Exhibit 10.7
PROMISSORY NOTE
U.S. $75,000,000.00 As of November 21, 2003
FOR VALUE RECEIVED, and at the times hereinafter specified, KS
PARCEL D, LLC, a Delaware limited liability company ("Maker"), whose address is
101 Main Street, 18th Floor, Cambridge, Massachusetts 02142, hereby promises to
pay to the order of THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, a Texas
corporation (hereinafter referred to, together with each subsequent holder
hereof, as "Holder"), at c/o AIG Global Investment Corp., 1 SunAmerica Center,
38th Floor, Century City, Los Angeles, California 90067-6022, or at such other
address as may be designated from time to time hereafter by any Holder, the
principal sum of SEVENTY-FIVE MILLION AND NO/100THS DOLLARS ($75,000,000.00),
together with interest on the principal balance outstanding from time to time,
as hereinafter provided, in lawful money of the United States of America.
By its execution and delivery of this promissory note (this "Note"),
Maker covenants and agrees as follows:
1. Interest Rate and Payments.
(a) The balance of principal outstanding from time to time
under this Note shall bear interest at the rate of six and thirty-eight
one-hundredths percent (6.38%) per annum (the "Original Interest Rate"), based
on a three hundred sixty (360) day year composed of twelve (12) months of thirty
(30) days each; provided, however, if any audit conducted by Genzyme Corporation
("Genzyme") pursuant to Section 3.1.1 of the Genzyme Lease shall result in a
reduction in the Annual Fixed Rent payable under such Genzyme Lease as of the
date of this Note (a "Rent Reduction") by more than five percent (5%). then,
commencing on the first day of the month following such Rent Reduction (the
"Rate Change Date"), the Original Interest Rate shall be adjusted in accordance
with the following formula: (i) if the Rent Reduction is greater than five
percent (5%), but less than or equal to ten percent (10%), then the Original
Interest Rate shall be increased by five one-hundredths percent (.05%), per
annum; (ii) if the Rent Reduction is greater than ten percent (10%), but less
than or equal to fifteen percent (15%), then the Original Interest Rate shall be
increased by fifteen one-hundredths percent (.15%), per annum; and (iii) if the
Rent Reduction is greater than fifteen percent (15%), then the Original Interest
Rate shall be increased by twenty five one-hundredths percent (.25%), per annum.
(b) Interest only shall be payable on the date the loan
evidenced by this Note (the "Loan") is funded by Holder, in advance, for the
period from and including the date of funding through and including November 30,
2003.
(c) Commencing on January 1, 2004 and on the first day of each
month thereafter through and including December 1, 2014, combined payments of
principal and interest (the "Regular Monthly Payment") shall be payable, in
arrears, in the amount of $500,796.03 each (such amount representing an amount
sufficient to fully amortize the original principal amount of this Note over a
twenty five (25) year period (the "Amortization Period"));provided, however, if
the Original Interest Rate is increased due to a Rent Reduction, as provided
in Section 1 (a), above, then the Regular Monthly Payment shall be revised and,
commencing on the first day of the month following the Rate Change Date and on
the first day of each month thereafter through and including December 1, 2014,
combined payments of principal and interest shall be payable, in arrears, in an
amount sufficient to fully amortize the outstanding principal balance of the
Loan existing following the application of the monthly payment due on the Rate
Change Date over the remaining Amortization Period, at the revised Original
Interest Rate.
(d) Commencing on January 1, 2015 and on the first day of each
month thereafter through and including November 1, 2018, combined payments of
principal and interest shall be payable, in arrears, in an amount equal to the
sum of (i) the Regular Monthly Payment, plus (ii) $125,000.00 (such $125,000.00
shall be an additional principal payment and referred to herein as the "Required
Additional Payment").
(e) The entire outstanding principal balance, together with
all accrued and unpaid interest and all other sums due hereunder, shall be due
and payable in full on December 1, 2018 (the "Original Maturity Date");
provided, however, if any Rent Reduction shall result in a reduction in the
Annual Fixed Rent payable under the Genzyme Lease as of the date of this Note by
twenty percent (20%), or more (a "20% Rent Reduction"), then, at Holder's
option, the entire outstanding principal balance, together with all accrued and
unpaid interest and all other sums due hereunder, shall be due and payable
within ninety (90) days following demand.
2. Holder's Extension Option; Net Operating Income.
(a) If Maker shall fail to pay the outstanding principal
balance of this Note and all accrued interest and other charges due hereon at
the Original Maturity Date, Holder shall have the right, at Holder's sole
option and discretion, to extend the term of the Loan for an additional period
of five (5) years (the "Extension Term"), in which case the entire outstanding
principal balance of this Note, together with all accrued interest and all other
sums due hereon, shall be due and payable in full on December 1, 2023. If Holder
elects to extend the term of the Loan, Maker shall pay all third-party fees of
Holder incurred in connection with such extension, including, but not limited
to, title insurance premiums and reasonable attorneys' fees. Maker shall execute
all documents reasonably requested by Holder to evidence and secure the Loan, as
extended, and shall obtain and provide to Holder any title insurance policy or
endorsement requested by Holder.
(b) Should Holder elect to extend the term of the Loan as
provided above, Holder shall (i) reset the interest rate borne by the
then-existing principal balance of the Loan to a rate per annum (the "New Rate")
equal to the greater of (A) the Original Interest Rate, or (B) Holder's (or
comparable lenders', if Holder is no longer making such loans) then-prevailing
interest rate for five (5) year loans secured by properties similar to the
Property(hereinafter defined), as determined by Holder in its sole discretion;
(ii) re-amortize the then-existing principal balance of the Loan over the
remaining portion of the Amortization Period (the "New Amortization Period");
(iii) have the right to require Maker to enter into modifications of the
non-economic terms of the Loan Documents as Holder may request to reflect such
extension (the "Non-Economic Modifications"); and (iv) notwithstanding any
provision set forth in the Loan Documents to the contrary, have the right to
require Maker to
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make monthly payments into escrow for insurance premiums and real property
taxes, assessments and similar governmental charges. Hence, monthly principal
and interest payments' during the Extension Term shall be based upon the New
Rate, and calculated to amortize fully the outstanding principal balance of the
Loan over the New Amortization Period.
(c) If Holder elects to extend the term of the Loan, Holder
shall advise Maker of the New Rate on or prior to the Original Maturity Date.
(d) In addition to the required monthly payments of principal
and interest set forth above, commencing on the first day of the second month
following the Original Maturity Date and continuing on the first day of each
month thereafter during the Extension Term (each an "Additional Payment Date"),
Maker shall make monthly payments to Holder in an amount equal to all Net
Operating Income (hereinafter defined) attributable to the Property for the
calendar month ending on the last day of the month that is two months preceding
each such Additional Payment Date. For example, assuming the Original Maturity
Date is January 1, then Net Operating Income for the period from January 1
through January 31 shall be payable to Holder on March 1; Net Operating Income
for the period from February 1 through February 28 shall be payable to Holder on
April 1, and so on.
(e) Holder shall deposit all such Net Operating Income
received from Maker into an account or accounts maintained at a financial
institution chosen by Holder or its servicer in its sole discretion (the
"Deposit Account") and all such funds shall be invested in a manner acceptable
to Holder in its sole discretion. All interest, dividends and earnings credited
to the Deposit Account shall be held and applied in accordance with the terms
hereof.
(f) On the third Additional Payment Date and on each third
Additional Payment Date thereafter, Holder shall apply all Excess Funds
(hereinafter defined), if any, to prepayment of amounts due under this Note,
without premium or penalty.
(g) As security for the repayment of the Loan and the
performance of all other obligations of Maker under the Loan Documents, Maker
hereby assigns, pledges, conveys, delivers, transfers and grants to Holder a
first priority security interest in and to: all Maker's right, title and
interest in and to the Deposit Account; all rights to payment from the Deposit
Account and the money deposited therein or credited thereto (whether then due or
in the future due and whether then or in the future on deposit); all interest
thereon; any certificates, instruments and securities, if any, representing the
Deposit Account; all claims, demands, general intangibles, choses in action and
other rights or interests of Maker in respect of the Deposit Account; any monies
then or at any time thereafter deposited therein; any increases, renewals,
extensions, substitutions and replacements thereof; and all proceeds of the
foregoing.
(h) From time to time, but not more frequently than monthly,
Maker may request a disbursement (a "Disbursement") from the Deposit Account for
capital expenses, tenant improvement expenses, leasing commissions and special
contingency expenses. Holder may consent to or deny any such Disbursement in its
sole discretion.
(i) Upon the occurrence of any Event of Default (hereinafter
defined) (i) Maker shall not be entitled to any further Disbursement from the
Deposit Account; and
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(ii) Holder shall be entitled to take immediate possession and control of the
Deposit Account (and all funds contained therein) and to pursue all of its
rights and remedies available to Holder under the Loan Documents, at law and in
equity.
(j) All of the terms and conditions of the Loan shall apply
during the Extension Term, except as expressly set forth above, and except that
no further extensions of the Loan shall be permitted.
(k) For the purposes of the foregoing:
(i) "Excess Funds" shall mean, on any Additional Payment
Date, the amount of funds then existing in the Deposit Account
(including any Net Operating Income due on the applicable Additional
Payment Date), less an amount equal to the sum of three regularly
scheduled payments of principal and interest due on this Note;
(ii) "Net Operating Income" shall mean, for any
particular period of time, Gross Revenue for the relevant period,
less Operating Expenses for the relevant period; provided, however,
that if such amount is equal to or less than zero (0), Net Operating
Income shall equal zero (0);
(iii) "Gross Revenue" shall mean all payments and other
revenues (exclusive, however, of any payments attributable to sales
taxes) received by or on behalf of Maker from all sources related to
the ownership or operation of the Property, including, but not
limited to, rents, room charges, parking fees, interest, security
deposits (unless required to be held in a segregated account),
business interruption insurance proceeds, operating expense
pass-through revenues and common area maintenance charges, for the
relevant period for which the calculation of Gross Revenue is being
made; and
(iv) "Operating Expenses" shall mean the sum of all
necessary operating expenses actually paid by Maker in connection
with the operation of the Property during the relevant period for
which the calculation of Operating Expenses is being made,
including, but not limited to, (a) payments made by Maker for taxes
and insurance required under the Loan Documents, and (b) monthly
debt service payments as required under this Note.
3. Budgets During Extension Term.
(a) Within fifteen (15) days following the Original Maturity
Date and on or before December 1 of each subsequent calendar year, Maker shall
deliver to Holder a proposed revenue and expense budget for the Property for the
remainder of the calendar year in which the Original Maturity Date occurs or the
immediately succeeding calendar year (as applicable). Such budget shall set
forth Maker's projection of Gross Revenue and Operating Expenses for the
applicable calendar year, which shall be subject to Holder's reasonable
approval. Once a proposed budget has been reviewed and approved by Holder, and
Maker has made all revisions requested by Holder, if any, the revised budget
shall be delivered to Holder and shall thereafter become the budget for the
Property hereunder (the "Budget") for the
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applicable calendar year. If Maker and Holder are unable to agree upon a Budget
for any calendar year, the budgeted Operating Expenses (excluding extraordinary
items) provided in the Budget for the Property for the preceding calendar year
shall be considered the Budget for the Property for the subject calendar year
until Maker and Holder agree upon a new Budget for such calendar year.
(b) During the Extension Term, Maker shall operate the
Property in accordance with the Budget for the applicable calendar year, and the
total of expenditures relating to the Property exceeding one hundred and five
percent (105%) of the aggregate of such expenses set forth in the Budget for the
applicable time period shall not be treated as Operating Expenses for the
purposes of calculating "Net Operating Income," without the prior written
consent of Holder except for emergency expenditures which, in the Maker's good
faith judgment, are reasonably necessary to protect, or avoid immediate danger
to, life or property.
4. Reports During Extension Term.
(a) During the Extension Term, Maker shall deliver to Holder
all financial statements reasonably required by Holder to calculate Net
Operating Income, including, without limitation, a monthly statement to be
delivered to Holder concurrently with Maker's payment of Net Operating Income
that sets forth the amount of Net Operating Income accompanying such statement
and Maker's calculation of Net Operating Income for the relevant calendar month.
Such statements shall be certified by an executive officer of Maker or Maker's
manager, managing member or general partner (as applicable) as having been
prepared in accordance with the terms hereof and to be true, accurate and
complete in all material respects.
(b) In addition, on or before February 1 of each calendar year
during the Extension Term, Maker shall submit to Holder an annual income and
expense statement for the Property which shall include the calculation of Gross
Revenue, Operating Expenses and Net Operating Income for the preceding calendar
year and shall be accompanied by Maker's reconciliation of any difference
between the actual aggregate amount of the Net Operating Income for such
calendar year and the aggregate amount of Net Operating Income for such calendar
year actually remitted to Holder. All such statements shall be certified by an
executive officer of Maker or Maker's manager, managing member or general
partner (as applicable) as having been prepared in accordance with the terms
hereof and to be true, accurate and complete in all material respects. If any
such annual financial statement discloses any inconsistency between the
calculation of Net Operating Income and the amount of Net Operating Income
actually remitted to Holder, Maker shall immediately remit to Holder the amount
of any underpayment of Net Operating Income for such calendar year or, in the
event of an overpayment by Maker, such amount may be withheld from any
subsequent payment of Net Operating Income required hereunder.
(c) Holder may notify Maker within ninety (90) days after
receipt of any statement or report required hereunder that Holder disputes any
computation or item contained in any portion of such statement or report. If
Holder so notifies Maker, Holder and Maker shall meet in good faith within
twenty (20) days after Holder's notice to Maker to resolve such disputed items.
If, despite such good faith efforts, the parties are unable to resolve the
dispute at such meeting or within ten (10) days thereafter, the items shall be
resolved by an
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independent certified public accountant designated by Holder (and approved by
Maker, such approval not to be unreasonably withheld) within fifteen (15) days
after such ten (10) day period; It shall be reasonable for Maker to withhold
consent to Holder's designation of an accountant if using such accountant would
cause a conflict of interest concern for or violation of any auditing or
accounting regulations or standards by any of the direct or indirect owners of
Maker under the regulations of the United States Securities Exchange Commission
or any similar regulatory body in the United States or United Kingdom. The
determination of such accountant shall be final. All fees of such accountant
shall be paid by Maker. Maker shall remit to Holder any additional amount of Net
Operating Income found to be due for such periods within ten (10) days after the
resolution of such dispute by the parties or the accountant's determination, as
applicable. The amount of any overpayment found to have been made for such
periods may be withheld from any required future remittance of Net Operating
Income.
(d) Maker shall at all times keep and maintain full and
accurate books of account and records adequate to reflect correctly all items
required in order to calculate Net Operating Income.
5. Prepayment.
(a) At any time during the term of the Loan, Maker shall have
the right to prepay the full principal amount of this Note and all accrued but
unpaid interest hereon as of the date of prepayment, provided that (i) Maker
gives not less than thirty (30) days' prior written notice to Holder of Maker's
election to prepay this Note, and (ii) Maker pays a prepayment premium to Holder
equal to (A) during the first two (2) years after the date of this Note (the
"First Prepayment Period"), the greater of (1) two percent (2%) of the
outstanding principal amount of this Note, or (2) one hundred fifty percent
(150%) of the Present Value of this Note(hereinafter defined), less the amount
of principal being prepaid, calculated as of the prepayment date, and (B) at any
time following the First Prepayment Period, the greater of(1) one percent (1%)
of the outstanding principal amount of this Note, or (2) the Present Value of
this Note, less the amount of principal being prepaid, calculated as of the
prepayment date.
(b) Holder shall notify Maker of the amount and basis of
determination of the prepayment premium. Holder shall not be obligated to accept
any prepayment of the principal balance of this Note unless such prepayment is
accompanied by the applicable prepayment premium and all accrued interest and
other sums due under this Note. Maker may not prepay the Loan on a Friday or on
any day preceding a public holiday, or the equivalent for banks generally under
the laws of the Commonwealth of Massachusetts.
(c) Except for making payments of Net Operating Income during
the Extension Term as required above, and except for the application of
insurance proceeds or condemnation awards to the principal balance of this Note,
as provided in the Mortgage(hereinafter defined), in no event shall Maker be
permitted to make any partial prepayments of this Note.
(d) If Holder accelerates this Note for any reason, then in
addition to Maker's obligation to pay the then outstanding principal balance of
this Note and all accrued but unpaid interest thereon, Maker shall pay an
additional amount equal to the prepayment premium
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that would be due to Holder if Maker were voluntarily prepaying this Note at the
time that such acceleration occurred.
(e) For the purposes of the foregoing:
(i) The "Present Value of this Note" with respect to any
prepayment of this Note, as of any date, shall be determined by
discounting all scheduled payments of principal and interest
remaining to maturity of this Note, attributed to the amount being
prepaid, at the Discount Rate (hereinafter defined). If prepayment
occurs on a date other than a regularly scheduled payment date, the
actual number of days remaining from the prepayment date to the next
regularly scheduled payment date will be used to discount within
such period;
(ii) The "Discount Rate" is the rate which, when
compounded monthly, is equivalent to the Treasury Rate, when
compounded semi-annually, plus twenty-five (25) basis points;
(iii) The "Treasury Rate" is the semi-annual yield on
the Treasury Constant Maturity Series with maturity equal to the
remaining weighted average life of this Note, for the week prior to
the prepayment date, as reported in Federal Reserve Statistical
Release H.15 - Selected Interest Rates, conclusively determined by
Holder on the prepayment date. The rate will be determined by linear
interpolation between the yields reported in Release H.15, if
necessary. In the event Release H.15 is no longer published, Holder
shall select a comparable publication to determine the Treasury
Rate.
(f) Holder shall not be obligated actually to reinvest the
amount prepaid in any treasury obligations as a condition precedent to receiving
any prepayment premium.
(g) Notwithstanding the foregoing, (i) during the three (3)
month period immediately preceding the Original Maturity Date and at any time
during the Extension Term, Maker shall have the right to prepay the full
principal amount of this Note and all accrued but unpaid interest thereon as of
the date of prepayment, without prepayment premium thereon,(ii) no prepayment
premium shall be due in connection with the application of any insurance
proceeds or condemnation awards to the principal balance of this Note, as
provided in the Mortgage, and (iii) no prepayment premium shall be due in
connection with any Required Additional Payment.
6. Payments. Whenever any payment to be made under this Note shall
be stated to be due on a Saturday, Sunday or public holiday or the equivalent
for banks generally under the laws of the Commonwealth of Massachusetts (any
other day being a "Business Day"),such payment may be made on the next
succeeding Business Day.
7. Default Rate.
(a) The entire balance of principal, interest, and other sums
due upon the maturity hereof, by acceleration or otherwise, shall bear interest
from the date due until paid
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at the greater of (i) eighteen percent (18%) per annum and (ii) a per annum rate
equal to five percent (5%) over the prime rate (for corporate loans at large
United States money center commercial banks) published in The Wall Street
Journal on the first business day of each month (the "Default Rate"); provided,
however, that such rate shall not exceed the maximum permitted by applicable
state or federal law. In the event The Wall Street Journal is no longer
published or no longer publishes such prime rate, Holder shall select a
comparable reference.
(b) If any payment under this Note is not made within five (5)
days after the date such payment becomes due, interest on the outstanding
principal balance of this Note shall accrue at the Default Rate from such fifth
(5th) day after such payment was due until payment is actually made.
8. Late Charges. In addition to interest as set forth herein, Maker
shall pay to Holder a late charge equal to four percent (4%) of any monthly
payment amounts due under this Note in the event any such amount is not paid
within five (5) days after the date such payment becomes due.
9. Application of Payments. All payments hereunder shall be applied
first to the payment of late charges, if any, then to the payment of prepayment
premiums, if any, then to the repayment of any sums advanced by Holder for the
payment of any insurance premiums, taxes, assessments, or other charges against
the property securing this Note (together with interest thereon at the Default
Rate from the date of advance until repaid), then to the payment of accrued and
unpaid interest, and then to the reduction of principal.
10. Immediately Available Funds. Payments under this Note shall be
payable in immediately available funds without setoff, counterclaim or deduction
of any kind, and shall be made by electronic funds transfer from a bank account
established and maintained by Maker for such purpose.
11. Security. This Note is secured by a Mortgage, Security
Agreement, Fixture Filing, Financing Statement and Assignment of Leases and
Rents of even date herewith granted by Maker for the benefit of the named Holder
hereof (the "Mortgage") encumbering certain real property and improvements
thereon commonly known as 500 Kendall Street, Cambridge, Massachusetts as more
particularly described in such Mortgage (the "Property").
12. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Mortgage.
13. Event of Default. Each of the following events will constitute
an event of default (an "Event of Default") under this Note and under the
Mortgage and each other Loan Document, and any Event of Default under any Loan
Document shall constitute an Event of Default hereunder and under each of the
other Loan Documents:
(a) any failure to pay when due any sum hereunder; provided,
however, that Maker shall be permitted to make one (1) payment hereunder
within-five (5) days following its due date in any consecutive twelve (12) month
period without such event constituting an Event of Default;
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(b) any failure of Maker to properly perform any obligation
contained herein or in any of the other Loan Documents (other than the
obligation to make payments under this Note or the other Loan Documents) and
the continuance of such failure for a period of thirty (30) days following
written notice thereof from Holder to Maker; provided, however, that if such
failure is not curable within such thirty (30) day period, then, so long as
Maker commences to cure such failure within such thirty (30) day period and is
continually and diligently attempting to cure to completion, such failure shall
not be an Event of Default unless such failure remains uncured for one hundred
twenty (120) days after such written notice to Maker; provided, further, that if
Holder shall so elect in the exercise of its sole but good faith discretion,
then after such 120 day period, and for so long as Maker is continually and
diligently attempting to cure to completion, such failure shall not be an Event
of Default so long as Maker provides to Holder such additional security to
adequately protect Holder as is acceptable to Holder in the exercise of its sole
but good faith discretion; or
(c) if, at any time during the Extension Term, Gross Revenue
for each of any two consecutive calendar months shall be less than ninety-three
percent (93%) of the amount of projected Gross Revenue for such months set forth
in the applicable Budget.
14. Acceleration. Upon the occurrence of any Event of Default, the
entire balance of principal, accrued interest, and other sums owing hereunder
shall, at the option of Holder, become at once due and payable without notice or
demand. Upon the occurrence of an Event of Default described in SECTION 13(c)
hereof, Holder shall have the option, in its sole discretion, to either (a)
exercise any remedies available to it under the Loan Documents, at law or in
equity, or (b) require Maker to submit a new proposed budget for Holder's
approval. If Holder agrees to accept such new proposed budget, then such budget
shall become the Budget for all purposes hereunder.
15. Conditions Precedent. Maker hereby certifies and declares that
all acts, conditions and things required to be done and performed and to have
happened precedent to the creation and issuance of this Note, and to constitute
this Note the legal, valid and binding obligation of Maker, enforceable in
accordance with the terms hereof, have been done and performed and happened in
due and strict compliance with all applicable laws.
16. Certain Waivers and Consents. Maker and all parties now or
hereafter liable for the payment hereof, primarily or secondarily, directly or
indirectly, and whether as endorser, guarantor, surety, or otherwise, hereby
severally (a) waive presentment, demand, protest, notice of protest and/or
dishonor, and all other demands or notices of any sort whatever with respect to
this Note, (b) consent to impairment or release of collateral, extensions of
time for payment and acceptance of partial payments before, at, or after
maturity, (c) waive any right to require Holder to proceed against any security
for this Note before proceeding hereunder, (d) waive diligence in the collection
of this Note or in filing suit on this Note, and (e) agree to pay all costs and
expenses, including reasonable attorneys' fees, which may be incurred in the
collection of this Note or any part thereof or in preserving, securing
possession of, and realizing upon any security for this Note.
17. Usury Savings Clause. The provisions of this Note and of all
agreements between Maker and Holder are, whether now existing or hereinafter
made, hereby expressly
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limited so that in no contingency or event whatever, whether by reason of
acceleration of the maturity hereof, prepayment, demand for payment or
otherwise, shall the amount paid, or agreed to be paid, to Holder for the use,
forbearance, or detention of the principal hereof or interest hereon, which
remains unpaid from time to time, exceed the maximum amount permissible under
applicable law, it particularly being the intention of the parties hereto to
conform strictly to Massachusetts and Federal law, whichever is applicable. If
from any circumstance whatever, the performance or fulfillment of any provision
hereof or of any other agreement between Maker and Holder shall, at the time
performance or fulfillment of such provision is due, involve or purport to
require any payment in excess of the limits prescribed by law, then the
obligation to be performed or fulfilled is hereby reduced to the limit of such
validity, and if from any circumstance whatever Holder should ever receive as
interest an amount which would exceed the highest lawful rate, the amount which
would be excessive interest shall be applied to the reduction of the principal
balance owing hereunder (or, at Holder's option, be paid over to Maker) and
shall not be counted as interest. To the extent permitted by applicable law,
determination of the legal maximum amount of interest shall at all times be made
by amortizing, prorating, allocating and spreading in equal parts during the
period of the full stated term of this Note, all interest at any time contracted
for, charged, or received from Maker in connection with this Note and all other
agreements between Maker and Holder, so that the actual rate of interest on
account of the indebtedness represented by this Note is uniform throughout the
term hereof.
18. Non-Recourse; Exceptions to Non-Recourse. Nothing contained in
this Note or any of the other Loan Documents shall be deemed to impair or limit
Holder's rights: in foreclosure proceedings or in any ancillary proceedings
brought to facilitate Holder's foreclosure on the Property or any portion
thereof or to exercise any specific rights or remedies afforded Holder under any
other provisions of the Loan Documents or by law or in equity, subject to the
non-recourse provisions set forth below; to recover under any guarantee given in
connection with the Loan; or to pursue any personal liability of Maker or any
Guarantor under the Environmental Indemnity Agreement or Section 5.10 of the
Mortgage. Except as expressly set forth in this Section 18, the recourse of
Holder with respect to the obligations evidenced by this Note shall be solely to
the Property, Chattels and Intangible Personality (as defined in the Mortgage)
and any other collateral given as security for the Loan:
(a) Notwithstanding anything to the contrary contained in this
Note or in any Loan Document, nothing shall be deemed in any way to
impair, limit or prejudice the rights of Holder to collect or recover from
Maker: (i) damages or costs (including without limitation reasonable
attorneys' fees) incurred by Holder as a result of waste by Maker; (ii)
any condemnation or insurance proceeds attributable to the Property which
were not paid to Holder or used to restore the Property in accordance with
the terms of the Mortgage; (iii) any rents, profits, advances, rebates,
prepaid rents or other similar sums attributable to the Property collected
by or for Maker following an Event of Default (as defined in the Mortgage)
and not properly applied to the reasonable fixed and operating expenses of
the Property, including payments of this Note and other sums due under the
Loan Documents; (iv) any security deposits collected by or for Maker and
not applied in accordance with applicable leases; (v) the amount of any
accrued taxes, assessments, and/or utility charges affecting the Property
(whether or not the same have been billed to Maker) that are either unpaid
by Maker or advanced by Holder under the Mortgage: (vi) any sums expended
by Holder in fulfilling the obligations of Maker, as
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lessor, under any leases affecting the Property; and (vii) the amount of
any loss suffered by Holder (that would otherwise be covered by insurance)
as a result of Maker's failure to maintain the insurance required under
the terms of any Loan Document. Notwithstanding the foregoing, Maker shall
not be personally liable for (A) taxes or utility charges relating to the
period after the date (the "Transfer Date") which is the earlier to occur
of (1) the date the Holder takes title to the Property in connection with
the foreclosure of the Mortgage, and (2) the date on which the Maker
tenders to Holder a deed in lieu of foreclosure for the Property, whether
or not it is accepted by Holder (provided that such deed contains no
changes to the title not previously approved in writing by Holder since
the Loan closing and that there are no Hazardous Substances as defined in
the Environmental Indemnity Agreement unlawfully present on the Property),
(B) any taxes accruing prior to the Transfer Date to the extent of amounts
on deposit in any real estate escrow account required under the Loan
Documents plus any amounts actually collected by Holder from tenants at
the Property which are payable as tenants' share of real estate taxes
accruing prior to the Transfer Date, or (C) any sums expended by Holder in
fulfilling the obligations of Maker, as lessor, under any leases affecting
the Property accruing after the Transfer Date;
(b) The agreement set forth in the introductory paragraph of
this Section 18 to limit the personal liability of Maker shall become null
and void and be of no further force and effect, and Maker and each
Guarantor shall be personally liable for the obligations evidenced by this
Note, in the event (i) that the Property, or any part thereof or any
interest therein, or any interest in Maker, shall be further encumbered by
a voluntary lien securing any obligation upon which Maker, any direct or
indirect general partner, manager or managing member of Maker, any
guarantor of the Loan, or any principal or affiliate of Maker shall be
personally liable for repayment, either as obligor or guarantor; (ii) of
any breach or violation of Section 5.4, 5.5 or 5.7 of the Mortgage; (iii)
of any fraud or misrepresentation by Maker in connection with the
Property, the Loan Documents or the application made by Maker for the
Loan; (iv) that Maker forfeits the Property or Chattels or any portion of
the Property or Chattels due to criminal activity; (v) of any attempt by
Maker, any Guarantor, or any other person directly or indirectly
responsible for the management of Maker or liable for repayment of Maker's
obligations under the Loan (whether as maker, endorser, guarantor, surety,
general partner or otherwise) to willfully and materially delay any
foreclosure against the Property, Chattels and/or Intangible Personalty
or any other exercise by Holder of its remedies under the Loan Documents,
which attempts shall include, without limitation, (A) any claim that any
Loan Document is invalid or unenforceable to an extent that would preclude
any such foreclosure or other exercise of remedies, (B) Maker filing a
petition In bankruptcy, Maker failing to oppose in good faith the entry of
an order for relief pursuant to any involuntary bankruptcy petition filed
against it or Maker seeking any reorganization, liquidation, dissolution
or similar relief under the bankruptcy laws of the United Slates or under
any other similar federal, state or other statute relating to relief from
indebtedness, or (C) the appointment of a receiver, trustee or liquidator
with respect to Maker or the Property or any part thereof; (vi) of any
amendment, modification or voluntary termination of the Genzyme Lease (as
such term is defined in the Mortgage) or of any execution or subsequent
amendment, modification or termination of any lease for any space
currently demised under the Genzyme Lease in excess of 25,000 square feet,
11
without the prior written consent of Holder; (vii) of any modification
without Holder's prior written consent, or the termination for any reason,
of the Parking Lease (as defined in the Mortgage); or (viii) of a 20% Rent
Reduction. For purposes of the foregoing, "affiliate" shall mean any
individual, corporation, trust, partnership or any other person or entity
controlled by, controlling or under common control with Maker. A person or
entity of any nature shall be presumed to have control when it possesses
the power, directly or indirectly, to direct, or cause the direction of,
the management or policies of another person or entity, whether through
ownership of voting securities, by contract, or otherwise.
19. Severability. If any provision hereof or of any other document
securing or related to the indebtedness evidenced hereby is, for any reason and
to any extent, invalid or unenforceable, then neither the remainder of the
document in which such provision is contained, nor the application of the
provision to other persons, entities, or circumstances, nor any other document
referred to herein, shall be affected thereby, but instead shall be enforceable
to the maximum extent permitted by law.
20. Transfer of Note. Each provision of this Note shall be and
remain in full force and effect notwithstanding any negotiation or transfer
hereof and any interest herein to any other Holder or participant.
21. Governing Law. Regardless of the place of its execution, this
Note shall be construed and enforced in accordance with the laws of the
Commonwealth of Massachusetts.
22. Time of Essence. Time is of the essence with respect to Maker's
obligations under this Note.
23. Remedies Cumulative. The remedies provided to Holder in this
Note, the Mortgage and the other Loan Documents are cumulative and concurrent
and may be exercised singly, successively or together against Maker, the
Property, and other security, or any guarantor of this Note, at the sole and
absolute discretion of the Holder.
24. No Waiver. Holder shall not by any act or omission be deemed to
waive any of its rights or remedies hereunder unless such waiver is in writing
and signed by the Holder and then only to the extent specifically set forth
therein. A waiver of one event shall not be construed as continuing or as a bar
to or waiver of any right or remedy granted to Holder hereunder in connection
with a subsequent event.
25. Joint and Several Obligation. If Maker is more than one person
or entity, then (a) all persons or entities comprising Maker are jointly and
severally liable for all of the Maker's obligations hereunder; (b) all
representations, warranties, and covenants made by Maker shall be deemed
representations, warranties, and covenants of each of the persons or entities
comprising Maker; (c) any breach, Default or Event of Default by any of the
persons or entities comprising Maker hereunder shall be deemed to be a breach,
Default, or Event of Default of Maker; and (d) any reference herein contained to
the knowledge or awareness of Maker shall mean the knowledge or awareness of any
of the persons or entities comprising Maker.
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26. WAIVER OF JURY TRIAL. MAKER AND HOLDER KNOWINGLY, IRREVOCABLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE MORTGAGE, OR ANY
OTHER LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN
DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MAKER AND HOLDER TO ENTER
INTO THE LOAN TRANSACTION EVIDENCED BY THIS NOTE.
27. WAIVER OF PREPAYMENT RIGHT WITHOUT PREMIUM MAKER HEREBY
EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE UNDER APPLICABLE LAW TO PREPAY THIS NOTE,
IN WHOLE OR IN PART, WITHOUT PREPAYMENT PREMIUM, UPON ACCELERATION OF THE
MATURITY DATE OF THIS NOTE, AND AGREES THAT, IF FOR ANY REASON A PREPAYMENT OF
ALL OR ANY PART OF THIS NOTE IS MADE, WHETHER VOLUNTARILY OR FOLLOWING ANY
ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON ACCOUNT OF THE
OCCURRENCE OF ANY EVENT OF DEFAULT ARISING FOR ANY REASON, INCLUDING, WITHOUT
LIMITATION, AS A RESULT OF ANY PROHIBITED OR RESTRICTED TRANSFER, FURTHER
ENCUMBRANCE OR DISPOSITION OF THE PROPERTY OR ANY PART THEREOF SECURING THIS
NOTE, THEN, EXCEPT AS OTHERWISE SET FORTH IN THIS NOTE OR THE OTHER LOAN
DOCUMENTS, MAKER SHALL BE OBLIGATED TO PAY, CONCURRENTLY WITH SUCH PREPAYMENT,
THE PREPAYMENT PREMIUM PROVIDED FOR IN THIS NOTE. MAKER HEREBY DECLARES THAT
HOLDER'S AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET
FORTH IN THIS NOTE CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT
BY MAKER, FOR THIS WAIVER AND AGREEMENT.
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IN WITNESS WHEREOF and intending to be legally bound, Maker has duly
executed this Note under seal as of the date first above written.
MAKER:
KS PARCEL D, LLC, a Delaware limited liability
company
By: Kendall Square, LLC, a Delaware limited
liability company, its manager
By: Lyme Properties LLC, a New Hampshire
limited liability company, its manager
By: /s/ David E. Clem
-----------------------------------
Name: David E. Clem
Title: Manager