have the right to
forward to any prospective purchaser, co-lender or participant all
documents and information relating to the Loan and the Loan Documents,
Borrower and the Collateral, whether furnished by Borrower or
otherwise, as Lender deems necessary or desirable. Borrower shall
reasonably cooperate with Lender in any efforts by Lender to sell,
transfer, assign, dispose of, grant participations in or syndicate the
Loan and the Loan Documents, including, without limitation, by
executing and delivering to Lender replacement a promissory note or
notes in the form of the Note and in the aggregate principal amount of
then outstanding principal amount of the Loan.
Section 8.12 Counterparts; Inconsistencies. This Agreement and
any amendments, waivers, consents or supplements may be executed in
counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which together shall constitute but one
and the same instrument. This Agreement and each of the other Loan
Documents shall be construed to the extent reasonable to be consistent
one with the other, but to the extent that the terms and provisions of
this Agreement are actually and directly inconsistent with the terms
and provisions of any other Loan Document, the terms and provisions of
this Agreement shall govern.
Section 8.13 Construction. The parties acknowledge that each
party has reviewed and participated in preparing, and has had the
opportunity to have such party's counsel review and participate in
preparing, the Loan Documents and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of the Loan
Documents or any amendments or exhibits thereto.
Section 8.14 Entire Agreement. This Agreement, taken together
with all of the other Loan Documents and all certificates and other
documents delivered by Borrower to Lender, embodies the entire
agreement, and supersedes all prior agreements, written and oral,
relating to the subject matter hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed on
the date set forth above.
BORROWER:
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Donald A. Lorenz
Its: Chief Financial Officer and
Executive Vice President
ADDRESS FOR NOTICE AND DELIVERY FOR
BORROWER:
Bedford Property Investors, Inc.
270 Lafayette Circle
Lafayette, CA 94549
Attn: Donald Lorenz
Tel: (510) 283-8910
Fax: (510) 283-5697
LENDER:
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Annette L. Billingsley
Its: Vice President
ADDRESS FOR NOTICE AND DELIVERY TO
LENDER:
Union Bank of California, N.A.
Real Estate Industries Group
350 California Street, 7th Floor
Attn: Annette L. Billingsley
Tel: (415) 705-5075
Fax: (415) 433-7438
EXHIBIT A
PROPERTIES AND RELEASE PRICES
PROPERTY RELEASE PRICE
1. Kenyon Center, Bellevue, WA. $8,184,000
2. Vista, San Diego, CA. $3,366,000
3. Napa Corporate Center, Napa, CA. $3,082,200
4. Carroll Tech Center, San Diego, CA. $4,691,800
5. 47633 Westinghouse Drive, Fremont, CA. $2,788,500
6. 47650 Westinghouse Drive, Fremont, CA. $957,000
7. 47600 Westinghouse Drive, Fremont, CA. $924,000
8. 115 Mason Circle, Concord, CA. $1,006,500
$25,000,000
EXHIBIT B
PROPERTY TENANT
1. Kenyon Center, Bellevue, WA. *Boeing
2. Vista, San Diego, CA. *Mark Sensing Western USA, Inc.
*Fujikura Composite America, Inc.
3. Napa Corporate Center, Napa,
CA. PPI Engineering
*Robert Mondavi Winery
Pinkerton's Inc.
Bay-Tec Engineering Co.
Enterprise Productivity System
Ratnor Garage Doors
4. Carroll Tech Center, San Diego,
CA. *Hybritech, Incorporated (3 Leases)
5. 47633 Westinghouse, Fremont,
CA. *Quester Technology, Inc.
6. 47650 Westinghouse, Fremont,
CA. *SMT Unlimited, L.P.
7. 47600 Westinghouse, Fremont,
CA. *Phase Metrics, Inc.
8. 115 Mason, Concord, CA. Performance Contracting, Inc.
*Koppl Industrial Systems, Inc.
Cables Unlimited
LMH, Inc.
Space Focus, Inc.
____________________
* See Section 3.01(b)(iii)
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . 1
ARTICLE II
LOAN . . . . . . . . . . . . 5
2.01 Loan. . . . . . . . . . . . . . . . . . . . 5
2.02 Use of Loan Proceeds. . . . . . . . . . . . 5
2.03 Debt Service on the Loan; Disqualification of the
Property 6
2.04 No Revolving Loan . . . . . . . . . . . . . 6
2.05 Fees. . . . . . . . . . . . . . . . . . . . 6
2.06 Payments. . . . . . . . . . . . . . . . . . 7
2.07 Release of Property . . . . . . . . . . . . 8
2.08 Substitution of Property. . . . . . . . . . 9
2.09 Limitation on Borrower's Liability. . . . . 10
ARTICLE III
CONDITIONS TO LOAN. . . . . . . . 12
3.01 Conditions to Disbursement of Loan. . . . . 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . 14
4.01 Representations and Warranties. . . . . . . 14
ARTICLE V
REPORTING COVENANTS . . . . . . . . . 18
5.01 Financial Statements and Other Financial and
Operating Information . . . . . . . . . . . 18
(a) Quarterly Property Statements. . . . . 18
(b) Quarterly Financial Statements . . . . 18
(c) Annual Financial Statements. . . . . . 19
(d) Cash Flow Projections. . . . . . . . . 19
(e) Knowledge of Event of Default. . . . . 19
(f) Litigation, etc. . . . . . . . . . . . 19
(g) Election to Terminate Status as a REIT 20
(h) Other Information. . . . . . . . . . . 20
ARTICLE VI
OTHER COVENANTS. . . . . . . . . . . 20
6.01 Existence, etc. . . . . . . . . . . . . . . 20
6.02 Taxes . . . . . . . . . . . . . . . . . . . 20
6.03 Insurance . . . . . . . . . . . . . . . . . 21
6.04 Compliance with Law . . . . . . . . . . . . 21
6.05 Inspection of Properties; Books and Records 21
6.06 Conduct of Business . . . . . . . . . . . . 21
6.07 Tenant Estoppel Certificates; Subordination,
Nondisturbance and . . . . . . . . . . . . . . . .Attornment
Agreements 21
6.08 Leases; Major Agreements. . . . . . . . . . 21
6.09 Chief Executive Office. . . . . . . . . . . 22
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES. . . . . . 22
7.01 Events of Default . . . . . . . . . . . . . 22
(b) Other Covenants. . . . . . . . . . . . 22
(c) Representations and Warranties . . . . 22
(d) Involuntary Bankruptcy; Appointment of
Receiver 23
(e) Voluntary Bankruptcy; Appointment of
Receiver 23
(f) Solvency; Material Adverse Change. . . 23
7.02 Rights and Remedies . . . . . . . . . . . . 23
(a) Acceleration . . . . . . . . . . . . . 23
(b) Waiver of Demand . . . . . . . . . . . 24
(c) Environmental Assessment . . . . . . . 24
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . 24
8.01 Expenses. . . . . . . . . . . . . . . . . . 24
(a) Generally . . . . . . . . . . . . 24
(b) After Event of Default. . . . . . 25
8.02 Indemnity . . . . . . . . . . . . . . . . . 25
8.03 Notices and Delivery. . . . . . . . . . . . 25
8.04 Survival of Warranties, Indemnities and
Agreements . 26
8.05 No Waiver; Remedies Cumulative. . . . . . . 26
8.06 Marshalling; Recourse to Security; Payments Set
Aside 26
8.07 Severability. . . . . . . . . . . . . . . . 26
8.08 Headings. . . . . . . . . . . . . . . . . . 26
8.09 Governing Law . . . . . . . . . . . . . . . 27
8.10 Successors and Assigns. . . . . . . . . . . 27
8.11 Sale of Loan, Participations. . . . . . . . 27
8.12 Counterparts; Inconsistencies . . . . . . . 27
8.13 Construction. . . . . . . . . . . . . . . . 27
8.14 Entire Agreement. . . . . . . . . . . . . . 28